Mortgage Costs for A Kentucky Mortgage Loan
Kentucky FHA Loan Requirements for 2020 to include Credit Fico Scores, Down Payment, Income and Job history
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 2019 it is as follows:
- The FHA national low-cost area mortgage limits, which are set at 65 percent of the national conforming limit of $510,400 for a one-unit property, are, by property unit number, as follows:
• One-unit: $331,760
• Two-unit: $42,800
• Three-unit: $513,400
• Four-unit: $638,100
- 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
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, 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 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.
- Max FHA loan in Kentucky is between $331,760.00 depending on the county in Kentucky
I can answer your questions and usually get you pre-approved the same day.
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.
500 Minimum Credit Score
More flexible underwriting guidelines and extenuating credit and income circumstances may be considered by the lender.
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
620 minimum credit score
Single family, 1-4 unit properties, HUD approved condominiums, and PUDS eligible
Down Payment Plus Assistance Program
Up to $5000 Grant to buy a home in the Northern Kentucky Area of The Homebuyer Assistance Program for 2019 is funded through the HOME Program and administered by the Northern Kentucky HOME Consortium through the City of Covington’s Neighborhood Services Department. The purpose of the program is to increase the number of homeowners in the Northern Kentucky HOME Consortium cities of Ludlow, Newport, Bellevue, and Dayton
- Borrower’s gross annual household income must be at or below 80% of the Area Median Income ($43,900 for a single person, $62,650 for a 4 person household). Borrowers must attend a HUD approved homebuyer education course.
- All properties must be one to two units, owner-occupied or vacant, and meet minimum local housing standards.
- Up to $5,000 to cover the lender required down payment and customary settlement charges to the borrower.
- Interest Rate/Loan Term: 0%, 5 years
- Monthly Payment Amount: No monthly payments. The loan will be forgiven if the owner occupies the home as their principal residence for 5 years from the date of purchase.
b. Credit: Credit history and documentation which indicates substantial evidence of borrower’s ability to pay will be reviewed. Reports from a Credit Bureau will be obtained for all borrowers.
c. Education: All applicants must participate in a HUD/City-approved homebuyer education course and must present a certificate of completion prior to loan closing.
d. Loan Underwriting: Borrower’s debt ratios cannot exceed 31% and 43% to ensure that the borrower’s income is sufficient to cover their mortgage and other monthly obligations. The interest rate on the first mortgage cannot be higher than 2.5% above the average 30 year conventional loan rate as published by Freddie Mac in the Weekly Primary Mortgage Market Survey. Borrowers may not use first mortgage financing with balloon payments, adjustable rates, or other terms that are determined to be subprime. Adjustable rate mortgages may be considered if the City determines them to be the most affordable financing option for the borrower.
e. Non occupant co-borrowers will be allowed, however debt ratio limitations will apply to primary borrower’s household income only.
f. Liquid Asset Limitation Policy: The applicant(s) must not have liquid assets in excess of the following amounts at time of loan application:
$10,000: Liquid assets in excess of this amount will be required to be used in the purchase transaction prior to the use of any Program funds.
Stocks and other readily salable securities will be considered liquid assets unless they are restricted by IRA, 401(k) or other similar requirements. Funds in IRAs, 401(k) plans or other qualified retirement accounts will not be considered liquid assets.
Applicants that are at or near retirement age may have retirement savings, which will not have to be contributed, unless such savings exceed an amount that
Persons in Household
- Purchase price up to $314,257 with Secondary Market.
- Assistance in the form of a loan up to $6,000 in $100 increments.
- Repayable over a ten-year term at 5.50 percent.
- Available to all KHC first-mortgage loan recipients.
- Purchase price up to $314,257 with Secondary Market.
- Assistance up to $6,000.
- Repayable over a ten-year term at 1.00 percent.
- Borrowers must meet Affordable DAP income limits.
More about down payment and closing costs
- No liquid asset review and no limit on borrower reserves.
- Specific credit underwriting standards may apply to down payment programs.
The Federal Home Loan Bank of Cincinnati (FHLB Cincinnati) has established a set-aside of Affordable Housing Program (AHP) funds to help create homeownership through a program called the Welcome Home Program. Welcome Home funds are available to Members as grants to assist homebuyers.
Welcome Home grants are limited to $5,000 per household, households are eligible only if the total household income is at or below 80% of Mortgage Revenue Bond (MRB) income limits, and funds are offered on a “first-come, first-served” basis. Other program requirements are identified below.
What are the Program Requirements?
Below is an abbreviated list of program eligibility requirements:
The total income for all occupants must be at or below 80 percent of the Mortgage Revenue Bond (MRB) limit for the county and state where the property is located. The FHLB has an Income and Affordability Workbook to assist in determining household income eligibility.
Home-buyers must contribute at least $500 of their own funds towards down payment and/or closing costs.
WHP applicants do not have to be first-time home buyers. However, all first-time home buyers are required to complete a home ownership counseling program.
WHP grant funds are intended only for home buyers who qualify for the first mortgage based on their own merit. Co-signors and co-borrowers are not allowed unless they will occupy the home as their primary residence and their incomes are included in determining eligibility.
WHP grant funds may be used in conjunction with other local, state and federal funding sources and with the FHLB Cincinnati’s Community Investment Cash Advance Programs.
The Member who reserves the WHP funds must originate the first loan, but the loan may close in the name of a third party.
The interest rate for the first mortgage may not exceed 7.50 percent.
The interest rate for the second mortgage may not exceed 11.00 percent.
Only second mortgages provided by formal organizations, community development financial institutions, housing finance agencies, non-profit organizations, etc. are acceptable.
All eligible property assisted with WHP funds is subject to a five-year retention mechanism (Retention Agreement), which may require the household to repay all, or a portion, of the subsidy, if the home is sold or refinanced within five years from the closing of the transaction.
Kentucky WELCOME HOME GRANT Available beginning March 4, 2021
*Welcome Home grant offered by FHLB of Cincinnati is available on a “first-come,
first-serve” basis only to the extent the funds are available.
Buyers do not have to be first-time home-buyers.
Home-buyers must contribute $500 toward down payment or closing costs, and cannot get cash back. Closing costs include appraisal, underwriter, title exam, credit reporting, title insurance, recording and flood determination fees.
First time home buyers must complete a home buyer counseling course.
Home buyer’s income cannot exceed specific county income limits.
The home must meet specific condition requirements. Manufactured housing may be allowed. No 203k programs allowed.
Offer is subject to credit approval. Contact a Mortgage Lender for details, limits and guidelines, or if you have any questions.
Limited Time Offer
Kentucky Income limits for Welcome Home Grant for 2020
Income limits are obtained from the state housing finance agency for each state.
Use the 80% limits for the Welcome Home Program.*******
Use the 100% limits for the Disaster Reconstruction Program.
County 100% limits 80% limits****Welcome Home Funds limit 1-2 Persons 3 + Persons 1-2 Persons 3 + Persons Adair $71,040 $82,880 $56,832 $66,304 Allen $71,040 $82,880 $56,832 $66,304 Anderson $69,400 $79,810 $55,520 $63,848 Ballard $59,200 $68,080 $47,360 $54,464 Barren $59,200 $68,080 $47,360 $54,464 Bath $71,040 $82,880 $56,832 $66,304 Bell $71,040 $82,880 $56,832 $66,304 Boone $78,300 $90,045 $62,640 $72,036 Bourbon $84,120 $98,140 $67,296 $78,512 Boyd $59,200 $68,080 $47,360 $54,464 Boyle $71,040 $82,880 $56,832 $66,304 Bracken $93,960 $109,620 $75,168 $87,696 Breathitt $71,040 $82,880 $56,832 $66,304 Breckinridge $71,040 $82,880 $56,832 $66,304 Bullitt $71,500 $82,225 $57,200 $65,780 Butler $71,040 $82,880 $56,832 $66,304 Caldwell $59,200 $68,080 $47,360 $54,464 Calloway $59,200 $68,080 $47,360 $54,464 Campbell $78,300 $90,045 $62,640 $72,036 Carlisle $71,040 $82,880 $56,832 $66,304 Carroll $71,040 $82,880 $56,832 $66,304 Carter $71,040 $82,880 $56,832 $66,304 Casey $71,040 $82,880 $56,832 $66,304 Christian $59,200 $68,080 $47,360 $54,464 Clark $84,120 $98,140 $67,296 $78,512 Clay $71,040 $82,880 $56,832 $66,304 Clinton $71,040 $82,880 $56,832 $66,304 Crittenden $71,040 $82,880 $56,832 $66,304 Cumberland $71,040 $82,880 $56,832 $66,304 Daviess $62,300 $71,645 $49,840 $57,316 Edmonson $71,040 $82,880 $56,832 $66,304 Elliott $71,040 $82,880 $56,832 $66,304 Estill $71,040 $82,880 $56,832 $66,304 Fayette $70,100 $80,615 $56,080 $64,492 Fleming $71,040 $82,880 $56,832 $66,304 Floyd $71,040 $82,880 $56,832 $66,304 Franklin $65,200 $74,980 $52,160 $59,984 Fulton $71,040 $82,880 $56,832 $66,304 Gallatin $93,960 $109,620 $75,168 $87,696 Garrard $71,040 $82,880 $56,832 $66,304 Grant $71,040 $82,880 $56,832 $66,304 Graves $59,200 $68,080 $47,360 $54,464 Grayson $71,040 $82,880 $56,832 $66,304 Green $71,040 $82,880 $56,832 $66,304 Greenup $59,200 $68,080 $47,360 $54,464 Hancock $62,300 $70,725 $49,840 $56,580 Hardin $61,500 $72,220 $49,200 $57,776 Harlan $71,040 $82,880 $56,832 $66,304 Harrison $71,040 $82,880 $56,832 $66,304 Hart $71,040 $82,880 $56,832 $66,304 Henderson $65,100 $74,865 $52,080 $59,892 Henry $85,800 $100,100 $68,640 $80,080 Hickman $71,040 $82,880 $56,832 $66,304 Hopkins $71,040 $82,880 $56,832 $66,304 Jackson $71,040 $82,880 $56,832 $66,304 Jefferson $71,500 $82,225 $57,200 $65,780 Jessamine $70,100 $80,615 $56,080 $64,492 Johnson $71,040 $82,880 $56,832 $66,304 Kenton $78,300 $90,045 $62,640 $72,036 Knott $71,040 $82,880 $56,832 $66,304 Knox $71,040 $82,880 $56,832 $66,304 Larue $73,800 $86,100 $59,040 $68,880 Laurel $59,200 $68,080 $47,360 $54,464 Lawrence $71,040 $82,880 $56,832 $66,304 Lee $71,040 $82,880 $56,832 $66,304 Leslie $71,040 $82,880 $56,832 $66,304 Letcher $71,040 $82,880 $56,832 $66,304 Lewis $71,040 $82,880 $56,832 $66,304 Lincoln $71,040 $82,880 $56,832 $66,304 Livingston $59,200 $68,080 $47,360 $54,464 Logan $71,040 $82,880 $56,832 $66,304 Lyon $60,500 $69,575 $48,400 $55,660 Madison $79,080 $92,260 $63,264 $73,808 Magoffin $71,040 $82,880 $56,832 $66,304 Marion $71,040 $82,880 $56,832 $66,304 Marshall $59,600 $68,540 $47,680 $54,832 Martin $71,040 $82,880 $56,832 $66,304 Mason $71,040 $82,880 $56,832 $66,304 McCracken $60,800 $69,920 $48,640 $55,936 McCreary $71,040 $82,880 $56,832 $66,304 McLean $74,760 $87,220 $59,808 $69,776 Meade $60,500 $69,575 $48,400 $55,660 Menifee $71,040 $82,880 $56,832 $66,304 Mercer $59,200 $68,080 $47,360 $54,464 Metcalfe $71,040 $82,880 $56,832 $66,304 Monroe $71,040 $82,880 $56,832 $66,304 Montgomery $71,040 $82,880 $56,832 $66,304 Morgan $71,040 $82,880 $56,832 $66,304 Muhlenberg $59,200 $68,080 $47,360 $54,464 Nelson $74,520 $86,940 $59,616 $69,552 Nicholas $71,040 $82,880 $56,832 $66,304 Ohio $71,040 $82,880 $56,832 $66,304 Oldham $71,500 $82,225 $57,200 $65,780 Owen $71,040 $82,880 $56,832 $66,304 Owsley $71,040 $82,880 $56,832 $66,304 Pendleton $93,960 $109,620 $75,168 $87,696 Perry $71,040 $82,880 $56,832 $66,304 Pike $71,040 $82,880 $56,832 $66,304 Powell $71,040 $82,880 $56,832 $66,304 Pulaski $71,040 $82,880 $56,832 $66,304 Robertson $71,040 $82,880 $56,832 $66,304 Rockcastle $71,040 $82,880 $56,832 $66,304 Rowan $71,040 $82,880 $56,832 $66,304 Russell $71,040 $82,880 $56,832 $66,304 Scott $84,120 $98,140 $67,296 $78,512 Shelby $75,200 $86,480 $60,160 $69,184 Simpson $59,200 $68,080 $47,360 $54,464 Spencer $85,800 $100,100 $68,640 $80,080 Taylor $59,200 $68,080 $47,360 $54,464 Todd $71,040 $82,880 $56,832 $66,304 Trigg $59,200 $68,080 $47,360 $54,464 Trimble $85,800 $100,100 $68,640 $80,080 Union $59,200 $68,080 $47,360 $54,464 Warren $59,200 $68,080 $47,360 $54,464 Washington $71,040 $82,880 $56,832 $66,304 Wayne $71,040 $82,880 $56,832 $66,304 Webster $71,040 $82,880 $56,832 $66,304 Whitley $71,040 $82,880 $56,832 $66,304 Wolfe $71,040 $82,880 $56,832 $66,304 Woodford $70,100 $80,615 $56,080 $64,492
Joel Lobb (NMLS#57916)
Senior Loan Officer
American Mortgage Solutions, Inc.
10602 Timberwood Circle Suite 3
Louisville, KY 40223
Company ID #1364 | MB73346
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.
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The requirements for Kentucky FHA loans are set by HUD.
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∘ What kind of credit score do I need to qualify for different first time home buyer loans in Kentucky?
Answer. Most lenders will wants a middle credit score of 640 for KY First Time Home Buyers looking to go no money down. The two most used no money down home loans in Kentucky being USDA Rural Housing and KHC with their down payment assistance will want a 640 middle score on their programs.
If you have access to 3.5% down payment, you can go FHA and secure a 30 year fixed rate mortgage with some lenders with a 580 credit score. Even though FHA on paper says they will go down to 500 credit score with at least 10% down payment, you will find it hard to get the loan approved because lenders will create overlays to protect their interest and maintain a good standing with FHA and HUD.
Another popular no money down loan is VA. Most VA lenders will want a 620 middle credit score but like FHA, VA on paper says they will go down to a 500 score, but good luck finding a lender for that scenario.
A lot of times if your scores are in the high 500’s or low 600’s range, we can do a rapid rescore and get your scores improved within 30 days.
∘ Does it costs anything to get pre-approved for a mortgage loan?
Answer: Most lenders will not charge you a fee to get pre-approved, but some lenders may want you to pay for the credit report fee upfront. Typically costs for a tri-merge credit report for a single borrower runs about $50 or less. Maybe higher if more borrowers are included on the loan application.
∘ How long does it take to get approved for a mortgage loan in Kentucky?
Answer: Typically if you have all your income and asset documents together and submit to the lender, they typically can get you a pre-approval through the Automated Underwriting Systems within 24 hours. They will review credit, income and assets and run it through the different AUS (Automated Underwriting Systems) for the template for your loan pre-approval. Fannie Mae uses DU, or Desktop Underwriting, FHA and VA also use DU, and USDA uses a automated system called GUS. GUS stands for the Guaranteed Underwriting System.
If you get an Automated Approval, loan officers will use this for your pre-approval. If you have a bad credit history, high debt to income ratios, or lack of down payment, the AUS will sometimes refer the loan to a manual underwrite, which could result in a longer turn time for your loan pre-approval answer
∘ Are there any special programs in Kentucky that help with down payment or no money down loans for KY First Time Home Buyers?
Answer: There are some programs available to KY First Time Home Buyers that offer zero down financing: KHC, USDA, VA, Fannie Mae Home Possible and HomePath, HUD $100 down and City Grants are all available to Kentucky First Time Home buyers if you qualify for them. Ask your loan officer about these programs
∘ When can I lock in my interest rate to protect it from going up when I buy my first home?
Answer: You typically can lock in your mortgage rate and protect it from going up once you have a home picked-out and under contract. You can usually lock in your mortgage rate for free for 90 days, and if you need more time, you can extend the lock in rate for a fee to the lender in case the home buying process is taking a longer time. The longer the term you lock the rate in the future, the higher the costs because the lender is taking a risk on rates in the future.
Interest rates are kinda like gas prices, they change daily, and the general trend is that they have been going up since the Presidential election in November 2016.
∘ How much money do I need to pay to close the loan?
Answer: Depending on which loan program you choose, the outlay to close the loan can vary. Typically you will need to budget for the following to buy a home: Good faith deposit, usually less than $500 which holds the home for you while you close the loan. You get this back at closing; Appraisal fee is required to be paid to lender before closing. Typical costs run around $400-$450 for an appraisal fee; home inspection fees. Even though the lender’s programs don’t require a home inspection, a lot of buyers do get one done. The costs for a home inspection runs around $300-$400. Lastly, termite report. They are very cheap, usually $50 or less, and VA requires one on their loan programs. FHA, KHC, USDAS, Fannie Mae does not require a termite report, but most borrowers get one done.
There are also lender costs for title insurance, title exam, closing fee, and underwriting fees that will be incurred at closing too. You can negotiated the seller to pay for these fees in the contract, or sometimes the lender can pay for this with a lender credit.
The lender has to issue a breakdown of the fees you will incur on your loan pre-approval.
How long is my pre-approval good for on a Kentucky Mortgage Loan?
Answer: Most lenders will honor your loan pre-approval for 60 days. After that, they will have to re-run your credit report and ask for updated pay stubs, bank statements, to make sure your credit quality and income and assets has not changed from the initial loan pre-approval.
How much money do I have to make to qualify for a mortgage loan in Kentucky?
Answer: The general rule for most FHA, VA, KHC, USDA and Fannie MAe loans is that we run your loan application through the Automated Underwriting systems, and it will tell us your max loan qualifying ratios.
There are two ratios that matter when you qualify for a mortgage loan. The front-end ratio, is the new house payment divided by your gross monthly income. The back-end ratio, is the new house payment added to your current monthly bills on the credit report, to include child support obligations and 401k loans.
Car insurance, cell phone bills, utilities bills does not factor into your qualifying rations.
If the loan gets a refer on the initial desktop underwriting findings, then most programs will default to a front end ratio of 31% and a back-end ratio of 43% for most government agency loans that get a refer. You then take the lowest payment to qualify based on the front-end and back-end ratio.
So for example, let’s say you make $3000 a month and you have $400 in monthly bills you pay on the credit report. What would be your maximum qualifying house payment for a new loan?
Take the $3000 x .43%= $1290 maximum back-end ratio house payment. So take the $1290-$400= $890 max house payment you qualify for on the back-end ratio.
Then take the $3000 x .31%=$930 maximum qualifying house payment on front-end ratio.
So now your know! The max house payment you would qualify would be the $890, because it is the lowest payment of the two ratios.