Category: job history

Here are action steps you can take right now to buy a home in Kentucky in 2024

If you’re planning to buy a home in Kentucky in 2024, here are some essential steps to consider:

1. Focus on improving your credit score to qualify for a mortgage with a low interest rate.
2. Manage your debt-to-income ratio by repaying existing debt, increasing your income, or both.
3. Ensure timely payments on all accounts to maintain a good credit score.
4. Get pre-approved for a mortgage before searching for a home to know your affordability.
5. Keep credit card utilization below 30% and seek down payment assistance programs if needed.


Here are action steps you can take right now to buy a home in Kentucky in 2024

1. Focus on your credit score

FICO credit scores are among the most frequently used credit scores, and range from 350-800 (the higher, the better). A consumer with a credit score of 750 or higher is considered to have excellent credit, while a consumer with a credit score below 620 is considered to have poor credit.

To qualify for a mortgage and get a low mortgage rate, your credit score matters.

Each credit bureau collects information on your credit history and develops a credit score that lenders use to assess your riskiness as a borrower. If you find an error, you should report it to the credit bureau immediately so that it can be corrected.

2. Manage your debt-to-income ratio

Many lenders evaluate your debt-to-income ratio when making credit decisions, which could impact the interest rate you receive.

A debt-to-income ratio is your monthly debt payments as a percentage of your monthly income. Lenders focus on this ratio to determine whether you have enough excess cash to cover your living expenses plus your debt obligations.

Since a debt-to-income ratio has two components (debt and income), the best way to lower your debt-to-income ratio is to:

  • repay existing debt;
  • earn more income; or
  • do both

3. Pay attention to your payments

Simply put, lenders want to lend to financially responsible borrowers.

Your payment history is one of the largest components of your credit score. To ensure on-time payments, set up autopay for all your accounts so the funds are directly debited each month.

FICO scores are weighted more heavily by recent payments so your future matters more than your past.

In particular, make sure to:

  • Pay off the balance if you have a delinquent payment
  • Don’t skip any payments
  • Make all payments on time

4. Get pre-approved for a mortgage before you start shopping for a home loan.

Too many people find their home and then get a mortgage.

Switch it.

Get pre-approved with a lender first. Then, you’ll know how much home you can afford.

To get pre-approved, lenders will look at your income, assets, credit profile and employment, among other documents.

5. Keep credit utilization low on your credit cards

Lenders also evaluate your credit card utilization, or your monthly credit card spending as a percentage of your credit limit.

Ideally, your credit utilization should be less than 30%. If you can keep it less than 10%, even better.

For example, if you have a $10,000 credit limit on your credit card and spent $3,000 this month, your credit utilization is 30%.

Here are some ways to manage your credit card utilization:

  • set up automatic balance alerts to monitor credit utilization
  • ask your lender to raise your credit limit (this may involve a hard credit pull so check with your lender first)
  • pay off your balance multiple times a month to reduce your credit utilization

6. Look for down payment assistance in Kentucky

There are various types of down payment assistance, even if you have student loans.

Here are a few:

  • FHA loans – federal loan through the Federal Housing Authority
  • USDA loans – zero down mortgages for rural and suburban homeowners
  • VA loans – if military service
  • Kentucky Housing Down Payment Assistance of $10,000

There are federal, state and local assistance programs as well so be on the look out.



If you want a personalized answer for your unique situation call, text, or email me or visit my website below:

Joel Lobb
Mortgage Loan Officer
Individual NMLS ID #57916

American Mortgage Solutions, Inc.
10602 Timberwood Circle
Louisville, KY 40223
Company NMLS ID #1364

Text/call: 502-905-3708

email: kentuckyloan@gmail.com

https://kentuckyloan.blogspot.com

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.

http://www.emailmeform.com/builder/form/0bfJs9b6bK8TGoc6mQk9hIu

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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Acceptable Income and Job History for a Mortgage Loan Approval in Kentucky


Acceptable Income and Job History for a Mortgage Loan Approval in Kentucky
Acceptable Income and Job History for a Mortgage Loan Approval in Kentucky

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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.

How to get approved for a Kentucky FHA, VA, USDA and Fannie Mae Mortgage loan with Variable Income
http://www.emailmeform.com/builder/form/0bfJs9b6bK8TGoc6mQk9hIu
 
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

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. 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 http://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.

Income Documents Needed for A Kentucky Mortgage Loan Approval.


What Income docs do you need?

Louisville Kentucky Mortgage Lender for FHA, VA, KHC, USDA and Rural Housing Kentucky Mortgages: Documents Needed Mortgage Approval in Kentucky

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:

  1. Copies of W-2’s for the last two years;
  2. Copies of paycheck stubs for the last 30 days (most current);
  3. Copies of checking and saving account statements for last three months (all pages);
  4. Copies of quarterly or semi-annual statements for checking, savings, IRA’s, CD’s, money market fund, stock, 401k, profit sharing, etc.;
  5. Copy of sales contract when ratified;
  6. Employment history for the last two years (address any gaps of employment);
  7. 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.
  8. Canceled earnest money check when it clears or corresponding bank statement, if applicable;
  9. Commissioned or bonus income — if 25% or more of base, must have tax returns;
  10. Check for the expense of appraisal & credit report;
  11. Refinance Copy of Note, Deed of Trust, Settlement Statement, Survey, and Insurance information;
  12. Any assets used for down payment, closing cost, and cash reserves must be documented by a paper trail;
  13. If paid off mortgage in the last 2 years, need copies of HUD1;
  14. Copy of drivers license for applicant and co-applicant.

SELF-EMPLOYED BORROWERS:

  1. Copies of most recent 2 years tax returns (with all schedules including k-I’s if applicable);
  2. Copy of current profit & loss statement and balance sheet;
  3. 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:

  1. Relocation Agreement if move is financed by employer, i.e. buyout agreement plus documentation outlining company paid closing costs benefits;
  2. Previous bankruptcy, need copies of petition for bankruptcy and discharge, including supporting schedules;
  3. Divorce Decree if applicable;
  4. 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:

  1. FHA: Copy of social security card and drivers license for each applicant and co-applicants;
  2. VA: Original Certificate of Eligibility and copy of DD214 Discharge Paper;
  3. VA: Name and address of nearest living relative
 
 
http://www.emailmeform.com/builder/form/0bfJs9b6bK8TGoc6mQk9hIu
Joel Lobb
Senior Loan Officer
NMLS#57916

text or call my phone: (502) 905-3708

email me at 

kentuckyloan@gmail.com

 
The view and opinions stated on this website belong solely to the authors, and are intended for informational purposes only. The posted information does not guarantee approval, nor does it comprise full underwriting guidelines. This does not represent being part of a government agency. The views expressed on this post are mine and do not necessarily reflect the view of my employer. Not all products or services mentioned on this site may fit all people. NMLS ID# 57916, (www.nmlsconsumeraccess.org).
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.

 

What is a debt to income ratio for a Kentucky Mortgage?


 

A debt to income ratio, commonly referred to as DTI, is the ratio of the amount of monthly expenses you have relative to your gross (before tax) income. 

 

The automated underwriter will look at two ratios when analyzing your DTI: your front end DTI ratio and your back end DTI ratio.

 

Front End DTI

 

The front end DTI is the ratio of your new housing payment including taxes and insurance relative to the amount of income you earn.  The front end DTI ratio excludes all other debts and simply analyzes your income relative to the payments on the new mortgage plus tax and insurance. 

 

So, if your mortgage payments including tax and insurance are $1,000 and you earn $4,000 per month in gross income, your front end DTI would be 25% ($1,000 / $4,000 = 25%). 

 

Generally, the automated underwriter likes to see front end DTI ratios below 40%, although it will approve higher front end DTI ratios with compensating factors like high credit scores, money in the bank, low loan to value ratio, etc. 

 

Back End DTI

 

The back end DTI is the ratio of all of your expenses appearing on your credit report plus your new mortgage payment including taxes and insurance divided by your gross monthly income.  The back end DTI ratio does not include things like utilities, health insurance or groceries.  It is calculated using only the liabilities appearing on your credit report plus any child support or garnishments that may appear on your paystubs. 

 

So, to continue our example from above, if your mortgage payments with tax and insurance are $1,000 per month, you have a $250 car payment, $250 in credit card payments and a gross income of $4,000, your back end DTI is 37.5% ($1,500 / $4,000 = 37.5%). 

 

Generally the automated underwriter likes to see back end DTI ratios under 45%.  However, it will approve loans with a 55% back end DTI or higher if there are compensating factors. 

 

It is important to understand what a debt to income ratio is, however, you do not have to calculate it yourself.  Your Loan Originator and your Processor will do this for you. 

 


Joel Lobb
Mortgage Loan OfficerIndividual NMLS ID #57916

American Mortgage Solutions, Inc.10602 Timberwood Circle Louisville, KY 40223Company NMLS ID #1364

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