Kentucky USDA Loan Requirements
Eligibility Requirements
Property Location
The home must be located in an eligible rural area as defined by USDA.
You can check property eligibility on the USDA website.
Income Limits
Household income must not exceed 115% of the median income for the area.
All income from household members is included, even if they are not on the loan.
Occupancy
The home must be the borrower's primary residence.
USDA loans cannot be used for investment properties or vacation homes.
Credit Requirements
Credit Score
A minimum credit score of 640 is typically required for automated underwriting.
Scores below 640 may require manual underwriting with compensating factors.
Credit History
A history of on-time payments for at least the past 12 months is generally required.
Collections or charge-offs may need to be resolved, depending on the lender's guidelines.
Loan Requirements
Loan Type
Only fixed-rate loans are allowed (30-year terms are standard).
No Down Payment
USDA loans allow for 100% financing, meaning no down payment is required.
Mortgage Insurance
An upfront guarantee fee of 1% of the loan amount is required.
An annual fee of 0.35% of the loan balance is added to monthly payments.
Debt-to-Income (DTI) Ratios
Standard Ratios
Front-end (housing) ratio: 29%
Back-end (total debt) ratio: 41%
Higher Ratios
May be allowed with compensating factors, such as a strong credit score or significant savings.
Employment and Income
Stable Income
Borrowers must show a steady income for at least two years.
Verification
Recent pay stubs, W-2s, tax returns, and employer verification are required.
Property Requirements
Type of Property
The property must be a single-family home, modular home, or eligible condo.
Manufactured homes must meet USDA standards.
Condition
The home must meet USDA safety, security, and livability standards.
A USDA-approved appraisal is required.
Closing Costs
Seller Concessions
The seller can contribute toward closing costs.
Financed Costs
Closing costs can be rolled into the loan if the appraised value is higher than the sales price.
Additional Requirements
GUS Approval
Most USDA loans go through the Guaranteed Underwriting System (GUS) for approval.
Manual Underwriting
If automated approval is not possible, manual underwriting may still allow for loan approval with sufficient compensating factors.
If you'd like more details about USDA loans in Kentucky or assistance with pre-qualification, let me know!
1 - 📅 Email - [email protected]
2. 📞 Call/Text - 502-905-3708
Joel Lobb
Mortgage Loan Officer - Expert on Kentucky Mortgage Loans
🌐 Website: www.mylouisvillekentuckymortgage.com
🏢 Address: 911 Barret Ave., Louisville, KY 40204
Evo Mortgage
Company NMLS# 1738461
Personal NMLS# 57916
For assistance with Kentucky mortgage loans, reach out via email, call, or text Joel Lobb directly.
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