Kentucky FHA Home loan programs for people with bad credit

Score Requirement on Kentucky FHA Loans for people with bad credit

Lowers Minimum Credit Score Requirement on Kentucky FHA Loans

Kentucky FHA Home loan programs for people with bad credit

FHA loans are designed to make housing more affordable with lower down payment requirements than conventional loans on purchases and less home equity requirements on refinances.  Less stringent qualification guidelines and the security of a government-insured loan makes FHA a popular choice for consumers.

Kentucky FHA Loans with 580 Credit scores and – Low Down Payment – 3.5% which can be gifted from relatives or borrowed off one’s retirement account. If your scores is between 500-579, 10% down needed for home loan and subject to underwriting approval.

  • Low down payment
  • 500 minimum credit score from 10% down, to 580 above credit score with 3.5% down payment
  • Can be used with Grants for Down payment through Eligible Sources
  • FHA  max loan – $336,750 in the State of Kentucky
  • FHA approved condos eligible
  • Entire Down payment can be a gift, a down payment assistance program or grant funds
  • Seller can pay 6% of purchase price toward closing costs

Quick guide to checking your credit score for Kentucky FHA loans

If you’re just starting to shop for home mortgages, it pays to know if banks think you have bad credit or not. Here’s how FICO, the main credit score provider in the U.S., breaks down credit scores:
  • 800-plus: Exceptional
  • 740-799: Very good
  • 670-739: Good
  • 580-699: Fair
  • 579 and lower: Poor

Kentucky FHA loans

Kentucky FHA Loan Details
Credit score required
500, but banks have minimum underwriting
standards
Down payment required
Credit score between 500-579: 10 percent
Credit score above 580: 3.5 percent
Upfront financing fee
1.75 percent, which can be financed
Mortgage insurance
0.45 to .85 percent
Mortgage limits
Generally, $336,766 for single-family units, but it
varies by location and you should check the limits in your area
Fine print
Mortgage insurance premiums are paid for the life of the loan,
except when putting 10 percent or more down. If your down payment is
less than 20 percent but 10 percent or more, you must have
mortgage insurance for 11 years.

Quick take

If you have bad credit, an Kentucky FHA loan offers a more accessible mortgage. While credit standards vary by lender, you may qualify for the Kentucky FHA loan with a credit score as low as 500. With a credit score above the 580 threshold, you may qualify for the 3.5 percent down payment.
Unfortunately, an Kentucky  FHA loan can be expensive because of mortgage insurance fees. In addition to paying ongoing mortgage premiums for the life of the loan, you’ll have to pay a 1.75 per

 Pros:

  • 3.5 percent down payments (for those above the 580 credit-score mark)
  • Credit scores as low a 500
  • Can buy up to four units

 Cons:

  • 1.75 percent upfront mortgage premium
  • Ongoing mortgage insurance for life of loan at .85% and .80%
  • Smaller loan limits $314,000 in Kentucky
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Text/call:      502-905-3708
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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#57916 http://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.

Kentucky FHA Down Payment Requirements, Credit Scores and Mortgage Insurance

How Credit Scores Impact Kentucky  FHA Loan Down Payment Requirements


Kentucky Home Buyers credit scores are one of  the largest factors in determining the amount of a down payment for an FHA loan.   A credit score of 580 or higher, 3.5 percent is the minimum required for a down payment. Anyone with a credit score of 500 to 579 will have to save 10 percent for a down payment to obtain an FHA loan.

What Are Mortgage Insurance Requirements on Kentucky FHA Loans?

FHA loans are required to pay mortgage insurance premiums, often known as upfront mortgage insurance premiums and monthly annual premiums.

  • Upfront mortgage insurance premium: 1.75 percent of the loan amount and is paid when the borrower gets the loan. The premium can be rolled into the mortgage.
  • Annual mortgage insurance premium: 0.45 percent to 1.05 percent, depending on the term of the loan (15 years vs. 30 years), the loan amount and the initial loan-to-value ratio, or LTV. This premium amount is divided by 12 and paid monthly.

For a homeowner who borrows $150,000, this means the upfront mortgage insurance premium would be $2,625 and your annual premium would range from $675 ($56.25 per month) to $1,575 ($131.25 per month), depending on the length of the mortgage.

Unlike traditional mortgage insurance premiums, homeowners are required to pay FHA premiums for the entire term of the mortgage. The only time you can stop paying them is to refinance into a non-FHA loan or to sell the house.

Down Payment Gifts and Rules for Kentucky FHA Loans Kentucky borrowers choose an FHA loan can receive money as a gift to help towards the total amount of the down payment.

There are several rules that homeowners need to keep in mind. Giftscan come from friends, family members, labor unions and employers, according to data from the Department of Housing and Urban Development (HUD).

Even non-profit organizations can provide money for a contribution toward a down payment.

In addition, each state offers various assistance programs for down payments for both FHA buyers in Kentucky lacking the down payment.

People obtaining an Kentucky FHA loan are also eligible for these programs. I.e. Kentucky Housing Dap Funds, Welcome Grants In Kentucky

 

Kentucky FHA Loan Requirements For 2020

Kentucky Mortgage Requirements

Kentucky FHA Guidelines Program for 2020

 

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 a family member or from a retirement savings plan, or money saved up. Any type of cash deposits is 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 an 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 the trustee. You will need to qualify with the Chapter 13 payment along with a 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 $331,760 in Kentucky for 2020
  • The property must be appraised by a Kentucky FHA-approved appraiser.
  • The property must be safe, sound and secure, in compliance with minimum property standards as defined by the U.S. Department of Housing and Urban Development, or HUD.
  • You may not have delinquent federal debt or judgments, or debt associated with past FHA loans. Caivrs Alert System will show up if you owe the government money.
  • 2020 Kentucky FHA loan limits are as follows:
Kentucky FHA loan limits for 2020 is set at $331,760.00
Kentucky FHA loan limits 2020

All Kentucky Counties received a loan amount increase in 2020 for FHA loans made starting January 1, 2020

The new loan limits are effective with case numbers assigned on
or after January 1, 2020

https://entp.hud.gov/idapp/html/hicostlook.cfm

Why Lenders Use CAIVRS

It is true that your CAIVRS report can help lenders to predict the risk of doing business with you, just like a traditional consumer credit report. But the primary reason lenders check your CAIVRS report is because they are generally required to do so for any applications that involve a federal loan (FHA, VA, USDA, SBA, etc.). Lenders are required to conduct a CAIVRS search because of Title 31 of the United States Code (Section 3720B) bars “delinquent federal debtors from obtaining federal loans or loan insurance guarantees.”

Kentucky FHA Loan Requirements for 2020

 

  • 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 2019, you can buy a home with average to below-average credit and 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 noted 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 FHA  in your state on Google to see what is available.

     

  • Benefits and Drawbacks for an FHA Borrower


    Image result for gift funds fha infographic

    Kentucky FHA Loan Requirements for 2020
    What are the requirements for a FHA loan in Kentucky?
  • 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.

     

    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.

     

 

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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