What is KY USDA Rural Development Guarantee in Kentucky?
Kentucky USDA Rural Development Guarantee USDA loans offer 100% financing options on home purchases in rural areas. Properties though can be located within city limits and in subdivisions depending on population density of that area.
The RDG loan program is primarily used to help low to moderate income individuals or households to purchase homes and the applicants need to be within 115% of the median income for the area. Most Kentucky Counties are around $87,000 for a household family incomes of four or less, and up to $115,000 for a family of five or more in the household income
Some highlights of the are:
- 100% financing on purchases and 100% Zero Money Down
- Low 30 year fixed rates on all loans. They don't offer any other terms or offer cash-out refinancing.
- A small Rural Housing monthly guarantee fee or sometimes called annual fee of .35% of the loan amount divide by 12 months to get total monthly mi payment.
- Upfront Rural Housing funding fee of 1% of the loan amount and is financed into new loan
- Minimum credit scores of 581, but helpful to have 640 and get an automated underwriting approval thru Rural Housing’s underwriting engine – GUS--GUS stands for the Guaranteed Underwriting System to pre-approval all Kentucky USDA loans.
- No rental verification needed with GUS approval if Approved Eligible Findings.
- Flexible trade line requirements with GUS approval with only 1 trade line needed on credit for 12 months
- No foreclosures in the last 36 months, but need explanation if < 36 months
- Bankruptcy discharged at least 36 months
For a Kentucky USDA Rural Housing property and income eligibility search, please click HERE.
Issues to avoid or be aware of with Rural Housing property search:
- Avoid homes in flood zones – RD is very restrictive for homes in flood zones
- Avoid homes with cisterns – they are extremely difficult to get financed
- Be aware that homes with wells and septic systems needed extra tests for contamination
- Avoid homes with any income producing activities such as working farms, detached buildings with offices or car lifts for auto repairs, or anything else related to income producing activities.
