Showing posts with label USDA Rural Development. Show all posts
Showing posts with label USDA Rural Development. Show all posts

Kentucky USDA Rural Housing Mortgage Lender: USDA Rural Housing Loan helps elderly woman become...

Kentucky USDA Rural Housing Mortgage Lender: USDA Rural Housing Loan helps elderly woman become...: USDA helps elderly WV woman become a first-time homeowner :  One 71-year-old woman from St. Albans is finally a homeowner thanks to a pr...

How Does Credit Scores, Down Payments, and Debt Ratio Affect Loan Approvals?

Credit score tracking is all the rage for personal finance-savvy consumers. With websites like Credit Karma, you can monitor your current score and keep an eye on irregularities in your line of credit.

But those aren’t the numbers used to gauge your credit-worthiness for a loan. Instead, banks rely on what’s known as the FICO score, an amalgamation of information about your ability to pay back credit cards, student loans, car debt and other forms of debt on time.

Here’s why you need a good credit score to buy a home: Credit scores impact the interest rate of your mortgage and could factor into whether you receive a conventional home loan (meaning that they are available/guaranteed through private financial institutions, or one of two government-backed entities, Fannie Mae or Freddie Mac).

You can visit and get a report from one of the three major credit bureaus, Experian, TransUnion and Equifax. This check will not hurt your score, but it will give you an idea of how trustworthy you look to lenders.

If you think your credit is in good enough shape to begin working with a lender, you can ask the financial institution to check your credit. All hard credit checks from mortgage lenders within a 45-day-window are treated like one inquiry. That’ll allow you to compare two to three lenders to see who will offer a more competitive mortgage rate. FICO advises taking advantage of this by shopping around for rates within a 30-day-window.

FICO has updated its scoring method, and new scores will be out in the summer of 2020. But while those new numbers might be a shock, they won’t have much impact on home loans because mortgage lenders prefer to use older FICO scoring models to determine a borrower’s eligibility, NPR reported.

Kentucky FHA Mortgage loan credit score requirements:

The minimum credit score is 500 for Kentucky FHA loans. However please keep in mind these two things: 1. Lenders credit their own overlays to increase the credit score threshold, most being 620, and secondly, if your credit score is below 580, you would need 10% minimum down payment, and if the credit score is over 580, then you can go with the minimum 3.5% down payment.
Obviously, if you have a higher credit score, this will increase your chances of getting approved for a Kentucky FHA Mortgage and possibly better rates and closing costs options.

Kentucky VA Mortgage loans requirements :

VA does not have a minimum credit score requirement, but if the credit score is below 620 few lenders will do the loan, but I am set up with several Kentucky VA lenders where I have closed them down to a 560 credit score, but the borrower had good compensating factors such as large down payment, low dti ratios, good job history and good residual income with no previous bankruptcies or foreclosures.

I would suggest if your credit scores are below 580, I would suggest on working on getting the scores up before you applied for a VA mortgage loan.

A lot of lenders will do a rapid rescore which in some cases can increase your credit scores in as little as 7-10 working days.

The federal Department of Veterans Affairs (VA) guarantees loans for current and former members of the military and their families. VA loans provide very favorable terms to eligible borrowers and have limited qualifying requirements.

You can get a VA loan with no down payment so long as the home isn’t worth more than you pay for it, and there’s no minimum credit score to qualify. You also don’t have to pay for mortgage insurance, although you do have to pay an up-front funding fee of between .5% and 3.3% of the loan amount unless you fall within an exception for disabled vets or military widows or widowers.

Kentucky USDA Mortgage credit score requirements:

According to their guidelines, USDA will go down to a 580 credit score, but most lenders will want a 640 credit score. USDA uses an online system to underwrite the risk of the loan, and scores under 640 are very difficult to get approved.

Validating the Credit Score. Two or more eligible tradelines are necessary to validate an applicant’s credit report score. Eligible tradelines consist of credit accounts (revolving, installment etc.) with at least 12 months of repayment history reported on the credit report. At least one applicant whose income or assets are used for qualification must have a valid credit report score

The Rural Housing Service (RHS) operates under the federal Department of Agriculture to guarantee loans for rural home-buyers with limited income who can’t obtain conventional financing. The upside is that Kentucky USDA loans require no down payment. The downside is that they charge a steep up-front fee of 1% of the loan amount (which can be paid off over the entire loan term) and an annual fee of 0.35%.

Kentucky Fannie Mae and Freddie Mac Conventional Credit Score Requirements

These are considered “conventional loans’ that can be often be obtained with a 3% to 5% down payment. Of course, there are higher standards for conventional home financing. The most common minimum credit score requirement to get approved today is a 620 FICO. 

This type of score is typical for people that have high credit card balances or a few delinquent payments in their past. The general consensus on Freddie Mac and Fannie Mae loans in Kentucky is that a 620 score is the entry-point to qualify, but you will need thorough documentation of income with credit scores in the 620 to 640 range. You will have a better shot to be approved for a mortgage-backed by Fannie or Freddie with a 680-credit score and less strenuous underwriting.
Competitive Mortgage Rates and Fees

Monthly Mortgage Insurance Is Not Always Required

Ideal for First Time Home Buyers with Good Credit

Down Payments For Mortgage Loan Approval

Down payments are fairly straightforward: it’s the amount you pay out initially when agreeing to buy a home, and the more you put down, the less you have to borrow from a mortgage lender to continue gaining equity in a home.

The minimum down payment to get a mortgage is 3.5 percent of the home’s cost, although unless you put down 20 or more percent on a conventional loan (more on that later) or get a mortgage backed by a federal agency, you’ll be subject to paying for mortgage insurance, according to the Consumer Financial Protection Bureau.

Down Payment Closing Cost Assistance

KHC recognizes that down payments, closing costs, and prep​aids are stumbling blocks for many potential home buyers. Here are several loan programs to help. Your KHC-approved lender can help you apply for the program that meets your need.

Regular DAP
Purchase price up to $314,827 with Secondary Market.
Assistance in the form of a loan up to $6,000 in $100 increments.
Repayable over a ten-year term at 5.50 percent.
Available to all KHC first-mortgage loan recipients.
Affordable DAP
Purchase price up to $314,827 with Secondary Market.
Assistance up to $6,000.
Repayable over a ten-year term at 1.00 percent.
Borrowers must meet Affordable DAP income limits.

KHC is used for mostly applicants in urban areas of Kentucky that don’t have access to USDA or other government agencies to buy a home with no down payment.

A minimum of 3.5% down payment is required with this loan. Down payment assistance loans are available from $4500-$6,000, and are paid back over a period of ten years. They are typically offered to buyers with limited cash reserves and carry an interest rate of 1 to 5.5%. These loans can make a critical difference to buyers for whom the down payment is an obstacle. Buyers whose 3.5% down payment is less than the $6000 limit may choose to use the remainder of a down payment loan to pay closing costs, further reducing the amount needed to bring to closing.

Welcome Home $5000 Grant for Kentucky Homebuyers 2020

The Federal Home Loan Bank of Cincinnati (FHLB Cincinnati) has established a set-aside of Affordable Housing Program (AHP) funds to help create homeownership through a program called the Welcome Home Program. Welcome Home funds are available to Members as grants to assist homebuyers.

Welcome Home grants are limited to $5,000 per household, households are eligible only if the total household income is at or below 80% of Mortgage Revenue Bond (MRB) income limits, and funds are offered on a “first-come, first-served” basis. Other program requirements are identified below.

The debt-to-income (DTI) ratio is particularly key for lenders.

Debt consists of how much you currently owe such as student loans, car payments and credit card payments, compared to your gross monthly income (before taxes are taken out).

Fannie Mae, a federally backed company that purchases and guarantees mortgages for borrowers, allows a debt-to-income ratio of up to 45 percent, although it may be as high as 50 percent for people with phenomenal credit scores and incomes.

How lenders use your DTI for a Kentucky Mortgage Loan Approval

Kentucky Mortgage lenders typically use DTI (along with other variables) to determine whether or not you qualify for a loan, and to help determine your Kentucky mortgage rate. A high front-end DTI raises red flags with lenders because it is commonly associated with borrower default. In fact, reducing front-end DTI to reduce the risk of homeowner default was one of the main objectives of the loan modification programs introduced by the government in 2009.

There are specific limits for DTI that are used as cut-off points when evaluating borrowers. Current DTI limits for conventional conforming mortgage loans are typically 28% on the front end and 36% on the back end, though these limits are slightly higher for government subsidized Kentucky FHA loans.

While there are certainly other factors to consider when determining our eligibility for financing (e.g., credit score, etc.), your DTI is an important determinant that you should be aware of. By working to improve it, you can make yourself a better credit risk, and thus get more favorable treatment from lenders.

Two obvious ways to improve DTI are to increase your income and/or decrease your debt. Both are solid goals.

Call us today for a free pre-qualification for your next mortgage loan in Kentucky. We are available 7 days a week to take your call..502-905-3780 or email us at

October 2012 Kentucky USDA and Rural Housing Loans Changes for Property Eligibility Locations in Kentucky.

October 2012 Kentucky USDA and Rural Housing  Loans Changes for Property Eligibility Locations in Kentucky. 

October 1, 2012 over 900 communities across the USA will lose their eligibility for 100% USDA Rural Housing loans including cities in Kentucky that where once eligible. If you know of buyers looking in these communities they need to act now. They should probably be under contract by end of August to be safe. There is no indication this expiration will be delayed. See the cities below that will be no longer eligible come 10/1/2012 for a Rural Housing USDA Loan in Kentucky 

No Longer Eligible for Kentucky RHS USDA Loans come 10/1/2012 below:

 Bardstown,  KY, Nelson County  

 Burlington, KY,   Boone County 

  Elizabethtown, KY,   Hardin County 

 Georgetown, KY,  Scott County

  Independence, KY,   Kenton  County 

 Nicholasville , KY, Jessamine County

 Shelbyville, KY , Shelby County

 Shepherdsville. KY , Bullitt County 

 Bardstown KY1

Table 1. Metropolitan Kentucky USDA Eligible Areas Potentially Impacted by Population Change

KY Burlington 8.84 15,926 10,779
KY Elizabethtown 25.36 28,531 22,542
KY Georgetown 15.84 29,098 18,080
KY Independence 17.44 24,757 14,982
KY Nicholasville 13.01 28,015 19,680
KY Shelbyville 8.06 14,045 10,085
KY Shepherdsville 9.67 11,222 8,334

To see an eligible Kentucky Map for Kentucky USDA Mortgage Loans for Rural Housing Mortgages in Kentucky  Please clink the following link below:

Kentucky USDA Rural Development No Money Down USDA Loan Program

For Kentucky homebuyers the no money down USDA Loan Program offers affordablemortgage financing for moderate income households purchasing a house in a designated USDA Rural area as determined by the Rural Housing Service (RHS). Income and property location guidelines for the USDA Loan Program require that the:
Household must have a moderate income not to exceed USDA Program county limits based on a household size of one to four or five and more family members.
The house must be located in a designated RHS USDA Rural approved area. Homebuyers should not assume that the term “rural” means the USDA Home Loan program is only available in farming communities.Many areas approved by the RHS for the USDA Loan Program are residential areas, near major cities, with a complete absence of any local farms.
By purchasing a home located in a USDA Rural area, USDA Loans allow qualified homebuyers the ability to buy a house with:

No Money Down – 100% USDA Loan Financing – No Monthly Mortgage Insurance – Flexible Credit Approval – Secure 30 Year Fixed Rate Mortgage – Unlimited Seller Closing Cost Help Allowed.

The Kentucky Guaranteed Rural Housing (GRH) Loan Program is designed to assist households in obtaining adequate but modest, decent, safe and sanitary dwellings and related facilities for their own use in rural areas. Loans are limited to applicants with incomes that do not exceed state and local Rural Development (RD) median income limits and property that is designated as rural by Rural Development.
The benefits of the Kentucky Guaranteed Rural Housing (GRH) Loan Program include:

•No Down Payment Required. Borrowers can finance up to 100% of the appraised value of the home.
•No monthly mortgage insurance payments.   
•Competitive 30 year fixed interest rates. 
•Flexible credit guidelines. 
•No maximum purchase price limit. 
To verify eligibility for a GRH Loan, property eligibility and income eligibility must be obtained.  Access our website for the USDA property and income eligiblity links (USDA Links). In addition, you will find AFR GRH Loan Program Guidelines, a GRH - Guarantee Fee Calculator and GRH overview presentation by Rural Development.

Thank you for your continued interest .  Please let me know if I can assist you.

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The Rural Housing Bubble

The Rural Housing Bubble

The Rural Housing Bubble

USDA program’s mismanagement led to nine-figure losses, IG report says

A federal program that guarantees home loans to rural borrowers has seen taxpayer losses and foreclosure rates skyrocket, problems federal watchdogs attribute to bureaucratic mismanagement but others say are more fundamental.
President Barack Obama used $10.5 billion in stimulus funds in 2009 to increase federal spending on the U.S. Department of Agriculture’s (USDA) Single Family Housing Guaranteed Loan Program.
USDA spent $27.8 billion on the program, which reimburses private lenders for up to 90 percent of the cost of default for loans made to low- and moderate-income borrowers in rural areas, in the four fiscal years ending in 2011.
The department’s loss claims—its reimbursements for loans in default—increased dramatically in recent years, according to a recent report from USDA’s inspector general. The program paid $103 million in loss claims in fiscal year 2008; that figure had nearly tripled, to $295 million, by fiscal year 2011.
The number of guaranteed loans increased by 131 percent from FY 2008 to FY 2011, while the number of foreclosures increased by 458 percent.
The IG in part blames bureaucratic mismanagement, noting that USDA did not put in place measures to ensure that borrowers were actually eligible for the program and did not undertake required steps to minimize taxpayer losses.
However, financial experts say the program’s losses speak to an inherent problem in federal efforts to extend credit to borrowers who might not qualify absent government intervention.
“Structurally, these programs will always lose money,” said Mark Calabria, director of financial regulation studies at the Cato Institute, because they exist to encourage banks to lend to borrowers who would not qualify for home loans if the risk of losses from those loans were not borne by taxpayers.
USDA did not respond to a request for comment. The agency did propose a host of corrective actions in response to the IG’s concerns.
The IG report estimates that USDA staff did not undertake all necessary steps to minimize taxpayer losses for about 70 percent of guaranteed loans. As a result, the report questions another $254 million in loss claims.
Because “the agency did not take steps to verify that lenders had considered all options for assisting the borrower without having to resort to foreclosure,” the report states, taxpayers “cannot be assured that losses from these loans were minimized as much as possible to the USDA.”
The report also estimates that about 30 percent of guaranteed loans were made to borrowers who may not have been eligible, resulting in $87 million in questioned loss claims.
The USDA agency that administers the program, according to the report, “did not identify these loans as being questionable, and, therefore, paid the loss claims without having them examined by a review committee that may have reduced the losses paid or disqualified the claims entirely.”
“Most of these loans had problems that could have been easily identified during a data scan, such as low credit scores, high debt ratios, or short employment histories,” the report notes.
Calabria said such problems are perfect examples of the deficiencies inherent in such programs.
“Usually lenders are happy to make safe loans,” he said.
Additional financial incentives are needed only for borrowers who, like those identified in the IG report, have credit histories that might disqualify them from a non-guaranteed home loan.
“The intent of the program is clearly to get lenders to make loans they wouldn’t make otherwise” due to the heightened risk of default, Calabria said.
John Berlau, senior fellow for finance and access to capital at the Competitive Enterprise Institute, agreed.
“The government subsidize[s] risky home loans that the private sector would never have made without these direct or indirect subsidies,” he said. “Republicans and Democrats, though the latter to a much larger extent, pursued the misguided goal that everyone should be encouraged to be a homeowner to achieve the American Dream.”
“The USDA’s additional souring mortgages should be a wakeup call to these politicos that government’s only role in housing should be to lift crushing regulatory barriers to affordable homes, such as Dodd-Frank and green ‘smart-growth’ regulation,” he said.
Update (4:13 p.m.): An earlier version of this article contained incorrect percentage increases in guaranteed loans and foreclosures. Those figures have been corrected.

The Rural Housing Bubble

Lachlan Markay   Email Full Bio | RSS
Lachlan Markay is a staff writer for the Washington Free Beacon.

Joel Lobb (NMLS#57916)Senior  Loan Officer
502-905-3708 cell
502-813-2795 fax

Key Financial Mortgage Co. (NMLS #1800)*
107 South Hurstbourne Parkway*
Louisville, KY 40222*

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Kentucky USDA Loans vs Louisville Kentucky FHA Loans.

Q: Differences between Rural Development and FHA Loans?
An Kentucky FHA loan is a loan that is made by a bank but insured by the Federal Housing Administration (FHA). The FHA guarantees the bank who lends the money in case of loan default.
Kentucky FHA loans require 3.5% down payment and will allow for the seller to pay some closing costs thru a process called ‘seller concessions.’ Seller concessions are limited to 6% of the sale price. 

Kentucky FHA loans have a mortgage insurance premium of 1.75% of the loan balance financed into the loan. Additionally, FHA loans carry a monthly mortgage insurance premium of 1.35%  (in other words, you pay an additional $112.50 a month for ever $100,000 financed).
FHA loans have lending limits based on the county you live in, and generally require a 620-640 or greater credit score. No bankruptcies in last 2 years and no foreclosures in last 3 years.

Lastly, FHA loans can be done in any location without the restrictions of being in a rural area like USDA loans have.
A: What is a Rural Development Loan?
Like a FHA loan a Rural Development Loan (also called USDA Loan) is also insured by the US Government.  Rural development loans offer 100% and will allow all closing costs to be paid by the seller, or can be rolled into your loan. Kentucky Rural Development loans are truly NO MONEY DOWN Loans!
Rural Development Loans have a one-time ‘funding fee’ of 2.0% that is financed into the loan amount on a purchase loanon a Rural Development refinance loan   In addition to the 100% financing, Rural Development Loans has a low monthly mortgage insurance of only .50 bps per month or $41.66  a month on a $100,000 sales price loan . 
Rural Development loans can only be done in certain rural areas, and they have income limit thresholds set by which County you are looking to buy in.

In order to qualify for the credit portion of the USDA Rural Development Loan, they generally will want a 640 or higher credit score with no bankruptcies or foreclosures in last 3 years. 

The “Farm Bill” revised the eligible rural area definition for USDA housing programs by amending population limits used to determine eligibility for program benefits.  It also retained the requirement for eligible areas to be rural in character and have a serious lack of mortgage credit.  However, on August 21, 2014, the Secretary of Agriculture suspended any changes to an eligibility determination based solely on the “rural in character” clause through September 30, 2015

On October 1, 2014, the USDA Rural Housing Service will update maps used to determine property eligibility.  The updated maps will include all eligibility changes.  Changes that were originally slated to take effect due to the "rural in character" clause will not be implemented at this time.  In advance of the upcoming map changes, future eligibility maps will be posted to the Eligibility Website on or about September 22, 2014.  A notification will be sent once the new future eligibility maps have been posted.

Joel Lobb
Senior  Loan Officer

American Mortgage Solutions, Inc.
800 Stone Creek Pkwy, Ste 7,
Louisville, KY 40223

 phone: (502) 905-3708
 Fax:     (502) 327-9119

 Company ID #1364 | MB73346

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