A Kentucky USDA home loan is a zero-dollar-down mortgage option provided by USDA’s Department of Rural Development.
Is a Kentucky USDA loan more beneficial than a Kentucky conventional loan?
• zero down payment
• competitive interest rates
• lower-than-average monthly mortgage insurance
• relaxed credit requirements versus conventional loans
• no loan limits
How do I determine eligibility for a Kentucky Rural Housing USDA loan?
• Employment. Applicants must have proof of two years of stable income and employment.
No Down Payments
Property Eligibility –
Job History –
Income Limits – The USDA program is intended to assist low and moderate-income households, therefore, to be eligible for a USDA loan, your household income may not exceed the moderate-income limits established for the specific county in which you are financing a home. Our Loan Specialists can help you determine your eligibility, or may view the eligibility requirements on this page of the USDA website:
DTI Ratio– One of the main criteria in determining if you will be approved or not is your debt-to-income ratio. While you must not make too much money, you also must not have too much debt. Your debt-to-income ratio is how much monthly debt you have (only those debts which show on your credit report are counted) compared to your qualifying income. So if your household income is $4,000/month, and your currently monthly debts (excluding rent), combined with your new mortgage payment are $1,500/month, this would equal 37.5% DTI ratios (this was calculated by taking $1,500 and dividing it by $4,000). Generally, your DTI ratio must be 41% or lower; however, in certain cases, a DTI of up to 44% may be acceptable. Our Loan Specialists can help determine your qualifying ratio and discuss these options with you.
Credit Score – The minimum credit score varies from lender to lender, but most want to see at least a 620 to 640-credit score for you to be approved with the automated GUS underwriting system used by USDA
Mortgage Insurance – USDA loans have their own version of mortgage insurance. It is called the “Guaranteed Fee” and works similarly to FHA loans which have an upfront and monthly mortgage insurance premium (MIP). With USDA loans, there is a 1.00% upfront guarantee fee which may be financed on top of your loan, and a 0.35% annual guarantee fee that is divided into 12 payments each year. The amount of your annual fee (paid monthly) adjusts each year and goes down as your loan balance does. Use our USDA calculator to get an idea of what your monthly payment will be:
RETAINING A DWELLING:
USDA has provided highlights of upcoming handbook revisions for Chapters 9 (Income) and 15 (Submitting Application Package) of the USDA Handbook 1-3555 which will be implemented in January 2023.
Please note: USDA has not provided an advanced copy of the full changes, nor is there a definitive effective date in January. When this information is released, FWL will announce with a deeper dive of the coming requirements.
The following are pertinent highlights of the proposed changes:
Senior Loan Officer
If you are an individual with disabilities who needs accommodation, or you are having difficulty using our website to apply for a loan, please contact us at 502-905-3708.
Disclaimer: No statement on this site is a commitment to make a loan. Loans are subject to borrower qualifications, including income, property evaluation, sufficient equity in the home to meet Loan-to-Value requirements, and final credit approval. Approvals are subject to underwriting guidelines, interest rates, and program guidelines and are subject to change without notice based on applicant’s eligibility and market conditions. Refinancing an existing loan may result in total finance charges being higher over the life of a loan. Reduction in payments may reflect a longer loan term. Terms of any loan may be subject to payment of points and fees by the applicant Equal Opportunity Lender.