Louisville Kentucky FHA Loan


FHA Loan.

via FHA Loan.

 

FHA Loan

 

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This web site will help you understand FHA mortgage underwriting guidelines and it will also help you determine if an fha mortgage loan is right for your situation.  FHA loans have always been a good opportunity for home buyers, but there are some things you should consider before you decide.

First, we need to understand what an fha mortgage is and is not.  The Federal HousingAdministration (FHA) does not lend money, plan, or build housing.  It is a division of theDepartment of Housing and Urban Development.  The Federal Housing Administration sets standards for underwriting and construction, but its main purpose is to insure residential mortgage loans made by individual/private lenders.  The basic intent was to provide FHA-insured loans to borrowers for their primary residence.

FHA loans have always been a great alternative for people who don’t quite qualify for Conventional financing.  The guidelines are more forgiving allowing for smaller down payments, higher debt to income ratios, some credit issues, and more sources for the down payment.  The great thing is that the interest rate is only slightly higher than a conventional loan. Sometimes the interest rate is actually lower.  Remember this!  IF you go to a Mortgage Broker or a Bank and the rate quoted is exceptionally higher, they are charging you too much.  Call around for quotes.  You will usually get a better rate from a broker.

Advantages:

  1. FHA is not as strict on credit scoring.
  2. High debt to income ratios: 31% / 43%
  3. 100% of down payment can be a gift from: relative, close friend, or employer.
  4. Seller, builder, or realtor can pay up to 6% of the sales price towards the buyers closing costs, discount points, prepaids,  and up front mortgage insurance premium.
  5. Buyer can finance closing costs into the loan, except for prepaids and discount points.
  6. Credit criteria is not as strict as a Conventional loan.  In fact, you might qualify if you have filed a chapter 13 bankruptcy and have been in it for at least one year.

Disadvantages:

  1. FHA mortgage insurance may be more expensive than Conventional mortgageinsurance.
  2. Maximum loan amounts are lower than conventional loans and they are determined by area.

This web site has a ton of information that will help you better understand FHA loans.  The guidelines are very complicated in some areas so I could never include them all on this site.  If there is information you think should be added to this web site please send us anemail or If there is an area you have a question about just send me an email and I’ll do my best to answer it for you.

If you are interested in the guidelines for Conventional loans you should visit our other web site about mortgage underwriting guidelines.  That site talks about all types of loan products and it has several Mortgage Calculators if you want to play around with the numbers. Mortgage Underwriters.com also covers Credit HistoryCredit Repair and the Loan Process.

HR 3221

HR 3221 eliminated FHA DPA (down payment assistance) as of Oct 2008, while HR 6694tried to re-instate it ‘just in time’.  Unfortunately it has not passed yet.  I’ll keep you posted.  

The FHA Secure program can help home owners who are behind on their home mortgage and facing foreclosure. This program allows the delinquent home owners to refinance their ARMS (adjustable rate mortgages).

 I have put together the underwriting guidelines for this program so you can determine if you qualify or if you are in the industry, you can learn how it works.  FHA Secure Mortgage Guidelines

Hope For Homeowners, H4H

This is a program developed to help homeowners stay in their homes and prevent foreclosure.  I’ll let you decide if it really helps anyone.  I have put up the guidelines and given you the link to the Mortgagee Letter so you too can have all the details.  Honest, this program is unbelievable! H4H

FHA Secure Refinance

 Closing Costs

Refinance

Seller Concessions

Loan Process

Non-Purchasing Spouse

FHA Updates

Guidelines Blog:

Good grief, how long does it take?
Underwriting denial because of CAIVRS

FHA Gift Programs
Seller Contributions

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Recommended Books

Economic Bail Out!
Read the bill yourself:

HR 1424

FHA Credit Guidelines

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The FHA loan underwriters focus primarily on the quality of credit over the last 12 months. They are not overly concerned about minor late payments which happened 18, 24 or 36 months ago.  However, all collections, excluding medical, must be paid in full prior to closing (preferably prior to application) or have a documented payment plan.  They do require letters of explanation for all late payments. Underwriters are more concerned about whether the loan makes sense and that you have addressed and corrected whatever issues created the past credit problems.

FHA credit guidelines can seem complicated as far as documentation but the credit guidelines or credit qualification requirements are actually slack compared to a Conventional loan.

FHA Credit Score: 

Most loans on the market today are credit score driven with the exception of FHA which is one of the best loan programs on the market for people with minor issues that have lowered their scores.

Please keep in mind that FHA may not be credit scoredriven but most lenders are.  They have the prerogative to maintain higher standards than FHA and each lender has a different cut off score (the least that they will accept).

Since you are here and if you are interested in understanding scores, this is the break down:

  • A score of 720 and above will get you into a conventional conforming loan with the lowest rates available (Fannie Mae and Freddie Mac). These rates are 1% above the 10 year T-Bill.
  • In the non-conforming market credit scores will determine your interest rate. You may be in this market for many reasons, not just score. It could be because your loan amount exceeds conventional guidelines (jumbo), the house does not qualify, no down payment, high debt ratios, credit history issues, or you could be self employed and don’t show enough income to qualify.
  • Credit scores above 680 will get you the best rates in this market which is 1 to 2 points higher than the conforming market, depending on the type of loan you are getting.
  • Scores from 620 to 680 could put you as much as 3 to 4 points higher in rate, and you can still qualify for a zero down program.

Mortgage and Rent payments:

This has to be your number one priority. If you have been more than 30 days late on your rent or mortgage payment in the last 12 months you will not qualify for a Fannie Mae, Freddie Mac,  FHA, or VA loan.   There are sometimes exceptions, … if you have a very high score, lots of assets, and a legitimate documented excuse, you may get a waiver.

Car payment and installment loans:

Your history should reflect no 60 day late payments and no more than one 30 day late to get a conforming loan. The non-conforming loans allow these and again the rate depends on how many late payments you have had.  Again, FHA credit requirements prefer no lates in the last 12 months.

Revolving accounts (credit cards): 

You should not have any payments 60 days late and no more than two payments 30 days late in the last two years for a conforming loan.  FHA allows it with a good explanation as long as they did not occur in the last 12 months.

Collections, Judgments, and Liens: 

Fannie Mae, Freddie Mac, FHA and VA require that all be paid in full and they prefer that they be at least two years old. FHA will sometimes make an exception on the length of time or if they are on a current payment plan in which case all other things must be good.

Bankruptcy: 

Fannie Mae and Freddie require 4 years from discharge date. FHA only requires 2 years after a chapter 7, a good excuse, and re-established credit. Actually, you can qualify for an FHA loan if you are still in chapter 13 (for at least a year) and  have been paying on time through the courts.   You must also get court approval which does happen often!

Non conforming lender requirements vary quite a bit. As a general rule they do want to see reestablished credit unless you are putting 20% down. There are some lenders that will lend with one day out of discharge. Your credit score is very important on these programs. Again, you need a broker to sort out the details for you. Guess what, that’s free, and no obligation. They will look at your entireportfolio and if they can’t get you in something now, they will counsel you on the steps you need to take to get in a loan later. Be sure you seek out a broker that has ALL the products on the market including FHA.

Foreclosure: 

Generally, a foreclosure of your primary residence must be at least three years old and have been caused by circumstances out of your control, such as: death of the primary wage earner, layoff, or long term serious illness. Non-conforming lenders do vary but will normally require a substantial down payment if it is less than 3 years old.

Repossessions: 

The guidelines on this are about the same as a foreclosure except that it cannot have a deficiency balance for a conforming or FHA loan. The non-conforming market doesn’t care about the balance if it is more than three years old and again, their guidelines vary from one lender to another.

Student Loans:

Defaulted student loans will haunt you for the rest of your life. Unless they are re-affirmed or paid off you will never get a conforming, FHA, or VA loan.  However, the non-conforming market generally does not care about them at all except in extreme cases to the tune of $50k or more.

Previous Marriage:

Be careful here. The conforming market could care less about your divorce agreement with respect to your debt. If you signed, you are still accountable. FHA will sometimes make a wavier if you can show the divorce decree that states it is the other parties responsibility and all other things are good. (These debts will also affect your debt to income unless you can prove the other party is paying with 12 months cancelled checks.) The non-conforming lenders will normally accept the divorce decree.

Credit Depth: 

Generally this term refers to how many trade lines you have, how long you have had them and their amounts. Most lenders want to see at least a two-year history and at least 4 trade lines. Some require one of those trade lines to have had a balance over a certain dollar amount ($5,000). In the non-conforming market these requirements vary between lenders.

You can see how poor credit will cost you a lot of money in higher interest. It is important to take care of your credit and monitor it often, as it sometimes contains errors.

FHA loans do not have a zero down payment mortgage but the down payment can be as little as 3.5%.

Here is the exciting part, … those funds (3.5%) can be aGift and come from a family member, charity, or your employer.

The person providing the gift will have to provide a gift letter and their funds will have to be sourced.  The provider will have to show where the money came from by supplying copies of withdrawal slips and bank statements.

  • Traditional Guidelines:
    • Neither the lack of traditional credit history, nor the lifestyle of the borrower may be used as a basis for rejection.
    • Collections: Based upon the surrounding circumstances, and as determined by our underwriter, these do not necessarily have to be paid.
    • Judgment: Judgments are required to be paid off before the mortgage loan is eligible for insurance. However, exceptions can be made if the borrower has been making regular timely documented payments and the creditor is willing to subordinate the judgment to the insured mortgage.
    • Foreclosure: A borrower whose previous residence or other real property was foreclosed on, or who has given a deed-in-lieu of foreclosure within the previous three years is not generally eligible. Exceptions can be made based upon extenuating documented circumstances.
    • Chapter 7 Bankruptcy: Will not disqualify a borrower if at least two years have passed since the bankruptcy was discharged.
    • Chapter 13 Bankruptcy: A borrower paying off debt under Chapter 13 may also qualify if at least one year of the pay out period has elapsed with satisfactory payment performance and the court approves the borrower entering into a mortgage transaction.
  • Aliens: FHA will insure mortgages made to lawful permanent resident aliens under the same terms and conditions as a US citizen.
  • No Income Restrictions.
  • Higher Ratios: HUD’s standard ratio guidelines are 29% (maximum exception of 36%) of your gross income for housing and 41% (maximum exception of 50%) of your gross income for housing plus other creditors. Borrowers may, at the underwriter’s discretion, be allowed to extend beyond these ratios based upon sufficient compensating factors.
  • Down Payment: The minimum down payment is approximately 3.5%. While credit quality can affect this qualifying requirement, the typical borrower only needs the standard HUD guideline of 3.5% to be approved.
  • Gifts: 100% gift funds are acceptable. The donor may be a relative of the borrower, the employer or labor union, a governmental agency, a not for profit private organization, or close friend with a clearly defined interest in the borrower. No repayment of any gift may be expected or implied. Sellers are allowed to pay all closing costs on behalf of the borrower, up to 6% of the purchase price.
  • Reserves: There are no reserve requirements for one and two-family unit residences. Three months reserves are required for three and four-family unit residences.
  • Multifamily: Three and four family unit residences, regardless of occupancy status, must be self-sufficient. The maximum mortgage is limited so that the ratio of the mortgage payment, divided by the monthly net rental income does not exceed 100%. The net rental income is the appraiser’s estimate of fair market rent from all units (including the unit chosen by the borrower for occupancy), less the allowance for vacancies and maintenance (which is 15%). 85% of the rental income that is expected from the non-occupied units is added to the borrower’s income for qualifying purposes. Down payment is calculated the same as single-family units.
  • Overtime, Bonus, and Part-time Income: Overtime and/or bonus income received for a period of less than two years is acceptable where the underwriter determines that there are reasonable expectations of its continuance. An earning trend over the period of time of receipt must be established and analyzed. Part-time income means income from jobs taken in addition to the normal regular employment to supplement the borrower’s income. The same rules apply for determining using it as a part of qualifying.
  • Extended Absence From Workforce: In some cases, the borrower may have recently returned to the work force after an extended absence. The borrower’s income may be considered effective and stable, provided the borrower has been employed in the current job for 6 months or more and the borrower can document a 2 year work history prior to the absence from the work force.
  • Rental Income: Rental income from relatives residing on the premises is acceptable, provided the rental income is shown on the borrower’s tax returns.
  • Cash Saved at Home: Borrowers who meet the “cash borrower” profile (no traditional credit, no bank accounts, etc.), who have saved cash at home and are able to adequately demonstrate the ability to do so, are permitted to have this money included, with satisfactory explanation, as an acceptable source of funds to close a mortgage loan.
  • Child care expenses are NO LONGER included as debt.
  • Non Occupant Co-Borrowers: When there are two or more borrowers, but one or more will not occupy the property as a primary residence, the maximum mortgage is usually limited to 75% loan to value. However, maximum financing is available for borrowers related by blood or for unrelated individuals that can document evidence of family type or long-standing and substantial relationship not arising out of the loan transaction. Qualifying is determined by the underwriter.
  • Assumable: All FHA loans are assumable.
  • Electronic/Online Payroll: The industry as a whole recognizes that some employers use online payroll for pay stubs and W-2s. These types of documentation are acceptable.
  • Rate Adjustments: There are no interest rateadjustment “penalties” for higher loan to values with FHA fixed rate loans. The rate, is the rate, is the rate.
  • Secondary Financing: Secondary financing is not allowed with an FHA loan. The only acceptable second mortgage is with an approved HUD gifting agent, such as down payment assistance provided by a gov’t agency in the form of a “silent” second mortgage. Piggie Back seconds/HELOCS are simply not allowed.
  • Home Inspection: A home inspection may or may not be required on a property, depending on various factors. Typically, you will find it is not required, but is recommended on any existing residence.
  • Pest Inspection: A termite inspection is required for all existing properties.
  • Closing Costs: Closing costs charged to the borrower are restricted and may, in fact, be less than conventional closing costs (dependent upon your lender or broker).

Author: Louisville Kentucky Mortgage Broker Offering FHA, VA, USDA, Conventional, and KHC Zero Down Payment Home Loans

I have helped over 589 Kentucky families buy or refinance their home over the last 18 years. Realizing that this is one of the biggest, most important financial transactions a family makes during their lifetime, I always feel honored and respected when I am chosen to originate their personal home loan. You can count on me to deliver on what I say, and I will always give you honest, up-front personal attention you deserve during the loan process. I have several advantages over the large banks in town. First, I can search and negotiate for your loan options through several different mortgage companies across the country to get you the best deal locally. Where most banks will offer offer you their one set of loan products. I have access to over 10 different mortgage companies to broker your loan through to get you the best pricing and loan products that may not fit into the bank's program due to credit, income, or other underwriting issues. You will not get lost in the shuffle like most borrowers do at the mega banks; you're just not a number at our company, you are a person and we will treat you like one throughout the entire process. Give us a try or let us compare your options on your next mortgage transaction. Call me locally at 502-905-3708. Free Mortgage Pre-Qualifications same day on most applications. Email me at kentuckyloan@gmail.com with your questions I specialize in Kentucky FHA, VA ,USDA, KHC, Conventional and Jumbo mortgage loans. I am based out of Louisville Kentucky. For the first time buyer with little money down, we offer Kentucky Housing or KHC loans with down payment assistance. Customer Testimonials 😍😍😍 We just moved here the first of January in 2017 from Ohio to the Louisville, KY area and we found Joel's website online. He was quick to respond to us and got back the same day on our loan approval. He was very knowledgeable about the local market and kept us up-to date throughout the loan process and was a pleasure to meet at closing. Would recommend his services. Angela Forsythe "We were searching online for mortgage companies in Louisville, Ky locally to deal with and found Joel's website, and it was a godsend. He was great to work with, and delivered on everything he said he would do. I ended up referring my co-worker at UPS, and she was very pleased with his service and rates too. Would definitely vouch for him." September 2016 Monica Leinhardt "We contacted Joel back in July 2011 to refinance our Mortgage and he was great to work with. We contacted several lenders locally and online, and most where taking almost 60 days to close a refinance, Joel got it done in 23 days start to finish,I would definetly recommmend him. He got us 3.75% with just $900 in closing costs on our FHA Streamline loan. Kayle Griffin “Joel is one of the best Mortgage Brokers I have ever worked with in my sixteen years in the real estate and mortgage business.” May 25, 2010 Tim Beck “Joel has always worked very hard to keep his word and to work out seasonable solutions to difficult problems. He is truly an expert in FHA and other type loans.” September 1, 2010 Nancy Nalley “I have worked with Joel since 1998. He is a great loan professional.” I refer most of my Louisville, Kentucky area home buyers to him and he always take special care of them. August 23, 2012 Jon ClarK “Joel Lobb is a real professional in the lending industry, with many years of experience, he is the one to go to for any mortgage lending needs.” August 22, 2011 RICHARD VOLZ , Residential Sales , Remax Foursquare Realty “When looking to purchase our new home in 2006, I had the pleasure of meeting Joel Lobb. Not only was he personable and easy to reach, he was extremely knowledgable in his field and made sure to find us the best rate and a top notch mortgage company. We were able to complete the process in less than 3 weeks with his expertise. I find Joel to have the utmost high integrity and I recommend him to anyone who say's they are need of mortgage assistance. He is also fantastic and keeping everyone up to date on the latest in the housing industry through his twitter posts. He provided great results for our family and we still communicate to this day!” August 21, 2010 Stacie Drake "We first use Joel on our new home purchase in 2007 in St Matthews, Kentucky area and he was great to work with. We have since refinanced our home with him in 2010 when rates got really low and he has always delivered on what he says. I could not imagine using anyone else." Melody Glasscock March 2014 Absolutely Amazing!! I emailed Joel after I had just got a denial from a bank and just thought i would try to get some advice on what my next steps would be to get a house. I honestly didn't expect to even get a reply because my credit is not great. That was about a week and a half ago. I just signed a contract on a house last night. ONLY because of Joel Lobb. He even worked with us throughout the weekend, which shocked me. Best decision I have ever made. THANK YOU SO MUCH FOR WORKING WITH US THROUGHOUT THE ENTIRE PROCESS. Cee Bellisle August 2017 Contacted him about buying a home and he was great to work with. I was moving to Louisville Ky to take a new job and he walked me through the entire process. He explained to me all the different options for FHA, VA, USDA mortgage loans and credit score requirements versus Fannie Mae. Since I was a first time home buyer I needed alot of help and guidance. I would definitely recommend him. Fast to respond and available to answer questions that I or my realtor had after hours. Anderson Johnson April 2018 Wow, what a great loan officer. I was referred to him by our agent and he was great to work with. We used him for a USDA no money down loan in Shelby County and we were really impressed. We were afraid we could not buy a home since we did not have money saved for a down payment, but Joe l was able to get us a zero down loan and we even got our appraisal fee and good faith deposit back at closing. We actually got money back at closing!!! I Can't think him enough. Our family moved from our apartment in the south end of town to get our own home with 5 acres for our kids and 2 dogs, at a payment that is equal to our rent payment also. .Thanks Again Joel. May god bless you Patty Locker We contacted Joel about buying a house on our move from Ohio for my husband's job transfer with Ford. We put a lot of trust in him since we were new to the area and first time home buyers in the Louisville KY market, and he always delivered on what he said. It took us a while to find a home due to the lack of homes, but once we got one, he was always quick to respond our questions via text or email ,and kept us informed through the process. We got to meet him at the closing and he was super nice and even got us a closing gift for our home which we didn't expect at all. Super nice guy 😀!!! I would definitely recommend him for a local Home loan in the Louisville area. pam dolby I got a VA loan with Joel and he was great. He is an ex-army guy so he could relate to my past experiences of being a veteran and moving around the country a lot. I had some credit issues that required a little extra work but Joel was able to find A VA lender to approve my situation as far as having past bad credit problems and a lower credit score. We closed yesterday on our home here in Louisville and we could not be happier. We finally have a home of our own thanks to Joel . I would definitely recommend him for a mortgage loan. Great experience and closed 8 days before expected close date so we were able to move in early. larry summit I contacted Joel about the $10,000 KY Housing Grant last month and we were able to get it and I just closed on my home. He was great to work with and if you are a first time home buyer here in Louisville, I would definitely contact him. I met him at his office and he was very nice and knowledgeable and kept me informed through the process. No surprises either so I was very happy. I am new homeowner thanks to Joel . Joel Lobb Senior Loan Officer American Mortgage Solutions, Inc. 10602 Timberwood Circle Suite 3 Louisville, KY 40223 phone: (502) 905-3708 Fax: (502) 327-9119 kentuckyloan@gmail.com http://www.mylouisvillekentuckymortgage.com/ Company ID #1364 | MB73346E This website is not an government agency, and does not officially represent the HUD, VA, USDA or FHA or any other government agency. http://www.nmlsconsumeraccess.org/ 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. NMLS#57916 http://www.nmlsconsumeraccess.org/ . 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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