|I have originated over 200 Kentucky and USDA Loans over my entire 20 year career. Put my experience to work for you today,. Free Mortgage Pre-Approvals for every County of Kentucky
24 Questions and Answers
1 What is the guarantee?
USDA Rural Development provides the full faith and assurance of the U.S Government
that any financial loss resulting from servicing the loan will be reimbursed in full up to
an amount not exceeding 90% of the original loan amount. All loss up to an amount not
exceeding 35% of the original loan is fully reimbursed. Losses exceeding 35% are 85%
2 What is the advantage to the customer?
100 percent financing, fixed interest rate, no MIP/PMI, and no restrictions on size or
design are just a few of the advantages.
3 What are the eligibility requirements?
Have adequate and dependable income (up to 115 percent of adjusted area median
income), have acceptable credit, do not own a dwelling in the local commuting area, US
Citizen or permanent resident, have the ability to personally occupy the home on a
permanent basis, and do not have funds for a 20% down payment loan plus closing and
4 Can a Broker originate Guaranteed loans? Yes, however only Approved lenders may underwrite & submit loans.
5 How long does it take to get an answer?
Our goal is a 2 to 5 day turnaround. Time will be longer in some offices due to the large
number of guarantee requests received.
6 What is the maximum fixed Interest Rate and term?
Fannie Mae 90 day delivery rate plus 60 basis points rounded up to nearest quarter of
one percent Or no more than the Lender's published VA rate for first mortgage loans
with no discount points. The term is 30 years.
7 What is the maximum loan amount?
8 What is the maximum Loan to Value?
9 What is the Guarantee Fee?
10 What are the qualifying ratios?
Higher ratios may be approved with compensating factors.
11 Do we show deferred student loans in the debt ratio?
Deferred student loans should be included in the debt ratio calculations for Guaranteed
Loans regardless of the deferment period.
12 What is the minimum credit score?
Under certain criteria, credit score 640 and above no comment required.
For credit score 639 and below document circumstances were temporary in nature
beyond the applicants control and have been removed. In most cases, loans will not be
guaranteed for applicants who have a middle credit score of 580 & below.
13 What about location? The dwelling must be located in eligible rural area (See eligibility site)
14 What about refinancing?
15 Can loans include acreage?
Possibly. The acreage must not contain any income producing facilities
16 Can Manufactured Homes be financed?
17 What about an in-ground swimming pool?
18 What are the required inspections?
Property must meet HUD Handbook 4905.1 & 4150.2 or similar standard. A FHA
roster appraiser can verify adequacy/working order of electrical, plumbing, heating,
water & waste disposal on existing dwellings.
19 Will USDA Rural Development issue a letter asking the Approved Lender to make
their standards and Agency standards before submitting.
20 Is homebuyer education required?
21 Are seller concessions allowed?
22 Who approves the Appraiser?
23 Can necessary repairs be included in loan?
24 Are alternate verifying income documents allowed?
Yes. Paycheck stubs, payroll earnings statements and W-2 tax forms for previous 2 tax
years, and telephone verification of employment.
► Guaranteed Underwriting System (GUS) Accept Underwriting Recommendation
Form RD 1980-21, “Request for Single Family Housing Loan Guarantee.”
Evidence of qualified alien, as applicable.
FEMA Form 81-93, “Standard Flood Hazard Determination Form.”
Uniform Residential Appraisal Report (URAR) with Market Condition Addendum (MC 1004).