How to Get Approved for a USDA Mortgage Loan in Kentucky

 How to Get Approved for a USDA Mortgage Loan in Kentucky

If you're considering buying a home in Kentucky and looking for a mortgage loan with favorable terms, a Kentucky USDA loan could be a great option. Kentucky USDA loans, backed by the U.S. Department of Agriculture, are designed to help low to moderate-income borrowers in Kentucky rural areas achieve homeownership. Here's a comprehensive guide on how to get approved for a USDA mortgage loan in Kentucky in regards to credit score, income, work history, debt to income ratios, bankruptcy and foreclosure :

1. Kentucky USDA loans Credit Score Requirements:

   • While Kentucky USDA loans are known for their lenient credit score requirements compared to conventional loans, having a good credit score can still improve your chances of approval. Aim for a credit score of 640 or higher for smoother processing. On paper USDA says there is no minimum score, but it is very difficult to get approved with lenders with no score.

2. Kentucky USDA loans Income Eligibility:

   • USDA loans have income eligibility criteria based on the area's median income. To qualify, your household income should fall within the USDA's income limits for the specific county or area in Kentucky where you plan to buy a home.

3. Kentucky USDA loans Work History:

   • Lenders typically look for a stable work history, preferably with at least two years of consistent employment in the same field or industry. This demonstrates your ability to repay the loan.

4. Kentucky USDA loans Property Location (Counties 120 in Kentucky):

   • USDA loans are specifically designed for properties located in eligible rural areas or designated suburban areas. Before applying, ensure that the property you're interested in is within a USDA-eligible location in Kentucky.

5. Kentucky USDA loans Income Ratio:

   • Your debt-to-income (DTI) ratio is an important factor in loan approval. Generally, USDA loans require a DTI ratio of 41% or lower, although some lenders may allow higher ratios with compensating factors.

6. Kentucky USDA loans Income Limits:

   • USDA loans have income limits based on family size and county location. These limits vary by area, so check the current income limits set by USDA for the county where you plan to purchase your home.

7. Kentucky USDA loans Property Type:

   • USDA loans are intended for primary residences, including single-family homes, townhouses, and eligible condominiums. Investment properties and vacation homes are not eligible.

8. Kentucky USDA loans Bankruptcy and Foreclosure Requirements:

   • Having a bankruptcy or foreclosure in your financial history doesn't necessarily disqualify you from a USDA loan. However, there are waiting periods after these events before you can apply:
     • Chapter 7 bankruptcy: 3 years from the discharge date.
     • Chapter 13 bankruptcy: 1 year of on-time payments and court approval.
     • Foreclosure: 3 years from the sale date.

9. Kentucky USDA loans Closing Time:

   • USDA loans typically take around 30 to 45 days to close, although this timeline can vary based on factors such as application volume and the efficiency of document processing.

10. Kentucky USDA loans Appraisal Requirements:

    • A professional appraisal is required for USDA loans to determine the fair market value of the property. The appraisal ensures that the property meets USDA standards and is worth the loan amount.

11. Kentucky USDA loans Termite Inspections:

    • USDA loans may require a termite inspection, especially in areas where termite infestations are common. The inspection aims to identify and address any termite-related issues in the property.

12. Kentucky USDA loans GUS (Guaranteed Underwriting System):

    • GUS is a tool used by lenders to process USDA loan applications. It evaluates the borrower's credit, income, and other factors to determine eligibility and streamline the underwriting process.

13. Kentucky USDA loans Manual Underwriting:

    • In some cases, USDA loans may undergo manual underwriting, especially if the borrower's application doesn't meet automated approval criteria. Manual underwriting involves a more thorough review of the borrower's financial situation by the lender.

To get a Kentucky USDA loan, potential Kentucky rural housing borrowers must follow this sequence of steps:

1. Determine eligibility by consulting online USDA maps.
2. Decide whether you want a guaranteed or direct loan. Guaranteed loans will have higher income limits, which you’ll work out with the lending institution.
3. Submit all applicable paperwork, including income, debts, and credit reports.
4. After pre-approval, begin searching for new homes (or launch renovations on your current home).

Keep in mind that you’ll have fees associated with your loan. Guaranteed loans require an upfront 1% fee and annual fees of 0.35% for as long as the mortgage is active.

USDA program for properties located outside urban areas of Kentucky areas where you can secure a no money down loan at a  fixed rate of on 30 years.  

The max household income limits usually are between  $110,500 to $146,000 for most rural area counties depending on household family size. 

 This changes every year so make sure you are using updated USDA Income Limits for this year 

A 620-640 middle credit score is needed for loan approval on this program. They're no max loan limits on USDA loans. You just need to qualify based on your debt to income ratio (see below under income section)-----USDA will go down to 580 on scores but it has to pass 👉 USDA Manual Underwriting guidelines

Need to be 3 years removed from a Chapter 7 Bankruptcy and 3 years from a foreclosure

Joel Lobb  Mortgage Loan Officer

American Mortgage Solutions, Inc.
10602 Timberwood Circle
Louisville, KY 40223


Text/call: 502-905-3708
fax: 502-327-9119
email: kentuckyloan@gmail.com

http://www.mylouisvillekentuckymortgage.com/

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Mortgage Insurance Requirements for Kentucky FHA, VA, USDA and Fannie Mae Home Loans

When does PMI stop on Kentucky FHA, USDA, and Conventional Loans?

How Can I Get Rid of PMI? 

Does PMI stop on my loan once I am under 80%? Not on all loans!

When does PMI stop on my loan? Will PMI drop off? How can I remove PMI off my loan? Each type of mortgage loan treats PMI ( Private Mortgage Insurance) differently. See below for a quick summary!

Kentucky USDA Loans- PMI is for the life of the loan

PMI private mortgage insurance advantages & strategies for lower down payment and payment USDA has an annual fee which is similar to PMI. The annual fee is recalculated each year based on the new balance of the mortgage. The annual fee is currently only .35 which began October 1, 2016. The annual fee percentage on USDA loans stays for the entire 30 year term but because it is based on the annual mortgage balance. Therefore, the dollar amount decreases each year.

 

How to calculate monthly PMI for USDA loans: Loan amount x 1.0101% (USDA funding fee) x .0035 / 12 = monthly fee to include in the monthly mortgage payment.

Kentucky FHA Loan PMI often continues for the life of the loan, but depends!

FHA has an annual fee but the percentage varies depending on the LTV and the loan term. The monthly amount of PMI is recalculated each year based on the new balance of the mortgage and the PMI percentage.

The length of time that FHA PMI stays on the loan varies depending on the loan term and LTV as shown below:

 

 Loans over 90% LTV or more will pay the annual PMI for the complete term – On a purchase, this means less than 10% down

 Loans equal to or less than 90% LTV will pay the annual PMI for 11 years – Purchases over 10% down payment

Loan terms greater than 15 years < $625,500: effective 1/26/15

 > 95% LTV =.85 PMI

 -< 95% LTV =.80 PMI

 

Loan terms 15 years or less < $625,500:

 -< 90% LTV =.45 PMI

 > 90% LTV =.70 PMI

 

Even though FHA PMI currently continues for the life of the loan with less than 10% down payment, it is still a great loan for buyers. It offers low down payment, very competitive rates, and flexibility on many guidelines.

Kentucky VA home loans DO NOT have monthly PMI

 

VA loans do not have monthly PMI on any of the terms so you don’t have to worry about when it continues. Like all government loans, VA does have a funding fee which is an up-front fee that is customarily financed on top

of the loan amount and required by the VA. Although VA does allow the Veteran or even the seller pay this fee! Additionally, qualified, disabled Veterans may be exempt from the VA funding fee. Ask about the requirements re: the waiver of the funding fee.

Kentucky Fannie Mae or Freddie Mac conventional loans have PMI when the LTV is greater than 80% with either primary, second homes, or investment properties. To cancel PMI on a conventional loan, the following typically needs to be met. Here are some of the details to have PMI stop as clarified by the Consumer Financial Protection Bureau in August 2015.

 Borrower Requested PMI Cancellation: Once balance is paid to under 80% of the original price, the borrower may request that PMI be cancelled on the cancellation date. The cancellation date means either the date when the principal balance is first scheduled to reach 80% of the original value (lower of purchase price or

appraised value) for the property or date on which the principal balance reaches 80% of the original value based on actual payments. The borrower may make extra payments to move the cancellation date earlier.

 Automatic PMI Cancellation: Once balance is paid to under 78% of the original price, the lender must cancel the PMI on the termination date. The termination date is defined as the date which the principal balance is first scheduled to reach 78% of the original value for the property. Although before cancelling PMI, the loan must be current.

“Good payment history” means no payments 60 or more days past due within 2 years and no payments 30 or more days past due within 1 year of the later of the cancellation date or the date you submit a request for cancellation.

 

** PMI could be cancelled on a conventional mortgage if the following conditions are satisfied:

 You submit a written request for cancellation  Borrower must be current on the loan.

 You are current on the payments required by your loan and if requested and at the borrower’s expense, evidence satisfactory to the note holder that the value of the property has not declined below it’s original value (value at the time of the mortgage initiation), and that there are no subordinate liens on the property

Joel Lobb  Mortgage Loan Officer

American Mortgage Solutions, Inc.
10602 Timberwood Circle
Louisville, KY 40223
Company NMLS ID #1364

Text/call: 502-905-3708
fax: 502-327-9119
email: kentuckyloan@gmail.com

http://www.mylouisvillekentuckymortgage.com/

NMLS 57916  | Company NMLS #1364/MB73346135166/MBR1574

The view and opinions stated on this website belong solely to the authors, and are intended for informational purposes only. The posted information does not guarantee approval, nor does it comprise full underwriting guidelines. This does not represent being part of a government agency. The views expressed on this post are mine and do not necessarily reflect the view of my employer. Not all products or services mentioned on this site may fit all people.
NMLS ID# 57916, (www.nmlsconsumeraccess.org).