Debt-to-Income (DTI) ratio requirements for ​Kentucky FHA, VA, USDA, and conventional mortgage loans

 Here’s a summary of the Debt-to-Income (DTI) ratio requirements for ​Kentucky FHA, VA, USDA, and conventional mortgage loans, along with examples for each:

1. ​Kentucky FHA Loan DTI Requirements:
   • Front-End DTI Ratio: Up to 31%
   • Back-End DTI Ratio: Up to 43%
   • Example: Monthly gross income of $5,000, the FHA loan allows a maximum monthly mortgage payment (including principal, interest, taxes, and insurance) of $2,150 (43% of $5,000).
2. ​ Kentucky VA Loan DTI Requirements:
   • Generally flexible with DTI ratios, but a common guideline is:
     • Back-End DTI Ratio: Up to 41%
   • Example: Monthly gross income of $6,000, the VA loan allows a maximum monthly debt payment (including mortgage, car loans, credit cards, etc.) of $2,460 (41% of $6,000).
3. ​Kentucky USDA Loan DTI Requirements:
   • Front-End DTI Ratio: Up to 29%
   • Back-End DTI Ratio: Up to 41%
   • Example: Monthly gross income of $4,000, the USDA loan allows a maximum monthly mortgage payment (including taxes and insurance) of $1,160 (29% of $4,000).
4. ​Kentucky Conventional Loan DTI Requirements:
   • Front-End DTI Ratio: Up to 28%
   • Back-End DTI Ratio: Up to 36-45% (may vary based on the lender and loan program)
   • Example: Monthly gross income of $7,000, a conventional loan may allow a maximum monthly debt payment (including mortgage, car loans, credit cards, etc.) of $2,520 to $3,150 (36-45% of $7,000).

How to calculate your front-end DTI for a Kentucky Mortgage Loan Approval

Your front-end DTI is calculated by dividing your monthly housing costs by your monthly gross income. Front-end DTI for renters is simply the amount paid in rent, whereas for homeowners it is the sum of mortgage principal, interest, property taxes, and home insurance (i.e., your PITI) divided by gross monthly income.

From above, if that $2,800 in debt payments is attributable to $1,500 in housing costs and $1,300 in non-housing costs, then your front-end DTI is $1,500/$5,000 = 30% (and your back-end ratio is still 56%, as calculated above).

How lenders use your DTI for a Kentucky Mortgage Loan Approval

Kentucky Mortgage lenders typically use DTI (along with other variables) to determine whether or not you qualify for a loan, and to help determine your Kentucky mortgage rate. A high front-end DTI raises red flags with lenders because it is commonly associated with borrower default. In fact, reducing front-end DTI to reduce the risk of homeowner default was one of the main objectives of the loan modification programs introduced by the government in 2009.

There are specific limits for DTI that are used as cut-off points when evaluating borrowers. Current DTI limits for conventional conforming mortgage loans are typically 28% on the front end and 36% on the back end, though these limits are slightly higher for government subsidized Kentucky FHA loans.

While there are certainly other factors to consider when determining our eligibility for financing (e.g., credit score, etc.), your DTI is an important determinant that you should be aware of. By working to improve it, you can make yourself a better credit risk, and thus get more favorable treatment from lenders.

Two obvious ways to improve DTI are to increase your income and/or decrease your debt. Both are solid goals.

 

Hope your day is full of sunshine

Joel Lobb  Mortgage Loan Officer

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
http://www.mylouisvillekentuckymortgage.com/

NMLS 57916  | Company NMLS #1364/MB73346135166/MBR1574

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).

Posted by Joel Lobb, Mortgage Broker FHA, VA, KHC, USDA 

Welcome Home Grant in Kentucky

Kentucky Welcome Home Grant Program Guidelines

The Kentucky Welcome Home Grant is out of funds. 

 

 

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 to get approved for a mortgage in Kentucky as a first-time homebuyer

How to get approved for a mortgage in Kentucky as a first-time homebuyer using FHA, VA, USDA, and Kentucky Housing Corporation (KHC) down payment assistance programs with Joel Lobb’s expertise, here are the steps you can follow:

1. Credit Check and Improvement if Necessary:

   • Check your credit score and credit report.
   • Improve your credit score if needed by paying off debts and resolving any issues on your credit report.

2. Financial Assessment:

   • Assess your financial situation, including income, savings, and debts.
   • Determine how much you can afford for a down payment and monthly mortgage payments.

3. Explore Loan Options:

   • Research FHA, VA, USDA, and KHC loan programs to understand their requirements, benefits, and eligibility criteria.
   • Discuss with Joel Lobb to get insights into each program’s pros and cons based on your financial situation.

4. Pre-Approval Process:

   • Apply for pre-approval with Joel Lobb’s assistance.
   • Submit necessary documents such as income statements, tax returns, bank statements, and employment history.

5. Down Payment Assistance Programs:

   • Explore down payment assistance programs offered by KHC or other organizations.
   • Understand the eligibility criteria and application process for these programs.

6. Property Search and Selection:

   • Start searching for homes within your budget and preferred location.
   • Consider factors such as neighborhood amenities, school districts, and property value trends.

7. Make an Offer and Negotiate:

   • Work with Joel Lobb to make a competitive offer on a property you like.
   • Negotiate terms such as price, closing costs, and seller concessions.

8. Loan Application and Processing:

   • Once your offer is accepted, complete the loan application process with Joel Lobb.
   • Provide any additional documentation required by the lender.

9. Home Inspection and Appraisal:

   • Schedule a home inspection to identify any potential issues with the property.
   • Arrange for an appraisal to determine the home’s value.

10. Closing Preparation:

    • Review the closing disclosure and loan terms.
    • Prepare funds for closing costs, down payment, and other expenses.

11. Closing Day:

    • Attend the closing meeting with Joel Lobb and sign all necessary documents.
    • Complete the transfer of ownership and receive the keys to your new home.

Throughout this process, Joel Lobb can provide valuable advice, assistance, and support to help you navigate the complexities of obtaining a mortgage and buying your first home in Kentucky

 

Hope your day is full of sunshine

Joel Lobb  Mortgage Loan Officer

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

http://www.mylouisvillekentuckymortgage.com/

 

 

 

 

NMLS 57916  | Company NMLS #1364/MB73346135166/MBR1574

 

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).

 

Summary of different loan programs for Kentucky first-time homebuyers

Here’s a summary of different loan programs for Kentucky first-time homebuyers with a focus on various criteria to include credit score, down payment, debt to income ratio, work history, credit, bankruptcy, foreclosure and employment and closing time frame, appraisal and income documents

1. FHA Loan:
   • Credit Score: Typically requires a minimum credit score of 580; borrowers with lower scores may still qualify but may need a larger down payment.
   • Down Payment: Minimum down payment of 3.5%.
   • Income Ratio: Front-end ratio (housing expenses to income) should not exceed 31%; back-end ratio (total debt to income) should not exceed 43%.
   • Work History: Generally requires at least two years of steady employment, though exceptions can be made.
   • Credit, Bankruptcy, and Foreclosure: More forgiving than conventional loans; may consider borrowers with past bankruptcy or foreclosure.
   • Employment and Work History: Stable employment and income are essential.
   • Time to Close: Typically around 30-45 days. Appraisal and property requirements follow FHA guidelines.
2. VA Loan:
   • Credit Score: VA doesn’t set a minimum score; lenders may have their requirements, often around 620 or higher.
   • Down Payment: No down payment required for most borrowers.
   • Income Ratio: Flexible debt-to-income ratios, often up to 41% or higher in certain cases.
   • Work History: Stable employment history is preferred.
   • Credit, Bankruptcy, and Foreclosure: More lenient on past credit issues; may consider borrowers with past bankruptcy or foreclosure.
   • Employment and Work History: Consistent income from stable employment is crucial.
   • Time to Close: VA loans can take 45-60 days to close. Appraisal and property requirements must meet VA standards.
3. USDA Loan:
   • Credit Score: Typically requires a minimum credit score of 640; exceptions may be possible with compensating factors.
   • Down Payment: No down payment required for eligible borrowers.
   • Income Ratio: Maximum debt-to-income ratio of 41%, though exceptions may be made with strong compensating factors.
   • Work History: Stable employment history is preferred, typically two years or more.
   • Credit, Bankruptcy, and Foreclosure: Consideration for borrowers with past credit issues, bankruptcy, or foreclosure.
   • Employment and Work History: Consistent income from stable employment is important.
   • Time to Close: USDA loans may take 30-60 days to close. Appraisal and property requirements must meet USDA guidelines.

Each loan program has specific eligibility criteria and requirements, so it’s essential for first-time homebuyers to consult with lenders or mortgage experts to determine the best fit based on their financial situation and goals.

Sure, here’s the additional information about appraisal requirements and income documentation needed for different loan programs:

1. FHA Loan:
   • Appraisal Requirements: The property must meet FHA guidelines, including minimum property standards and safety requirements. An FHA-approved appraiser assesses the property’s value and condition.
   • Income Documentation: Generally requires recent pay stubs, W-2 forms, tax returns for the past two years, and proof of additional income sources (if applicable).
2. VA Loan:
   • Appraisal Requirements: VA loans require a VA appraisal conducted by a VA-assigned appraiser. The appraisal assesses the property’s value and ensures it meets VA’s Minimum Property Requirements (MPRs).
   • Income Documentation: Typically includes pay stubs, W-2 forms, tax returns for the past two years, and proof of any additional income (e.g., bonuses, alimony, rental income).
3. USDA Loan:
   • Appraisal Requirements: USDA loans require a USDA appraisal to determine the property’s value and ensure it meets USDA’s standards for safety and livability.
   • Income Documentation: Similar to FHA and VA loans, USDA loans require pay stubs, W-2 forms, tax returns for the past two years, and documentation of other income sources.

Hope your day is full of sunshine

Joel Lobb  Mortgage Loan Officer

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
http://www.mylouisvillekentuckymortgage.com/

NMLS 57916  | Company NMLS #1364/MB73346135166/MBR1574

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).

Kentucky FHA loans

Qualifying for an FHA Loan in Kentucky