A Kentucky Mortgage Loan Officer that has closed over 600 home loans specializing in Kentucky First Time Homebuyer Loans to include the following FHA, VA, USDA, Rural Housing, Down Payment Assistance Loan from Kentucky Housing Corp or KHC and the Fannie Mae Home Path HUD $100 Down Mortgage Program in Kentucky. Call/Text 502-905-3708 with your mortgage questions or email kentuckyloan@gmail.com I try to respond to all requests within minutes during regular business hours. NMLS# 57916 Joel Lobb Loan Originator, American Mortgage Solutions NMLS ID. 1364 Equal Housing Lender
Are you a first-time homebuyer in Kentucky looking to navigate the world of home loans? Understanding the various types of home loan programs available to you can help you make informed decisions about financing your dream home. In this article, we’ll explore different home loan programs, including their credit score requirements, down payment requirements, bankruptcy considerations, debt-to-income ratio requirements, loan limits, and income limits.
Kentucky FHA Loans
Kentucky FHA Credit Score Requirements:
Minimum credit score typically ranges from 500 to 580, depending on the lender.
Kentucky FHA Down Payment Requirements:
A down payment as low as 3.5% of the purchase price is required. 10% down payment required for scores below 580
Kentucky FHA Bankruptcy Requirements:
Chapter 7 bankruptcy: Generally, two years must have passed since the discharge date.
Chapter 13 bankruptcy: Typically, one year of on-time payments and approval from the bankruptcy court are required.
Kentucky FHA Debt-to-Income Ratio Requirements:
Front-end ratio (housing expenses): Up to 31% of gross monthly income.
Back-end ratio (total monthly debt payments): Up to 43% of gross monthly income.
Up to 45% and 56% respectively for borrowers with higher credit scores, down payment and reserves along with good residual income
Kentucky FHA Loan Limits and Income Limits:
Loan limits vary by county and property type. Currently $498,257 in all Kentucky Counties
Income limits—-No income limits just loan limits.
Kentucky VA Loans
Kentucky VA Credit Score Requirements:
While there is no official minimum credit score requirement, most lenders prefer a score of 580 to 620 or higher.
Kentucky VA Down Payment Requirements:
No down payment is required for eligible veterans, active-duty service members, and certain spouses.
Kentucky VA Bankruptcy Requirements:
Chapter 7 bankruptcy: Generally, two years must have passed since the discharge date.
Chapter 13 bankruptcy: Typically, one year of on-time payments and approval from the bankruptcy court are required.
Kentucky VA Debt-to-Income Ratio Requirements:
Flexible debt-to-income ratio requirements, with consideration given to residual income.
Kentucky VA Loan Limits and Income Limits:
VA loan limits do not apply, but lenders may have their own limits.
No specific income limits, but income must be sufficient to cover monthly expenses.
Kentucky USDA Loans
Kentucky USDA Credit Score Requirements:
No minimum score, but credit score typically ranges from 580 and above, depending on the lender.
Kentucky USDA Down Payment Requirements:
No down payment is required for eligible properties in designated rural areas.
Kentucky USDA Bankruptcy Requirements:
Chapter 7 bankruptcy: Generally, three years must have passed since the discharge date.
Chapter 13 bankruptcy: Typically, one year of on-time payments and approval from the bankruptcy court are required.
Kentucky USDA Debt-to-Income Ratio Requirements:
Maximum total debt-to-income ratio is usually 45%.
Kentucky USDA Loan Limits and Income Limits:
Loan limits vary by county.
Income limits are based on area median income and household size.
Kentucky Conventional Loans
Kentucky Conventional Credit Score Requirements:
Minimum credit score typically ranges from 620 to 680, depending on the lender and loan type.
Kentucky Conventional Down Payment Requirements:
Down payment requirements can range from 3% to 20% or more, depending on the loan type and borrower qualifications.
Kentucky Conventional Bankruptcy Requirements:
Chapter 7 bankruptcy: Generally, four years must have passed since the discharge date.
Chapter 13 bankruptcy: Typically, two years of on-time payments and approval from the bankruptcy court are required.
Debt-to-Income Ratio Requirements:
Maximum total debt-to-income ratio is typically 43% to 50%, depending on the loan type and borrower qualifications.
Loan Limits and Income Limits:
Loan limits vary by property type and location.
No specific income limits, but income must be sufficient to qualify for the loan amount.
Conclusion
As a first-time homebuyer in Kentucky, you have several home loan programs to choose from, each with its own requirements and benefits. Whether you opt for an FHA loan, VA loan, USDA loan, or conventional loan, it’s essential to understand the credit score requirements, down payment requirements, bankruptcy considerations, debt-to-income ratio requirements, loan limits, and income limits associated with each program. Working with a knowledgeable lender can help you navigate the process and find the best loan program for your financial situation and homeownership goals.
Joel Lobb Mortgage Loan Officer
American Mortgage Solutions, Inc. 10602 Timberwood Circle Louisville, KY 40223 Company NMLS ID #1364
NMLS 57916 | Company NMLS #1364/MB73346135166/MBR1574The 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).
Most lenders want a 580 to 620 credit score nowadays with no bankruptcies in the last 2 years and no foreclosures in the last 3 years. You have three fico scores from Experian, Equifax and Transunion credit reporting agencies and the lenders will throw out the high and low score and take the middle score of the borrower(s).
Credit scores range from 334 to 850, the higher the score the better. The Fico Versions used for mortgage credit scores are Version, 2,4 and 5 models for Experian, Equifax and Transunion. They’re a lot of different scoring models out there and I can walk you through that once I pull your credit.
For example if you have a 598, 625, 604 on each of the main three reporting agencies, then your qualifying fico score would be 604.
They always take the lowest middle score of both borrowers, so keep that in mind too if there is a co-borrower. So if your mid score is 616, and your co-borrower is 638, and we used both of your incomes, then the score used to qualify would be the 616 score.
Once I get the credit report, I can analyze your scores, If the scores are okay, then we can proceed with pre-approval. If we need to work on them, I can help do that too.
If you’re trying to get a mortgage, your credit score matters. Mortgage lenders use credit scores — as well as other information — to assess your likelihood of repaying a loan on time.
Because credit scores are so important, lenders set minimum scores you must have in order to qualify for a mortgage with them. Minimum credit score varies by lender and mortgage type, but generally, a higher score means better loan terms for you.
Let’s look at which loan types are best for different credit scores.
Credit score needed to buy a house
Mortgage lending is risky, and lenders want a way to quantify that risk. They use your three-digit credit score to gauge the risk of loaning you money since your credit score helps predict your likelihood of paying back a loan on time. Lenders also consider other data, such as your income, employment, debts and assets to decide whether to offer you a loan.
Different lenders and loan types have different borrower requirements, loan terms and minimum credit scores. Here are the requirements for some of the most common types of mortgages.
Conventional loan
Minimum credit score: 620
A conventional loan is a mortgage that isn’t backed by a federal agency. Most mortgage lenders offer conventional loans, and many lenders sell these loans to Fannie Mae or Freddie Mac — two government-sponsored enterprises. Conventional loans can have either fixed or adjustable rates, and terms ranging from 10 to 30 years.
You can get a conventional loan with a down payment as low as 3% of the home’s purchase price, so this type of loan makes sense if you don’t have enough for a traditional down payment. However, if your down payment is less than 20%, you’re required to pay for private mortgage insurance (PMI), which is an insurance policy designed to protect the lender if you stop making payments. You can ask your servicer to cancel PMI once the principal balance of your mortgage falls below 80% of the original value of your home.
FHA loan
Minimum credit score (10% down): 500
Minimum credit score (3.5% down): 580
FHA loans are backed by the Federal Housing Administration (FHA), a part of the U.S. Department of Housing and Urban Development (HUD). The FHA incentivizes lenders to make mortgage loans available to borrowers who might not otherwise qualify by guaranteeing the federal government will repay the mortgage if the borrower stops making payments. This makes an FHA loan a good option if you have a lower credit score.
FHA loans come in 15- or 30-year terms with fixed interest rates. Unlike conventional mortgages, which only require PMI for borrowers with less than 20% down, all FHA borrowers must pay an up-front mortgage insurance premium (MIP) and an annual MIP, as long as the loan is outstanding.
VA loan
Minimum credit score: N/A
VA loans are mortgages backed by the U.S. Department of Veterans Affairs (VA). The VA guarantees loans made by VA-approved lenders to qualifying veterans or service members of the U.S. armed forces, or their spouses. This type of loan is a great option for veterans and their spouses, especially if they don’t have the best credit and don’t have enough for a down payment.
VA loans are fixed-rate mortgages with 10-, 15-, 20- or 30-year terms.
Most VA loans don’t require a down payment or monthly mortgage insurance premiums. However, they do require a one-time VA funding fee, that ranges from 1.4% to 3.6% of the loan amount.
USDA loan
Minimum credit score: N/A
The U.S. Department of Agriculture guarantees loans for borrowers interested in buying homes in certain rural areas. USDA loans don’t require a minimum down payment, but you have to meet the USDA’s income eligibility limits, which vary by location.
All USDA mortgages have fixed interest rates and 30-year repayment terms.
USDA-approved lenders must pay an up-front guarantee fee of up to 3.5% of the purchase price to the USDA. That fee can be passed on to borrowers and financed into the home loan. If the home you want to buy is within an eligible rural area (defined by the USDA) and you meet the other requirements, this could be a great loan option for you.
What else do mortgage lenders consider?
Your credit score isn’t the only factor lenders consider when reviewing your loan application. Here are some of the other factors lenders use when deciding whether to give you a mortgage.
Debt-to-income ratio — Your debt-to-income (DTI) ratio is the amount of debt payments you make each month (including your mortgage payments) relative to your gross monthly income. For example, if your mortgage payments, car loan and credit card payments add up to $1,800 per month and you have a $6,000 monthly income, your debt-to-income ratio would be $1,800/$6,000, or 30%. Most conventional mortgages require a DTI ratio no greater than 36%. However, you may be approved with a DTI up to 45% if you meet other requirements.
Employment history — When you apply for a mortgage, lenders will ask for proof of employment — typically two years’ worth of W-2s and tax returns, as well as your two most recent pay stubs. Lenders prefer to work with people who have stable employment and consistent income.
Down payment — Putting money down to buy a home gives you immediate equity in the home and helps to ensure the lender recoups their loss if you stop making payments and they need to foreclose on the home. Most loans — other than VA and USDA loans — require a down payment of at least 3%, although a higher down payment could help you qualify for a lower interest rate or make up for other less-than-ideal aspects of your mortgage application.
The home’s value and condition — Lenders want to ensure the home collateralizing the loan is in good condition and worth what you’re paying for it. Typically, they’ll require an appraisal to determine the home’s value and may also require a home inspection to ensure there aren’t any unknown issues with the property.
How is your credit score calculated?
Most talk of credit scores makes it sound as if you have only one score. In fact, you have several credit scores, and they may be used by different lenders and for different purposes.
The three national credit bureaus — Experian, Equifax and TransUnion — collect information from banks, credit unions, lenders and public records to formulate your credit score. The most common and well-known scoring model is the FICO Score, which is based on the following five factors:
Payment history (35%) — A history of late payments will drag your score down, as will negative information from bankruptcies, foreclosures, repossessions or accounts referred to collections.
How much you owe (30%) — Your credit utilization ratio is the amount of revolving credit you’re using compared to your total available credit. For example, if you have one credit card with a $2,000 balance and a $4,000 credit limit, your credit utilization ratio is 50%. Credit scoring models view using a larger percentage of your available credit as risky behavior, so high balances and maxed-out credit cards will negatively impact your score.
Length of credit history (15%) — This factor considers the age of your oldest account, newest account and the average age of all your credit accounts. In general, the longer you’ve been using credit responsibly, the higher your score will be.
Types of accounts (10%) — Credit scoring models favor people who use a mix of credit cards, installment loans, mortgages and other types of credit.
Recent credit history (10%) — Lenders view applying for and opening several new credit accounts within a short period as a sign of financial trouble and it’ll negatively impact your score.
What Fico Score is Used for a Mortgage Loan Approval
Which Lenders Use Which FICO Scores?
With the exception of the mortgage market, which is heavily regulated, lenders can generally choose which FICO score they use when doing a credit check. However, they tend to use certain versions depending on the kind of credit for which you’re applying. Here’s a look at the most common FICO scores used for each type of credit.
Mortgages
When you’re taking out a mortgage, there’s a good chance that the loan will end up being bought by Fannie Mae or Freddie Mac. As with many other aspects of the housing market, these massive government-backed mortgage companies dictate which FICO scores can be used by home lenders. Here are the FICO scores used in credit reports generated by the three credit bureaus (as well as the alternative names the bureaus use to advertise them):9
Experian: FICO Score 2 (Experian/Fair Isaac Risk Model V2SM)
The reason mortgage lenders use older FICO Scores is because they don’t have a choice. They are essentially forced to use them.
Unlike every other industry, mortgage lenders don’t have the flexibility to choose the scoring model brand or generation they want to use. Mortgage lenders must follow the direction of the government-sponsored enterprises (GSEs), Fannie Mae and Freddie Mac, as it pertains to scoring models.
The GSEs play an important role in mortgage lending. These publicly traded companies buy mortgages from banks, bundle them together, and sell them to investors. This frees up funds so that banks can offer new mortgages to additional homebuyers.
For a bank to sell a mortgage to Fannie Mae or Freddie Mac, the loan has to meet certain guidelines. Some of these guidelines require borrowers to have a minimum credit score under specific FICO Score generations.
If a lender uses a different scoring model other than what the GSEs approve when it underwrites a mortgage, it probably won’t be able to sell that mortgage after it issues the loan. This limits the lender’s ability to write new loans because it will have less money available to lend to future borrowers.
Ready to shop around for a mortgage?
Joel Lobb Mortgage Loan Officer Individual NMLS ID #57916
American Mortgage Solutions, Inc. 10602 Timberwood Circle Louisville, KY 40223 Company NMLS ID #1364
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Credit Score Requirements for FHA, VA, USDA and Conventional Loans in Kentucky
Below I have spelled out some info that will help you out when you look at your credit scores and what affects them and what you can do to help your credit scores in order to prepare for a mortgage loan approval when it comes to your credit scores.
Opting out will help a credit score. No it won’t. The bureaus don’t know if someone has opted out or not and it’s not factored into the credit scores. If someone’s score improves after they have opted out it’s because something else has changed on the report but not because they opted out.
Paying off old delinquencies will remove them from your credit report. No a collection account or an account with late payments will stay on a credit report for 7 years. That being said, the credit bureaus will occasionally go in and remove old collections that have not reported for a while. But that’s at their discretion. Just because you paid if off doesn’t mean it will be removed. Also paying off an older collection with then brings the reporting date current which could actually hurt the credit scores.
Opening new accounts will help your credit score. This will help only if the borrower has no established credit yet. Once you have several accounts, opening new ones will actually have a negative affect on a credit score until substantial history is accumulated on the account.
Paying off all your revolving balances is a good thing! Actually no it’s not. The credit bureaus models like to see at least one revolving balance, even if it’s small. Having no revolving balances can actually have a negative impact on a credit score. So always keeping one account with a small balance is a very good idea.
Your credit is affected by how much money you have in your savings or checking accounts. Neither of these are factored into a credit score.
Closing old accounts will help a credit score. The credit scoring models like to see several open accounts that have zero balances and are not used often. When an account is closed you lose that history. If it’s an account you’ve had for a long time and has no late payments, closing it can actual hurt the credit score. Having several open accounts, even if they are not used much, makes it look like a person has good financial responsibility.
When I check my own credit score it’s the same one used by lenders. Unfortunately no it’s not. A person actually has 69+ different credit scores. The ones that lenders use are completely different than what a borrower sees when they get their own scores. Those are personal scores and are not used by any industry for any reason.
Checking my own credit report will hurt my score. When a consumer checks their own credit report it’s a “soft” inquiry and will not impact the scores. Only “hard” inquiries done by creditors when a consumer applies for a loan or credit card will possibly have a negative affect on a credit score.
It’s possible to avoid paying for your credit score or at least an estimate. Here is a list of all of the well-known ways to get a FICO score or score estimate for free:
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Disclaimer: No statement on this site is a commitment to make a loan. Loans are subject to borrower qualifications, including income, property evaluation, sufficient equity in the home to meet Loan-to-Value requirements, and final credit approval. Approvals are subject to underwriting guidelines, interest rates, and program guidelines and are subject to change without notice based on applicant’s eligibility and market conditions. Refinancing an existing loan may result in total finance charges being higher over the life of a loan. Reduction in payments may reflect a longer loan term. Terms of any loan may be subject to payment of points and fees by the applicant Equal Opportunity Lender. NMLS#57916http://www.nmlsconsumeraccess.org/
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Score Requirement on Kentucky FHA Loans for people with bad credit Lowers Minimum Credit Score Requirement on Kentucky FHA Loans
Kentucky FHA Home loan programs for people with bad credit
FHA loans are designed to make housing more affordable with lower down payment requirements than conventional loans on purchases and less home equity requirements on refinances. Less stringent qualification guidelines and the security of a government-insured loan makes FHA a popular choice for consumers.
Kentucky FHA Loans with 580 Credit scores and – Low Down Payment – 3.5% which can be gifted from relatives or borrowed off one’s retirement account. If your scores is between 500-579, 10% down needed for home loan and subject to underwriting approval.
Which Credit Score is used for a Kentucky Mortgage Loan Approval? Credit score used for a Kentucky Mortgage Loan Approval for FHA, VA, USDA Rural Housing, KHC Down payment assistance FAnnie MaeFICO Scores used for mortgages
Glossary of Mortgage Terms to Know For A Kentucky Mortgage Loan.
ACCRUED INTEREST: Accumulated interest since the principal investment that has not yet been paid. AMORTIZATION: Paying off debt, principal and interest, with a fixed repayment schedule in regular installments over a fixed period of time. ANNUAL PERCENTAGE RATE (APR): The annual rate charged for borrowing money expressed as a percentage. APR takes into account interest, discount points, lender fees and mortgage insurance. APPLICATION FEE: A fee charged by a lender to cover the initial costs of processing a loan application. APPRAISAL: A written estimate of a property’s current market value, based on the current condition of the property and recent sales information from similar properties in the same area. APPRAISAL FEE: The cost to have a licensed, certified appraiser estimate the market value of a property as of a specific date. BORROWER: An individual who receives a loan from a lender with the intention of repaying the loan in full over the agreed upon time-frame. CAP: A limit on the amount the interest rate can increase or decrease for an ARM, either in an adjustment period or over the life of the loan. CERTIFICATE OF ELIGIBILITY: A document given to qualified veterans entitling them to a VA loan. Obtained by sending DD-214 (Separation Paper) to the local VA office with VA form 1880 (request for Certificate of Eligibility). CERTIFICATE OF REASONABLE VALUE (CRV): An appraisal issued by the VA. CLOSING: Also called “settlement,” is when all parties in a mortgage loan transaction sign the necessary documents to legally transfer property and funds. CLOSING COSTS: Expenses incurred during the home purchase or refinance process that are paid at closing, including the loan origination fee, discount points, attorney’s fees, title insurance, appraisals, etc. CLOSING DISCLOSURE (CD): A five-page document listing final details about the mortgage such as loan terms, projected monthly payments and total closing costs. COMMITMENT LETTER: A legal document issued to a loan applicant from the lender to provide them with a mortgage under certain terms and conditions. COMPARABLES: An abbreviation for “comparable properties;” recently sold properties with similar characteristics and location to the subject property that help the appraiser determine the fair market value of the subject property. CONVENTIONAL LOAN: A loan not secured by the U.S. government, such as FHA, VA, or USDA. DEBT-TO-INCOME RATIO (DTI): A percentage of an individual’s debt, measured by dividing total monthly recurring debt payments by gross monthly income. DEED: A written legal document showing who owns a particular property. This must be signed to transfer a property’s ownership rights to a new homeowner. DEPARTMENT OF VETERANS AFFAIRS (VA): A government agency that manages benefits and other services for eligible veterans of the military. DOWN PAYMENT: The upfront money paid to purchase a home. It is deducted from the total amount of a mortgage and represents the beginning equity.
EARNEST MONEY: A security deposit made by a buyer to a seller to demonstrate that the buyer is serious and willing to purchase the property. EQUAL CREDIT OPPORTUNITY ACT (ECOA): Federal law enacted in 1974 making it unlawful for any creditor to discriminate based on race, color, religion, national origin, age, sex, marital status or receipt of income from public assistance programs. EQUITY: The portion of a property that homeowner owns. Equity is the difference between the home’s fair market value and the outstanding balance of the mortgage on the property. ESCROW: A third party that holds money to ensure pay property taxes, homeowner’s insurance or mortgage insurance is paid on time. HAZARD INSURANCE (HOMEOWNER’S INSURANCE): Protects a homeowner against loss due to fire or other natural disasters in exchange for a premium paid to the insurer. HOMEOWNERS ASSOCIATION (HOA): An organized group of owners, usually found in condominiums or closed communities, who manage the common areas and enforce rules. INTEREST RATE: The amount charged to borrow money from a lender, expressed as a percentage of the principal loan. LOAN ESTIMATE (LE): A three-page document that explains the important details about a borrower’s loan, including the estimated interest rate, monthly payment and total closing costs for the loan. The LE will be provided within three business days of the lender receiving the loan application. LOAN-TO-VALUE RATIO (LTV): The percentage of the loan amount to the appraised value of the property. LOCK-IN RATE: An offer by a lender to guarantee an interest rate for a set period of time. MARKET VALUE: Also called “home value;” the amount for which a house will likely sell. MORTGAGE INSURANCE (MI): Insurance that protects the lender if a borrower defaults on their mortgage loan. MI is usually required if the down payment is less than 20% of the purchase price. ORIGINATION FEE: A fee charged by a lender to cover the administrative costs of processing a loan. PREPAYMENT: An advanced principal payment prior to the due date, thus saving money on interest. PREPAYMENT PENALTY: A fee charged to borrowers for paying ahead on their mortgage. PRINCIPAL: Outstanding loan balance still owed to the lender, not including interest. REALTOR: A licensed real estate professional who represents a buyer or seller in a real estate transaction in exchange for a commission; a member of the National Association of Realtors. REAL ESTATE SETTLEMENT PROCEDURES ACT (RESPA): A federal law requiring lenders to provide disclosures to borrowers informing them of loan settlement costs. These guidelines provide acceptable practices and fees in real estate transactions. SECOND MORTGAGE: An additional mortgage, or lien, placed on a property with subordinate rights to the first mortgage. TERM: The period of time that covers the life of the loan, usually in years. TITLE: A document that indicates ownership of a property, as well as rights of ownership and possession of the property. TITLE INSURANCE: Insurance that protects the lender (lender’s policy) or the buyer (owner’s policy) against loss due to disputes over property ownership.
Kentucky First Time Home Buyer Questions to Ask Your Lender?
∘ 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.
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). Mortgage loans only offered in Kentucky.
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.
Kentucky First-Time Homebuyer Loan Programs for FHA, VA, KHC and USDA Mortgage Loans in Kentucky 