Kentucky Mortgage Info to Know for a FHA loan Loan Approval.

The mortgage process can often be a confusing one — whether you’ve bought a home before or not. There’s a lot of prep work and moving parts, and most of the terminology is unfamiliar to the average consumer.

Fortunately, that last part is an easy fix.

Are you getting ready to buy a home or refinance your current mortgage? Take a look at some of the lesser-known terms you might want to know.

  • Annual Percentage Rate (APR): This number reflects the total annual cost of taking out your mortgage loan. It’s different from your mortgage interest rate and includes some extra fees.
  • Underwriting: When a loan professional evaluates your application and verifies all your financial details, that’s underwriting. It’s important to ensure that you have the means to manage your new monthly payment.
  • Escrow: An escrow account is used to hold funds prior to closing, including your earnest money deposit. You might also pay into an escrow account to cover property taxes, homeowners insurance and private mortgage insurance (if you have it).
  • Closing Disclosure: This is a document that you’ll be given at least three days before your closing date. It should detail all the final costs of your loan, as well as what you’ll be expected to pay on closing day.
  • Mortgage Note: You’ll sign this document at closing.It outlines the terms of your home loan and includes how much you’re borrowing, whether it’s a fixed-rate or adjustable-rate mortgage and more.
  • Prepaid Costs: These also come up at closing and will go into your escrow account. They usually cover mortgage interest, property taxes and homeowners insurance expenses that occur between your closing date and the date your first mortgage payment is due.

If you need help understanding any part of the mortgage process, get in touch today.

FHA loans
FHA down payments
FHA credit scores
HA Loans vs. Conventional Loans
 FHA LOANCONVENTIONAL LOAN
Minimum Credit Score500620
Down Payment3.5% with credit score of 580+ and 10% for credit score of 500 to 5793% to 20%
Loan Terms15 or 30 years10, 15, 20, or 30 years
Mortgage InsuranceUpfront MIP + Annual MIP for either 11 years or the life of the loan, depending on LTV and length of loanNone with down payment of at least 20% or after loan is paid down to 78% LTV
Mortgage Insurance PremiumsUpfront: 1.75% of the loan + Annual: 0.45% to 1.05% PMI: 0.5% to 1% of the loan amount per year
Down Payment Gifts100% of down payment can be a giftOnly part can be a gift if down payment is less than 20%
Down Payment Assistance ProgramsYesNo

Qualifying for an FHA Loan

Your lender will evaluate your qualifications for an FHA loan as it would any mortgage applicant. However, instead of using your credit report, a lender may look at your work history for the past two years (as well as other payment-history records, such as utility and rent payments). As long as you’ve re-established good credit, you can still qualify for an FHA loan if you’ve gone through bankruptcy or foreclosure. It’s important to keep in mind that, as a general rule of thumb, the lower your credit score and down payment, the higher the interest rate you’ll pay on your mortgage.

Along with the credit score and down payment criteria, there are specific lending FHA mortgage requirements outlined by the FHA for these loans. Your lender must be an FHA-approved lender and you must have a steady employment history or have worked for the same employer for the past two years.

If you’re self-employed, you need two years of successful self-employment history; this can be documented by tax returns and a current year-to-date balance sheet and profit and loss statement.15 If you’ve been self-employed for less than two years but more than one year, you may still be eligible if you have a solid work and income history for the two years preceding self-employment (and the self-employment is in the same or a related occupation). You must have a valid Social Security number, reside lawfully in the U.S., and be of legal age (according to your state laws) in order to sign a mortgage.

Usually, the property being financed must be your principal residence and must be owner-occupied. In other words, the FHA loan program is not intended to be used for investment or rental properties. Detached and semi-detached houses, townhouses, rowhouses, and condominiums within FHA-approved condo projects are all eligible for FHA financing.

Your front-end ratio (your mortgage payment, HOA fees, property taxes, mortgage insurance, and homeowner’s insurance) needs to be less than 31% of your gross income.16 In some cases, you may be approved with a 40% ratio.

Your back-end ratio (your mortgage payment and all other monthly consumer debts) must be less than 43% of your gross income.16 However, it is possible to be approved with a ratio as high as 50%. Also, you need a property appraisal from an FHA-approved appraiser, and the home must meet certain minimum standards. If the home doesn’t meet these standards and the seller won’t agree to the required repairs, you must pay for the repairs at closing. (In this case, the funds are held in escrow until the repairs are made).

http://www.emailmeform.com/builder/form/0bfJs9b6bK8TGoc6mQk9hIu

Joel Lobb

Joel Lobb, American Mortgage Solutions (Statewide)

Joel has worked with KHC for 12 of his 20 years in the mortgage lending business. Joel said, “A lot of my clients would not have been able to purchase a home of their own or possibly delayed their purchase due to lack of down payment but with the $6,000 DAP loan program, this gets them into a house sooner and starts their path to homeownership while building equity instead of throwing their money away.”

When you’re ready to purchase a home in Joel’s area, contact him at:
Phone: 502-905-3708
Email: Kentuckyloan@gmail.com
Website: www.mylouisvillekentuckymortgage.com

Joel Lobb (NMLS#57916)
Senior  Loan Officer

American Mortgage Solutions, Inc.
10602 Timberwood Circle Suite 3

Louisville, KY 40223Company ID #1364 | MB73346

Text/call 502-905 3708

kentuckyloan@gmail.com

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. Equal Opportunity Lender.

NMLS#57916 http://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.

KENTUCKY FHA MORTGAGE GUIDELINES FOR 2020

  • FHA – 620+ Min Fico Approve Eligible / NO OVERLAYS-NONE!
  • FHA – 620+ FICO for PURCH, RT, C/O including Flips & High Balance
  • FHA – 640+ REFERS OK!—no overlays -u/w directly to 4000.1
  • FHA – 640+ MANUALS up to 50% DTI (with 2 comp factors)
  • FHA – 620+ No DTI CAP – Follow AUS Findings!!! (with approved eligible)
  • FHA – 620+ NO Minimum Credit History or Trades with AUS Approval!
  • FHA – 620+ – No VOR Unless Required by DU Findings!
  • FHA – Transfer appraisals from ANY lender/AMC OK!
  • FHA – ORDER YOUR APPRAISAL FROM 20+ AMCs YOU CHOOSE!
  • FHA – Collections – HUD Guides Apply –
  • FHA – Mortgage Lates OK if AUS Approved!!!
  • FHA – ESCROW STATE – Non Purchasing Spouse derogs ignored – only affects DTI
  • FHA – Borrower w/ Work Permits, Non-Resident Alien OK!
  • FHA – 1 Day off Market for Cashout Refi! – Must be off market before date of loan application!
  • FHA – Rental Income on 2-4 units ok FTHB
  • FHA – STREAMLINE – 620 Minimum 
  • FHA – Streamline – 620 Score – No Appraisal, No Income, No AVM, No Credit Qualifying!!!
  • FHA – Streamline -Investment and 2nd Homes OK!
  • FHA – Streamline – Mtg only on subject property only!

CREDIT SCORE REQUIREMENTS FOR KENTUCKY FHA FINANCING

CREDIT REQUIREMENTS FOR KENTUCKY FHA FINANCING

What credit score do I need to qualify for a Kentucky FHA loan is one of the most common questions I hear from Kentucky homebuyers?

The short answer is you must have a minimum credit score of 500 to be eligible for an FHA loan in Kentucky.  Anything lower than 500 disqualifies you from consideration for an FHA loan.

There are two sets of credit score requirements for a Kentucky FHA Loan

One important thing to understand is that the Federal Housing Administration (FHA) does not lend money directly to home buyers. You will fill out an application with a regular lender just as you would if you were applying for any other type of mortgage. What the FHA does is ensure your loan to help protect the lender in case you default.

You will be required not only to meet the FHA guidelines to qualify for a loan but also meet any additional qualifications required by the lender. This means there are two sets of requirements you have to meet with your credit score.

1. The first set of requirements comes from the Department of Housing and Urban Development (HUD). HUD oversees the FHA and determines what a borrower’s minimum eligibility requirements will be to obtain an FHA loan.

2. The second set of requirements comes from the mortgage lender. The mortgage lender has the right to add its requirements to those mandated by HUD.

What HUD requires of borrowers to be eligible for an FHA loan

The HUD Handbook 4000.1 includes the official guidelines when it comes to the FHA mortgage insurance program.

It states that in 2020 the Kentucky FHA borrowers with credit scores of 580 or higher are eligible for a 96.5% loan with 3.5% down.

Borrowers with credit scores from 500 to 579 are eligible for a 90% loan with 10% down.

Individuals with credit scores below 500 are not eligible for the FHA program.

What lenders may require of borrowers to be eligible for an Kentucky FHA loan

Lenders have the right to add requirements over and above the minimum requirements of HUD. These additional requirements are called overlays. Your lender may or may not require them.

This is not something that should come as a surprise to you, however. Requiring a credit score of 580 to 620 is not unusual. In addition to your credit score, you must have a manageable debt level that lenders are comfortable with and enough income to repay your loan.

What credit score do I need to qualify for FHA loan?

Each month Ellie Mae, the software company processing more than ⅓ of America’s mortgage loans, publishes an insight report for mortgage trends and standards. One of the things they track is average credit scores. The following is their report for November 2019 which shows what percentage of successful borrowers fall into what credit score ranges.

500 – 549    2.14%
550 – 599    5.20%
600 – 649    23.01%
650 – 699    34.74%
700 – 749    21.88%
750 – 799    10.87%
800+     1.89%

These percentages show that the majority of borrowers who successfully qualify for FHA loans fall into the 600 to 799 range. While it is true that some successfully qualify in the low range of 500 to 599, you have a much better chance of being approved for a loan with good terms and a low down payment if you fall into the higher range.

 

 

 

For your free credit report and analysis call us today at 502-905-3708 or email us at kentuckyloan@gmail.com

Joel Lobb (NMLS#57916)
Senior  Loan Officer
 
American Mortgage Solutions, Inc.
10602 Timberwood Circle Suite 3
Louisville, KY 40223
Company ID #1364 | MB73346
 


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

 

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/

 

 

 

 

Lending 101: FHA Loans In Kentucky

Lending 101: FHA Loans In Kentucky

Kentucky FHA loans are great loan program that is not just for first-time buyers!

Here are some of our favorite features of Kentucky FHA loans:

  1. Low down payment – FHA requires 3.5 % down. For qualified buyers, this money may be able to be gifted from a family member.
  2. No income limits – There are no income limits placed on the borrower or the household.
  3. Credit scores – Interest rates and underwriting requirements are less credit score sensitive than other loan programs. In some scenarios, we are able to lend to buyers with scores in the mid-500s. *Note: Credit scores under 580 will require a 10% down payment.
  4. Manufactured homes – No problem with FHA! Manufactured homes must be on a permanent foundation and have been built after June 1976.
  5. Rehab loans – Utilizing the FHA 203K program, we can do purchase and refinance loans that roll the cost of rehabs or repairs into the loan amount.
  6. No geographic restrictions – FHA loans can be done anywhere,
  7. Generous Debt-to-Income Ratios – For most buyers, FHA allows for a higher debt load than other programs. FHA may be the only program for some borrowers with high credit card and/or student loan debt.
  8. Non-Occupant Co-Borrowers – FHA is one of the few programs that allow non-occupant co-borrowers. While a non-occupant co-borrower cannot help in scenarios where a buyer has a low score and cannot qualify on their own, it is a great solution for buyers who have low income or income that can’t be documented.

Want to learn more about FHA loans? Contact any member of our team today, reply to this email, or give us a call at 502-905-3708 and ask to speak to a mortgage loan originator.

What does Identity Of Interest mean for FHA Loans?

Does FHA Restrict down payment requirements on Identity of Interest Transactions?

The 85 percent maximum LTV restriction does not apply for Kentucky FHA Loans in regards to FHA Identity-of-Interest transactions under the following circumstances:

👇👇👇

FAMILY MEMBER TRANSACTIONS•  the principal residence of another family member; or  a property owned by another family member in which the borrower has been a tenant for at least six months immediately predating the sales contract. A lease or other written evidence to verify occupancy is required.

BUILDER’S EMPLOYEE PURCHASE• An employee of a builder, who is not a family member, purchases one of the builder’s new houses or models as a principal residence.

CORPORATE TRANSFER • A corporation transfers an employee to another location, purchases the employee’s house, and sells the house to another employee.

TENANT PURCHASE• the current tenant purchases the property where the tenant has rented the property for at least six months immediately predating the sales contract. A lease or other written evidence to verify occupancy is required.

Source: FHA Handbook 4000.1

What You Need To Know About Identity Of Interest Transactions
What You Need To Know About Identity Of Interest Transactions

 

 
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

 

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