A Kentucky Mortgage Loan Officer that has closed over 600 home loans specializing in Kentucky First Time Homebuyer Loans to include the following FHA, VA, USDA, Rural Housing, Down Payment Assistance Loan from Kentucky Housing Corp or KHC and the Fannie Mae Home Path HUD $100 Down Mortgage Program in Kentucky. Call/Text 502-905-3708 with your mortgage questions or email kentuckyloan@gmail.com I try to respond to all requests within minutes during regular business hours. NMLS# 57916 Joel Lobb Loan Originator, American Mortgage Solutions NMLS ID. 1364 Equal Housing Lender
Acceptable Income and Job History for a Mortgage Loan Approval in Kentucky
Mortgage Underwriters must follow both DU and agency guidelines when it comes to documenting and calculating qualifying income for a loan transaction. Income guidelines may vary slightly depending on the loan program and the borrower’s employment profile. Below are some general tips for W2 income.
Documentation that may be required
Paystub with year to date gross earnings
At least 1 year’s W2
Verbal or full VOE
Base Pay:
Salaried and fixed hourly income is calculated by averaging the gross year to date income
Variable hourly income is calculated by averaging 12 month history
Commission and tip income is calculated by averaging over 24 months
No transcripts are required for salaried, hourly, or less than 25% commission W2 income borrowers
Unreimbursed expenses do not have to be deducted from the gross pay for salaried, hourly, or less than 25% commission W2 borrowers
Overtime, and Bonus Income:
Overtime and Bonus can be used as effective income as long as it’s been received for 2 years and is reasonably likely to continue
Periods of less than 2 years may be considered as long as it’s been consistently earned over a period of at least 12 months and there are positive factors to offset the shorter history of receipt per underwriter discretion
Overtime and Bonus income must be documented by a full VOE
Declining overtime and bonus income cannot be used for qualifying income
Part Time Income:
FHA loans requires a 2 year history of working multiple jobs
Fannie Mae or Conventional loans will allow less than 2 years as long as it’s been consistently earned over a period of at least 12 months and there are positive factors to offset the shorter history of receipt per underwriter discretion
How to get approved for a Kentucky FHA, VA, USDA and Fannie Mae Mortgage loan with Variable Income
Variable INCOME if your borrower is not hourly at 40 hours a week or salary do you fall within VARIABLE INCOME?? Yup we all dislike that is calculated by an averaging method..
Examples of income of this type include income from hourly workers with fluctuating hours, or income that includes commissions, bonuses, or overtime.
History of Receipt: Two or more years of receipt of a particular type of variable income is recommended; however, variable income that has been received for 12 to 24 months may be considered as acceptable income, as long as the borrower’s loan application demonstrates that there are positive factors that reasonably offset the shorter income history.
Frequency of Payment: us as a lender must determine the frequency of the payment Examples:
If a borrower is paid an annual bonus on March 31st of each year, the amount of the March bonus should be divided by 12 to obtain an accurate calculation of the current monthly bonus amount.
Note that dividing the bonus received on March 31st by three months produces a much higher, INACCURATE monthly average.
If a borrower is paid overtime on a biweekly basis, the most recent paystub must be analyzed to determine that both the current overtime earnings for the period and the year-to-date overtime earnings are consistent and, if not, why.
There are legitimate reasons why these amounts may be inconsistent yet still eligible for use as qualifying income. For example, borrowers may have overtime income that is cyclical (transportation employees who operate snow plows in winter, package delivery service workers who work longer hours through the holidays).
We must investigate the difference between current period overtime and year-to-date earnings and document the analysis before using the income amount in the trending analysis.
Income Trending: After the monthly year-to-date income amount is calculated, it must be compared to prior years’ earnings using the borrower’s W-2’s or signed federal income tax returns (or a standard Verification of Employment completed by the employer or third-party employment verification vendor).
If the trend in the amount of income is stable or increasing, the income amount should be averaged.
If the trend was declining, but has since stabilized and there is no reason to believe that the borrower will not continue to be employed at the current level, the current, lower amount of variable income must be used.
If the trend is declining, the income may not be stable.
Additional analysis must be conducted to determine if any variable income should be used, but in no instance may it be averaged over the period when the declination occurred.
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. Rates are subject to change and are subject to borrower(s) qualification.
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;
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.
Glossary of Mortgage Terms to Know For A Kentucky Mortgage Loan.
ACCRUED INTEREST: Accumulated interest since the principal investment that has not yet been paid. AMORTIZATION: Paying off debt, principal and interest, with a fixed repayment schedule in regular installments over a fixed period of time. ANNUAL PERCENTAGE RATE (APR): The annual rate charged for borrowing money expressed as a percentage. APR takes into account interest, discount points, lender fees and mortgage insurance. APPLICATION FEE: A fee charged by a lender to cover the initial costs of processing a loan application. APPRAISAL: A written estimate of a property’s current market value, based on the current condition of the property and recent sales information from similar properties in the same area. APPRAISAL FEE: The cost to have a licensed, certified appraiser estimate the market value of a property as of a specific date. BORROWER: An individual who receives a loan from a lender with the intention of repaying the loan in full over the agreed upon time-frame. CAP: A limit on the amount the interest rate can increase or decrease for an ARM, either in an adjustment period or over the life of the loan. CERTIFICATE OF ELIGIBILITY: A document given to qualified veterans entitling them to a VA loan. Obtained by sending DD-214 (Separation Paper) to the local VA office with VA form 1880 (request for Certificate of Eligibility). CERTIFICATE OF REASONABLE VALUE (CRV): An appraisal issued by the VA. CLOSING: Also called “settlement,” is when all parties in a mortgage loan transaction sign the necessary documents to legally transfer property and funds. CLOSING COSTS: Expenses incurred during the home purchase or refinance process that are paid at closing, including the loan origination fee, discount points, attorney’s fees, title insurance, appraisals, etc. CLOSING DISCLOSURE (CD): A five-page document listing final details about the mortgage such as loan terms, projected monthly payments and total closing costs. COMMITMENT LETTER: A legal document issued to a loan applicant from the lender to provide them with a mortgage under certain terms and conditions. COMPARABLES: An abbreviation for “comparable properties;” recently sold properties with similar characteristics and location to the subject property that help the appraiser determine the fair market value of the subject property. CONVENTIONAL LOAN: A loan not secured by the U.S. government, such as FHA, VA, or USDA. DEBT-TO-INCOME RATIO (DTI): A percentage of an individual’s debt, measured by dividing total monthly recurring debt payments by gross monthly income. DEED: A written legal document showing who owns a particular property. This must be signed to transfer a property’s ownership rights to a new homeowner. DEPARTMENT OF VETERANS AFFAIRS (VA): A government agency that manages benefits and other services for eligible veterans of the military. DOWN PAYMENT: The upfront money paid to purchase a home. It is deducted from the total amount of a mortgage and represents the beginning equity.
EARNEST MONEY: A security deposit made by a buyer to a seller to demonstrate that the buyer is serious and willing to purchase the property. EQUAL CREDIT OPPORTUNITY ACT (ECOA): Federal law enacted in 1974 making it unlawful for any creditor to discriminate based on race, color, religion, national origin, age, sex, marital status or receipt of income from public assistance programs. EQUITY: The portion of a property that homeowner owns. Equity is the difference between the home’s fair market value and the outstanding balance of the mortgage on the property. ESCROW: A third party that holds money to ensure pay property taxes, homeowner’s insurance or mortgage insurance is paid on time. HAZARD INSURANCE (HOMEOWNER’S INSURANCE): Protects a homeowner against loss due to fire or other natural disasters in exchange for a premium paid to the insurer. HOMEOWNERS ASSOCIATION (HOA): An organized group of owners, usually found in condominiums or closed communities, who manage the common areas and enforce rules. INTEREST RATE: The amount charged to borrow money from a lender, expressed as a percentage of the principal loan. LOAN ESTIMATE (LE): A three-page document that explains the important details about a borrower’s loan, including the estimated interest rate, monthly payment and total closing costs for the loan. The LE will be provided within three business days of the lender receiving the loan application. LOAN-TO-VALUE RATIO (LTV): The percentage of the loan amount to the appraised value of the property. LOCK-IN RATE: An offer by a lender to guarantee an interest rate for a set period of time. MARKET VALUE: Also called “home value;” the amount for which a house will likely sell. MORTGAGE INSURANCE (MI): Insurance that protects the lender if a borrower defaults on their mortgage loan. MI is usually required if the down payment is less than 20% of the purchase price. ORIGINATION FEE: A fee charged by a lender to cover the administrative costs of processing a loan. PREPAYMENT: An advanced principal payment prior to the due date, thus saving money on interest. PREPAYMENT PENALTY: A fee charged to borrowers for paying ahead on their mortgage. PRINCIPAL: Outstanding loan balance still owed to the lender, not including interest. REALTOR: A licensed real estate professional who represents a buyer or seller in a real estate transaction in exchange for a commission; a member of the National Association of Realtors. REAL ESTATE SETTLEMENT PROCEDURES ACT (RESPA): A federal law requiring lenders to provide disclosures to borrowers informing them of loan settlement costs. These guidelines provide acceptable practices and fees in real estate transactions. SECOND MORTGAGE: An additional mortgage, or lien, placed on a property with subordinate rights to the first mortgage. TERM: The period of time that covers the life of the loan, usually in years. TITLE: A document that indicates ownership of a property, as well as rights of ownership and possession of the property. TITLE INSURANCE: Insurance that protects the lender (lender’s policy) or the buyer (owner’s policy) against loss due to disputes over property ownership.
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/
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.”
Tax Returns are always required for a self employed borrower. Depending on the business structure, the borrower may have business returns in addition to their personal tax returns.
1099, Sole Proprietorships, and LLC self employed borrowers typically file Schedule C on their personal tax returns.
Corporations and Partnerships will file Business Tax Returns in addition to their personal returns. The business returns will include K1’s listing the borrower’s ordinary business income and percentage of ownership.
Corporation and Partnerships may also have W2 income in addition to their K1’s.
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. Rates are subject to change and are subject to borrower(s) qualification.
Examples of income of this type include income from hourly workers with fluctuating hours, or income that includes commissions, bonuses, or overtime.
Kentucky First-Time Homebuyer Loan Programs for FHA, VA, KHC and USDA Mortgage Loans in Kentucky 