What income is acceptable for FHA, VA, USDA and Fannie Mae Mortgage Loan Approval in Kentucky?

How to qualify for a Kentucky mortgage

The type of mortgage you’re applying for determines the minimum requirements you’ll have to meet for your down payment, credit score, and debt-to-income ratio.

Find out what type of loan you might qualify for or what aspects of your finances you’ll need to improve to get a better shot at qualifying for a mortgage.

Loan Type	Min. Down Payment	Min. Credit Score	Max DTI	Property Type
Conventional	3%	620	45%	Primary, secondary, investment
VA	0%	none	none	Primary
FHA	3.5%	500	50%	Primary
USDA	0%	none	41%	Primary

Keep in mind: The minimum down payment, minimum credit score, and maximum DTI shown in the table apply to mortgages used to purchase a primary residence. While you can use a conventional loan or a jumbo loan to purchase a home for another purpose, you might need a larger down payment, a higher credit score, more cash reserves, or all three.

Credit score needed to buy a house

Mortgage lending is risky, and lenders want a way to quantify that risk. They use your three-digit credit score to gauge the risk of loaning you money since your credit score helps predict your likelihood of paying back a loan on time. Lenders also consider other data, such as your income, employment, debts and assets to decide whether to offer you a loan.

Different lenders and loan types have different borrower requirements, loan terms and minimum credit scores. Here are the requirements for some of the most common types of mortgages.

Conventional loan

Minimum credit score: 620

A conventional loan is a mortgage that isn’t backed by a federal agency. Most mortgage lenders offer conventional loans, and many lenders sell these loans to Fannie Mae or Freddie Mac — two government-sponsored enterprises. Conventional loans can have either fixed or adjustable rates, and terms ranging from 10 to 30 years.

You can get a conventional loan with a down payment as low as 3% of the home’s purchase price, so this type of loan makes sense if you don’t have enough for a traditional down payment. However, if your down payment is less than 20%, you’re required to pay for private mortgage insurance (PMI), which is an insurance policy designed to protect the lender if you stop making payments. You can ask your servicer to cancel PMI once the principal balance of your mortgage falls below 80% of the original value of your home.

FHA loan

Minimum credit score (10% down): 500

Minimum credit score (3.5% down): 580

FHA loans are backed by the Federal Housing Administration (FHA), a part of the U.S. Department of Housing and Urban Development (HUD). The FHA incentivizes lenders to make mortgage loans available to borrowers who might not otherwise qualify by guaranteeing the federal government will repay the mortgage if the borrower stops making payments. This makes an FHA loan a good option if you have a lower credit score.

FHA loans come in 15- or 30-year terms with fixed interest rates. Unlike conventional mortgages, which only require PMI for borrowers with less than 20% down, all FHA borrowers must pay an up-front mortgage insurance premium (MIP) and an annual MIP, as long as the loan is outstanding.

VA loan

Minimum credit score: N/A

VA loans are mortgages backed by the U.S. Department of Veterans Affairs (VA). The VA guarantees loans made by VA-approved lenders to qualifying veterans or service members of the U.S. armed forces, or their spouses. This type of loan is a great option for veterans and their spouses, especially if they don’t have the best credit and don’t have enough for a down payment.

VA loans are fixed-rate mortgages with 10-, 15-, 20- or 30-year terms.

Most VA loans don’t require a down payment or monthly mortgage insurance premiums. However, they do require a one-time VA funding fee, that ranges from 1.4% to 3.6% of the loan amount.

USDA loan

Minimum credit score: N/A

The U.S. Department of Agriculture guarantees loans for borrowers interested in buying homes in certain rural areas. USDA loans don’t require a minimum down payment, but you have to meet the USDA’s income eligibility limits, which vary by location.

All USDA mortgages have fixed interest rates and 30-year repayment terms.

USDA-approved lenders must pay an up-front guarantee fee of up to 3.5% of the purchase price to the USDA. That fee can be passed on to borrowers and financed into the home loan. If the home you want to buy is within an eligible rural area (defined by the USDA) and you meet the other requirements, this could be a great loan option for you.

What else do mortgage lenders consider?

Your credit score isn’t the only factor lenders consider when reviewing your loan application. Here are some of the other factors lenders use when deciding whether to give you a mortgage.

• Debt-to-income ratio — Your debt-to-income (DTI) ratio is the amount of debt payments you make each month (including your mortgage payments) relative to your gross monthly income. For example, if your mortgage payments, car loan and credit card payments add up to $1,800 per month and you have a $6,000 monthly income, your debt-to-income ratio would be $1,800/$6,000, or 30%. Most conventional mortgages require a DTI ratio no greater than 36%. However, you may be approved with a DTI up to 45% if you meet other requirements.
• Employment history — When you apply for a mortgage, lenders will ask for proof of employment — typically two years’ worth of W-2s and tax returns, as well as your two most recent pay stubs. Lenders prefer to work with people who have stable employment and consistent income.
• Down payment — Putting money down to buy a home gives you immediate equity in the home and helps to ensure the lender recoups their loss if you stop making payments and they need to foreclose on the home. Most loans — other than VA and USDA loans — require a down payment of at least 3%, although a higher down payment could help you qualify for a lower interest rate or make up for other less-than-ideal aspects of your mortgage application.
• The home’s value and condition — Lenders want to ensure the home collateralizing the loan is in good condition and worth what you’re paying for it. Typically, they’ll require an appraisal to determine the home’s value and may also require a home inspection to ensure there aren’t any unknown issues with the property.

Louisville Kentucky Mortgage Loans

Acceptable Income and Job History for a Mortgage Loan Approval in Kentucky

View original post

Kentucky FHA loans after a bankruptcies, foreclosures, deeds-in-lieu of foreclosure, pre-foreclosures, short sales, and mortgage charge-offs.

Kentucky FHA loans after a significant derogatory credit events which include bankruptcies, foreclosures, deeds-in-lieu of foreclosure, pre-foreclosures, short sales, and mortgage charge-offs.

A Chapter 7 bankruptcy – MUST be discharged at least 2 years from Case Number Assignment Date. Requirements
include:
1. Complete Copy of Bankruptcy paperwork MUST be provided
2. Borrower must write a detailed explanation explaining the reason for the Bankruptcy
3. The Borrower must have re-established good credit; or chosen not to incur new credit obligations.
4. An elapsed period of less than two years, but not less than 12 months, may be acceptable, if the Borrower:
– Can show that the bankruptcy was caused by extenuating circumstances beyond the Borrower’s control; and
– Has since exhibited a documented ability to manage their financial affairs in a responsible manner.
– If a Chapter 7 is discharged less than 2 years from the date of Case Number Assignment Date the loan must be downgraded to Manual Underwriting and meet all requirements listed in HUD 4000.1 Handbook

 

Chapter 13 must be discharged ** Requirements include:
1. Complete Copy of Bankruptcy paperwork MUST be provided
2. Borrower must write a detailed explanation explaining the reason for the Bankruptcy
3. The Borrower must have re-established good credit; or chosen not to incur new credit obligations.
4. An elapsed period of less than two years, but not less than 12 months, may be acceptable, if the Borrower:
‐ Can show that the bankruptcy was caused by extenuating circumstances beyond the Borrower’scontrol; and
‐ Has since exhibited a documented ability to manage their financial affairs in a responsible manner.

5. If a Chapter 13 is discharged less than 2 years from the date of Case Number Assignment Date the loan must be downgraded to Manual Underwriting and meet all requirements listed in HUD 4000.1 Handbook

Foreclosure/Deed-in-Lieu
1. A Borrower is generally not eligible for a new FHA-insured Mortgage if the Borrower had a foreclosure or a DIL of foreclosure in the three-year period prior to the date of Case Number Assignment.
2. This three-year period begins on the date of the DIL or the date that the Borrower transferred ownership of the Property to the foreclosing Entity/designee.

Short Sale

1. A Borrower is generally not eligible for a new FHA-insured Mortgage if they relinquished a Property through a Short Sale within three years from the date of Case Number Assignment.
2. The three-year period begins on the date of transfer of title by Short Sale.

 

Kentucky FHA Loan

FHA loans are good for home buyers with lower credit scores and no much down, or with down payment assistance grants. FHA will allow for grants, gifts, for their 3.5% minimum investment and will go down to a 580 credit score.

The current mortgage insurance requirements are kinda steep when compared to USDA, VA , but the rates are usually good so it can counteract the high mi premiums. As I tell borrowers, you will not have the loan for 30 years, so don’t worry too much about the mi premiums.

The mi premiums are for life of loan like USDA.

FHA requires 2 years removed from bankruptcy and 3 years removed from foreclosure.

Maximum FHA loan limits in Kentucky are set around $285,000 -$299,000 depending on the county in Kentucky

Joel Lobb
Senior Loan Officer
(NMLS#57916)

American Mortgage Solutions, Inc.
10602 Timberwood Circle, Suite 3
Louisville, KY 40223

text or call my phone: (502) 905-3708
email me at kentuckyloan@gmail.com

The view and opinions stated on this website belong solely to the authors, and are intended for informational purposes only. The posted information does not guarantee approval, nor does it comprise full underwriting guidelines. This does not represent being part of a government agency. The views expressed on this post are mine and do not necessarily reflect the view of my employer. Not all products or services mentioned on this site may fit all people. NMLS ID# 57916, (www.nmlsconsumeraccess.org). Mortgage loans only offered in Kentucky.
All loans and lines are subject to credit approval, verification, and collateral evaluation and are originated by lender. Products and interest rates are subject to change without notice.

Joel E Lobb
American Mortgage
5029053708
email us here

Some products and services may not be available in all states. Credit and collateral are subject to approval. Terms and conditions apply. This is not a commitment to lend. Programs, rates, terms and conditions are subject to change without notice. The content in this marketing advertisement has not been approved, reviewed, sponsored or endorsed by any department or government agency. Rates are subject to change and are subject to borrower(s) qualification.

Kentucky FHA, VA, USDA & Rural Housing, KHC and Fannie Mae mortgage loans.

FHA Back to Work Extenuating Circumstances Works!

FHA Back to Work Extenuating Circumstances Works, FHA Back to Work Program, Success Story, FHA Loans

via FHA Back to Work Extenuating Circumstances Works!.

Kentucky FHA loans have new guidelines for collections, judgements, and disputed accounts on credit report.

 

HA has published the following guideline updates, which will be effective for all loans with case numbers assigned on or after September 9th

• Specific verbiage for Well Water Testing has been added indicating that it must be performed by a disinterested party in a method acceptable to the local health authority. The borrower or any other interested party may not have contact with the sample. Additionally, cases mandating a Well Water Test have been added to include (but not limited to) the following
  • Newly constructed properties and/or wells
  • Properties with deficiencies in the well or well water as determined by an appraiser
  • Areas where water has been reported or is otherwise known to be unsafe
  • Properties located in close proximity to dumps, landfills, industrial sites, farms, or other sites that could contain hazardous waste
  • Properties where distance between well and septic systems is less than 100 feet
• Clarification issued indicating Overtime, Bonus, or Tip Income must be calculated using the lesser of
  • Average Overtime, Bonus, or Tip income earned over the previous 2 years (or if earned less than 2 years, the total length of time it has been received); OR
  • Average Overtime, Bonus, or Tip income earned over the previous year
• All requirements regarding unreimbursed business expenses and Commission Income or Automobile Allowances has been completely removed to align with current IRS tax laws
• Mortgagees and Third Party Originators have been specifically added to the list of parties to which Interested Party Contribution (IPC) limits apply, with the exception that Premium Pricing credits do not apply to the IPC limit unless the mortgagee is also acting as the seller, agent, builder, or developer.
• Rent Below Fair Market has been defined as an inducement to purchase when the borrower is allowed to live in the property rent free or at a rental amount more than 10 percent under the fair market rent as determined by the appraiser.
• Disaster Certifications and new Appraisals in Disaster Areas must now be dated at least 14 days after the Incident Period start date. NOTE: This requirement is in addition to the standard Century Disaster Area Policy.
• Clarification has been added that Reduction in Term for Streamline Refinances refers specifically to the reduction of the remaining amortization period of the existing mortgage.

• Manual Underwriting Tips for FHA

  Don’t Forget to Submit! Verbal VOE, paystub(s) covering most recent 30 day period, W2’s for the past 2 years 2 year employment history At least 1 months reserves from the borrower’s own funds (cannot be a gift); 3 months required for 3-4 unit properties VOR or 12 months cancelled checks if credit does not report last 12 months housing history LOX for any derogatory credit or any late payments within the last 24 months DTI Requirements: 31/43% FHA (no compensating factors required) What can trigger a downgrade to manual underwrite? $1,000 or more in Disputed Derogatory Credit Accounts 20% or greater decline in self employed income Mortgage lates in the last 12 months (see guidelines for full list) Payment History Requirements: All mortgage and installment loan payments must have been on time within the last 12 months and no more than two 30 day lates within the last 24 months No derogatory credit on revolving accounts in the last 12 months

• FHA – Underwriting must follow DU to determine if a collection account must be paid, even on a manual underwrite. Typically DU will require the following:
  • If the credit report shows a cumulative balance of $2,000 or more for collection accounts:
  • The debt(s) must be paid in full prior to or at closing, or
  • Payment arrangements must be made with the creditor and the monthly payment included in the DTI, or
  • A monthly payment of 5% of the outstanding balances of each collection must be included in the borrower’s DTI.
  • Collection accounts of non-borrowing spouses in a community property state must be included in the $2,000 cumulative balance and analyzed as part of the Borrower’s ability to pay all collection accounts. Community property states are Arizona, California, Texas, Washington, and Wisconsin.

The Latest Guidelines on Waiting Periods – Valley Business Journal

The Latest Guidelines on Waiting Periods – Valley Business Journal.

 

It might be interesting to update everyone on the latest guidelines on required waiting periods after a Bankruptcy, Foreclosure or Short Sale. The rules seem to change fairly often and, of course, may vary greatly with lenders and mortgage investors.

For conventional financing, basic guidelines at this time show a waiting period of four years after a Chapter 7 or 11 Bankruptcy, two years with extenuating circumstances; after a Chapter 13 Bankruptcy, it would be two years from the Discharge date, four from Dismissal date (two from Dismissal with justifying circumstances). A Foreclosure on your record would mandate a seven-year waiting period, three with extenuating circumstances but with additional restrictions as to the maximum loan-to-value allowed and occupancy of the property. A Short Sale or Deed-in-Lieu on a person’s credit requires a waiting period of at least two years for an 80% loan-to-value and four for 90%, two with mitigating circumstances can be possible up to 90%.

FHA and VA requirements may be considerably different. For example, if a person had a Chapter 7 Bankruptcy, the usual waiting period would be two years for FHA, but under some circumstances it could be moved down to just one, not with VA though. Many factors must be clearly illustrated, including either no new debt since discharge or re-establishment and maintenance of good credit plus a demonstrated ability to manage one’s financial obligations. A new purchase after a Chapter 13 Bankruptcy (where debts are being paid over time) has different guidelines also, primarily being that the Bankruptcy has been in a payout period for at least one year, with satisfactory performance and Court approval. Foreclosures and short sales generally mandate three years with FHA, two with VA.

These are some of the lending policies, but of course a person must also qualify for the new loan – income, stability of same, debt ratios and credit scores are critical. We must measure that with the basic question of whether a person is ready to purchase again and take on ownership responsibilities. Working with an experienced, professional mortgage advisor should be very helpful if you find yourself in this kind of situation.

The snag would come in the underwriting portion of the mortgage application process.

“The IRS office won’t be able to provide the forms to prove income, deal with tax lien information, and the like. Because those documents aren’t available, those loans will be stuck until further notice,’’ Herrera said.

It’s in the intake — the starting of the files — where a backlog could occur, he said.

With the housing recovery in the Inland region still viewed as fragile, any slow-down in sales has a trickle-down effect on the economy.

National Association of Realtors chief economist Lawrence Yun recently pinned the August slow-down in pending home sales — contract signings eased 1.6 percent — on tight inventory conditions, higher interest rates, rising prices and restrictive mortgage credit.

For the three month quarter ended June 2013, nearly 20 percent of the 8,758 mortgage transactions reported to the Inland Valleys Association of Realtors were FHA-insured.

Conventional loans insured by Freddie Mac and Fannie Mae accounted for 34 percent of the transactions; Veterans Administration-backed mortgage applications represented 4 percent of the loan business, Herrera said.

Donavon Ternes, president and chief operating officer of Provident Savings Bank, agreed the FHA-furloughs could end up harming – or bogging down — the number of refinance transactions or purchase money transactions looking for FHA-insurance on the loan.