What are the Kentucky FHA Credit Score Requirements for 2017 Mortgage Loan Approvals?

 

Getting a FHA loan in Kentucky in 2017 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 a FHA loan in 2017, some lenders will have higher credit score minimums in addition to the FHA Mortgage Insurance program.

For a Kentucky Home buyer 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 an 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 relativley  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.

 

home-loan-with-low-credit-scores-150x128

Kentucky FHA Loans with less than 620 Score

If your score is below 620, a manual underwrite is where the AUS (Automated Underwriting System) refers your loan to an 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 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 have 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 $285,000 and below.

If you are looking to take a FHA loan in 2017 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.

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.

 

 

 

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FHA Loans After Bankruptcy, Foreclosure, Short Sale: 2013 Rule Change

FHA Loans After Bankruptcy, Foreclosure, Short Sale: 2013 Rule Change.

FHA Loans After Bankruptcy, Foreclosure, Short Sale: 2013 Rule Change

To that end, FHA is changing the rules for borrowers who want to use an FHA loan after a bankruptcy, short sale, foreclosure, or deed in lieu of foreclosure. Borrowers who can show that the negative event was due to income losses beyond their control could be eligible for an FHA loan within one year of the event. This is a major change over the previous three-year rule for bankruptcies and foreclosures.

Read more: http://www.homebuyinginstitute.com/news/fha-after-foreclosure-bankruptcy-463/#ixzz2f4Rpj5Os

— 

Joel Lobb (NMLS#57916)
Senior  Loan Officer
502-905-3708 cell
502-813-2795 fax
kentuckyloan@gmail.comKey Financial Mortgage Co. (NMLS #1800)*
107 South Hurstbourne Parkway*

Louisville, KY 40222*

A fast and easy refinance for those with an FHA mortgage | CharlotteObserver.com

A fast and easy refinance for those with an FHA mortgage | CharlotteObserver.com.

Verification and documentation requirements are also very light compared to the traditional mortgage requirements. With an FHA refinance, there is no employment verification and no income verification. While the FHA approves these lighter requirements, some individual lenders may decide to verify these items for their own purposes.

FHA Streamline Refinance also does not require a credit score verification. Instead, payment history is used as a guideline for your ability to pay the loan in the future. So, low FICO scores are not a problem as long as your payment history is in good shape.

The FHA Streamline Refinance program does require several things to get your loan approved:

• First, you’ll need a history of making payments on time over the past year, and at least six months must have passed since the closing date on your original FHA mortgage.

• Second, while there are no requirements for employment verification or income verification, you do need to provide copies of your W-2s or tax returns.

• Third, your loan balance cannot increase to cover closing costs. You can only add the upfront portion of the required mortgage insurance premium to the balance of your loan. So, the new loan balance can’t exceed the current amount outstanding, plus the upfront portion of the mortgage insurance premium. You’ll either have to pay the closing costs upfront in cash, or qualify with your lender for a zero-cost FHA Streamline refinance.

• Finally, the refinance must have a purpose that benefits the homeowner, such as significantly lowering the monthly mortgage payments, or moving from an adjustable-rate mortgage to a more stable fixed-rate mortgage. If lowering the monthly payment is the purpose, you must be able to demonstrate at least a 5 percent drop in your monthly mortgage payments, including the mortgage insurance premiums.

The FHA frequently updates these mortgage guidelines, and individual lenders may add their own specific requirements, so it’s best to check with your preferred lender to determine your exact situation. Also, if your original FHA mortgage was closed after May 31, 2009, the mortgage insurance premiums most likely will be significantly higher, so make sure to evaluate those costs carefully versus the savings you’ll receive from the lower interest rate.

Joel Lobb (NMLS#57916)
Senior  Loan Officer
502-905-3708 cell
502-813-2795 fax
kentuckyloan@gmail.com

Key Financial Mortgage Co. (NMLS #1800)*
107 South Hurstbourne Parkway*

Louisville, KY 40222*

FHA cuts mortgage wait times after hard times

FHA cuts mortgage wait times after hard times.

FHA cuts mortgage wait times after hard times



Don’t Let a Short Sale Keep You From a New Mortgage | Consumer Information

Don’t Let a Short Sale Keep You From a New Mortgage | Consumer Information.

If you negotiated a short sale of your home, you may be surprised to learn that some mortgage loan underwriting systems can’t distinguish short sales from foreclosures on consumer reports. And that may keep or delay you from getting a new mortgage.

You see, borrowers who go through a foreclosure typically have to wait seven years before they’re eligible for a new mortgage. But short sellers may qualify in as little as two years. When you’re trying to buy a new home, an additional five years can seem like a lifetime. So is there anything you can do to improve your financial footing? You bet there is.

  • Get a letter from your lender confirming that your loan closed in a short sale, not a foreclosure. Send a copy of the letter to each of the nationwide credit reporting companies: EquifaxExperian, and TransUnion.
  • Order a copy of your credit report. Make sure the information is accurate. If you find a mistake, contact the credit reporting company and business providing the information to correct the error.
  • When you’re ready to buy another home, get pre-approved for a loan. A pre-approval letter from a lender shows that you are able to go through with a purchase. Pre-approval is not a final loan commitment; it means you met with a loan officer, your credit report was reviewed, and the lender believes you can qualify for a specific loan amount. This pre-approval process allows your lender to identify issues and errors in your credit report that may keep you from qualifying for a loan. That, in turn, allows you to correct inaccuracies before they can prevent you from buying another home.

Documenting Disability Earnings as Stable Income

Documenting Disability Earnings as Stable Income.

 

Documentation Requirements for Income from the Social Security Administration

(SSA).

Purpose This Mortgagee Letter (ML) clarifies guidance on documentation requirements for

different types of SSA income used for income qualification purposes. This ML is

provided in response to requests for clarification on this issue.

Effective Date This ML is effective immediately.

All income from the Social Security Administration (SSA) including, but not limited to, Supplemental Security Income (SSI), Social Security Disability Insurance (SSDI), and Social Security Income, can be used to qualify the borrower if the income has been verified, and is likely to continue for at least a three year period from the date of mortgage application.

The lender must verify income by obtaining from the borrower any one of the following documents:

Federal tax returns; the most recent bank statement evidencing receipt of income from the SSA; a Proof of Income Letter, also known as a “Budget Letter” or “Benefits Letter” that evidences income from the SSA (Please visit http://www.ssa.gov for an explanation of types of letters issued by the SSA); or a copy of the borrower’s Social Security Benefit Statement, SSA-1099/1042S.

In addition to verification of income, the lender must document the continuance of this income by obtaining from the borrower (1) a copy of the last Notice of Award letter which states the SSA’s determination on the borrower’s eligibility for SSA income, or (2) equivalent document that establishes award benefits to the borrower (equivalent document). If any income from the SSA is due to expire within three years from the date of mortgage application, that income may only be considered as a compensating factor.

Documentation Requirements for Income from the Social Security Administration (continued)

If the Notice of Award or equivalent document does not have a defined expiration date, the lender shall consider the income effective and likely to continue. The lender should not request additional documentation from the borrower to demonstrate continuance of Social Security Administration income. Under no circumstance may lenders inquire into or request documentation concerning the nature of the disability or the medical condition of the borrower

Note: Pending or current re-evaluation of medical eligibility for benefit payments is not considered an indication that the benefit payment is not likely to continue.

Note: An initial Notice of Award letter (or its equivalent) may specify a start date for receipt of income in the future. Lenders may consider this income as effective income as of the start date specified in the Notice of Award Letter. The borrower must have other income to qualify for the mortgage until the start date for receipt of income.

Note: Other forms of long-term disability income (such as worker’s compensation or private insurance) may be considered qualifying income with a reasonable expectation of continuance. Lenders should use procedures similar to those noted above to verify such income.