Kentucky FHA Loan Requirements for 2020

Here is my Top 5 List for getting a Kentucky FHA Mortgage Loan:

1.A Low Down Payment –  Kentucky FHA Mortgage Loans only require a 3.5% down payment. And what makes that even more attractive is that it can be a gift from a relative. Do you have a parent or sibling who would “Gift” you some money for a down payment? If so, it could be time to apply for an  Kentucky FHA Mortgage Loan.

2.Flexible Credit Qualifying – HUD did NOT set a credit score requirement for qualifying for an KY FHA Mortgage Loan. However many lenders in the market today have drafted “Overlays” that set minimum credit score requirements. Most lenders like to see a minimum 620 credit score, but don’t get discouraged if you are not there yet. If you are close to 620, it is often just as simple as reviewing your credit to determine how to quickly raise it. If you are not close to 620, ask your FHA Mortgage Loan Originator if they have a program for you. Chances are, there is! Bankruptcies and prior foreclosures do not automatically disqualify you either.

3.The Seller Can Pay Your Closing Costs – That’s right. You need to have a quality Realtor who will help you negotiate not only the best price for the home, but also that the seller will pay your closing costs. HUD allows Kentucky FHA Mortgage Loans to have the seller pay up to 6% of the purchase price. Sounds good so far, a down payment gift and seller paying closing costs!

4.Flexible Income Qualifying – The standard for income qualifying ratios is 31/43 which means that up to 31% of your monthly income can be used to pay your monthly household mortgage payment; and up to 43% of your monthly income can be used to qualify for ALL monthly expenses. Those ratios can go up to 55% if you have good credit and a good income history allowing you to qualify when others might not.

5.Qualify Without Your Spouse’s BAD Credit – This is a tricky one but it is also not well known. You can effectively qualify for an Kentucky FHA Mortgage Loan without your spouse’s Bad Credit. FHA will look at your spouse’s credit but cannot decline your loan due to your spouse’s debt or credit score. So if you have a spouse with a crummy credit profile, you should take a look at Kentucky FHA Mortgage Loans to see if it will work for you.

What are Kentucky FHA Loans?

FHA stands for Federal Housing Authority. FHA Loans provide low-cost insured Home Mortgage Loans that suit a variety of purchasing options. Whether you’re buying a home or want to refinance your mortgage, FHA loans might be right for you. If you’re unsure about your credit rating, or have concerns about a down payment, FHA loans can give you piece of mind with super low closing costs and flexible payment options.

What factors determine if I am eligible for an FHA Loan in Kentucky?

To be eligible for FHA Mortgage Loans, your monthly housing costs (mortgage principal and interest, property taxes, and insurance) must meet a specified percentage of your gross monthly income. Your credit background will be fairly considered. You must be able to make a down payment, cover closing costs and have enough income to pay your monthly debt.

What is the maximum amount that I can borrow?

The maximum amount for an FHA Mortgage is determined by:

Maximum Loan Amount in Kentucky: The Maximum FHA Loan amount allowed for FHA Home Mortgages varies from county to county in Kentucky. The highest maximum FHA Home Loan right now in Kentucky is $331,760.00

Kentucky FHA loan limits for 2020 is set at $331,760.00
Kentucky FHA loan limits 2020

Maximum financing: In Kentucky, the maximum FHA financing will be 96.5% of the appraised value of the home or its selling price, whichever is lower.

 

Kentucky FHA Loan Requirements

 

How much money will I need for the down payment and closing costs?

Kentucky FHA loans require the home buyer to invest at least 3.5% of the sales price in cash for the down payment and closing costs. If the sales price is $100,000 for example, the home buyer must invest at least $3,500. However, the home buyer can use gifts from family, funds from local, state or government agencies, or other sources for the down payment.

What property types are allowed for FHA Loans in Kentucky?

While FHA Guidelines do require that the property be Owner Occupied (OO), they do allow you to purchase condos, planned unit developments, manufactured homes, and 1-4 family residences, in which the borrower intends to occupy one part of the multi-unit residence.

There are three main types of FHA Refinance loans available in KY.

FHA Rate/Term Refinance

The FHA Rate/Term Refinance is for borrowers who currently have a conventional fixed rate or ARM mortgage and wish to refinance into an FHA Mortgage. This program helps borrowers who wish to have a stable, fixed rate FHA Insured Loan.

Cash-Out Refinance

An FHA Cash Out Refinance is perfect for the homeowner who wants to access the equity that they have built up in their home. This program is beneficial to homeowners whose property has increased in value since it was purchased.

Streamline Refinance

The FHA Streamline Refinance is designed to lower the interest rate on a current FHA House Loan or convert a current FHA adjustable rate mortgage into a fixed rate. An FHA Streamline Refinance can be performed quickly and easily. It requires much less hassle and paperwork than a normal refinance including no appraisal, no qualifying debt ratios and no income verification.

Kentucky FHA Mortgage Loans—updated Guidelines

Kentucky home buyers with sketchy credit who are unable to qualify for conventional mortgages may now find it more costly and difficult to obtain loans insured by the Federal Housing Administration.

New rules that went into effect this month adjust the two types of mortgage insurance paid by consumers for loans insured by the F.H.A., which is part of the Department of Housing and Urban Development.

One change raises the annual insurance premium, paid monthly by the borrower, setting it at 0.85 percent to 0.9 percent of the loan balance, depending on the down payment or equity owned; the amount used to be 0.5 percent to 0.55 percent. The other change lowers the one-time upfront insurance premium that borrowers must pay, to 1 percent of the loan balance from 2.25 percent.

The upfront premium is paid in a lump sum at closing or added to the loan balance, unlike the monthly premium, which is paid over the life of the loan in addition to the interest and principal.

The decrease in the upfront premium, welcome though it might seem to some customers, does little to offset the effects of the monthly increase, called “really pretty hefty.”

Kentucky F.H.A. loans are usually taken out by buyers who cannot qualify under the stiffer down-payment requirements of Fannie Mae or Freddie Mac, the government-controlled buyers of loans. F.H.A. requires 3.5 percent, while Fannie Mae typically requires 5 to 15 percent or more, depending on the type of loan.

The changes, under an example provided by the F.H.A., mean that a borrower who puts 3.5 percent down on a $154,000 house with a 30-year fixed-rate mortgage at 5 percent (such a consumer typically earns a gross annual income of $54,000, according to the agency) and who finances the upfront premium into the loan will see monthly mortgage payments, including taxes, interest and the two insurance premiums, rise to $1,238 from $1,205.

The example is based on median data, including property taxes put at about 2.5 percent of home value. That increase includes the drop in the upfront mortgage insurance, to $1,486 from $3,344 — but also includes the rise in the monthly insurance premium, to $111 from $68.

 

Conventional loans, which conform to Fannie and Freddie underwriting guidelines, do not require upfront mortgage insurance. But some may require monthly private mortgage insurance, if the borrower puts less than 20 percent down toward the purchase, or has less than 20 percent equity in a refinancing.

Kentucky F.H.A. borrowers, meanwhile, can stop paying the monthly mortgage insurance only after five years and when their loan-to-value ratio reaches 78 percent, at which point they have 22 percent equity in their home.

Kentucky F.H.A. loans are typically offered by niche direct lenders, and because of the insurance, they often carry interest rates equal to or slightly below those of conventional loans.

In October, the F.H.A. set a minimum FICO score of 500 for borrowers who want an Kentucky F.H.A.-insured loan — the first time a minimum was set. It also introduced a new minimum down payment of 10 percent for borrowers with FICO scores below 580. (Those above 580 still pay a minimum 3.5 percent.)

580 fico score for 3.5% down payment, and 579 fico score or below for 10% down payment
Kentucky FHA Down payment Requirements based on FICO credit scores

For your free credit report and analysis call us today at 502-905-3708 or text.

 

Joel Lobb (NMLS#57916)
Senior  Loan Officer
 
American Mortgage Solutions, Inc.
10602 Timberwood Circle Suite 3
Louisville, KY 40223
Company ID #1364 | MB73346
 


Text/call 502-905-3708
kentuckyloan@gmail.com

http://www.nmlsconsumeraccess.org/
If you are an individual with disabilities who needs accommodation, or you are having difficulty using our website to apply for a loan, please contact us at 502-905-3708.
Disclaimer: No statement on this site is a commitment to make a loan. Loans are subject to borrower qualifications, including income, property evaluation, sufficient equity in the home to meet Loan-to-Value requirements, and final credit approval. Approvals are subject to underwriting guidelines, interest rates, and program guidelines and are subject to change without notice based on applicant’s eligibility and market conditions. Refinancing an existing loan may result in total finance charges being higher over the life of a loan. Reduction in payments may reflect a longer loan term. Terms of any loan may be subject to payment of points and fees by the applicant  Equal Opportunity Lender. NMLS#57916http://www.nmlsconsumeraccess.org/

 

21 thoughts on “Kentucky FHA Loan Requirements for 2020”

  1. Click to access 8dacb6d4-8c8e-45c9-aeb0-66e1b9586c24.pdf

    UPDATED FHA HANDBOOK

    HUD has released the new Handbook 4000.1. This handbook will combine and clarify information from several different existing handbooks and mortgagee letters, including existing HUD Handbook 4155.1. There are also many changes with the release of this handbook that will become effective with case numbers assigned on or after September 14, 2015. You may review the handbook at HUD’s website by clicking here.
    The HUD FAQ for the changes can be accessed by clicking here.
    \

    . Attached with this announcement is a chart that reflects some of the changes.
    If there is no case number assignment in the file at the time of submission on or after September 14, 2015, the loan will be underwritten to the new FHA guidelines.
    Several of these guideline changes are more restrictive. We recommend that you carefully examine your pipeline of loans to determine if and how they might be impacted. If any of the loans could be adversely impacted, you MUST get a case number assigned BEFORE September 14, 2015.

    FHA GUIDELINES CHANGES CHART

  2. Click to access huddoc

    September 1, 2015
    UPDATED FHA HANDBOOK

    HUD has released the new Handbook 4000.1. This handbook will combine and clarify information from several different existing handbooks and mortgagee letters, including existing HUD Handbook 4155.1. There are also many changes with the release of this handbook that will become effective with case numbers assigned on or after September 14, 2015. You may review the handbook at HUD’s website by clicking here.
    The HUD FAQ for the changes can be accessed by

    Click to access huddoc

  3. My brother suggested I might like this website.
    He was totally right. This post actually made my day.
    You can not imagine simply how much time I had spent for this
    info! Thanks!

  4. Pingback: More info
  5. Pingback: Homepage
  6. Pingback: click here
  7. It was some sort of excitement coming across your site recently. I arrived here now hoping to discover interesting things. I was not upset. Your ideas about new approaches on this subject material were useful and a fantastic help to us. Thank you for creating time to write down these things as well as sharing your thinking.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s