Kentucky Mortgage Requirements for FHA, VA, USDA and Fannie Mae
Getting a FHA loan in Kentucky in 2019 you will be confronted with minimum credit score requirements set forth by FHA and the lender. Even though FHA will insure the mortgage loan at a certain credit score, you will see that lenders will create “credit-overlays” to protect their risk and ask for a higher credit score.
So keep in mind when you are getting an FHA loan in 2019 some lenders will have higher credit score minimums in addition to the FHA Mortgage Insurance program.
For a Kentucky Homebuyer wanting to purchase a home or refinance their existing FHA loan, FHA requires a 3.5% down payment and the borrower must have a 580 FICO Credit Score. If the score is below 580, then you would need 10% down and still qualify on a manual underwrite.
You must have a FICO score of at least 500 to be eligible for a Kentucky FHA loan. If your FICO score is from 500 to 579, your down payment on the loan is 10 percent of the loan.
If your FICO score is 580 or higher, your down payment is only 3.5 percent. If your credit score is less than 580, it may be more cost-effective to take the necessary steps to improve your score before taking out the loan, rather than putting the money into a larger down payment.
How do they get the credit score: There are three main credit bureaus in the US. Equifax, Experian, and Transunion. The three scores vary but should be relatively close as long as the same creditors are reporting to the same bureaus.
You will get a variation in the scores due to all creditors or collection companies don’t report to all three bureaus. This is why they take the mid score. So if you have a 590 Experian, 680 Equifax, and 620 TransUnion, your qualifying credit score would be 620
Based on my experience with lenders that I deal with in Kentucky on FHA loans, most lenders require 620 middle credit score for consideration for loan approval.
How do they get the score: They take the mid score, so if you have a 590 Experian, 680 Equifax, and 620 TransUnion, your qualifying score would be 620.
If your score is below 620, a manual underwrite is where the AUS (Automated Underwriting System) refers your loan to a human being, and they look at the entire file to see if they can overturn and approve the mortgage loan because the Desktop Underwriting Automated Software could not approve you.
With scores below 620, they typically will want to verify your rent history, have no bankruptcies in the last two years, and no foreclosures in the last 3 years.
If you have had any lates since the bankruptcy this will probably result in a denial on a refer manual underwrite file.
Your max house payment will be set at 31% of your gross monthly income, and your new house payment plus the bills you are paying on the credit report cannot be more than 43%.
Typically, on scores below 620 for FHA loans, they will also look at reserves or money you have saved up after the loan is made to try and qualify you. For example, if you have a 401k or savings account that has at least 4 months reserves (take your mortgage payment x 4) and this would equal your reserves. They look at this as a rainy day fund and could help you keep up on your bills if you were unemployed or could not work.
Maximum FHA loan limits in Kentucky are set around $314,500 and below.
If you are looking to take a FHA loan in 2019 to buy or refinance a home in Kentucky, please contact me below with your questions about the credit score requirements and how they affect your loan approval.
What credit score do you need to qualify for a Kentucky mortgage loan?
The first thing to keep in mind is that qualifying for a mortgage involves a lot more than just a credit score. While your FICO score is a very important ingredient, it is just one factor. Lenders also look at your income and level of debt, among other things.
As a rule of thumb, however, a credit score below 620 will make buying a home very difficult. A FICO score below 620 is considered sub-prime. In the past, there were mortgage companies that specialized in sub-prime mortgages. Because of the challenges in the credit market over the last year or so, however, sub-prime loans have become difficult if not impossible to obtain.
A FICO score between 600 and 640 is considered fair to good credit. But keep in mind, this range of credit scores does not guarantee you will qualify for a mortgage, and if you do qualify, it won’t get you the lowest interest rate possible. Still, to buy a home aim for a score of at least 620, recognizing that other factors weigh in the decision and that some banks may require a higher score.
What credit score do you need to get a low rate mortgage?
It uses to be that a score of about 720 would yield the lowest mortgage rates available. Today, the best rates kick in with a FICO score of 760. And interest rates go up significantly as your credit score drops. To give you an idea, the following table shows current rates by credit score and calculates a monthly principal and interest payment based on a $300,000 loan:
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
Kentucky FHA loans guidelines for after a bankruptcy, foreclosure, short-sale below:
- Foreclosures: 3 years from the foreclosure completion date and transferred back to the lender to the credit report date
- Short Sale: 3 years from the title transfer date
- Bankruptcy Chapter 7: 2 years from the discharge date. If a property is surrendered in chapter 7 bankruptcy, it is considered to be possible foreclosure which could increase waiting time
- Bankruptcy Chapter 13: 1 year wait with a scheduled payment plan on liabilities factored into debt-to-income ratio and bankruptcy court approval for mortgage process or 2 years from discharge date
Senior Loan Officer
phone: (502) 905-3708
- A cancelled check, evidence of wire transfer or other draw request showing that prior to or at the time of closing the Government Entity had authorized a draw of the funds on its account provided towards the borrower’s required Minimum Cash Investment from the Government Entity’s account; or
- A letter from the Government Entity, signed by an authorized official, establishing that the funds provided towards the borrower’s required Minimum Cash Investment were funds legally belonging to the Government Entity at or before closing
- A statement that the Government Entity has, at or before closing, incurred alegally enforceable liability as a result of its agreement to provide the funds towards the borrower’s required Minimum Cash Investment;
- A statement that the Government Entity has, at or before closing, incurred alegally enforceable obligation to provide the funds towards the borrower’s required Minimum Cash Investment; or
- A statement that the Government Entity has, at or before closing, authorized a draw on its account to provide the funds towards the borrower’s required Minimum Cash Investment.
- Kentucky Mortgage Underwriting Guidelines updated for 2013 (kentuckyfirsttimehomebuyer.com)
- 2013 Louisville Kentucky Mortgage programs (louisvillekentuckymortgagerates.com)
- Kentucky FHA Mortgage Guidelines for 2013 (louisvillemortgageguide.com)
- Low and No Down Payment Mortgages Are Still Available (debtroundup.com)
- Different Types of Mortgage Loans available for 2013 Kentucky Home buyers and homeowners (kentuckyfirsttimehomebuyer.com)
- Kentucky Single Family Housing USDA RHS Guaranteed Loan Program Update 2011 (kentuckyusdaloan.com)
- See You At The MBA Secondary Conference! Stop By Our Panel or Booth! (kentuckyusdaloan.com)
- #CRE, #CGREA, Commercial Appraiser FW: FHA INFO #13-27: New Mortgagee Letters 13-14 and 13-15 / Industry Call / Training Opportunities (commercialappraiser.typepad.com)
- 4 Ways You Might Be Hurting Your Credit Score (And What You Can Do About It) (kentuckyusdaloan.com)
- 4 Things Every Borrower Needs to Get Approved for a Mortgage or Home Loan In Kentucky (mylouisvillekentuckymortgage.com)
Thanks to previous changes to the FHA program, borrowers now have to pay mortgage insurance premiums longer than ever.
The length of time on which you’ll pay mortgage insurance premiums on your FHA loan is as follows:
|Mortgage Term||Loan to Value Ratio||Length of Mortgage Premium|
|15 years or shorter||Up to 90%||11 years|
|15 years or shorter||Greater than 90%||Full loan term|
|Greater than 15 years||Up to 90%||11 years|
|Greater than 15 years||Greater than 90%||Full loan term|
Kentucky FHA PMI Rates Changes 2013
Then that that TOTAL Loan Amount (including your Upfront PMI) and multiply that by the Annual FHA PMI Rate. Divide that number by 12. You will have THAT amount added to your Principal and Interest Payment with loans that have case numbers pulled after the end of March 2013.
Additionally, you will note that the new effective annual FHA PMI rates for loans with an LTV of less than or equal to 78 percent and with terms of up to 15 years have gone from ZERO to .45%. The new annual FHA PMI changes ONLY for these loans is effective for case numbers assigned on or after June 3, 2013.
Term > 15 Years
|Base Loan Amount||
|≤$625,500||≤ 95.00%||April 1, 2013||1.30 %||1.75%|
|≤$625,500||> 95.00%||April 1, 2013||1.35 %||1.75%|
|Above $625,500||≤95.00%||April 1, 2013||1.50%||1.75%|
|Above $625,500||> 95.00%||April 1, 2013||1.55%||1.75%|
|NOTE! Guideline Change. NO MATTER What the LTV is, there is a FHA PMI fee|
Term > 15 Years
|Base Loan Amount||
|≤$625,500||≤ 90.00%||April 1, 2013||
|≤$625,500||> 90.00%||April 1, 2013||
|Above $625,500||≤ 90.00%||April 1, 2013||
|Above $625,500||> 90.00%||April 1, 2013||
|Exception: New Streamline Refinances previously endorsed on or before May 31,2009|
|Base Loan Amount||
|June 11, 2012||
Note that FHA has also issued guidance regarding how long FHA PMI will be on the loan. Effective June 3, 2013 the following will be in effect:
Previous and New FHA Annual PMI Duration
|≤ 15 yrs||≤ 78||April 1, 2013||No annual MIP||11 years|
|≤ 15 yrs||> 78 – 90.00||April 1, 2013||Cancelled at 78% LTV||11 years|
|≤ 15 yrs||> 90.00||April 1, 2013||Cancelled at 78% LTV||Loan term|
|> 15 yrs||≤ 78||April 1, 2013||5 years||11 years|
|> 15 yrs||> 78 – 90.00||April 1, 2013||
Cancelled at 78% LTV & 5 yrs
|> 15 yrs||> 90.00%||April 1, 2013||
Cancelled at 78% LTV & 5 yrs
Senior Loan Officer
- Kentucky FHA Mortgage Guidelines for 2013 (kentuckyvaloan.com)
- 2013 Kentucky FHA Mortgage Changes to Mortgage Insurance (louisvillemortgageguide.com)
- Kentucky FHA Mortgage Guidelines for 2013 (mylouisvillekentuckymortgage.com)
- Fha Changes Are Coming! (montclairmaha.wordpress.com)
- Louisville Kentucky Mortgage Rates (kentuckyvaloan.com)
- Down Payment and Closing Costs Assistance (kentuckyvaloan.com)
- FHA mortgage premium to rise on April 1 (sfgate.com)