What are the 2014 Kentucky FHA Guidelines for credit scores, down payments, cash out, and mortgage insurance requirements for a FHA Mortgage loan?

Kentucky FHA Program guidelines have been updated as follows:

For a Kentucky FHA Purchase Loan, we can go down to a 600 credit score with the minimum down payment of 3.5%.  No bankruptcies or foreclosures in the last 2 years.

If you are getting cash out, then the max loan to value or equity position is limited to 85% of the homes value. For example, if you had a home that was valued at $100,000, then the max loan for a FHA Cash Out in Kentucky would be $85,000.00. You still have to may mortgage insurance for life of loan so think carefully about using FHA for a cashout refinance.

The maximum debt to income ratios will be set by the AUS when we run it, but for a refer, it will be limited to 31% and 43% respectively. For example, if you make $3000 a month gross income, the max house payment would be $930.00 piti, and the maximum monthly payments including the new house payment would be $1290.00. So in the above example, the most you could have left in monthly bills listed on the credit report would be $360.00–If you had child support this would count in the dti calculation on the backend ratio of 43%

The seller can pay up to 6% of the buyer’s closing costs and prepaids (property taxes, home insurance for 1st years escrows) of the sales price. So, if you purchased a home for $100,000.00, the seller could give you a concession at closing to pay your closing costs and prepaids. A lot of Kentucky First Time homebuyers use this to limit their cash to close.

The minimum down payment of 3.5% for Kentucky FHA Loans can come from a family member in the form of a gift, or can be borrowed from a 401k, retirement account, or secured asset like a car.

• Seller must own the property a minimum of 90 days prior to the contract date.

FHA loans do not require a termite or home inspection, but they do require a HUD appraisal by a FHA approved Appraiser.

The following changes are effective for all Kentucky  FHA case numbers assigned on or after June 3, 2013: FHA is changing the duration for the collection of MIP
o For all mortgages with an original principal LTV of 90% or less, regardless of loan term, the annual MIP will be assessed for 11 years.
o For all mortgages with an original principal LTV greater than 90%, regardless of loan term, the annual MIP will be assessed for the entire life of the loan.

Loans of 15 year terms or less with LTV 78% or less will pay an MIP amount of 45 bps.

FHA Streamlines Prior to June 2009
FHA Streamlines with case numbers dated June 11, 2012 or later will have new MIP rules applied. If the loan being refinanced was endorsed on or before May 31, 2009, the new Streamline will receive a flat annual MIP of 55 basis points, regardless of loan amount, and the UFMIP ratio will decrease to 0.01% of the base loan amount.

 

 

2014 Kentucky FHA Loan Guidelines for Credit, Down payment, income,

Senior Loan Officer
(NMLS#57916)

American Mortgage Solutions, Inc.
800 Stone Creek Pkwy, Ste 7,
Louisville, KY 40223

phone: (502) 905-3708
Fax: (502) 327-9119
kentuckyloan@gmail.com

Company ID #1364 | MB73346
http://mylouisvillekentuckymortgage.com/

 

FHA loans are secured through the FHA, or Federal Housing Administration
FHA loans are secured through the FHA, or Federal Housing Administration

Mortgages and Credit Scores

Today, credit scores plays a big role in determining whether or not your mortgage loan is approved and at what interest rate.  Obtaining a mortgage loan at an interest rate just one point less results in a savings of about $5,000 on the average 15 year mortgage, and significantly more on a 30 year mortgage (about $50,000).
 
Why do lenders use your credit score in their lending decisions?  Because they discovered that there is a direct correlation between your credit score and the odds of your becoming delinquent on your monthly mortgage payments. Consider the following statistics the mortgage industry has compiled:

If Your Credit Score Is
 
780  

700
680
660
645
630
615
600
585
Your Odds of Becoming 90 Days Delinquent are
 

Factors contributing to someone's credit score...
Factors contributing to someone’s credit score, for Credit score (United States). (Photo credit: Wikipedia)
576 to 1
288 to 1
144 to 1
72 to 1
36 to 1
18 to 1
9 to 1
4 to 1
2 to 1
As the above table illustrates, those with credit scores below 630 are not a very good risk, so they will obtain a mortgage at a significantly higher interest rate and this will add anywhere from $50 to about $250 to their monthy mortgage payment and add thousands to the price of the home.
 
If your score is 660 or above, you can get a mortgage loan fairly easily since you are a pretty good risk. As stated above, the higher your score the lower your interest rate, so your goal shouldn’t be to obtain a credit score of 660; it should be to achieve a credit score of at least 700.  Some lenders will reward you if your credit score is higher than 725, by lowering your interest rate by about 1/4th of a percent.  If it is between 700 and 724, it will be lowered by 1/8th of a percent.
 
Does an interest point or two make such a big difference in the price of the house?  You bet it does!  It means saving  thousands in finance charges and a lower monthly payment.  For example, paying an interest rate just two points higher means paying an additional $200 each month on your house payment on the typical $150,000, 30-year mortgage loan.  That’s at least $72,000 more you’re going to pay for your house!
 
There are steps you can take to raise your credit score or overcome a low credit score:
 
(1)  Offer a larger down payment so that you aren’t borrowing so much money
(2)  Lower your debt-to-income ratio by paying off as much debt as you possibly can before applying for a mortgage loan in order to increase your credit score
(3)  Don’t buy a car just before applying for a mortgage loan as it lowers your credit score
For a Kentucky FHA Purchase Loan, we can go down to a 620 credit score with the minimum down payment of 3.5%.  No bankruptcies or foreclosures in the last 2 years.

FHA Manual Underwriting

The minimum FICO for FHA Manual Underwrites is being lowered to 620

Joel Lobb
Senior  Loan Officer

(NMLS#57916)
American Mortgage Solutions, Inc.
800 Stone Creek Pkwy, Ste 7,
Louisville, KY 40223
 Fax:     (502) 327-9119
 
 Company ID #1364 | MB73346

Down-payment Assistance Programs Louisville and Kentucky

Down-payment Assistance Programs Louisville and Kentucky.