BREAKING: HUD suspends FHA mortgage insurance premium cut

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That didn’t take long! BREAKING: HUD suspends FHA mortgage insurance premium cut

In first moments of Trump presidency, HUD makes it official: FHA mortgage insurance premium cut is suspended “indefinitely.”

The Department of Housing and Urban Development announced it suspended the reduction of Mortgage Insurance Premiums, effective immediately. HUD sent out an announcement just an hour after President Trump was sworn in on Friday, stating that the cuts have been suspended indefinitely. Click the headline for more.

Source: BREAKING: HUD suspends FHA mortgage insurance premium cut

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Kentucky FHA Loan Requirements for 2018

Benefits and Drawbacks for an FHA Borrower

Kentucky HUD $100 Down FHA Program for 2018

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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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  • 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 2018, you can buy a home with average to below average credit and a 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 note 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 EAH in your state on Google to see what is available.

    Experts say that down payment help is available for nearly 90% of homes in the US. There is a good chance that you can get help on your down payment through one of these organizations. References: https://www.fha.com/fha_article?id=441

  • Benefits and Drawbacks for an FHA Borrower
  • 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.

22 New Fannie Mae Homes in Kentucky

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$25,000Just Listed

3801 Herd Elias Rd
Tyner, KY 40486

3 Beds |2 Baths | 1634 sq. ft.

View Property

 

$79,900Back on Market

36 Sweetbriar Ave
Florence, KY 41042

3 Beds |1 Baths | 1288 sq. ft.

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$40,000Back on Market

2204 Parkwood Rd
Louisville, KY 40214

2 Beds |1 Baths | 624 sq. ft.

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$55,000Price Reduced

504 5th Ave
Frankfort, KY 40601

3 Beds |1 Baths | 1056 sq. ft.

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$108,900Price Reduced

1927 Brooklyn Chapel Rd
Morgantown, KY 42261

3 Beds |2 Baths | 2097 sq. ft.

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$288,900Price Reduced

7154 Thornwood Ln
Florence, KY 41042

4 Beds |3 Baths | 2776 sq. ft.

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$64,900Price Reduced

517 Washington Ave
Paintsville, KY 41240

3 Beds |2 Baths | 2242 sq. ft.

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$135,500Price Reduced

136 W Main St
Mount Sterling, KY 40353

5 Beds |2 Baths | 3641 sq. ft.

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$42,900Price Reduced

147 Williams Branch
Hazard, KY 41701

3 Beds |2 Baths

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$39,900Price Reduced

158 Baker Ave
Hazard, KY 41701

3 Beds |2 Baths | 2416 sq. ft.

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$19,000Price Reduced

1229 Hermes Ave
Covington, KY 41011

1 Beds |1 Baths

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$79,000Price Reduced

2116 Quillman Rd
Louisville, KY 40214

4 Beds |1 Baths | 1440 sq. ft.

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Kentucky FHA Loan Requirements For Loan Approval.

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FHA Handbook 4000.1 Updates

Administration (FHA) Single Family Housing Policy Handbook 4000.1. These updates are effective September 30, 2016 and

 Clarification that an Upfront Mortgage Insurance Premium (UFMIP) refund calculation applies even if original UFMIP was
not financed.
 Mortgage Debt Not Included in Credit Report: Clarification that a manual downgrade is not required when there is no history of late payments, as detailed below.
o Not currently delinquent; and
o No 30 day late payments within 12 months of the case number assignment date; and
o No more than 2 x 30 day late payments within 24 months of the case number assignment date.
 A link has been added in the FHA Product Description from Mortgage Payment History requirements to “Credit History
Requirements for Manually Underwritten Loans.”
Appliances that add contributory value must be operable.
 Mechanical components and utilities: The appraiser must report the utility, safety, and capacity of the mechanical systems.
The appraiser must observe and operate all applicable mechanical systems and utilities. In conjunction with this guidance,
existing FHA Handbook guidance on the following topics will be added:
o Electrical System
o Heating and Cooling
o Plumbing
o Utilities

If you have questions about qualifying as first time home buyer in Kentucky, please call, text, email or fill out free prequalification below for your next mortgage loan pre-approval.


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 views of my employer. Not all products or services mentioned on this site may fit all people
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Kentucky FHA Mortgage Guidelines Changes for 2015

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Did You Know that Kentucky Mortgage FHA Income Requirements changed in October 2015?

• Job Changes –

FHA loan rules instruct lenders to, favorably consider a borrower for a mortgage if he/she changes jobs frequently within the same line of work, but continues to advance in income or benefits. In this instance, income stability takes precedence over job stability.

And FHA loan applicants who have been out of a job for a while but have since returned to employment may have their income considered effective and stable when recently returning to work after an extended absence if he/she:
–is employed in the current job for six months or longer, and
–can document a two year work history prior to an absence from employment using traditional employment verifications, and/or copies of W-2 forms or pay stubs.

Note: An acceptable employment situation includes an individual who took several years off from employment to raise children, then returned to the workforce.

• Employment Gaps –

For borrowers with gaps – FHA does not require a minimum length of time that a borrower must have held a position of employment. However, the lender must verify the borrowers employment for the most recent two full years, and the borrower must:
–explain any gaps in employment that span one or more months, and
–indicate if he/she was in school or the military during the most recent two full years, providing evidence supporting this claim, such as college transcripts, or discharge papers.

When analyzing the probability of continued employment, the lender must examine –the borrowers past employment record
–qualifications for the position
–previous training and education, and
–the employers confirmation of continued employment

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Joel Lobb
Senior Loan Officer
(NMLS#57916)

 

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

 

 

 

 

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

Louisville Kentucky FHA Seller Contributions and Closing Costs

Louisville Kentucky FHA Seller contributions can make a big impact for a first time home buyer struggling to save the required 3.5% down payment let alone all other related fees. A seller who understands the benefit and has the ability to offer assistance could make the difference between purchasing a home now and continuing to rent.

Louisville Kentucky FHA Maximum Seller Contributions

Louisville Ky FHA guidelines allow the seller to contribute up to 6% of the sales price toward the buyers closing costs, discount points, and prepaids. The seller is also allowed to pay the upfront mortgage insurance premium (MIP) which is typically rolled into the cost of the loan.

Common FHA Closing Costs:

Below is a list of customary fees associated with an Kentucky FHA loan. This is only an example of costs the seller may pay on your behalf and does not include all allowable costs per Kentucky FHA guidelines. Make certain your lender provides you with an itemized list known as a Good Faith Estimate.

  • Origination fee – The maximum origination fee is 1 percent of your loan amount, or 2 percent of the loan amount if it’s a home equity conversion loan.
  • Appraisal fee to determine the value of the home
  • Costs associated with your mortgage credit report
  • Attorney’s fees, title search fees, title insurance – Attorney’s fees are not typical in Colorado, but title fees are and can range from $250 to $1,500 depending on the home’s location.
  • Prepaid interest – You will pay interest accrued between the closing date and the end of the month.
  • Upfront premium for your Kentucky FHA mortgage insurance. This will be 1.5 percent of the loan amount, but you may be able to roll it into your loan.
  • Escrow amounts for future taxes and insurance – You will be required to pay 1 year of homeowner’s insurance and a few months of your property taxes.
  • Discount points (if applicable)
  • Up Front Mortgage Insurance Premium (MIP)
  • Buy Downs (cost incurred for a permanent or temporary interest rate buy down)While the total amount of your closing costs might seem like a hefty price to pay, keep in mind what you’re getting in return:A home you can call your very own.