Kentucky USDA Rural Housing Guidelines
What’s Changing for 2023?
• Delinquent Child Support
o A clarification was added to include presently delinquent child support that is not subject to administrative offset and presently delinquent child support that is subject to administrative offset.
An approved repayment agreement with three timely payments documented is acceptable for presently delinquent child support that is not subject to administrative offset.
• Judgements
o Court ordered judgements with an approved arrangement with the creditor require three timely payments. The borrower may not prepay a lump sum at one time to equal three monthly payments.
Annual and Repayment Income
• The Annual and Repayment Income Table has been updated as follows:
o Boarder Income – Income received from an individual renting a space inside the dwelling makes the property income producing which is ineligible for USDA-RD financing.
o Bonus and Overtime – The required history of one year must be in the same line of work.
o Child Support and Alimony/Separate Maintenance that meets the minimum history requirement, whether court ordered (6 months) or a voluntary payment agreement (12 months), and the payment amounts are not consistent requires an average to be used consistent with the payer’s current ability and willingness to pay.
o Guardianship/Conservatorship Income has been added as an eligible income type with acceptable documentation that supports payment amounts and duration. There is no required history for this type of income as long as the income has been received prior to submission to USDA-RD.
o IRA Distribution income has been added as an eligible income type. There is no required history as long as the income is received prior to submission to USDA-RD. It must be documented that the borrower is currently receiving the income and the amount received each month.
o Secondary Employment – One year history has been clarified as one year of working primary and secondary employment concurrently.
o Variable Income (piece rate, union work, or similar types of pay structures) has been added as an eligible income type with acceptable documentation. A one year history in the same or similar line of work is required. Significant variances of 20% or greater must be analyzed before considering the income stable and dependable.
• Self-Employed Borrowers - If ownership interest is less than 25%, neither the “business owner” or “self-employed” option should be selected in GUS.
Assets
• Gift Funds – If the gift funds will be sent directly to the settlement agent, in addition to the gift letter, a donor’s bank statement and verification that the settlement agent has received funds from the donor is required.
• Gift funds applied as earnest money should not be reflected in the Gifts or Grants you have been given or will receive for this loan section of the Loan and Property Information of the GUS application page.
• Retirement Accounts – Funds borrowed against these accounts may not be considered towards reserves. The borrowed funds should not be reflected in the balance of any asset entered in the Assets and Liabilities application page in GUS.
Property Eligibility
• Multiple Parcels
o An improvement that has been built across lot lines is acceptable.
o A home built across both parcels where the lot line runs under the house is acceptable.
• Accessory Dwelling Units (ADU)
o ADUs designed to create a potential rental income stream are not eligible.
Appraisals
• Appraisal Validity/Appraisal Update - the appraisal validity period has been updated as follows:
o The appraisal must not be more than 180 days old as of the Note Date.
o When the original appraisal is updated, the appraisal must be valid for no more than one year from the effective date of the initial appraisal as of the Note Date.
• Appraisal Transfers
o An appraisal transfer letter from the initial lender is required.