How to qualify for a Kentucky FHA Home Loan ?

How to qualify for a Kentucky FHA Home Loan ?

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FHA stands for the Federal Housing Administration which is a government agency created to increase home-ownership across the United States all the way back in 1934. The agency itself doesn’t offer home loans but insures loan that are offered by private lenders (i.e. mortgage companies).

It’s important to understand the different types of loan programs available to you and what benefits and drawbacks there are to each type.

For example, if you’re looking to find a fixer upper this may not be the right loan program for you. But an FHA loan may be a better fit for you if you have little cash saved up for a down payment or if you don’t have a high credit score.

Kentucky FHA loan requirements:

  • At least 18 years old to apply
  • No age limit. just must be 18 years of age to apply.
  • Must occupy the home as a primary residence, no rental homes or investment property
  • An appraisal must be done by an FHA-approved appraiser.Typically FHA appraisal in Kentucky costs anywhere from low-end $325 to $525 with most FHA lenders in KY.
  • Home inspection is not required
  • Termite inspection not required
  • 2 years removed from Chapter 7 bankruptcy, and 1 year in Chapter 13 bankruptcy is possible to get a loan while in bankruptcy
  • Foreclosure or short sale on previous home mortgage requires 3 years removal from those dates.
  • Mortgage insurance (MIP) is required
  • Upfront Mortgage Insurance Premium is 1.75% and monthly mortgage insurance is .85% or .80% depending on loan term and loan to value.
  • Mortgage insurance is for life of loan.
  • No matter your credit scores, everyone pays the same mortgage insurance premiums.
  • Must have 2 years of employment history proving a reliable source of income
  • 500 FICO score requirement with at least 10% down payment
  • 580 FICO score requirement with at least 3.5% down payment
  • Gifts and down payment assistance programs are allowed to meet your down payment requirements. Cannot come from seller, but seller can contribute up to 6% of the sales price toward buyer’s closing costs and prepaids.
  • Student loan payments are factored into the debt-to-income ratio when applying. Typically if loans are deferred, or in an income=based repayment plan, the FHA underwriters will use 1% of the outstanding balance, which sometimes can make it difficult to qualify.
  • Your debt-to-income ratio must not be higher than 31% or total debt obligation cannot be higher than 43% of your current income. This is for a manual underwriter, meaning that if the AUS underwriting system by mortgage lenders will approve you for a higher debt to income ratio, that is fine.

 

New FHA loan limits for 2019 in Kentucky:

The Kentucky FHA has a maximum loan limit it will insure. These Kentucky FHA loan limits are updated each year and are influenced by the conventional loan limits set by Fannie Mae and Freddie Mac. Other things like the type of home (i.e. duplex or single-family) can also affect the FHA loan limits. *

For low-cost areas, the loan limit increased from $294,515 to $314,827 for all Kentucky Counties in 2019. . You can check the FHA loan limits in your area here.

 

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. Rates are subject to change and are subject to borrower(s) qualification.

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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.

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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