Kentucky FHA Loan Requirements for 2017

Kentucky HUD $100 Down FHA Program for 2017

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Kentucky FHA Loan Requirements

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 family member or from retirement savings plan, or money saved-up. Any type of cash deposits are 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 a 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 trustee. You will need to qualify with the Chapter 13 payment along with 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 between $275,000 to $299,000 depending on the county in Kentucky
    I can answer your questions and usually get you pre-approved the same day.

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  • Call or Text me at 502-905-3708 with your mortgage questions.
    Email Kentuckyloan@gmail.com





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    Joel Lobb
    Senior  Loan Officer
    (NMLS#57916)
    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. Manufactured and mobile homes are not eligible as collateral.

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Underwriting Rental Income for a Kentucky Mortgage Loan in 2014

Underwriting Rental Income.

 

Rental income can be used if all of the following conditions apply:

• The borrower has a two year history of managing rental properties as demonstrated by two years personal tax returns (1040’s) and schedule E.
• If the borrower wishes to qualify with rental income on the subject property in an investment transaction, they must provide evidence of rent loss insurance to cover six month’s rent in the event of a property vacancy.
• If the borrower owns a rental property that is not yet reflected on schedule E, they may use income from this property to qualify with a lease agreement. However, if the borrower does not have a two year demonstrated history of managing rental properties, this guideline is not valid. Also note, when a property is reflecting on the schedule E of the personal tax returns, lease agreements may not be used to determine qualifying income for any reason.

Once the gross rental income has been calculated from the schedule E of the tax returns OR using 75% of the monthly lease payment, you must deduct the monthly housing expense to determine net rental income. Net rental income is the final figure that is used to calculate the total debt ratio.

For example:

• Using a 24 month average of the calculated schedule E the underwriter has determined there is $300 monthly gross rental income.
• The underwriter then verifies the monthly PITI (principle, interest, taxes, and insurance) of $450 on the rental property. Note: If the rental property has a mortgage insurance or homeowners association dues expense, these amounts will be included in the PITI calculation.
• $300 gross rental income minus $450 monthly PITI nets a rental loss of $150. As a result, a $150 monthly liability is added to the total debt ratio.
This calculation is commonly referred to as “washing” the housing expenses on the property. Even though we still have a net loss that is included in the debt ratio, we were able to “wash” $300 of the $450 monthly PITI thereby improving our total debt ratios.

— 


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

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