Category: fha refinance

Kentucky FHA loans


Qualifying for an FHA Loan in Kentucky

Kentucky FHA Loan Requirements for 2024

Originally posted on Kentucky FHA Mortgage Lender:
Kentucky FHA Loan Requirements The requirements for Kentucky FHA loans are set by HUD. Borrowers must have a steady employment history of the last two years within the same industry or line of work. Recent college graduates can use their transcripts to supplant the 2 year work history…


Kentucky FHA Loan Requirements for 2024 to include Credit Fico Scores, Down Payment, Income and Job history

FHA

An FHA loan is a mortgage issued by federally qualified lenders and insured by the Federal Housing Administration (FHA). FHA loans are designed for low-to-moderate income borrowers who are unable to make a large down payment.

  • Minimum Credit Score is 500 with at least 10% down
  • Minimum Credit Score is 580 if you put less than 10% down

  • FHA Guidelines

    FHA Mortgage Guidelines

  • Upfront and Monthly Mortgage Insurance is required regardless of the Loan to Value
  • FHA Loans are only available for financing primary residences
  • Maximum Debt to Income Ratio of 50% (unless mitigating factors justify allowing a higher DTI)

Kentucky FHA Loan Requirements

Kentucky FHA Loan Requirements

The requirements for Kentucky FHA loans are set by HUD.

  • Borrowers must have a steady employment history of the last two years within the same industry or line of work. Recent college graduates can use their transcripts to supplant the 2-year work history rule as long as it makes sense.
  • Self-Employed will need a 2-year history of tax returns filed with IRS. They will take a 2-year average.
  • FHA requires a 3.5% down payment. Can be gifted from family member or from retirement savings plan, or money saved-up. Any type of cash deposits is not allowed for down payments. No exceptions to this rule!! This is one of the biggest issues I see in FHA underwriting nowadays.
  •  FHA loans are for primary residence occupancy. Not rental houses.
  • Borrowers must have a property appraisal from a FHA-approved appraiser.
  • Borrowers’ front-end ratio (mortgage payment plus HOA fees, property taxes, mortgage insurance, homeowners’ insurance) needs to be less than 31 percent of their gross income, typically. You may be able to get approved with as high a percentage as 43 percent. If the Automated Underwriting System gives you an Approved Eligible you can go higher on the debt ratios
  • Borrowers must have a minimum credit score of 580 for maximum financing with a 3.5% down payment
  • Borrowers must have a minimum credit score of 500-579 for maximum LTV of 90 percent with a minimum down payment of 10 percent. Most lenders will not go below 580 to 620 score, and very few lenders will go to 580 score. It’s best to work on getting your scores up before you apply or work with a loan officer to improve them.
  • 2 years removed from Chapter 7 is required with good pay history after bankruptcy
  • 1 year removed from Chapter 13 is okay with an excellent pay history with the Chapter 13 plan and permission from trustee. You will need to qualify with the Chapter 13 payment along with new house payment. Again, scores will play into your loan pre-approval.
  • Typically, borrowers must be three years out of foreclosure and have re-established good credit. Exceptions can be made if there were extenuating circumstances and you’ve improved your credit. If you were unable to sell your home because you had to move to a new area, this does not qualify as an exception to the three-year foreclosure guideline.



FHA 

Low Down Payment which can be 100% gift from family member or Grant Program
Seller can pay closing costs-Maximum 6% of purchase price
There is maximum mortgage amount for each county. Check FHA loan limit for your county.
Non-occupant co-signers are allowed on this program.
FHA Approved Condos-Single family home-2-4 unit properties, and PUDs are eligible.
Fast automated underwriting approval available. Also, the file can be manually underwritten by a live person to get loan approval if you do not receive approval through automated underwriting system.

FHA Foreclosure Program 

Must be HUD Owned property or FHA Foreclosure in HUD Participating Communities
$100 Down Payment than standard FHA program
580 minimum credit score
Single family, 1-4 unit properties, HUD approved condominiums, and PUDS eligible

https://youtu.be/-kZbDJVgwY8

2. Kentucky Housing Corporation Down Payment Assistance for 2024.

Kentucky Down payment assistance loans are available up to $10,000 for Mortgage

Down payment Assistance for Kentucky Homebuyers $10,000 Through KHC

KHC recognizes that down payments, closing costs, and prep​aids are stumbling blocks for many potential home buyers. We offer a special loan program to help with those. Your KHC-approved lender can help you apply.

Eligibility: Both first-time and repeat home buyers purchasing a single-family dwelling. Purchase price can be no more than $481,176. Applicant’s income must be within applicable secondary market limits in effect. If KHC’s Homebuyer Tax Credit is used, then household income must be under the Homebuyer Tax Credit income limits.

Mortgage Revenue Bond (MRB) First Mortgage Products
Eligibility: Must be a first-time home buyer, unless purchasing a single-family dwelling in a targeted county. Purchase price can be no more than $481,176. Gross annual household income must be within applicable limits in effect. All non-borrowing occupants age 18 or older must disclose income and complete Non- Borrowing Occupant Form.
KHC ELIGIBILITY AND CREDIT STANDARDS OVERVIEW (Not intended to be an all-inclusive list.)
Home Buyer Eligibility
•
KHC can help both first time and repeat home buyers statewide.
•
Must be a U.S. citizen or legal status to be in U.S.
•
Applicant’s income ONLY through Secondary Market.
•
Property must be the borrower’s principal residence.
•
Borrower cannot own any other residential property at time closing for all loans with MRB Funding.
•
Any Borrower that meets both the income and purchase price limit can have access to Down Payment Assistance.
Kentucky Housing Credit Standards
•
620 minimum credit score required for FHA, VA, & RHS.
•
660 minimum credit score required for Conventional.
•
Debt ratios: 40/50%
•
Collections in most cases do not need to be paid-off in full.
•
Bankruptcies and foreclosures must be discharged two to seven years.
•
Non-taxable income can be grossed-up.
Property Eligibility
•
Both new and existing property.
•
Both new & existing Manufactured Housing.
•
With RHS only new construction Manufactured housing is allowed.
•
Purchase price limit of $481,176 for Secondary Market, MRB Loans, and Tax Credit.
•
Full appraisal required on all KHC loans.
•
With Existing Property, VA is the only loan product that requires a termite inspection.
•
A termite soil treatment certificate is required on ALL new construction
Regular Down Payment Assistance Programs (DAP) Only home buyers obtaining a Kentucky Housing Corporation first mortgage are eligible for DAP funds.
Interest Rate with DAP applicable.
Eligible KHC Mortgages FHA, RHS, VA, HFA Preferred, & HFA Preferred Plus 80 Income Eligibility
Secondary Market or Mortgage Revenue Bond Property Eligibility New and Existing Properties
Borrower Eligibility First-time and Repeat Home Buyers Amount Up to $10,000
Not required to be at maximum LTV first mortgage amount Terms 3.75% amortized over 10 years Purchase Price Limit $481,176 AUS
Borrower must qualify with additional monthly payment.
With AUS approval, can go up to 40/50% with all loans.
Required Repairs Buyer or seller must use OWN funds to pay for repairs DAP

Mortgage Revenue Bonds (MRB)

FHA
VA
RH​​S

​​​​

​​​​​Secondary Market Funding Source

  • First-time and repeat homebuyers statewide
  • 30-year fixed interest rate
  • Principal residence ONLY
  • Purchase Price Limit:  $481,176
  • Borrower must meet KHC’s Secondary Market Income Limits
Conventional Preferred ​Program
Conventional Preferred Plus 80
FHA
VA
RH​​S

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

 NMLS Consumer Access for Joel Lobb 

Privacy Policy

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#57916

— 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.

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Kentucky FHA Mortgage Lender

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Kentucky FHA Loan Requirements

The requirements for Kentucky FHA loans are set by HUD.

  • Borrowers must have a steady employment history of the last two years within the same industry or line of work. Recent college graduates can use their transcripts to supplant the 2 year work history rule as long as it makes sense.
  • Self-Employed will need a 2 year history of tax returns filed with IRS. They will take a 2 year average.
  • FHA requires a 3.5% down payment. Can be gifted from family member or from retirement savings plan, or money saved-up. Any type of cash deposits are not allowed for down payments. No exceptions to this rule!! This is one of the biggest issues I see in FHA underwriting nowadays.
  •  FHA loans are  for primary residence occupancy. Not rental houses.
  • Borrowers must have a property appraisal from a FHA-approved appraiser.
  • Borrowers’ front-end ratio (mortgage payment plus HOA fees…

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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:

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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
Individual NMLS ID #57916
 
American Mortgage Solutions, Inc.
 

Text/call:      502-905-3708

fax:            502-327-9119
email:          kentuckyloan@gmail.com
 

 

 

 

Kentucky FHA Loan Requirements


Kentucky FHA Mortgage Loan Lender Guidelines

Kentucky FHA Loan Requirements

The requirements for Kentucky FHA loans are set by HUD.

  • Borrowers must have a steady employment history of the last two years within the same industry or line of work. Recent college graduates can use their transcripts to supplant the 2-year work history rule as long as it makes sense.
  • Self-Employed will need a 2-year history of tax returns filed with IRS. They will take a 2-year average.
  • FHA requires a 3.5% down payment. Can be gifted from family member or from retirement savings plan, or money saved-up. Any type of cash deposits is not allowed for down payments. No exceptions to this rule!! This is one of the biggest issues I see in FHA underwriting nowadays.
  •  FHA loans are for primary residence occupancy. Not rental houses.
  • Borrowers must have a property appraisal from a FHA-approved appraiser.
  • Borrowers’ front-end ratio (mortgage payment plus HOA fees, property taxes, mortgage insurance, homeowners’ insurance) needs to be less than 31 percent of their gross income, typically. You may be able to get approved with as high a percentage as 43 percent. If the Automated Underwriting System gives you an Approved Eligible you can go higher on the debt ratios
  • Borrowers must have a minimum credit score of 580 for maximum financing with a 3.5% down payment
  • Borrowers must have a minimum credit score of 500-579 for maximum LTV of 90 percent with a minimum down payment of 10 percent. Most lenders will not go below 580 to 620 score, and very few lenders will go to 580 score. It’s best to work on getting your scores up before you apply or work with a loan officer to improve them.
  • 2 years removed from Chapter 7 is required with good pay history after bankruptcy
  • 1 year removed from Chapter 13 is okay with an excellent pay history with the Chapter 13 plan and permission from trustee. You will need to qualify with the Chapter 13 payment along with new house payment. Again, scores will play into your loan pre-approval.
  • Typically, borrowers must be three years out of foreclosure and have re-established good credit. Exceptions can be made if there were extenuating circumstances and you’ve improved your credit. If you were unable to sell your home because you had to move to a new area, this does not qualify as an exception to the three-year foreclosure guideline.


FHA 

Low Down Payment which can be 100% gift from family member or Grant Program
Seller can pay closing costs-Maximum 6% of purchase price
There is maximum mortgage amount for each county. Check FHA loan limit for your county.
Non-occupant co-signers are allowed on this program.
FHA Approved Condos-Single family home-2-4 unit properties, and PUDs are eligible.
Fast automated underwriting approval available. Also, the file can be manually underwritten by a live person to get loan approval if you do not receive approval through automated underwriting system.

FHA Foreclosure Program 

Must be HUD Owned property or FHA Foreclosure in HUD Participating Communities
$100 Down Payment than standard FHA program
580 minimum credit score
Single family, 1-4 unit properties, HUD approved condominiums, and PUDS eligible

Kentucky FHA, VA, and USDA loans for purchase, refinance, and renovations, and we now allow credit scores down to 580.

Kentucky FHA, VA, and USDA loans for purchase, refinance, and renovations, and we now allow credit scores down to 580.


Kentucky First Time Homebuyers government mortgage programs offer expanded qualifying criteria for people with lower incomes or less-than-perfect credit.

Our expansive product set includes various Kentucky FHA, VA, and USDA loans for purchase, refinance, and renovations, and we now allow credit scores down to 580.

Other key features and benefits include:

Kentucky FHA Loans 3.5% down payment from borrower or other approved source1 Up to 6% seller’s concessions 580 credit score minimum Streamline and cash-out refinance options No reserves with most transactions AUS with TOTAL Mortgage Scorecard Kentucky VA loans Purchase, cash-out refinance, and Interest Rate Reduction Refinancing Loans (IRRRL) 100% loan-to-value available All closing costs may be paid by the seller No monthly mortgage insurance No prepayment penalty, and loan is assumable Kentucky USDA Mortgage Loans No down payment or reserves required 580 credit score minimum Financing available for closing costs and prepaid expenses2 Up to 6% interested party contributions