Kentucky Home Buyers. Purchase a Home No Money Down.



I can answer your questions and usually get you pre-approved the same day. 

Call or Text me at 502-905-3708 with your mortgage questions.

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

 

fax:            502-327-9119

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
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.

Self-Employed with Income and Getting Approved for a Home Mortgage Loan in Kentucky?


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Self Employed Income for FHA, VA, USDA and KHC Mortgage Loans Guidelines
 
• A borrower is considered self employed if they have 25% or more ownership in a business.
 
• Contract or 1099 employees are self employed borrowers
 
• There are 4 types of self employed business structures
o  Sole Proprietorships
o  Corporations
o  Limited Liability Company (LLC)
o  Partnerships
 
Tax Returns are always required for a self employed borrower.  Depending on the business structure, the borrower may have business returns in addition to their personal tax returns.
 
1099, Sole Proprietorships, and LLC self employed borrowers typically file Schedule C on their personal tax returns
 
Corporations and Partnerships will file Business Tax Returns in addition to their personal returns.  The business returns will include K1’s listing the borrower’s ordinary business income and percentage of ownership.
 
Corporation and Partnerships may also have W2 income in addition to their K1’s.
 
All self employed income is calculated per agency guidelines
 
Self employed income requires a 2 year history. 
 
Declining self employed income typically cannot be used unless allowed by specific agency of loan program
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.

What kind of income is allowed and needed for a FHA, VA, USDA and Fannie Mae Mortgage Loan Approval in Kentucky?


Income and your job history  plays a significant role when applying for a mortgage loan and getting approved for one for Kentucky Homebuyers . Mortgage Underwriters from FHA, VA, USDA and Fannie Mae  must follow both Fannie Mae  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 requires a 2 year history of working multiple jobs
  • Fannie 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

 

Joel Lobb
Mortgage Loan Officer
Individual NMLS ID #57916
American Mortgage Solutions, Inc.
Company NMLS ID #1364
Text/call:      502-905-3708
fax:            502-327-9119
email:
          kentuckyloan@gmail.com
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.

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 approvalnor 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).

 

 

Part-time earnings or second jobs may not count when seeking a mortgage loan approval in Kentucky


Part-time earnings may not count when seeking a mortgage.

 

 

The two-year rule for counting part-time income has been an industry standard for years and was recently incorporated into regulations adopted by the Consumer Financial Protection Bureau. The rationale is straightforward: If part-time income hasn’t been established for an extended period of time, it may not be dependable or available in the future to make monthly payments on a mortgage. The industry also has restrictions on qualifying seasonal income and overtime earnings.
 Part-time or second-job income may be used if it can be verified as having been uninterrupted for the previous 2 years and there is a strong likelihood of continuation. Seasonal income may be considered if the borrower has worked in the same job for the past 2 years, and expects to be rehired for the next season
 

 

Using Income from a 2nd Job

Generally speaking, each program wants to make sure that the borrower has a stable and documented history of working two jobs. This is very common for many occupations (health professionals, firefighters, etc), as full time is often less than 40 hours per week. Schooling/Training directly related to the borrower’s current position can often count as work history. This flexibility can help you qualify for borrowers!

•FANNIE Conventional DU: Requires a 24-month uninterrupted history of secondary employment, but an underwriter may accept a shorter history as long as it at least 12 months if there is other positive factors. Found in Ch. B3-3.1-05

•FREDDIE Conventional LP: Requires a 24-month uninterrupted history of secondary employment, but an underwriter may accept a shorter history as long as it at least 12 months AND there are other positive factors and we can support that the income is stable. Guidelines also give specific instructions for teachers who teach summer school – this income would be allowed at the start of the second summer the borrower is teaching. Also, if a borrower had a 40 hr primary job, and was laid off and replaced the income with two part-time 20 hr. jobs in the same field/line of work could be considered as stable after 12+ months. Found in Ch. 5305.2

•FHA: R

equires a 24-month uninterrupted history of secondary employment in order to use income to qualify, and there must be a likelihood of continuance. Found in 4000.1 handbook, Part II, Section A, part 4, section c.

•VA: Secondary income is generally not considered stable unless it has a 24-month history and a likelihood of continuation. If the income has been received for at least 12 months, the underwriter may at their discretion, use it to offset debts that have 10-24 months left (car notes, installment loans, etc.) Found in Ch.4, 2-h

•USDA: USDA follows FHA guidelines for secondary income as the USDA guidelines do not specifically address secondary income

 

 

Unacceptable Sources of Income


Income derived from any of the following may not be used in calculating qualifying income:

• Projected income
• Draw Income
• Capital withdrawals
• Expense/Auto Reimbursement 
• VA Education Benefits
• Income not listed on Tax Returns
• Any income that cannot be documented and verified.

How much house can you qualify for?

Traditionally, mortgage lenders have used something known as the 28/36 rule to determine how much of a mortgage you can qualify for. This refers to two income ratios that provide guidelines for your maximum monthly payment.

Front-end ratio-The “28” is known as the front-end ratio and says that your mortgage payment, including taxes and insurance, shouldn’t exceed 28% of your pre-tax income.

Back-end ratio-The “36” is called the back-end ratio, which means your entire debt load, including your mortgage payment, car payment, credit cards, student loans, and other monthly payments shouldn’t exceed 36% of your pre-tax income.

Some lenders will stretch these limits even further. For example, if your loan is a qualifying mortgage under Fannie Mae’s underwriting standards, and you meet a few other requirements, you can qualify for a debt-to-income ratio of up to 45%. In other words, if your monthly paychecks are $5,000 before taxes, you could qualify for a mortgage as long as it doesn’t cause your monthly debt load to exceed $2,250. No doubt this is on the high end of the spectrum for what you can afford with little cushion for unexpected events.

Credit history – Lenders will generally review your FICO Score to better understand your risk as a borrower and the interest rate offered. Homeowners will need a minimum FICO Score of 580 to qualify for an FHA, low down-payment mortgage. Potential homeowners with larger down payments will need a FICO Score of 620 to 660, depending upon lenders. That’s not to say anyone with a lower score won’t qualify, but there’s no hard-and-fast rule on credit scores and qualifying for a mortgage.

If you’re thinking of buying a home for the first time, or maybe haven’t owned since the real estate collapse starting in 2008, you may be wondering what credit score you need to get a mortgage. 

In fact, before the housing market crashed, it was far easier for the average person to get a loan since credit standards were very low (or nonexistent!) and the subprime loan market was nearly unregulated.

However, banks and lenders have tightened up their lending standards since then (which is a good thing), including the credit score you need to qualify for a mortgage.

So let’s look at some data that will help us define what score you need to get a mortgage loan approved:

What credit scores are being turned down for loans?

To help gauge what credit score you realistically need to buy a home (and get a mortgage), we can also check the average credit score for loans that were actually denied.

In fact, the average credit score has dropped to 645 in 2017, a decrease from a declined loan average of 675 in 2016. (The number and percentage of declined loans has also dropped.)

According to FICO, the average score for denied FHA purchase applications was 636.

For VA loans, the average FICO score for denied purchase loan applications is 642.

Crunching the credit score data for closed loans

We can also ascertain some data about not just guidelines, but information from actual closed loans.

Mortgage servicer Ellie Mae is a great source for that information, since about a quarter of all loan applications in the U.S. pass through that agency.

After tracking 3.7 million loan applications, Ellie Mae found that the average FICO score for approved/closed FHA loan applications is 645, down from 689 in 2015.

Approved conventional loans have an average score of 719, down from 731 a year ago and 755 in 2015.

For VA loans, the average approved purchase loan has a 707 FICO now.

Credit score minimums by loan type

The easiest way to figure out what credit score you might need to buy a house is to just open the “rulebook” for different loan types.

FHA loans have a minimum credit score requirement of 500 with a 10% downpayment.

But most FHA loans are approved with a score of 580 and up

VA Loans – 620+ credit score

USDA Loans – 640+ credit score

FHA 203K Loans – 620+ credit score

Conventional Loans – 620+ credit score

But that doesn’t mean you’ll be approved with that credit score!

Don’t get too excited if you have those minimum credit scores, because that doesn’t mean you’ll be automatically approved.

That’s because individual lenders apply what’s called “mortgage overlays” which means they have more stringent credit standards than those programs dictate.

In fact, a recent study by Fannie Mae found that nearly two-thirds of mortgage lenders apply mortgage overlays these days, with 47% of lenders calling for higher credit score overlays.

For instance, FHA – the Federal Housing Administration – may only require a 500 credit score on paper, but the FHA also doesn’t lend any money or issue any loans! Instead, the FHA is a governmental agency that insures loans made by other lenders, and so we see it’s rare and difficult to get an FHA loan approved with a score under 580.

Remember that the lower your credit score, the more you can typically expect to pay for your mortgage interest rate. For instance, with FHA if your score is:

579 and lower score: If you get approved at all, your interest rate will probably be 2% higher than conventional rates.

580-619: Your interest rate will be up to 1% higher than the lowest rates available.

620-679: Your interest rate will only be bumped up slightly – probably by about .5%.

680+: Your rate probably won’t be affected at all, and with a 720 or 740 and up score, the best rates will be available.

What is the average credit score for mortgage holders, and homeowners?

To put it another way, people with mortgages have higher credit scores than the general public, as do homeowners. In fact, the average credit score among non-mortgage holders in the U.S. is 613, compared to 649 for FHA loan holders, and 652 for conventional real estate mortgagees.

So is YOUR credit score good enough to buy a house? Chances are that with our help and a few months, you’ll be in prime position to qualify for a great home loan and get the keys to a new house!

gotquestion-15daae-mortgage-documents

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

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