Kentucky First Time Home Buyer Programs for 2014 FHA, VA, KHC, USDA, RHS, Fannie Mae Loans in Kentucky

Kentucky USDA Loan Guidelines

Borrower Eligibility

• U.S. citizens
• Permanent resident aliens
• First time homebuyers allowed
• Non-occupant co-borrowers NOT allowed

Commitment Fee

• USDA charges a 1% Commitment Fee
• Commitment Fee can be financed into the loan
• Example:
  • Purchase price – $100,000
  • Base Loan amount – $100,000
  • Commitment Fee – $1,010 ($100,000 [purchase price] /.99 – 100,000)
  • Maximum financed loan amount = $101,010 o

Downpayment Requirement

• No down payment is required
• If borrower has adequate liquid assets (i.e. 20% of the property purchase price) to obtain conventional financing the borrower may be ineligible for the USDA Rural Development Loan

Eligible Properties

• Must be in an eligible USDA Rural Development Location
• Owner-occupied properties
• Existing attached & detached single family residences
• New construction with permanent financing only
• PUD’s (i.e. Townhomes)
• Condo-units. HUD, VA, FNMA or FHLMC approved project
• Log cabin homes, provided Appraisal Report lists other comparable log cabin homes that have recently sold in the area

Ineligible Properties

• Co-ops
• Mixed-use
• Condotels
• Manufactured homes
• Single Family Homes where the land value excess 30% of the appraised value and can be sub-dividend.

Loan Amount

Maximum Income Amount

• County specific. Reference the USDA website for adjusted household income limits

Maximum Loan-To-Value

• Maximum loan-to-value is 101.01%

Maximum Mortgage Amount

• None

Minimum Credit Score

• Middle Credit Score – 640 for each applicant for GUS automated underwritting approval
• Middle Credit Score – 620 for each applicant for manual underwritting approval and a documentable rent history within the last 12 months

Monthly Mortgage Insurance Premium (MIP) Requirements

• USDA requires a monthly mortgage insurance premium with an annual factorial of .35%

Multiple Property Ownership

• USDA primarily often won’t allow applicants to own other properties
• Exceptions include when the other property owned is:
  • Not owned in the local commuting area as the new property; or
  • Not structurally sound and/or functionally adequate
• Manufactured home not on a permanent foundation

Occupancy Type

• Owner occupied only

Qualifying Ratios

• 29/41% debt-to-income (DTI) – Target
• 33.99/45.99% debt-to-income (DTI) – With compensating factors such as:
  • 680 or higher credit score
  • No or low “payment shock” – less than a 100% increase in proposed mortgage payment Vs. current rental housing expenses
  • Fiscally sound use of credit
  • Ability to accumulate savings
  • Stable employment history with 2 or more in current position or continuous employment history with no job gaps
  • Cash reserves available for use after settlement
  • Career advancement as indicated by job training or additional education in the applicants profession
  • Trailing spouse income – as a result of a job transfer, the house is being purchased, prior to the secondary wage-earner obtaining employment. If the secondary wage-earner has an established history of employment and has a reasonable chance to obtain new employment in the area
  • Low total debt load

Occupancy Type

• Owner occupied only

Seller Contribution

• 6% of sales price towards closing costs, prepaids, discount points, buydown fees, and upfront Commitment Fee

Transaction Types

• Purchase
• Rate/Term Refinance on existing USDA loan