FHA Announces COVID-19 Temporary Guidance for Kentucky FHA Mortgage Loans

Kentucky FHA Temporary Guideline Changes:
Rental Income & Self-Employment Income

FHA Announces COVID-19 Temporary Guidance for Kentucky FHA Mortgage Loans
Due to the ongoing effect of COVID-19, FHA has announced in ML 2020-03, updates to the following temporary guidelines below effective with case number assignments on or after 8/12/2020 -11/30/2020:

Rental Income for Kentucky FHA Mortgage Loans

  • When qualifying utilizing rental income, for each property generating rental income the following is required:
    • Reduce the effective income associated with the calculation of rental income by 25%, or
    • Verify 6 months PITI reserves, or
    • Verify the borrower has received the previous 2 months rental payments as evidenced by borrower’s bank statements showing the deposit. (This option is applicable only for borrowers with a history of rental income from the property).

Self Employment Income for Kentucky FHA Mortgage loans 

  • Self-employment income must be stable with a reasonable expectation that it will continue. Verification of the existence of the borrower’s business within 10 calendar days prior to the date of the Note to confirm that the Borrower’s business is open and operating.  One (1) of the following to verify and confirm that the business is open and operating:
    • Evidence of current work (executed contracts or signed invoices that indicate the business is operating on the day the lender verifies self-employment);
    • Evidence of current business receipts within 10 days (Note Fairway Policy) of the note date (payment for services performed);
    • Lender certification that the business is open and operating (lender confirmed through a phone call or other means) (Note Fairway Policy); or
    • Business website demonstrating activity supporting current business operations (timely appointments for estimates or service can be scheduled).

 

fha pic

Joel Lobb
Mortgage Loan Officer
Individual NMLS ID #57916
 
American Mortgage Solutions, Inc.
 

Text/call:      502-905-3708

fax:            502-327-9119
email:
          kentuckyloan@gmail.com

 

First Time Home Buyer Louisville Kentucky Mortgage Programs

KENTUCKY USDA RURAL HOUSING LOAN PROGRAM GUIDELINES

2020 USDA Income limits, the Jefferson County Louisville, KY

Louisville Kentucky Mortgage Loans

via KENTUCKY USDA RURAL HOUSING LOAN PROGRAM GUIDELINES

With the new changes for 2020 USDA Income limits, the Jefferson County Louisville, KY Metro area (**) saw an increase of $90,300 for a family of four and up to $119,200 for a family of five or more. The metro area surrounding counties of Jefferson County includes Oldham, Bullitt, Spencer are included in these higher income limits for USDA loans.
Remember,  the entire  Jefferson County and Fayette County  Kentucky counties are not eligible for USDA loans. Along with parts of the following counties Daviess (Owensboro), Mccracken (Paducah), Madison County, (Richmond), Clark County (Winchester), Warren (Bowling Green), Hardin (Fort Knox and Radcliff), Bullitt(Hillview, Maryville, Zoneton, Fairdale, Brooks), Franklin, (Frankfort), Henderson (Henderson City Limits), Christian County (Hopkinsville, Fort Campbell), Boyd County (Ashland city limits) and the most Northern Parts of Boone, Kenton, Campbell Counties of Northern Kentucky (Covington, Florence, Richwood, Hebron, Ludlow, Fort Thomas…

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Kentucky FHA Mortgage Work History and Income Requirements.

  • No matter what you must provide a 2 year employment history. Conventional or Kentucky FHA Mortgage Loan.  Conventional does not always need to be verified with a written work verification form
    • if you do not have a complete 2 year history you must explain any large gaps.  Typically I have seen this to be greater than 30 days.
    • you must have a 2 year history prior to the gap as well.  (two underwriters from two different lenders have recently told me the same thing)
    • also check your AUS-Automated Underwriting Findings  because that can help when speaking with your potential borrower.
  • Exception to the 2 year history is college or HS graduation
    • need official college transcripts or they can be unofficial if you get them with the web URL just like bank activity.
    • good idea to snag their diploma as well.
    • you probably don’t even need to use this exception if the person was a student but also worked and had a 2 year job history.

 

  •  Kentucky FHA Case Number Assignment
    • if there are any job gaps greater than 6 months in their two year history the borrower must be on their current job for at least 6 months before the FHA case number can be assigned.
    • again you must then get a 2 year employment history prior to the 6 month or more gap.  however far you must go back.
  •  
  • W2s / 1099s
    • even if you are not using the income to qualify from a part time job please get every single w2 / 1099 from your borrowers.  

 

fha pic

Joel Lobb
Mortgage Loan Officer
Individual NMLS ID #57916
 
American Mortgage Solutions, Inc.
10602 Timberwood Circle 
Louisville, KY 40223
Company NMLS ID #1364
click here for directions to our office
 

Text/call:      502-905-3708

fax:            502-327-9119
email:
          kentuckyloan@gmail.com

FHA or USDA?

FHA or USDA?
Leave a comment
I’m a first time home buyer looking to buy an owner occupied income property. I’m still in the researching options phase and have not spoken with a lender. Though, I actually have a private lender that I can use and have spoken with them but I would get cheaper interest rates with FHA or USDA so I’m looking for general advice, insight, information, knowledge or personal experience with those loans.

I’m not sure what the better option would be. I can do the 3.5% down for an FHA but it would break the bank. For obvious reasons I’m not comfortable with this.

I would prefer a USDA with no money down but it seems the stipulations for income property are that you must offer low income housing. I’m not against that at all as long as the numbers work. I’m just curious how that works? How is a cap on rent set? Is it a condition for the duration of the loan or just a certain amount of years? If I refinanced down the road would it be still be a stipulation? What are the pros and cons of this stipulation?

I’m just curious what others have done if in a similar situation or what you would recommend in general in this situation.

I should add that where I’m currently renting has gone into foreclosure and at some point (this year I imagine but with the virus who knows) I will have to move so waiting to save more money isn’t something I can really do or want to. I hate to hit my savings to move to another rental and would really like to purchase an income property instead. If your advice is to wait and keep renting though then tell me.

Thank you for any words of wisdom! They are appreciated.

More real estate tips at Program Realty Wix site

Program Realty

I’m a first time home buyer looking to buy an owner occupied income property. I’m still in the researching options phase and have not spoken with a lender. Though, I actually have a private lender that I can use and have spoken with them but I would get cheaper interest rates with FHA or USDA so I’m looking for general advice, insight, information, knowledge or personal experience with those loans.

I’m not sure what the better option would be. I can do the 3.5% down for an FHA but it would break the bank. For obvious reasons I’m not comfortable with this.

I would prefer a USDA with no money down but it seems the stipulations for income property are that you must offer low income housing. I’m not against that at all as long as the numbers work. I’m just curious how that works? How is a cap on…

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