Kentucky FHA Mortgage Qualifying Guidelines for 2020

Kentucky FHA Loans

The FHA is actually not the lender. They insure the loans that are issued by FHA-approved lenders. FHA loans are gear more toward borrower’s with less than 20% down payment and credit issues in the past.

Qualifying for a FHA Loan Mortgage In Kentucky

Credit Scores and Down Payment Percentages – Each year, the rules for qualifying for these loans changes. For 2020, applicants need a minimum credit score of 580 in order to get the low down payment, which is 3.5 percent.

For those whose credit score is less than 580, they will have to come up with 10 percent for their down payment. This does not guaranteed a mortgage loan approval if you have the certain credit scores, just a the minimum required.

Compensating Factors for FHA loan Approval

The credit score is just one part of the story. The FHA will also evaluate the borrower’s bankruptcies, foreclosures, prior payment history on other debts. They will also want information on difficulties that kept the borrower from making payments on other debts in the past.

Negative strikes against qualifying for the loan include not having any credit history or a bankruptcy.

Someone with a bankruptcy will have to wait for two or more years after their bankruptcy before applying for an FHA-insured loan.

If you have late payments on debt obligations, it is best to wait until you have had a full year of on-time payments before you apply for a FHA-insured loan.

If you have had a foreclosure in the past, you may still be able to get a FHA-insured loan three years after your foreclosure. The lender will be looking at the circumstances behind the foreclosure.

If you have had any civil judgement against you for money owed, collections actions or unpaid/unresolved federal debt, the FHA-approved lender will be required by the FHA to establish that all of these outstanding issues are resolved or paid before you can go through closing.

Watch out for student loans if they are delinquent because sometime this can cause a lien against you in the form of a CAVIRS Alert with HUD

As you can see, many types of borrowers who would not be eligible for a traditional mortgage, or who would face exorbitant interest rates, will be able to qualify for a FHA-insured loan at attractive interest rates.

Employment and Income for a Kentucky FHA Loan

You must have an employment history that is steady for the last two years. Does not have to be same employer.

Your income has to be verifiable in some way, whether that be through pay stubs, your income tax returns. No bank statements or cash deposits , or undocumented income can be used for income qualifying purposes.

Image result for Employment and Income for a Kentucky FHA Loan

Debt-to-Income Ratio Requirements –

Depending on the automated underwriting system from Desktop Originator, your Debt-to-income ratio is the percentage of your income before taxes that you spend on monthly debt.

Taking into account the proposed mortgage payment as well as the other debts, the FHA requires that these debts all total less than 43 percent of your pretax income in order to qualify for the loan.

If your debt load is too high, you will struggle to pay all of your bills and mortgage expenses and care for yourself and your family.

55488026_2283733755207645_6787062571322048512_n (1)

Property Requirements for a Kentucky FHA Loan

It must be the place where you intend to reside. You must move into the home within 60 days of closing the loan. The home cannot be an investment. There will be an inspection to ensure that the home is safe and habitable.

It is really not too hard to pass FHA loans and the appraisal process.

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Pros of FHA Loans –

  • New homebuyers and those who have lower credit scores or who have other blemishes on their credit history will often qualify for FHA-insured loans.

  • Even though these borrowers are considered “subprime” to a traditional lender, they will receive attractive interest rates through the FHA-insured mortgage programs.

  • The down payments required from borrowers are lower than those required by traditional mortgage lenders.

  • These loans can be combined with other forms of public assistance for lower income or new borrowers so that the borrower will not need to come up with a down payment of any kind.

Cons of FHA Loans –

  • Since the FHA is not actually the lender, and you have to go through FHA-approved lenders, you may not qualify due to stricter standards that the lender has for the loan.

  • Because you are not paying 20 percent as a down payment, the FHA requires two mortgage insurance premiums to be paid. One is an upfront premium that is 1.75 percent of the loan amount. Lenders often will allow you to make that mortgage insurance premium a part of your loan. The second is an annual mortgage insurance premium that is .45 percent or 1.05 percent. This premium is paid monthly.

 FHA FINANCING

CREDIT REQUIREMENTS FOR KENTUCKY FHA FINANCING

What credit score do I need to qualify for a Kentucky FHA loan is one of the most common questions I hear from Kentucky homebuyers?

The short answer is you must have a minimum credit score of 500 to be eligible for an FHA loan in Kentucky.  Anything lower than 500 disqualifies you from consideration for an FHA loan.

There are two sets of credit score requirements for a Kentucky FHA Loan

One important thing to understand is that the Federal Housing Administration (FHA) does not lend money directly to home buyers. You will fill out an application with a regular lender just as you would if you were applying for any other type of mortgage. What the FHA does is ensure your loan to help protect the lender in case you default.

You will be required not only to meet the FHA guidelines to qualify for a loan but also meet any additional qualifications required by the lender. This means there are two sets of requirements you have to meet with your credit score.

1. The first set of requirements comes from the Department of Housing and Urban Development (HUD). HUD oversees the FHA and determines what a borrower’s minimum eligibility requirements will be to obtain an FHA loan.

2. The second set of requirements comes from the mortgage lender. The mortgage lender has the right to add its requirements to those mandated by HUD.

What HUD requires of borrowers to be eligible for an FHA loan

The HUD Handbook 4000.1 includes the official guidelines when it comes to the FHA mortgage insurance program.

It states that in 2020 the Kentucky FHA borrowers with credit scores of 580 or higher are eligible for a 96.5% loan with 3.5% down.

Borrowers with credit scores from 500 to 579 are eligible for a 90% loan with 10% down.

Individuals with credit scores below 500 are not eligible for the FHA program.

What lenders may require of borrowers to be eligible for an Kentucky FHA loan

Lenders have the right to add requirements over and above the minimum requirements of HUD. These additional requirements are called overlays. Your lender may or may not require them.

This is not something that should come as a surprise to you, however. Requiring a credit score of 580 to 620 is not unusual. In addition to your credit score, you must have a manageable debt level that lenders are comfortable with and enough income to repay your loan.

What credit score do I need to qualify for FHA loan?

Each month Ellie Mae, the software company processing more than ⅓ of America’s mortgage loans, publishes an insight report for mortgage trends and standards. One of the things they track is average credit scores. The following is their report for November 2019 which shows what percentage of successful borrowers fall into what credit score ranges.

500 – 549    2.14%
550 – 599    5.20%
600 – 649    23.01%
650 – 699    34.74%
700 – 749    21.88%
750 – 799    10.87%
800+     1.89%

These percentages show that the majority of borrowers who successfully qualify for FHA loans fall into the 600 to 799 range. While it is true that some successfully qualify in the low range of 500 to 599, you have a much better chance of being approved for a loan with good terms and a low down payment if you fall into the higher range.

 

 

 

For your free credit report and analysis call us today at 502-905-3708 or email us at kentuckyloan@gmail.com

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

 

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/

 

Kentucky FHA Down Payment Requirements, Credit Scores and Mortgage Insurance

How Credit Scores Impact Kentucky  FHA Loan Down Payment Requirements


Kentucky Home Buyers credit scores are one of  the largest factors in determining the amount of a down payment for an FHA loan.   A credit score of 580 or higher, 3.5 percent is the minimum required for a down payment. Anyone with a credit score of 500 to 579 will have to save 10 percent for a down payment to obtain an FHA loan.

What Are Mortgage Insurance Requirements on Kentucky FHA Loans?

FHA loans are required to pay mortgage insurance premiums, often known as upfront mortgage insurance premiums and monthly annual premiums.

  • Upfront mortgage insurance premium: 1.75 percent of the loan amount and is paid when the borrower gets the loan. The premium can be rolled into the mortgage.
  • Annual mortgage insurance premium: 0.45 percent to 1.05 percent, depending on the term of the loan (15 years vs. 30 years), the loan amount and the initial loan-to-value ratio, or LTV. This premium amount is divided by 12 and paid monthly.

For a homeowner who borrows $150,000, this means the upfront mortgage insurance premium would be $2,625 and your annual premium would range from $675 ($56.25 per month) to $1,575 ($131.25 per month), depending on the length of the mortgage.

Unlike traditional mortgage insurance premiums, homeowners are required to pay FHA premiums for the entire term of the mortgage. The only time you can stop paying them is to refinance into a non-FHA loan or to sell the house.

Down Payment Gifts and Rules for Kentucky FHA Loans Kentucky borrowers choose an FHA loan can receive money as a gift to help towards the total amount of the down payment.

There are several rules that homeowners need to keep in mind. Giftscan come from friends, family members, labor unions and employers, according to data from the Department of Housing and Urban Development (HUD).

Even non-profit organizations can provide money for a contribution toward a down payment.

In addition, each state offers various assistance programs for down payments for both FHA buyers in Kentucky lacking the down payment.

People obtaining an Kentucky FHA loan are also eligible for these programs. I.e. Kentucky Housing Dap Funds, Welcome Grants In Kentucky

 

Kentucky FHA Loan Requirements For 2020

Kentucky Mortgage Requirements

Kentucky FHA Guidelines Program for 2020

 

The requirements for Kentucky FHA loans are set by HUD.

  • Borrowers must have a steady employment history of the last two years within the same industry or line of work. Recent college graduates can use their transcripts to supplant the 2-year work history rule as long as it makes sense.
  • Self-Employed will need a 2-year history of tax returns filed with IRS. They will take a 2-year average.
  • FHA requires a 3.5% down payment. Can be gifted from a family member or from a retirement savings plan, or money saved up. Any type of cash deposits is not allowed for down payments. No exceptions to this rule!! This is one of the biggest issues I see in FHA underwriting nowadays.
  •  FHA loans are for primary residence occupancy. Not rental houses.
  • Borrowers must have a property appraisal from an FHA-approved appraiser.
  • Borrowers’ front-end ratio (mortgage payment plus HOA fees, property taxes, mortgage insurance, homeowners insurance) needs to be less than 31 percent of their gross income, typically. You may be able to get approved with as high a percentage as 43 percent. If the Automated Underwriting System gives you an Approved Eligible you can go higher on the debt ratios
  • Borrowers must have a minimum credit score of 580 for maximum financing with a 3.5% down payment
  • Borrowers must have a minimum credit score of 500-579 for maximum LTV of 90 percent with a minimum down payment of 10 percent. Most lenders will not go below 620 score, and very few lenders will go to 580 score. It’s best to work on getting your scores up before you apply or work with a loan officer to improve them.
  • 2 years removed from Chapter 7 is required with good pay history after bankruptcy
  • 1 year removed from Chapter 13 is okay with an excellent pay history with the Chapter 13 plan and permission from the trustee. You will need to qualify with the Chapter 13 payment along with a new house payment. Again, scores will play into your loan pre-approval.
  • Typically borrowers must be three years out of foreclosure and have re-established good credit. Exceptions can be made if there were extenuating circumstances and you’ve improved your credit. If you were unable to sell your home because you had to move to a new area, this does not qualify as an exception to the three-year foreclosure guideline.
  • Max FHA loan in Kentucky is $331,760 in Kentucky for 2020
  • The property must be appraised by a Kentucky FHA-approved appraiser.
  • The property must be safe, sound and secure, in compliance with minimum property standards as defined by the U.S. Department of Housing and Urban Development, or HUD.
  • You may not have delinquent federal debt or judgments, or debt associated with past FHA loans. Caivrs Alert System will show up if you owe the government money.
  • 2020 Kentucky FHA loan limits are as follows:
Kentucky FHA loan limits for 2020 is set at $331,760.00
Kentucky FHA loan limits 2020

All Kentucky Counties received a loan amount increase in 2020 for FHA loans made starting January 1, 2020

The new loan limits are effective with case numbers assigned on
or after January 1, 2020

https://entp.hud.gov/idapp/html/hicostlook.cfm

Why Lenders Use CAIVRS

It is true that your CAIVRS report can help lenders to predict the risk of doing business with you, just like a traditional consumer credit report. But the primary reason lenders check your CAIVRS report is because they are generally required to do so for any applications that involve a federal loan (FHA, VA, USDA, SBA, etc.). Lenders are required to conduct a CAIVRS search because of Title 31 of the United States Code (Section 3720B) bars “delinquent federal debtors from obtaining federal loans or loan insurance guarantees.”

Kentucky FHA Loan Requirements for 2020

 

  • Gift Rules for Down-Payment Sources Guidelines on FHA Mortgage Programs

    One of the biggest obstacles to buying a home for Americans is the down payment. There was a time when you needed a 20% down payment and a high credit score to buy a home. But in 2019, you can buy a home with average to below-average credit and low down payment in some cases. One of the most popular loan programs for these buyers if the FHA loan. A major advantage of the FHA mortgage loan is you can get approved with only a 3.5% down payment with a 580 or higher credit score. If you have a lower score than that, you need a 10% down payment.

    Still, there are situations where the borrower is having trouble coming up with the down payment for the loan. What to do then? FHA guidelines do allow other options. Keep reading to learn more.

    More on FHA Down Payments and Approved Sources

    As we noted above, you are required to have at least a 3.5% down payment to be approved for an FHA loan. The money must be verified by the FHA-approved lender to come from an ‘approved source.’ What is an approved source, anyway? Most people get their down payment from cash reserves, investments, borrow from 401k or IRA, etc. The idea behind verifying where the money came from is to make sure the borrower did not get the down payment from a credit card or payday loan, etc.

    But there are other options for your down payment. The funds also can come from a gift. The gift and the giver do need to meet FHA requirements, but this flexible guideline makes it possible to get into an FHA loan with, technically, zero money down. To determine if the down payment gift can be used or not, it is necessary to check HUD rules. According to HUD 41.55.1 Chapter 5 Section B, for the funds to be a gift, there cannot be any expected repayment of the money.

    Also, FHA will scrutinize the giver of the gift. Chapter 5 of the HUD Code states the cash gift is OK if it comes from your relative; employer or labor union; close friend with a defined interest in you; charitable organization; government agency or public entity.

    FHA also states who cannot give gift funds to you for the down payment. These are the seller; the real estate agent or broker on the deal; the builder or an associated entity.

    Gift Terms Explained

    The gift for your down payment cannot be made based upon paying it back later. You are required to get a gift letter from the person or organization. The letter should state that you are not required to pay the money back. It also should provide the contact information for the borrower, such as name, address, and phone number. Also included should be the bank account from which the funds will be sent.

    The gift donor should be OK with giving a bank statement with the letter. Also, he or she should ensure that the transfer amount matches what is in the gift letter and what is deposited into your account.

    FHA rules are very specific on these areas to ensure that the home buying process through FHA is fair and just. But as long as you follow the FHA rules, you should be able to get help with your down payment from a friend or relative.

    Don’t Have Friends or Family Who Can Help?

    Not every borrower has friends or family who can give them a gift for their down payment. But HUD lists many government programs spread throughout the country in most states that can offer down payment and closing cost help for certain borrowers.

    It also is worth checking if your employer and state have employer-assisted housing. This program can help people with moderate incomes to get a loan to cover closing costs and down payment. Look up FHA  in your state on Google to see what is available.

     

  • Benefits and Drawbacks for an FHA Borrower


    Image result for gift funds fha infographic

    Kentucky FHA Loan Requirements for 2020
    What are the requirements for a FHA loan in Kentucky?
  • 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

     

    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.

     

    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.

     

 

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What does Identity Of Interest mean for FHA Loans?

Does FHA Restrict down payment requirements on Identity of Interest Transactions?

The 85 percent maximum LTV restriction does not apply for Kentucky FHA Loans in regards to FHA Identity-of-Interest transactions under the following circumstances:

👇👇👇

FAMILY MEMBER TRANSACTIONS•  the principal residence of another family member; or  a property owned by another family member in which the borrower has been a tenant for at least six months immediately predating the sales contract. A lease or other written evidence to verify occupancy is required.

BUILDER’S EMPLOYEE PURCHASE• An employee of a builder, who is not a family member, purchases one of the builder’s new houses or models as a principal residence.

CORPORATE TRANSFER • A corporation transfers an employee to another location, purchases the employee’s house, and sells the house to another employee.

TENANT PURCHASE• the current tenant purchases the property where the tenant has rented the property for at least six months immediately predating the sales contract. A lease or other written evidence to verify occupancy is required.

Source: FHA Handbook 4000.1

What You Need To Know About Identity Of Interest Transactions
What You Need To Know About Identity Of Interest Transactions

 

 
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/
— 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

 

Kentucky FHA Loans in the State of Kentucky for 2020.

Advantages of Kentucky FHA Mortgage Loans

  • You can often make a down payment as low as 3.5 percent down to a 580 credit score
  • You can finance a home with a 500 credit score with 10% down payment.
  •  Kentucky FHA loans are assumable meaning that if you have a good rate on your current mortgage and the potential buyer of your home meets FHA guidelines, then he can assume your low rate mortgage
  • Kentucky FHA loans offer streamline refinancing without credit score minimums, verification of income, and no appraisals to refinance to a lower rate making it easier to qualify.
  • Kentucky FHA loans offer flexible terms when it comes to previous bankruptcy or foreclosures. 2 years removed from Chapter 7 with reestablished
  •  credit, or if a Chapter 13, one year in the payment plan is eligible for FHA financing.
  • Foreclosures on a past home. FHA will finance a home 3 years removed from the sale date of your foreclosure property
  • 30 year fixed rate mortgage with usually the best going rates on government insured loans like FHA, VA, USDA etc.
  • No prepayment penalty on Kentucky FHA loans.
  • Higher debt to income ratio requirements when compared to Conventional loans because most Fannie Mae Conventional loans cannot have a higher debt to income ratio than 45% on the back-end
  • You can make an FHA loan anywhere in the state of Kentucky with no geographical restrictions.
  • Will allow for down payment assistance and grants for borrowers minimum down payments in the State of Kentucky through the likes of KHC, Welcome Home Grant, and Kentucky Housing Down Payment Second Mortgage loans.
  • Kentucky FHA loans allow for unoccupied cosigner. For example, lets say you have a daughter that is getting ready to graduate college and does not have the income or credit history established yet to buy a home. FHA allows a family-member to co-sign for them to buy a home and you don’t have to occupy as primary residence. Note, FHA co-singers are not allowed to makeup for some that has bad credit, because they will take the lowest credit scores of both applicants. FHA usually allows for co-singers lack of income purposes only.
  • Can usually close within 30 days just like a regular conventional mortgage. No extra time to close an FHA loan in Kentucky versus other secondary market loans like VA, USDA, Fannie Mae.
  • You can use the FHA loan over and over. You can actually have two FHA loans open at the same time, but it gets tricky on this. Call or text me with more info if you have an FHA loan currently and would like to use FHA Financing again.
  • FHA loans aren’t just for first time home buyers in Kentucky.
 
 

Disadvantages of Kentucky FHA Mortgage Loans

  • There are loan limits in the State of Kentucky on FHA Mortgage loans. The maximum FHA loan in the state of Kentucky is $331,760 for 2020.  So if you were needing to finance a loan over this amount, you would need to look at doing a Conventional loan with the updated 2020 Kentucky State Loan Limits for a Fannie Mae loan being $510,400
  • If buying a condo in Kentucky, FHA requires the condo development be FHA approved. There is a >>>list here of Kentucky FHA approved condos here.
  • Seller must have own the home for 90 days before you can make an offer on the home. This comes into play where the seller bought the home as an investor and rehabbed the property and wants to sell for a quick profit. FHA mandates seller must maintain for 90 days before you can write up an offer on it. Also called FHA Flipping Policy. Read more here  
  • There is mortgage insurance. This is one of the biggest disadvantages for FHA loans.But as I tell most people, nobody rarely has a loan for 30 years, so if it meets your payment and your cash to close requirement, I tell people to go with it because it can be refinanced down the road and you are getting one of the lowers 30 year fixed rates out there. Both upfront and monthly mortgage insurance premiums you have to pay HUD/FHA. These premiums change whenever FHA/HUD replenish their insurance pool to pay claims from defaults, but currently theFHA upfront mortgage insurance premium is 1.75% and monthly is .85% and .80% of the loan amount. If you happen do a 15 year term or shorter, the mortgage insurance is cheaper monthly with .45 and .70 respectively  each month. The upfront mortgage insurance is the same for a 30 year and 15 year at 1.75%
  • FHA Mortgage insurance can be on the loan for life of loan. This is a recent change made in 2016 when FHA lowered there premiums for upfront and monthly mi premiums, but made the mortgage insurance for life of loan for some FHA loans. 
  • If you put down more than 10% on the loan, or have at least 10% equity in the home for a refinance, you only have to pay mortgage insurance for 11 years before it automatically falls off.
  • Obviously you can refinance out of an FHA loan at anytime, since it does not a prepayment penalty, and you can potentially get a refund of your upfront mortgage insurance if paid off within 3 years on sliding scale.
  • I have incorporated some charts below to illustrate the different Kentucky FHA Mortgage Insurance premiums to explain it better.
  • The upfront mortgage insurance is usually financed into the loan, so it will look like you are borrowing more than the standard 3.5% down payment because this is financed into the loan. Some borrowers elect to pay it out of pocket upfront, but I have never seen this done in my 20 years of doing FHA loans in the State of Kentucky
  • Kentucky FHA Loans Greater Than 15 Years MIP Chart
  • 👇
    Base Loan Amt. LTV Annual MIP
    ≤$625,500 ≤95.00% 80 bps (0.80%)
    ≤$625,500 >95.00% 85 bps (0.85%)
    >$625,500 ≤95.00% 100 bps (1.00%)
    >$625,500 >95.00% 105 bps (1.05%)

    Kentucky FHA Loans Less Than or Equal to 15 Years MIP Chart👇

    Base Loan Amt. LTV Annual MIP
    ≤$625,500 ≤90.00% 45 bps (0.45%)
    ≤$625,500 >90.00% 70 bps (0.70%)
    >$625,500 ≤78.00% 45 bps (0.45%)
    >$625,500 78.01% – 90.00% 70 bps (0.70%)
    >$625,500 >90.00% 95 bps (0.95%)

    When can I get the FHA mortgage insurance off my Mortgage Loan? See chart below 👇👇

 

Image result for fha cancellation of mortgage insurance chart kentucky

 

  • Appraisals. On an FHA appraisal, the FHA appraiser has to turn on the utilities to make sure they are in worked order when he gets there. This is different that Conventional loan appraisals. A lot of realtors or buyers think that FHA loans are harder due to appraisals, but honestly, they’re really not. FHA puts these minimum HUD standards in place to make sure the home is in good working order and SAFE to live in. I.e.is there any lead based paint or chipping paint that could lead to poisoning  It is all about Safety with FHA and HUD on these appraisals. The value is determined just like a regular Conventional, USDA, VA appraisals whereas they compare the house to 3 recent homes sold in the area to get a value.
  • Some lenders don’t offer FHA loans due to their complexity and sale on the secondary market, so if you call a local lender in Kentucky and they don’t offer FHA loans, the reason is usually they don’t have the team in place to do them or don’t want to do them due to lack of experience on the secondary government market.
  • Government Liens. FHA will not be an option for you usually if you have unpaid federal tax liens, delinquency  on federal backed-government loans, or a claim with social security etc. FHA loans are ran through aCAVIRS alert system to check to see if you are delinquent on any federal oblation. If so, this swill stop you until you can clear the CAVIRS alert system. For example, I did a loan for a buyer that had a delinquent federal debt with his student loan that happened over 14 years old. It was off the credit report and title search, so I had to switch to a conventional loan to make the home loan work.
  • FHA loans are not good for second homes or investment properties. FHA loans are mainly for single family residence 1-4 unit, that are going to occupied primarily as main home.

In summary, FHA loans have few drawbacks other than the mortgage insurance in my opinion. It is a great first time home buyer program or borrowers with past credit problems to get into a house of their own with very little out of pocket, at a low 30 year fixed rate, and no prepayment penalty

Questions about qualifying for a FHA loan in Kentucky . Give me text, call or email below. Love to help you out on your next home or refinance in Kentucky

 

Read more below about specific FHA Loans in Kentucky.👇👇👇
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

 

 

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/

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Louisville Kentucky Mortgage Broker Offering FHA, VA, USDA, Conventional, and KHC Zero Down Payment Home Loans | October 17, 2018 at 3:54 pm | Tags: fha gift fundsfha loan kentuckyFHA Loans Kentucky Housing First time home buyerfha mortgagefha mortgage loangift funds for fha mortgagekentucky fha loans |

 

 

Gift Funds for a Kentucky FHA Mortgage

Getting Gift Funds for your down payment on a Kentucky FHA Mortgage. 

Image result for gift funds fha infographic

What is the Great Way to do it?

To avoid getting turn down for your Kentucky FHA mortgage loan if you are getting a gift from your mom, dad or another family member, please follow these rules:

The source of the down payment must always show Kentucky FHA gift funds and their source (usually a relative). It cannot be a personal loan or cash.

Common Gift Fund Issues:

Scenario 1 – only gift funds being used in the transaction
Gift amount: $5,000

Common submission problem:

  • Source of down payment submitted as “checking and savings account.”
  • Asset submitted as “checking account” with the financial institution as “Gift from Relative.”

Correct submission practice:

  • Source of a down payment should be submitted as an “FHA Gift from a relative for $5,000”
  • If funds are not yet in the bank account, DU should be submitted as miscellaneous assets, “Gift for $5,000”

Scenario 2 – (gift funds and borrower’s own funds being used in transaction)
Gift amount: $5,000

Common submission problem:

  • Checking account has $7,000 in total – including the gift.
  • Source of down payment submitted as “checking and savings account.”
  • Asset submitted as “checking account”:
    • Financial institution with $7,000 AND
    • Miscellaneous asset, “Gift from relative of $5,000”
  • When ran this way, the gift is put through twice and assets are overstated by $5,000.

Correct submission practice:

  • Source of down payment should be submitted as an “FHA Gift from relative $5000.”
  • Since the gift fund is already in the Borrower’s bank account, DU should be submitted as “checking or savings” in ABC account in the amount of $7,000. DU will recognize that $5,000 of the $7,000 in the account is from a gift. 
Scenario 3 – (gift funds and borrower’s own funds being used in transaction)
Gift amount: $5,000Correct submission practice:
  • Checking account currently has $2,000. The $5,000 gift will be wired to the title company.
  • Source of down payment submitted as “checking and savings account.”
  • Asset submitted as “checking account:”
    • The financial institution with $7,000, AND
    • Miscellaneous asset, “Gift from relative of $5,000.”

Correct submission practice:

  • Source of down payment should be run as “FHA Gift from relative $5,000.”
  • Since gift funds will be provided to the title company and not the borrower:
    • DU should be submitted as checking or savings in ABC account in the amount of $2,000, AND
    • Miscellaneous assets, “gift funds as $5,000.”

 

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American Mortgage Solutions, Inc.
 

Text/call:      502-905-3708

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

 

 

 

What are the requirements to  qualify for a Kentucky FHA Mortgage?

What are the requirements to  qualify for a Kentucky FHA Mortgage in 2020?

Kentucky  FHA loan is a mortgage that is insured by the Government agency under Housing and Urban Development that is called FHA or short for Federal Housing Administration. The loan was established for Kentucky Home buyers will very little or no money down home loans with more  lenient credit score and  income requirements  and tends to be more forgiving about credit history with regard to bankruptcy and foreclosures, higher debt to income ratios and job history with limited work history for home buyers will only 2 years work history or less.

Kentucky FHA Credit Score Requirements and Down Payment Requirements

The Kentucky FHA  home loan  program may accept credit scores as low as 580 and require at least a 3.5 percent down payment of the sales price on a purchase. If you have a credit score below 580, then  a 10 percent down payment or more may be acceptable some FHA lenders in Kentucky , providing you meet all program guidelines in regards to debt to income ratios, assets, and income requirements .  The loan cannot be used for rental properties and does allow for co-signers if they are related.

Remember, these guidelines are set forth by FHA and all lenders do not have to offer these guidelines, to whereas they may a higher credit score or more money down or income restrictions on how much you can qualify for.

Kentucky FHA Mortgage Loans and Bankruptcy or Foreclosure

In case you had a  blemish on your credit report with a bankruptcy, short sale or foreclosure, follow these guidelines.

Kentucky FHA loans requires a passage of two years since the discharge date of a chapter 7 bankruptcy. A chapter 13 bankruptcy may be acceptable after at least 12 months of an on time pay-back period and the borrower has received permission from bankruptcy court to enter the mortgage transaction, and you qualify with the new house payment along with other debts on the credit report.

Three years must pass if you went through a short sale or foreclosure. The date starts when the home was sold, not when you entered the transaction toward foreclosure or short sale period. Sometimes the house will not sell to 1-2 years later after the foreclosure and this is when the passage date starts. Keep this in mind on your next FHA loan pre-approval if you have had a bankruptcy or foreclosure in the past.

Kentucky FHA Loans and Mortgage Insurance

FHA loans have two forms of mortgage insurance which protects the lender for any losses suffered if the borrower defaults on the payment. ne is called upfront mortgage insurance premium (UFMIP) which has a rate of 1.75% of the loan amount. The fee can be added to the loan amount or paid in full as part of your closing costs. In addition, FHA loans also have a 0.8-0.85% (of the loan amount) monthly mortgage insurance. In most cases, this mortgage insurance remains for the life of the loan. To eliminate the mortgage insurance, the borrower must refinance the loan into a non-FHA loan program and have 20% equity in the property.

In addition to the down payment requirements on a FHA loan, they’re closing costs and prepaids to pay at closing. The  seller can contribute up to 6% of the sales price to help the buyer with closing costs and prepaid expenses. Closing costs vary from lender to lender and your prepaids would be the same no matter which lender you choose because this is a function of the property ‘s home insurance premium quote you obtain and the property tax bill on the home set by PVA.

Sometimes the lender can pay a credit toward these expenses at closing with a lender credit which lets the lender credit back to you with a higher rate to reduce the costs of the loan’s costs at closing for out of pocket expenses.

All Kentucky FHA loans are assumable, which means that when the homeowner sells a home, the buyer may be able to take on the existing loan and terms (e.g.: balance, rate and remaining loan amount). Of course, anyone interested in the assumable loan feature must go through the approval process (credit check, income verification) with the current lender on the property. This is a very rare occurrence because most sellers are going to sell the home for more than they owe on it.

Kentucky FHA Loan Requirements

 

 

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). USDA Mortgage loans only offered in Kentucky.

All loans and lines are subject to credit approval, verification, and collateral evaluation

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