Qualifications for a USDA Loan to Buy a Home in Kentucky

USDA loan in Kentucky

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

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

How long is my pre-approval good for on a Kentucky Mortgage Loan?

Shopping for a Kentucky Mortgage Loan?

1. Mortgage Rates Change

Just like the stock market, mortgage rates change throughout the day. Mortgage rates you see today may not be available tomorrow. If you are in the market for a mortgage loan, be sure to check the current rates being offered by lenders. If you have already done your research and have found your dream home consider locking in your rate as soon as possible.

2. Different Lenders Charge Different Fees

Don’t expect every lender to charge the same fees for a mortgage loan. Every lender structures their fees differently, which is why it is important to shop with at least 3 lenders to compare. Next time you apply for a mortgage loan pay attention to the rates, points being charged and closing costs.

3. Lenders Can Sell Your Loan to Another Bank

Many borrowers have experience getting a mortgage loan with a certain lender only to find out that the loan has been sold to another bank. This occurs because lenders need to free up their liabilities in order to make room to give out more loans. This does not affect your mortgage whatsoever, but it’s important to pay close attention to your mortgage statement and any correspondence you receive in the mail to make sure you do not make payments to the wrong bank.

4. Your Middle Credit Score Matters

When you apply for a mortgage loan, the lender will pull your credit scores from three credit bureaus (Transunion, Equifax and Experian) to help them determined if you are credit worthy. Your middle score of the three is what lenders will use for loan qualification. However, the underwriter will review all three scores as part of the loan underwriting process. If you pull your own credit score through a website online, the credit scores displayed to you may be different than what lenders use because they use different reporting systems.

5. You Can Refinance Your Home Loan Anytime

You can refinance your mortgage anytime, but it doesn’t necessarily mean you should. Think about why you want to refinance. Is because you want to lower your monthly payments, to change the type of loan you are in or to take cash out from your equity? Whatever the reason is, make sure that it makes financial sense.

6. You Can Get a Mortgage Loan After a Foreclosure

Many homeowners have experienced a foreclosure after the recent mortgage crisis. There is good news for these borrowers because they can get a mortgage loan after foreclosure. There are waiting periods involved, for example, to apply for an FHA loan you must wait three years after foreclosure to apply. If you want to get a conventional loan the waiting period is seven years from foreclosure. For those seeking a VA loan, the waiting period is two-years.

There are exceptions to the waiting periods, but you have to show the lender that your foreclosure was caused by an event outside your control, such as losing your job or being seriously ill.

8. Good Credit Allows you to Get Better Mortgage Rates

Good credit scores mean a better rate in any type of loan, especially a mortgage loan. Your credit heavily impacts the type mortgage loan you will qualify for. To maintain a good credit report, make sure you monitored it closely. One of the advantages to good credit is that more banks will want to compete for your business, therefore giving you leverage to negotiate the closing costs.

9. Know Your Annual Percentage Rate (APR)

Knowing your APR will allow you see the true cost of your loan. While the interest rate shows the annual cost of your loan, the APR includes other fees such as origination points, admin fees, loan processing fees, underwriting fees, documentation fees, private mortgage insurance and escrow fees.

There may be more or less fees included in the ARP from what we mentioned. To be sure what fees are included in the APR, ask your lender to give you a breakdown of the closing costs included.

10. You Can Always Reduce Closing Costs

One way to reduce closing costs is to have the sellers contribute towards the closing costs when purchasing your home. This can be negotiated between the buyer and the sellers in the purchase contract. The amount the seller can contribute will depend on the type of loan. Another way to save on closing costs is to have the lender give you a credit to cover out of pocket loan costs.

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

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The difference in Kentucky USDA Direct loans vs. Kentucky USDA Guaranteed Loans

The difference in Kentucky USDA Direct loans vs. Kentucky USDA Guaranteed Loans

What is the minimum credit score I need to qualify for a Kentucky FHA, VA, USDA and KHC Conventional mortgage loan?

What is the minimum credit score I need to qualify for a Kentucky mortgage currently?

Question:

What is the current minimum credit scores needed to qualify for a Kentucky mortgage Loan?

Answer:

The minimum credit score needed to qualify for a Kentucky mortgage depends on the type of loan program you are looking to obtain, this could be the reason that you have received conflicting answers.

The most common types of mortgage are Conventional, FHA, USDA, VA, and KHC mortgage loans in Kentucky. I’ll explain each briefly below and the minimum credit score needed to qualify for each loan program. Keep in mind these are continuously changing and can vary by lender do to credit overlays.

Kentucky Conventional or Fannie Mae  

Conventional loans make up the majority of mortgages in the US. They are also known as conforming loans, because they conform to specific guidelines set by Fannie Mae and Freddie Mac.

• Minimum Credit Score is 620
• What Are the Conforming Loan Limits for 2024?
  Property Type Minimum Conforming Loan Limit Maximum Conforming Loan Limit
  One-unit $766,550 $1,149,825
  Two-unit $981,500 $1,472,250
  Three-unit $1,186,350 $1,779,525
  Four-unit $1,474,400 $2,211,600
• You can use a conventional loan to buy a primary residence, second home, or rental property
• Conventional loans are available in fixed rates, adjustable rates (ARMs), and offer many loan terms usually from 10 to 30 years
• Down payments as low as 3% and 5% depending on Home Ready or straight conventional loan.
• No monthly mortgage insurance with a down payment of at least 20%
• Max Debt to Income Ratio of 50%

KENTUCKY FHA MORTGAGE

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
• The maximum loan amount varies by Geographical Area, for 2024 is  $498,257
• 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) up to 57% in some instances with strong compensating factors.

KENTUCKY USDA RURAL HOUSING LOAN 

• • 100% Financing
  • Cities and towns located outside metro areas-see link (https://eligibility.sc.egov.usda.gov/eligibility/welcomeAction.do?pageAction=sfp
  • Do NOT have to be a Kentucky First Time Home Buyer
  • No Down Payment
  • 30 year low fixed rate loans
  • No Prepayment Penalty
  • Great Low FIXED Interest Rates
  • No max loan limits, just income limits
  • Possible to Roll Closing Costs into Loan if Appraises Higher
  • No Cash Reserves Required
  • UNLIMITED Seller Contribution toward Closing Costs
  • 100% Gifted Closing Costs allowed
  • Primary Residents only (no rentals/investment properties)
  • Debt to income ratios no more than 45% with GUS approval and 29 and 41% with a manual underwrite.
  • Only Need a 580 Credit Score to Apply*** Most USDA loans need a 620 or score higher to get approved through their automated underwriting system called GUS. 640 usually required for an automated approval upfront.
  • No bankruptcies (Chapter 7) last 3 years and no foreclosure last 3 years. If Chapter 13 bankruptcy possible to go on after 1 year
   
• KENTUCKY VA Mortgage

• 100% Financing Available up to qualifying income and entitlement
• Must be eligible veteran with Certificate of Eligibility. We can help get this for veterans or active duty personnel.
• No Down Payment Required
• Seller Can Pay ALL Your Closing Costs
• No Monthly Mortgage Insurance
• Minimum 580 typically Credit Score to Apply–VA does not have a minimum credit score but lenders will create credit overlays to protect their interest.
• Active Duty, Reserves, National Guard, & Retired Veterans Can Apply
• No bankruptcies or foreclosures in last 2 years and a clear CAVIRS
• Debt to income ratios vary, but usually 55% back-end ratio with a fico score over 620 will get it done on qualifying income and if it is a manual underwrite, 29% and 41% respectively
• Can use your VA loan guaranty more than once, and in some cases, can have two existing VA loans out at they same time. Call or email for more info on this scenario.
• Cost of VA loan appraisal in Kentucky now costs a  minimum $605 with a termite report needed on all purchase and refinance transactions unless a condo.
• 2 year work history needed on VA loans unless you can show a legitimate excuse, ie. off work due to injury, schooling, education etc.
• You cannot use your GI Bill for income qualifying for the mortgage payment.

KENTUCKY HOUSING DOWN PAYMENT ASSISTANCE 100 FINANCING 

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Down Payment:  There are still housing programs that exist for Kentucky home buyers whereas you can purchase a home with no down payment. You will need a 620 mid credit score to purchase a home using the KHC loan programs for their no down payment credit requirements.

How the Down Payment Assistance Program (DAP) Works

 Down payment assistance loans are available up to $10,000 and is paid back over a period of ten years at a current rate of 3.75%.

Regular DAP

• Purchase price up to $481,176 with Secondary Market​ or Mortgage Revenue Bond (MRB) income limits.
• Assistance in the form of a loan up to $10,000 in $100 increments.
• Repayable over a 10-year term at 3.75 percent.
• Available to all KHC first-mortgage loan recipients

If you have questions about qualifying as first time home buyer in Kentucky, please call, text, email or fill out free prequalification below for your next mortgage loan pre-approval.

 

 

 

Joel Lobb
Senior  Loan Officer

(NMLS#57916)

 

Text or call phone: (502) 905-3708

 

email me at kentuckyloan@gmail.com

 

 

http://www.mylouisvillekentuckymortgage.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 views of my employer. Not all products or services mentioned on this site may fit all people