Kentucky FHA Loans with A Chapter 13 Bankruptcy and Credit Score Down Payment Requirements

A Chapter 13 bankruptcy does not disqualify a Kentucky Borrower from obtaining an Kentucky FHA-insured Mortgage, if at the time of case number assignment at least 12 months of the payout period under the Chapter 13 bankruptcy has elapsed.
The Borrower’s payment performance must have been satisfactory and all required payments have been made on time; and the Borrower has received written permission from bankruptcy court to enter into the mortgage transaction.
Kentucky FHA Loans Highlight Info below:
  • Closing Loans in less than 20 days!
  • Gift Funds with no restrictions
  • NO Minimum Tradelines with an AUS! Automated Underwriting System Approval
  • Manufactured Homes OK too with some lenders I work with

  • Manual Underwrites OK
  • Cash Out to 85% LTV to 580 score
  • Down Payment Assistance Programs OK with KHC Down Payment Assistance 620 credit score needed and 45% back-end dti

 

f4517ed9-37c8-41e8-ae94-505616e2f541-original (2)

HA loans can be the long-sought answer for first-time home buyers with lower credit scores and low down payments. The question remains, though: Do you have a FICO credit score that would qualify you for an FHA loan? Here’s what you need to know.

Lowest allowable credit score: 500

You’ve got to bat at least 500 to get into this game. With a FICO score below 500, you won’t qualify for a Federal Housing Administration loan. And even with that, you won’t get the full low-down-payment benefit that FHA borrowers with higher scores will.

Better credit score = lower down payment

If your credit score is just a little bit higher, you get a major break on the down payment.

“To qualify for FHA’s minimum down payment of 3.5%, a borrower must have a credit score of 580 or above,” says Brian Sullivan, a public affairs specialist for the Department of Housing and Urban Development.

“Between 500 and 579, the borrower must put 10% down,” Sullivan says.

 

It’s not just about your credit score

“FHA’s standard underwriting criteria is rolled up into a ‘scorecard’ that considers many factors related to income and debt,” Sullivan adds. “Under certain conditions, particularly when a borrower doesn’t fit into our general scorecard requirements, a manual underwriting is required.”

That means a lender has to pull your file out of its automated loan process and review it by hand, and lenders aren’t always eager to do that.

 Required scores can vary by lender

The credit score thing may seem pretty cut and dried, but hang on. The fact is: “Lenders set the interest rate, not FHA,” Sullivan cautions.

Lenders set the interest rate, not FHA.

BRIAN SULLIVAN, HUD SPOKESMAN

“FHA is a government mortgage insurance company,” Sullivan explains. The FHA can set its standards and commit to insure mortgages that meet those requirements, “and yet, lenders may add on what are called ‘credit overlays’ on top of our standards,” he adds.

So lenders may require a higher credit score to make a loan or stack on additional credit qualifications. To make sure you get the best interest rate and loan terms, shop more than one FHA-approved lender and compare.

Kentucky FHA loan Credit Score requirements

Minimum down payment: 3.5% to 10% depending on the credit score
Minimum credit score: 500 to 579 requires 10% down payment, 580 Credit score or higher 3.5% down payment. 
Maximum debt-to-income ratio: determined by AUS or a manual underwrite will be 31% and 43%

FHA loans are great for first-time buyers or people without sterling credit or much money. Created by the Federal Housing Administration, these loans are insured by this government agency, so that guarantees that lenders won’t lose their money if borrowers default on their mortgage. In short, it allows lenders to take on riskier borrowers, while also helping hopeful home buyers in less-than-ideal circumstances achieve the dream of homeownership.

FHA loans may be a boon to home buyers (particularly first-timers) who might not qualify for a loan otherwise, but they do have a few disadvantages. For one, they’re usually capped at $417,000 (in certain high-cost areas, the limit is $625,000)—meaning you may have limited buying power. Also, because the federal government insures these loans, you have to pay an upfront mortgage insurance premium (currently, the fee is about 1.75%) and annual mortgage insurance (typically 0.85% of the borrowed loan amount), which remains throughout the life of the loan (or until you can refinance the loan into a conventional mortgage).

Kentucky FHA loan advantages

Unlike conventional home loans, FHA loans are government-backed, which protects lenders against defaults, making it possible to for them to offer prospective borrowers more competitive interest rates on traditionally more risky loans.

An FHA home loan works like any other mortgage in that you borrow a certain amount of money from a lender and pay it back, typically over 30 years. The main distinction is that FHA loans charge both upfront and monthly mortgage insurance premiums, often for the life of the loan.

However, they also come with low down payment and credit score requirements, making them one of the easier home loans to qualify for. Oh, and FHA interest rates are some of the lowest around!

Let’s explore some of the finer details to give you a better understanding of these common loans to see if one is right for you.

 

Can I get an FHA loan with bad credit?

Borrowers with credit scores of 580 and above are eligible for maximum financing, or just 3.5% down. This is the low-down payment loan program the FHA is famous for.

And a 580 credit score is what I would define as “bad,” so the answer to that question is yes.

What if my credit score is below 580?

If your credit score is between 500 and 579, your FHA loan is limited to 90% loan-to-value (LTV), meaning you must put down at least 10%. This is why you’ll probably want to aim higher.

If your credit score is below 500, you are not eligible for an FHA loan.

I can’t find a lender willing to give me an FHA loan with a 500 credit score.

As noted earlier, these are just FHA guidelines – individual banks and mortgage lenders will likely have higher minimum credit score requirements, so don’t be surprised if your 580 FICO score isn’t sufficient (at least one lender now goes as low as 500).

Can I get an FHA loan with no credit score?

Surprisingly, yes! The FHA makes exceptions for those with non-traditional credit and those with no credit scores whatsoever. You can even get maximum financing (3.5% down) as long as you meet certain requirements.

The FHA is a little tougher on this type of borrower, imposing lower maximum DTI ratios, requiring two months of cash reserves, and they do not permit the use of a non-occupant co-borrower.

If you have rental history, it needs to be clean. If not, you still need to create a 12-month credit history using Group I credit references (rent, utilities, etc.) or Group II references (insurance, tuition, cell phone, rent-to-own contracts, child care payments, etc.).

You are allowed no more than one 30-day late on a credit obligation over the past 12 months, and no major derogatory events like collections/court records filed in the past 12 months (other than medical).

Assuming you can muster all that, it is possible to get an FHA loan without a credit score. Of course, it’s probably a lot easier if you have a credit score (and a good one at that!).

Since the mortgage crisis struck, FHA loans have become increasingly popular, essentially replacing subprime lending, largely because of their relatively easy underwriting requirements and government guarantee.

But make sure you compare FHA loans with conventional loans as well. There will be cases when the benefit of one outweighs the other.

FHA loans are not guaranteed to be a better deal than other mortgages, so take the time to shop around. And watch out for unscrupulous FHA-qualified lenders who may attempt to misinform you.

Sometimes certain types of loan benefit them more than you, so knowing which is best for you before you speak to an interested party might be the best way to go

gotquestion-1

Joel Lobb
Mortgage Loan Officer
Individual NMLS ID #57916
 
American Mortgage Solutions, Inc.
Company NMLS ID #1364
 
 

Text/call:      502-905-3708
email:          kentuckyloan@gmail.com

 
 

 

 

Advertisements

What is the minimum credit score I need to qualify for a Kentucky FHA, VA, USDA and KHC Conventional mortgage loan in 2018?

What is the minimum credit score I need to qualify for a Kentucky FHA, VA, USDA and KHC Conventional mortgage loan in 2018?

Louisville Kentucky Mortgage Loans

03_your_interest_rate_over_the_life_of_your_loan02_by_the_numbers_what_your_fico_score_meanscta_how_to_improve_your_credit_score

Four things to know about qualifying and closing a mortgage loan for Kentucky First Time Home Buyers

Kentucky First Time Home Buyers Questions Answered Below:

1.  Do Mortgage Interest Rates Change Daily?

Just like the gas prices at the pump,  mortgage rates can change daily or throughout the day.  Typically mortgage rates are published at 10-11 am daily by most lenders and you can lock up through the close of business which is usually around 6-7 PM.  Mortgage rates can change up or down throughout the day based on various financial, economics, and geopolitical news in the US Financial markets and World markets. Generally speaking, good economic news is bad for rates and vice versa, bad economic news is good for mortgage rates.

The good news is this: Once you find a home and get it under contract, you can lock your mortgage loan rate. Typically it takes about 30-45…

View original post 1,402 more words

Property Flipping Rules for Mortgages for FHA VA USDA Conventional Appraisals

appraisal flipping, fha appraisals, property flipping fha, property flipping va, property usda flipping, rhs appraisals, usda appraisals.

Kentucky First Time Home Buyer Loan Programs for FHA, VA, KHC, USDA, RHS, Fannie Mae Home Mortgage Loans in Kentucky for 2018

FHA MORTGAGE LOANS AND FLIPPING RULE FOR APPRAISALS
Resales Occurring 90 Days or Fewer after Acquisition:
 Not eligible for FHA financing
Resales occurring between 91 days and 180 Days after Acquisition:
 Obtain 2nd appraisal if resold between 91 to 180 days after acquisition
 Obtain 2nd appraisal if resale price is 100% or more over price paid by seller
 If 2nd appraisal is more than 5% lower than value of first appraisal, the lower value must be used
 Borrower not allowed to pay for 2nd appraisal
Exceptions to FHA Flipping Rules:
 Property purchased by an employer or relocation company due to relocation of an employee
 Resales by HUD – REO program
 Sales by other government agencies (i.e., IRS, court-ordered, DEA, etc.)
 Sales of non-profit agencies approved to purchase HUD properties
 Acquisition due to inheritance
 Sales of properties by federally chartered…

View original post 296 more words

HUD Awards $19 Million to Ky. Homeless Programs

LOUISVILLE, Ky. (1/12/18) — The U.S. Department of Housing and Urban Development announced $19.38 was awarded Thursday to support 105 homeless housing and service programs in Kentucky.

 

SurfKY.com is a free local news source highlighting Caldwell, Calloway, Christian, Crittenden, Daviess, Henderson, Hopkins, Livingston, Lyon, Marshall, McCracken, McLean, Muhlenberg, Ohio, Trigg, Wester counties in Kentucky. SurfKY.com is your portal for free local and statewide news, sports, obituaries, and community information.

Source: HUD Awards $19 Million to Ky. Homeless Programs

$10,000 Down Payment Assistance Grant for 2017 Kentucky Home buyers HHF DAP

$10,000 HHF DAP Available
Kentucky Housing Corporation (KHC) is proud to announce a new round of Hardest Hit Fund (HHF) Down payment Assistance Program (DAP), a total of $5 million will be available for new reservations beginning today, Tuesday, January 9, 2018, at 10 am, ET. The HHF DAP will be available on a first-come, first served basis, based on the completion of the first mortgage and HHF DAP Reservations. All program guides have been updated to reflect the availability of the HHF DAP.

HHF DAP Program Guidelines:
$10,000, zero-percent interest, forgivable second mortgage loan with a five-year term.
Property must be located in one of the four counties:
Christian
Hardin
Jefferson
Kenton
No New-Construction properties allowed.
Property has to have been previously occupied.
Secondary Market Purchase Price and Income Limits apply.
Borrower must be a first-time home buyer (no ownership interest in the last three years).
Most recent three-year federal tax returns or tax transcripts required.
Pre-purchase homebuyer education required for all borrowers.
Dodd-Frank Certification must be completed.
Terms & Conditions form (prints with the HUD-1, Note and Mortgage)
This form highlights a few of the program requirements, such as occupancy/ownership status and forgiveness period.

To successfully originate KHC mortgages you should begin with prequalified applicants and
properties meeting FHA, VA, RHS, or Fannie Mae Conventional guidelines. The applicant (s)
must be purchasing or refinancing a single family, one unit, and owner-occupied property,
located in Kentucky. Then follow the steps below….
1. The purchase price or refinance amount is at or below:
 $282,000 with Secondary Market
 $253,800 with KHC’s Homebuyer Tax Credit (purchase only)
2. The applicant (s) meet KHC’s simple credit overlays:
 660 credit score for Conventional
 620 credit score for FHA, VA, and RHS
 Max ratio caps for government loans of 40/45%
 Max ratio caps for conventional loans of 40/50%
 AUS Approval required except on RHS

Louisville Kentucky Mortgage Loans

$10,000 Down payment Assistance Grant for Kentucky First Time Home buyers 2017Hey everyone, KHC just released another $10,000 Down  Payment Assistance Grant for 2017 Kentucky Home buyers for  that’s available on a first come first

Source: $10,000 Down Payment Assistance Grant for 2017 Kentucky Home buyers HHF DAP

View original post

Beshear: Nearly 550 Kentuckians Faced With Home Foreclosures Eligible for Payments

In Kentucky, 548 borrowers are eligible for a payment:

A total of 300 who lost their property – 66 Kentuckians in 2009; 80 Kentuckians in 2010; 97 Kentuckians in 2011; and 57 Kentuckians in 2012. These Kentuckians will qualify for a minimum $840 payment from the settlement.

A total of 248 whose foreclosures had not been finalized – 28 Kentuckians in 2009; 55 Kentuckians in 2010; 62 Kentuckians in 2011; and 103 Kentuckians in 2012. These Kentuckians will receive a minimum $285 payment.

A settlement administrator on the case will contact Kentuckians eligible for payments.

The settlement requires PHH to adhere to comprehensive mortgage servicing standards, conduct audits and provide audit results to a committee of states.

The settlement does not release PHH from liability for conduct that occurred beginning in 2013.

“As Attorney General, I am committed to protecting Kentucky families,” Beshear said. “This settlement holds PHH accountable for its past abusive practices, and it provides some relief to Kentuckians. Tough standards will also require PHH to treat people fairly in the future.”

Kentucky First Time Home Buyer Loan Programs for FHA, VA, KHC, USDA, RHS, Fannie Mae Home Mortgage Loans in Kentucky for 2018

FRANKFORT, KY. – Attorney General Andy Beshear today announced nearly 550 Kentuckians who faced foreclosures on their homes from New Jersey-based PHH Mortgage Company are eligible fo…

In Kentucky, 548 borrowers are eligible for a payment:

A total of 300 who lost their property – 66 Kentuckians in 2009; 80 Kentuckians in 2010; 97 Kentuckians in 2011; and 57 Kentuckians in 2012. These Kentuckians will qualify for a minimum $840 payment from the settlement.

A total of 248 whose foreclosures had not been finalized – 28 Kentuckians in 2009; 55 Kentuckians in 2010; 62 Kentuckians in 2011; and 103 Kentuckians in 2012. These Kentuckians will receive a minimum $285 payment.

A settlement administrator on the case will contact Kentuckians eligible for payments.

The settlement requires PHH to adhere to comprehensive mortgage servicing standards, conduct audits and provide audit results to a committee of states.

The settlement does not release PHH from…

View original post 62 more words