What is a debt to income ratio for a Kentucky Mortgage?

What is a debt to income ratio?

Kentucky First Time Home Buyer Loan Programs for FHA, VA, KHC and USDA Mortgage Loans in Kentucky

 

A debt to income ratio, commonly referred to as DTI, is the ratio of the amount of monthly expenses you have relative to your gross (before tax) income. 

 

The automated underwriter will look at two ratios when analyzing your DTI: your front end DTI ratio and your back end DTI ratio.

 

Front End DTI

 

The front end DTI is the ratio of your new housing payment including taxes and insurance relative to the amount of income you earn.  The front end DTI ratio excludes all other debts and simply analyzes your income relative to the payments on the new mortgage plus tax and insurance. 

 

So, if your mortgage payments including tax and insurance are $1,000 and you earn $4,000 per month in gross income, your front end DTI would be 25% ($1,000 / $4,000 = 25%). 

 

Generally, the automated underwriter likes to see front…

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Kentucky FHA Mortgage Insurance Requirements and Down Payments

FHA mortgage insurance, typically referred to as MIP, is the one closing cost that is unique to FHA mortgage programs. 

**Every FHA mortgage must have mortgage insurance regardless

of the amount of the down payment.**


There are two types of mortgage insurance for FHA insured loans – Up-front Mortgage Insurance Premiums and Monthly Mortgage Insurance Premiums.

Up-front Mortgage Insurance Premium (UFMIP)


UFMIP is calculated at 1.75% of the base loan amount on all loans, regardless of the down payment amount.  This insurance protects the lender against losses in the event that the borrower defaults on the loan. 

**The entire amount of the UFMIP can be financed into the loan amount!**


For example:

  • If the FHA loan amount is $100,000 (base loan amount)
  • The mortgage insurance premium would be $1,750 ($100,000 x 1.75%)
  • The mortgage amount including MIP would be $101,750 ($100,000 + $1,750)

What really happens during an FHA mortgage transaction is that the borrower owes FHA a lump sum mortgage insurance premium.  The lender making the FHA loan will actually lend the money for the premium to the borrower and send the money to FHA so that the mortgage will be insured. 

Monthly Mortgage Insurance Premium


In addition to the UFMIP, there may be a monthly premium due as well.  The monthly premium is .80% of the base loan amount if the loan amount is less than or equal to 95% of the value of the home.  If the loan amount is over 95% of the value of the home, the monthly premium is .85% of the base loan amount..


On a 30 year fixed loan, the monthly payment would be calculated as follows:


$100,000 x .80% = $800 / 12 months = $66.67 per month

FHA Minimum Down Payment

Effective January 1, 2009, the minimum down payment required on an FHA loan is 3.5% of the purchase price. 


Any deposit (usually called earnest money) that you are required to give to your realtor at the time of an accepted purchase contract will count towards your 3.5% down payment. The appraisal fee collected at the time of inspection will also count towards your 3.5% down payment. 

 
If, for example, you are purchasing a $100,000 house, your minimum down payment required would be $3,500.  If your seller/realtor required you to put down $500 in earnest money on top of the $300 for your appraisal, your down payment would be lowered to $2,700 ($3,500 – $500 – $300 = $2,700). 


Down Payment As A Gift


If a borrower does not have 3.5% of his or her own money to put down towards the home purchase, FHA allows that amount to be in the form of a gift to the borrower. The gift must be from a qualified source, such as a family member, employer or significant other. The source of the gift must be able to provide proof that they have the money in an account registered in their name prior to transfer to the borrower.


In some areas, this gift may also be grant money from a state or local municipality, if such funds are available.

FHA now allowing 0.5% on Student Loans instead of 1%

FHA now allowing 0.5% on Student Loans instead of 1%
BREAKING NEWS: KENTUCKY FHA & STUDENT LOANS

Louisville Kentucky Mortgage Loans

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Here are all the $0 Mortgage options in Kentucky

Here are all the $0 Mortgage options in Kentucky

VA – available to veterans, surviving spouses and active military. • VA Mortgages are always $0 down.• FICO Score – 620 preferable.• Need DD214 (honorable discharge) and Certificate of Eligibility.• Seller can pay up to 4% of closing costs.

USDA: the location of the property determines the $0 Down.• Seller can pay 6% of closing costs. • Income Limitations – Any primary home.

. FHA $0 Down – one of my lenders offers FHA Down Payment Assistance by way of a 2nd Mortgage.• FICO Score 620. • Ideal for First Time Home Buyers. • 2 Mortgages: 1 for 96.5% and 2nd for 3.5%.• Largest loan size based on county: $356,362• Seller can pay closing costs up to 6% of price

Kentucky First Time Home Buyer Loan Programs for FHA, VA, KHC and USDA Mortgage Loans in Kentucky

Here are all the $0 Mortgage options in Kentucky

VA – available to veterans, surviving spouses and active military. • VA Mortgages are always $0 down.• FICO Score – 620 preferable.• Need DD214 (honorable discharge) and Certificate of Eligibility.• Seller can pay up to 4% of closing costs.

USDA: the location of the property determines the $0 Down.• Seller can pay 6% of closing costs. • Income Limitations – Any primary home.

. FHA $0 Down – one of my lenders offers FHA Down Payment Assistance by way of a 2nd Mortgage.• FICO Score 620. • Ideal for First Time Home Buyers. • 2 Mortgages: 1 for 96.5% and 2nd for 3.5%.• Largest loan size based on county: $356,362• Seller can pay closing costs up to 6% of price

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Kentucky Home Loan Program Requirements for FHA, VA, USDA and Conventional Mortgage loans.

FHA
Minimum credit score
580 AUS Approved
580 Manual
theNada program – easiest DPA ever – 100% cltv, done in-house
Non-Credit Qualifying Streamline refinances allowed
Gift funds allowed for down payment and closing costs
Cash out 80% LTV
DACA Allowed – EAD must reflect Category C33
theNADA
Easiest FHA DPA loan ever
580 FICO Minimum for DU Refer Eligible
No DTI Restrictions – up to 46.99%/56.99% with Approve Eligible
No Income Limitations
Available in all Areas
Maximum Loan Amount per County Limits, Now Including High Costs Counties
2nd Payment must be included in housing DTI
Follow FHA guidelines and DU findings
Homeowner Education (at least one borrower) Required
Seller Contributions: FHA Allowable of up to 6%
Non Occupying Co-Borrowers Allowed
Lender & Borrower Paid Compensation Options Available

Kentucky First Time Home Buyer Loan Programs for FHA, VA, KHC and USDA Mortgage Loans in Kentucky

FHA

  • Minimum credit score
  • 580 AUS Approved
  • 580 Manual
  • Non-Credit Qualifying Streamline refinances allowed
  • Gift funds allowed for down payment and closing costs
  • Cash out 80% LTV

VA

  • Minimum credit score
  • 600AUS approved
  • 620 manual
  • Cash-out up to 90% LTV
  • Foreclosure/Short Sale/Bankruptcy <2 years allowed with AUS Approval

USDA

  • Minimum credit score:620
  • 100% maximum LTV
  • Manual Underwrites
  • No maximum loan amount
  • USDA Streamlined, Streamlined-Assist, and Rate/Term refinances allowed

CONVENTIONAL

  • Minimum credit score:620
  • Fannie Mae
  • Freddie Mac
  • Standard and High Balance
  • HomeReady
  • HomePossible

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