Category: Application Document Checklist for Approval
Kentucky First-Time Home Buyer Loan Programs
Kentucky First Time Home Buyer Loan Programs for 2024
Kentucky First-Time Home Buyer Loan Programs
There are 4 basic things that a Kentucky-First Time Homebuyers in 2024 needs to show a lender in order to get approved for a mortgage. Each category has so many what-ifs and sub plots that each box can read as its own novel. In other words, each category has so many variables that can affect what it takes to get approved, but without further adieu here are the four categories in no particular order as each without any of these items, you’re pretty much dead in the water:
1. Income
You need income. You need to be able to afford the home. But what is acceptable income? Let’s just say that there are two ratios mortgage underwriters look at to qualify you for mortgage payment:
First Ratio – The first ratio, top ratio or housing ratio. Basically, that means out of all the gross monthly income you make, that no more that X percent of it can go to your housing payment. The housing payment consists of Principle, Interest, Taxes, and Insurance. Whether you escrow or not every one of these items is factored into your ratio. There are a lot of exceptions to how high you can go, but let’s just say that if your ratio is 33% or less, generally, across the board, you’re safe.
Second Ratio- The second ratio, bottom ratio or debt ratio includes the housing payment, but also adds all of the monthly debts that the borrower has. So, it includes housing payment as well as every other debt that a borrower may have. This would include, Auto loans, credit cards, student loans, personal loans, child support, alimony….basically any consistent outgoing debt that you’re paying on. Again, if you’re paying less than 45% of your gross monthly income to all of the debts, plus your proposed housing payment, then……generally, you’re safe. You can go a lot higher in this area, but there are a lot of caveats when increasing your back ratio.
What qualifies as income? Basically, it’s income that has at least a proven, two-year history of being received and pretty high assurances that the income is likely to continue for at least three years. What’s not acceptable? Unverifiable cash income, short term income and income that’s not likely to continue like unemployment income, student loan aid, VA education benefits, or short term disability are not allowed for a mortgage loan.
2. Assets
What the mortgage underwriter is looking for here is how much can you put down and secondly, how much will you have in reserves after the loan is made to help offset any financial emergencies in the future.
Do you have enough assets to put the money forth to qualify for the down payment that the particular program asks for? The only 100% financing or no money down loans still available in Kentucky for home buyers are available through USDA, VA, and KHC or Kentucky Housing Loans. Most other home buyers that don’t qualify for the no money down home loans mentioned above, will turn to the FHA program. FHA loans currently require a 3.5% down payment.
Kentucky Home buyers that have access to putting down at least 5% or more, will usually turn to Fannie Mae or Freddie Mac mortgage programs so they can get better pricing when it comes to mortgage insurance.
These assets need to be validated through bank accounts, 401k or retirements account and sometimes gifts from relatives or employer… Can you borrow the down payment? Sometimes. Generally, if you’re borrowing a secured loan against a secured asset you can use that. But rarely can cash be used as an asset. FHA will allow for gifts from relatives for down payments with little as 3.5% down but Fannie Mae will require a 20% down payment when a gift is being used for the down payment on the home.
The down payment scenarios listed above are for Kentucky Primary Residences only. There are stricter down payment requirements for investment homes made in Kentucky.
3. Credit
- Kentucky FHA Mortgage loan credit score requirements:
- The minimum credit score is 500 for Kentucky FHA loans. However please keep in mind these two things: 1. Lenders credit their own overlays to increase the credit score threshold, most being 580 to 620, and secondly, if your credit score is below 580, you would need 10% minimum down payment, and if the credit score is over 580, then you can go with the minimum 3.5% down payment.
- Obviously, if you have a higher credit score, this will increase your chances of getting approved for a Kentucky FHA Mortgage and possibly better rates and closing costs options.
- Kentucky VA Mortgage loans requirements :
- VA does not have a minimum credit score requirement, but if the credit score is below 620 few lenders will do the loan, but I am set up with several Kentucky VA lenders where I have closed them down to a 580 credit score, but the borrower had good compensating factors such as large down payment, low dti ratios, good job history and good residual income with no previous bankruptcies or foreclosures.
- I would suggest if your credit scores are below 580, I would suggest on working on getting the scores up before you applied for a VA mortgage loan.
- A lot of lenders will do a rapid rescore which in some cases can increase your credit scores in as little as 7-10 working days.
- The federal Department of Veterans Affairs (VA) guarantees loans for current and former members of the military and their families. VA loans provide very favorable terms to eligible borrowers and have limited qualifying requirements. You can get a VA loan with no down payment so long as the home isn’t worth more than you pay for it, and there’s no minimum credit score to qualify. You also don’t have to pay for mortgage insurance, although you do have to pay an up-front funding fee of between .5% and 3.3% of the loan amount unless you fall within an exception for disabled vets or military widows or widowers.
- Kentucky USDA Mortgage credit score requirements:
- According to their guidelines, USDA will go down to a 580 credit score, but most lenders will want a 640 credit score. USDA uses an online system to underwrite the risk of the loan, and scores under 640 are very difficult to get approved.
- Validating the Credit Score. Two or more eligible trade lines are necessary to validate an applicant’s credit report score. Eligible trade lines consist of credit accounts (revolving, installment etc.) with at least 12 months of repayment history reported on the credit report. At least one applicant whose income or assets are used for qualification must have a valid credit report score
- The Rural Housing Service (RHS) operates under the federal Department of Agriculture to guarantee loans for rural home-buyers with limited income who can’t obtain conventional financing. The upside is that Kentucky USDA loans require no down payment. The downside is that they charge a steep up-front fee of 1% of the loan amount (which can be paid off over the entire loan term) and an annual fee of 0.35%.
- Kentucky Fannie Mae and Freddie Mac Conventional Credit Score Requirements
These are considered “conventional loans’ that can be often be obtained with a 3% to 5% down payment. Of course, there are higher standards for conventional home financing.
The most common minimum credit score requirement to get approved today is a 620 FICO. This type of score is typical for people that have high credit card balances or a few delinquent payments in their past. The general consensus on Freddie Mac and Fannie Mae loans in Kentucky is that a 620 score is the entry-point to qualify, but you will need thorough documentation of income with credit scores in the 620 to 640 range.
You will have a better shot to be approved for a mortgage-backed by Fannie or Freddie with a 680-credit score and less strenuous underwriting.
- Competitive Mortgage Rates and Fees
- Monthly Mortgage Insurance Is Not Always Required
- Ideal for First Time Home Buyers with Good Credit
As far as previous Bankruptcies and foreclosures:
Kentucky FHA Mortgage Loans currently requires 3 years removal from a foreclosure or short sale and 2 years on a bankruptcy with good re-established credit.
Kentucky Fannie Mae Mortgage Loans currently requires 4 years removal from bankruptcy, and 7 years on a foreclosure.
Kentucky VA Mortgage Loans currently requires 2 years of removal from bankruptcy or foreclosure with good re established credit.
Kentucky USDA loans require 3 years of removal from bankruptcy and foreclosure with good reestablished credit.
4. Appraisal
Generally, there’s nothing you can do to affect this. The bottom line here is…..” is the value of the house at least the value of what you’re paying for it?” If not, then not good things start to happen. Generally, you’ll find fewer issues with values on purchase transactions, because, in theory, the realtor has done an accurate job of valuing the house prior to taking the listing. The big issue comes in refinancing. In purchase transactions, the value is determined as the
Lower of the value or the contract price!!!
That means that if you buy a $1,000,000 home for $100,000, the value is established at $100,000. Conversely, if you buy a $200,000 home and the value comes in at $180,000 during the appraisal, then the value is established at $180,000. Big issues….Talk to your loan officer.
For each one of these boxes, there are over 1,000 things that can affect if a borrower has reached the threshold to complete that box. So..talk to a great loan officer. There are so many loan officers that don’t know what they’re doing. But, conversely, there’s a lot of great ones as well. Your loan is so important! Get a great lender so that you know, for sure, that the loan you want, can be closed on!
—
Joel Lobb
Mortgage Loan Officer
Mortgage Loan Officer
Individual NMLS ID #57916
American Mortgage Solutions, Inc.
Text/call: 502-905-3708
fax: 502-327-9119
email: kentuckyloan@gmail.com
email: kentuckyloan@gmail.com
Income Documents Needed for A Kentucky Mortgage Loan Approval.
What Income docs do you need?
Income Type:
Social Security Awards letter (Current Year)
Prior 1099’s
To Determine if you can gross up (Follow Product guide-FHA/Conv. Etc)
and review 1040 Tax return Line 5.. 5A will show non taxed income and
5B will show taxable portion – you can only gross up non taxable
Pension Benefits Letter – Must show Minimum 3 year continuation – most will be lifetime -letter must state lifetime or other timeframe
2 years W2’s
Self Employed:
2 Years 1040’s with all schedules (These are your personal tax returns).
The tax returns will tell you what other documents are needed
1040 – Page 1 Line 7 will tell you if there is any W2 income.
Self employed
people also pay themselves w2 income often. You will need all w2’s that
when added up match the $ amount entered on line 7 of the 1040
Line 7A will tell you if there’s other income. The income details will be
farther indicated on Schedule 1
Schedule 1 Line 2A show alimony received
Line 3 indicates if there is a Schedule C (Sole Proprietors or single person
LLC’s)
Line 5 is for Schedule E which is either Business (LLC/SCorp/Corp) or
Rental income- It could be both if borrower owns rental property and
businesses.
Schedule E The totals on all schedule E’s should add up to match the $ on Schedule
1. If the total on one of the schedules doesn’t match you know there are
others
On Schedule E Part II Box 28 you will see business name. If the business
name is duplicated on multiple lines it’s because both parties on the tax
filing have ownership in the business.
Check to confirm the Tax ID (FEIN)
is the same on both lines. If it’s different it indicated multiple companies.
Box 28B will have a P or S
P = LLC (Partnership) which is filed on a 1065 partnership return of if
owned by one person can be filed on a Schedule C in the personal 1040
Tax return. If the return is Filed on 1065 there will be a K1 which will
show the % of ownership. If they own 25% or more you will need the 2
years returns. (Assuming not single person partnership filed on 1040
Schedule C – There is no K1 on the Schedule C) if they advise that they
own less than 25% on a 1065 you’ll just need the K1 from the 1065 to
support that. If there are multiple partners there must be a 1065 filing
S = SCorp or Corporation which is filed on an 1120S for the S Corp or an
1120 for a Corporation. On the 1120S you will have a Schedule K1 which
will show the % of ownership. If they own 25% or more you will need 2
year full returns. If they advise that they own <25% the K1 will show their
shares. The 1120 will not have K1’s, the income just flows thru to the
personal returns. We don’t see 1120’s often
Docs Needed:
LLC with 25% or more ownership you need:
2 year 1065’s with all schedules
Year to date Profit and Loss statement and balance sheet –signed and dated
3 months bank statements from the business (3 because of covid-normally 2)
If they own <25% then you only need the K1s for 2 years
(If LLC is owned by one person A/K/A single person partnership they can file income on
Schedule C on personal 1040 Return – P & L / Balance sheet and Bank statements still required
SCorp/Corp with 25% plus ownership you need:
2 year 1120’s/1120 with all schedules
Year to date Profit and Loss statement and balance sheet –signed and dated
3 months bank statements from the business (3 because of covid-normally 2)
If they own <25% you only need the K1’s for 2 years
1040 Schedule C – Sole Proprietor or Single Person LLC you still need;
2 year 1040s with all schedules
Year to date Profit and Loss statement and balance sheet –signed and dated
3 months bank statements from the business (3 because of covid-normally 2)
Wage Earner
2 years w2’s for all jobs
Paystubs for the most recent 30 days
(All w2’s should balance with line 7 on 1040)
VOE’s – Primary job full income breakdown
Former jobs – Dates of employment only needed unless you are trying to support an income trend then you need full breakdowns
Trust Income
Copy of Trust – must be irrevocable
Child support/Alimony
Marital settlement agreement and final dissolution of marriage
Proof income received (For timeline follow program specific guideline)
If never married and receiving child support request court order and proof received
Voluntary child support/alimony – review program specific guides
All Social security/Disability, Pension, Child Support, Alimony, Trust income must be guaranteed to continue for a minimum of 3 years from closing.
Social Security/Disability/Child Support
may be able to be grossed up if not taxed. For social security review 1040 Line 5 – 5A & 5b will
confirm taxable/non taxable then follow program rules
Dividends/interest/capital gains. Only use if completely necessary – capital gains are not typically allowed as usually they are 1 time events.
Military Income
Paystubs aka LES (Leave earnings Statement
DD214
Current orders if active
Documents Needed For All Loan Applications
ALL BORROWERS:
- Copies of W-2’s for the last two years;
- Copies of paycheck stubs for the last 30 days (most current);
- Copies of checking and saving account statements for last three months (all pages);
- Copies of quarterly or semi-annual statements for checking, savings, IRA’s, CD’s, money market fund, stock, 401k, profit sharing, etc.;
- Copy of sales contract when ratified;
- Employment history for the last two years (address any gaps of employment);
- Residency history over the last two years, with name, phone number, address and account number of Land or Mortgage Company. Rental property copies of leases plus mortgage information.
- Canceled earnest money check when it clears or corresponding bank statement, if applicable;
- Commissioned or bonus income — if 25% or more of base, must have tax returns;
- Check for the expense of appraisal & credit report;
- Refinance Copy of Note, Deed of Trust, Settlement Statement, Survey, and Insurance information;
- Any assets used for down payment, closing cost, and cash reserves must be documented by a paper trail;
- If paid off mortgage in the last 2 years, need copies of HUD1;
- Copy of drivers license for applicant and co-applicant.
SELF-EMPLOYED BORROWERS:
- Copies of most recent 2 years tax returns (with all schedules including k-I’s if applicable);
- Copy of current profit & loss statement and balance sheet;
- Copy of corporate/partnership tax returns for most recent 2 year period if owning 25% or more of company — copies of W-2’s and/or 1099 forms.
DOCUMENTS WHICH MAY BE REQUIRED:
- Relocation Agreement if move is financed by employer, i.e. buyout agreement plus documentation outlining company paid closing costs benefits;
- Previous bankruptcy, need copies of petition for bankruptcy and discharge, including supporting schedules;
- Divorce Decree if applicable;
- Documentation supporting moneys received from social security/retirement trust income, i.e. copies of direct deposit bank statements, awards letter, evidence income will continue.
DOCUMENTS NEEDED FOR FHA/VA LOANS:
- FHA: Copy of social security card and drivers license for each applicant and co-applicants;
- VA: Original Certificate of Eligibility and copy of DD214 Discharge Paper;
- VA: Name and address of nearest living relative
Joel Lobb
Senior Loan Officer
NMLS#57916
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).
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.
Kentucky First Time Home Buyer Mortgage Guide
There are several alternative mortgage options
available if you don’t have a down payment,
haven’t established a strong credit history,
or are unable to supply documentation for a
“traditional” mortgage. Some options include:
DOWN PAYMENT ASSISTANCE (DPA) by KHC
These programs often come from states and
municipalities allowing you to purchase a
home with a smaller down payment. Many
DPA programs come in the form of a repayable
second mortgage or a deferred or forgiven
grant
Kentucky FHA (FEDERAL HOUSING ADMINISTRATION)
An FHA loan is insured by the Federal
Housing Administration and is ideal for low-
or moderate-income individuals or families,
or borrowers with past credit problems or
limited down payment resources.
FHA loans are popular for Kentucky first-time home buyers because they
offer down payment options as low as 3.5% and
an upfront Mortgage Insurance Premium (MIP)
financed into your loan amount. 100% of the
money needed at closing is allowed to be a gift.
FHA also allows a “streamline” refinance when
rates go down to lower your interest rate.
Kentucky VA (VETERAN’S ADMINISTRATION)
If you have served or are currently serving in
the U.S. military, we thank you for your service!
The VA loan program offers low rates and low-
or no-money-down payment options. VA loans
do not require mortgage insurance, and also
offer a low-cost Interest Rate Reduction Loan
(IRRL) program allowing you to refinance and
lower your mortgage payment. The maximum
VA loan amount varies, so check with your
Mortgage Professional for
up-to-date information.
Kentucky USDA Mortgage Loans
If you plan to live in a more rural area, the USDA
(United States Department of Agriculture) has
a variety of loans to help low- or moderate
income individuals and families buy, repair
or renovate a home. USDA loans often carry
lower interest rates and do not require a cash
down payment. Not all properties qualify, so
check with your
KENTUCKY HOME PURCHASE DOCUMENT CHECKLIST
l. INCOME
SALARY/HOURLY
Most recent 30 days of pay stubs
Last 2 years of W2s
Most recent tax return (pages 1 and 2)
SELF EMPLOYED (all schedules)
2 years personal tax returns
2 years business tax returns
P&L and balance sheet through most recent
quarter (FHA & Jumbo required)
OTHER (Social Security/Pension/Annuity)
2 years 1099s
Awards letter
ASSETS (every page)
Most recent 2 months bank statements
Most recent quarterly statement for 401K,
Retirement, Profit Sharing accounts
PROPERTY
Purchase Contract: disclosures, addendums,
copy of Earnest Money check
Homeowner’s Insurance: Agent name and
MISCELLANEOUS (if applicable)
Divorce Decree
*These documents may
Child support order
upon receipt of fully ex
Bankruptcy documents with discharge
VA: Certificate of Eligibility (COE) / DD-214 Papers
OTHER PROPERTIES OWNED:
Mortgage Statement
Proof of Insurance
Proof of any association fees
GIFT LETTER:
Evidence of transfer/deposit (Conventional)
Evidence of transfer/deposit and document donor ability to gift (FHA)
THE 8 STEPS OF HOMEOWNERSHIP
There are several events that will occur throughout your new home purchase process.
This guide will help you fully understand the process to eliminate stress:
- Save for Down Payment & Credit Scores
- Apply for Pre-Approval
- Determine Housing Criteria & Neighborhood
- Hire an Agent & Start Your Home Search
- Complete the Loan Application
- Move Through the Loan Process
- Set a Closing Date
- Understand Monthly Mortgage Payments
STEP 1: SAVE FOR
DOWN PAYMENT & CREDIT SCORES
Buying a home requires some upfront cash, including your down payment and closing costs.
Financial experts typically recommend a down payment of 20% of the purchase price. However,
you can purchase a home with a down payment as little as 0-3% of the purchase price.
While you’re working on saving for your down payment, keep an eye on your credit score. Your
credit score is a number that indicates how much of a credit risk you pose when you borrow
money and helps determine your interest rate. Typically, the higher your score, the lower your rate.
There are three different credit scores agencies: Equifax (BEACON),
Experian (FICO Risk Model), and TransUnion (FICO Risk Score, Classic).
Credit scores range from 300-850. Each credit reporting agency gives
you different scores, but all three should be pretty similar.
Your credit score is divided into five factors:
10%
10%
35%
Payment History……………………………………………………. 35%
Amounts Owed……………………………………………………… 30%
Length of Credit History………………………………………. 15%
Inquiries……………………………………………………………………. 10%
Type of Credit Used………………………………………………. 10%
15%
30%
Often, when you’re shopping for a mortgage, you may look for the best rate from multiple lenders.
Each lender may pull your credit report which is typically bad for your score. However, credit
reporting agencies distinguish a single loan search from a search for many new credit lines by the
length of time the inquiries occur. Avoid lowering your score by completing your rate shopping
within a short period of time, such as 14 days.
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/
NMLS Consumer Access for 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
Kentucky First Time Home Buyer Questions to Ask Your Lender?
Kentucky First Time Home Buyer Questions to Ask Your Lender?
∘ What kind of credit score do I need to qualify for different first time home buyer loans in Kentucky?
Answer. Most lenders will wants a middle credit score of 640 for KY First Time Home Buyers looking to go no money down. The two most used no money down home loans in Kentucky being USDA Rural Housing and KHC with their down payment assistance will want a 640 middle score on their programs.
If you have access to 3.5% down payment, you can go FHA and secure a 30 year fixed rate mortgage with some lenders with a 580 credit score. Even though FHA on paper says they will go down to 500 credit score with at least 10% down payment, you will find it hard to get the loan approved because lenders will create overlays to protect their interest and maintain a good standing with FHA and HUD.
Another popular no money down loan is VA. Most VA lenders will want a 620 middle credit score but like FHA, VA on paper says they will go down to a 500 score, but good luck finding a lender for that scenario.
A lot of times if your scores are in the high 500’s or low 600’s range, we can do a rapid rescore and get your scores improved within 30 days.
∘ Does it costs anything to get pre-approved for a mortgage loan?
Answer: Most lenders will not charge you a fee to get pre-approved, but some lenders may want you to pay for the credit report fee upfront. Typically costs for a tri-merge credit report for a single borrower runs about $50 or less. Maybe higher if more borrowers are included on the loan application.
∘ How long does it take to get approved for a mortgage loan in Kentucky?
Answer: Typically if you have all your income and asset documents together and submit to the lender, they typically can get you a pre-approval through the Automated Underwriting Systems within 24 hours. They will review credit, income and assets and run it through the different AUS (Automated Underwriting Systems) for the template for your loan pre-approval. Fannie Mae uses DU, or Desktop Underwriting, FHA and VA also use DU, and USDA uses a automated system called GUS. GUS stands for the Guaranteed Underwriting System.
If you get an Automated Approval, loan officers will use this for your pre-approval. If you have a bad credit history, high debt to income ratios, or lack of down payment, the AUS will sometimes refer the loan to a manual underwrite, which could result in a longer turn time for your loan pre-approval answer
∘ Are there any special programs in Kentucky that help with down payment or no money down loans for KY First Time Home Buyers?
Answer: There are some programs available to KY First Time Home Buyers that offer zero down financing: KHC, USDA, VA, Fannie Mae Home Possible and HomePath, HUD $100 down and City Grants are all available to Kentucky First Time Home buyers if you qualify for them. Ask your loan officer about these programs
∘ When can I lock in my interest rate to protect it from going up when I buy my first home?
Answer: You typically can lock in your mortgage rate and protect it from going up once you have a home picked-out and under contract. You can usually lock in your mortgage rate for free for 90 days, and if you need more time, you can extend the lock in rate for a fee to the lender in case the home buying process is taking a longer time. The longer the term you lock the rate in the future, the higher the costs because the lender is taking a risk on rates in the future.
Interest rates are kinda like gas prices, they change daily, and the general trend is that they have been going up since the Presidential election in November 2016.
∘ How much money do I need to pay to close the loan?
Answer: Depending on which loan program you choose, the outlay to close the loan can vary. Typically you will need to budget for the following to buy a home: Good faith deposit, usually less than $500 which holds the home for you while you close the loan. You get this back at closing; Appraisal fee is required to be paid to lender before closing. Typical costs run around $400-$450 for an appraisal fee; home inspection fees. Even though the lender’s programs don’t require a home inspection, a lot of buyers do get one done. The costs for a home inspection runs around $300-$400. Lastly, termite report. They are very cheap, usually $50 or less, and VA requires one on their loan programs. FHA, KHC, USDAS, Fannie Mae does not require a termite report, but most borrowers get one done.
There are also lender costs for title insurance, title exam, closing fee, and underwriting fees that will be incurred at closing too. You can negotiated the seller to pay for these fees in the contract, or sometimes the lender can pay for this with a lender credit.
The lender has to issue a breakdown of the fees you will incur on your loan pre-approval.
How long is my pre-approval good for on a Kentucky Mortgage Loan?
Answer: Most lenders will honor your loan pre-approval for 60 days. After that, they will have to re-run your credit report and ask for updated pay stubs, bank statements, to make sure your credit quality and income and assets has not changed from the initial loan pre-approval.
How much money do I have to make to qualify for a mortgage loan in Kentucky?
Answer: The general rule for most FHA, VA, KHC, USDA and Fannie MAe loans is that we run your loan application through the Automated Underwriting systems, and it will tell us your max loan qualifying ratios.
There are two ratios that matter when you qualify for a mortgage loan. The front-end ratio, is the new house payment divided by your gross monthly income. The back-end ratio, is the new house payment added to your current monthly bills on the credit report, to include child support obligations and 401k loans.
Car insurance, cell phone bills, utilities bills does not factor into your qualifying rations.
If the loan gets a refer on the initial desktop underwriting findings, then most programs will default to a front end ratio of 31% and a back-end ratio of 43% for most government agency loans that get a refer. You then take the lowest payment to qualify based on the front-end and back-end ratio.
So for example, let’s say you make $3000 a month and you have $400 in monthly bills you pay on the credit report. What would be your maximum qualifying house payment for a new loan?
Take the $3000 x .43%= $1290 maximum back-end ratio house payment. So take the $1290-$400= $890 max house payment you qualify for on the back-end ratio.
Then take the $3000 x .31%=$930 maximum qualifying house payment on front-end ratio.
So now your know! The max house payment you would qualify would be the $890, because it is the lowest payment of the two ratios.
Joel Lobb
Senior Loan Officer
Senior Loan Officer
(NMLS#57916)
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.
Kentucky First-Time Homebuyer Loan Programs for FHA, VA, KHC and USDA Mortgage Loans in Kentucky 