RESOURCES – USDA (Rural Housing) Mortgage

USDA Mortgage:
The USDA developed a program to target low-to-moderate income borrowers located rural areas of the country and help them afford financing.
Eligible home buyers have access to a great mortgage option called the USDA Home Loan when looking to buy or refinance an eligible property.
USDA home loan allows eligible borrowers to put $0 down on a home purchase Two of the biggest differences between a USDA loan and other types of home loans is that the borrower must meet maximum allowable income requirements and the property must be considered eligible (property eligibility is based on property location). See below for resources to determine both property and income eligibility.


Benefits of a USDA Mortgage
• $0 Down Payment Required
• Flexible Credit Guidelines
• Competitive Mortgage Interest Rate
• No Pre–Payment Penalty


Borrower(s) must lack sufficient assets to obtain conventional financing:


If the borrower meets all five primary criteria, Borrower(s) are not eligible for USDA
– 20% down payment
 ~ Cash equivalents: checking/saving, stocks, bonds, mutual funds, COD’s & money markets funds
 ~ Cash equivalents typically do not include IRA, 401k, Keogh, or retirement accounts that are restricted and may not be accessed without incurring substantial monetary penalties. Educational college savings plans, such as a 529 plan, which incur a penalty to withdraw, is not considered a cash equivalent.
– Applicant able to pay all closing cost out of pocket
– DTI od 28/36
– Good credit history
 ~ 2 trade lines open & paid as agreed for 24-months
 ~ Not currently 30 days past due on any account
 ~ No 60 day late pays in last 24 months
 ~ No foreclosure or BK in last 36 months
– Conventional mortgage term of 30 years without a conditional to obtain PMI


Basic USDA Mortgage Guidelines
What can a USDA loan be used to finance? Primary residences only

Maximum Loan Amount: Appraisal determines maximum USDA loan limit in Kentucky

Down Payment Requirement: 0% of the purchase price
Available Loan Terms: 30 year fixed mortgage
Guarantee Fee: 1.00% of the loan amount, which can be financed into the loan amount
Is Monthly Mortgage Insurance Required? Yes (annual fee of .35% of the unpaid principal balance)
Income Eligibility Requirements: Yes
Property Location Eligibility Requirements: Yes
Maximum Debt to Income Ratio: Contact us for more information
Are Seller Paid Closing Costs allowed: Yes
Are gift funds allowed? Yes

Give me a call to see which option will best meet your renovation needs: 859-317-5065 or click here to receive a call from us.

The USDA Website