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  $112,450 to $148,450 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






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Kentucky FHA, VA, USDA Appraisal Requirements for Mortgage Loans

entucky FHA, VA, USDA Appraisal Requirements for Mortgage Loans.

Joel Lobb (NMLS#57916)

Senior  Loan Officer

Text/call 502-905-3708







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Assumable Mortgage Louisville, KY

Assumable Mortgages are a type of financing arrangement in which the outstanding mortgage and its terms can be transferred from the current owner to a buyer. By assuming the previous owner’s remaining debt, the buyer can avoid having to obtain his or her own mortgage. 

Buyers are typically attracted to homes with existing assumable mortgages during times of rising interest rates. This is because they can assume the seller’s mortgage, which was created when interest rates were lower, and use it to finance their purchase. If the home’s purchase price exceeds the mortgage balance by a significant amount, the buyer will either need to provide a sizable down payment or obtain a new mortgage anyway.

 For example, if a buyer is purchasing a home for $250,000, and the seller’s assumable mortgage only has a balance of $110,000, the buyer would need a down payment of $140,000 to cover the difference, or would have to get a separate mortgage to secure the needed funds.


  • An Kentucky assumable mortgage is an arrangement in which an outstanding mortgage and its terms are transferred from the current owner to a buyer. 
  • When interest rates rise, an assumable mortgage is attractive to a buyer who takes on an existing loan with a lower rate. For example if the current home buyer has a 3% rate, and the current market rate is 7%, the seller of the home can have the buyer assume their mortgage in order to qualify for a lower mortgage payment, but if there is a difference in the sales price and the mortgage amount being assumed, the buyer must come up with the difference hence most of the time this is not a viable option for Kentucky Homebuyers looking to assume a mortgage at a lower rate.
  • Kentucky USDA, FHA, and VA loans are assumable when certain criteria are met. 
  • Buyers must still qualify for the mortgage to assume it.
  • Conventional Loans are not assumable.
Assumable Mortgage Louisville, KY

An assumable mortgage is a type of home loan that allows a new buyer to take over the seller's existing mortgage instead of obtaining a new loan. 

Here are the key points about assumable mortgages:


Transfer of responsibility: 

The buyer assumes the remaining balance, interest rate, repayment term, and other conditions of the seller's mortgage.

Potential benefits:


Buyers may get a lower interest rate than current market rates
Lower closing costs compared to a new mortgage
Simplified process in some cases

Restrictions:


Not all mortgages are assumable
Lender approval is usually required

In regards to the assumption of the mortgage on a borrowers current loan on a house.

This sounds good on paper but in reality it never works.

Below I listed the reasons why assuming someone's mortgage does not work.


Only Certain Loans Are Eligible


Only USDA, FHA, and VA loans are eligible for mortgage assumption. Additionally, sellers may have to jump through a few hoops to release themselves of liability from the loan. This situation makes assumable mortgage loans less appealing to sellers if they have traditional offers on the table.

A Large Down Payment Is Required


The biggest obstacle to assuming a mortgage loan is the large down payment. You can obtain a second mortgage if you do not have the cash to cover the seller’s equity, but this situation can complicate things a bit. Depending on how much equity the seller has, it may be easier and more advantageous for you to obtain a traditional mortgage.


Stringent Approval Process



Assuming a mortgage isn’t a walk in the park. Buyers must provide extensive documentation and undergo a lengthy approval process, often taking up to 90-120 days. This can be cumbersome and time-consuming, potentially delaying the home buying process. Most services of current mortgage loans will not do an assumption due to the low rate.


Seller’s Liability



In a simple assumption, the seller remains liable for the outstanding mortgage debt. If the buyer defaults on payments, both parties’ credit scores are affected. This shared risk can strain the relationship between buyer and seller and lead to financial repercussions for both.



Assumptions are permitted, however they are rarely used as 7 CFR 3555.256(b)(2) requires the transferor to remain personally liable for the debt after the acquisition and assumption (among other requirements) Names cannot be removed from the loan without a refinance of the loan.



Questions about assuming someone's mortgage. Contact me below.


Thanks

Joel Lobb Mortgage Loan Officer NMLS 57916
EVO Mortgage
911 Barret Ave, Louisville, KY 40204
Company NMLS ID # 173846

Text/call: 502-905-3708

email: kentuckyloan@gmail.com

https://lnkd.in/eGz9-TbB
fha assumable homes in louisville

Text/call: 502-905-3708

email: kentuckyloan@gmail.com

http://www.mylouisvillekentuckymortgage.com/


NMLS 57916 


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).


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