I specialize in Kentucky First Time Homebuyers FHA, VA, USDA & Rural Housing, KHC and Fannie Mae mortgage loans. I have helped over 900 Kentucky families buy their first home and refinance their current mortgage for a lower rate; Kentucky First time buyers $0 down still available with down payment assistance with KHC. Free Mortgage applications same day approvals. Web site is not endorsed by the FHA, VA, USDA govt agency. Text/call 502-905-3708 kentuckyloan@gmail.com
NMLS 57916 NMLS ID 1364
Conventional home loans - conventional mortgages are the ones that comply with the loan limits and terms set by government-backed mortgage companies Fannie Mae and Freddie Mac. They usually require a 3-5% down payment and allow you to borrow up to $647,200 (as of 2022). Typical credit score requirements are 620 and up. In reality, if scores are under 720, and with minimal down payment, it is hard to get approved for a conventional loan and best to look at doing a FHA loan.
USDA Loans - these mortgages are designed for those buyers looking to invest in rural areas. They are backed by the USDA and don’t require a down payment, but only homes in certain areas might be eligible. No minimum score but 620 to 640 credit score requirement with household income limits for each county in Kentucky.
VA Loans - these loans are catered to members of the US military and their families. They are backed by the Department of Veterans Affairs and don’t require a down payment or no monthly Private Mortgage Insurance (PMI). No minimum score but 580 and above with most lenders.
FHA Loans - These are loans backed by the Federal Housing Administration and only require a minimum down payment of 3.5 and a score of 580 and 10% down with a 500 credit score.
KHC loans with down payment assistance of $7,500 require minimum credit score of 620
A Good Credit Score
Some government-backed loans are accessible with a score no minimum score or 500 to 580, while conventional loans require a minimum credit score of 620.
Down Payment
Thanks to today’s availability of different loan types, you no longer need to build that infamous 20% down payment, and you can access a loan with a 0-3% down.
A Debt-To-Income Ratio Below 45%
The debt-to-income (DTI) ratio measures how much of your income is used to repay outstanding debt.
Kentucky FHA Gift of Equity and Gift Funds for Down Payment Requirements
Gifts may be provided by:
• Borrower's family member*; • the borrower's employer or labor union; • a close friend with a clearly defined and documented interest in the borrower; • a charitable organization; • a governmental agency or public entity that has a program providing homeownership assistance to: • low or moderate income families; or • first-time homebuyers.
*Family member defined as: • child, foster child, parent, or grandparent; spouse or domestic partner; • legally adopted son or daughter, including a child who is placed with the borrower by an authorized agency for legal adoption; • brother, stepbrother, sister, stepsister; • uncle or aunt • son-in-law, daughter-in law, father-in-law, mother in-law, brother-in-law, or sister-in-law of the borrower.
Guidelines - Personal Gift Funds
• Primary residence 1-4 unit only • Funds may not be used to fulfill mandatory reserve requirements for manually underwritten files. • No borrower funds are required for down payment. • Cash on hand is not an acceptable source of donor funds.
Documentation - Personal Gift Funds
• Gift letter - See Requirements in "Notable Agency Differences" Above • If the gift funds have been verified in the borrower's account, obtain the donor's bank statement showing the withdrawal and evidence of the deposit into the borrower's account. • If the gift funds are not verified in the borrower's account, obtain the certified check or money order or cashier's check or wire transfer or other official check, and a bank statement showing the withdrawal from the donor's account. • If the gift funds are paid directly to the settlement agent, verify that the settlement agent received the funds from the donor for the amount of the gift, and that the funds were from an acceptable source. • If the gift funds are being borrowed by the donor and documentation from the bank or other savings account is not available, have the donor provide written evidence that the funds were borrowed from an acceptable source, not from a party to the transaction. Regardless of when gift funds are made available to a borrower, the lender must be able to make a reasonable determination that the gift funds were not provided by an unacceptable source. This usually requires a copy of the donor's bank statement.
Guidelines - Gift of Equity
• Family member is ONLY eligible donor for gifts of equity • Limited to 85% LTV unless: o residence is currently selling-family member's primary residence or purchasing family member has been renting residence 6 months prior to sales contract date.
Documentation - Gift of Equity
Gift Letter - See Requirements in "Notable Agency Differences" Above
In most cases, it's ok with lenders to use gift money from a family member to make a down payment. The FHA allows down payments of as little as 3.5 percent,
If you’re a Kentucky first-time homebuyer looking for low down payment mortgage options, several may be available to you. In fact, many of these options are available even if you aren’t a Kentucky first-time homebuyer.
Low down payment mortgage options and requirements for Kentucky Homebuyers:
Down payment mortgage options and requirements for Kentucky Homebuyers
Kentucky Mortgage Closing costs can include the following:
Down Payments
20% of the purchase price depending on your qualifications and loan choice
Earnest Money Deposit
The money put down when a contract is written - it usually goes into an escrow account
Lender Fees
Includes charges for loan processing, underwriting and preparation
Third-party Fees
Includes charges for insurance, title insurance, title search, appraisal fees and other inspections
Government Fees
Includes deed recording and state mortgage taxes
Escrow Interest Fees
Include homeowner's insurance, loan interest, real estate taxes, home warranties and prepaid interest
Property Taxes
Capital tax based on the estimated value of the property
Please do not hesitate to contact me when you are ready to take the next step. I look forward to assisting you!
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.
Email Kentuckyloan@gmail.com
The view and opinions stated on this website belong solely to the authors, and are intended for informational purposes only. The posted information does not guarantee approval, nor does it comprise full underwriting guidelines. This does not represent being part of a government agency. The views expressed on this post are mine and do not necessarily reflect the 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.
Credit score tracking is all the rage for personal finance-savvy consumers. With websites like Credit Karma, you can monitor your current score and keep an eye on irregularities in your line of credit.
But those aren’t the numbers used to gauge your credit-worthiness for a loan. Instead, banks rely on what’s known as the FICO score, an amalgamation of information about your ability to pay back credit cards, student loans, car debt and other forms of debt on time.
Here’s why you need a good credit score to buy a home: Credit scores impact the interest rate of your mortgage and could factor into whether you receive a conventional home loan (meaning that they are available/guaranteed through private financial institutions, or one of two government-backed entities, Fannie Mae or Freddie Mac).
You can visit annualcreditreport.com and get a report from one of the three major credit bureaus, Experian, TransUnion and Equifax. This check will not hurt your score, but it will give you an idea of how trustworthy you look to lenders.
If you think your credit is in good enough shape to begin working with a lender, you can ask the financial institution to check your credit. All hard credit checks from mortgage lenders within a 45-day-window are treated like one inquiry. That’ll allow you to compare two to three lenders to see who will offer a more competitive mortgage rate. FICO advises taking advantage of this by shopping around for rates within a 30-day-window.
FICO has updated its scoring method, and new scores will be out in the summer of 2020. But while those new numbers might be a shock, they won’t have much impact on home loans because mortgage lenders prefer to use older FICO scoring models to determine a borrower’s eligibility, NPR reported.
The minimum credit score is 500 for Kentucky FHA loans. However please keep in mind these two things: 1. Lenders credit their own overlays to increase the credit score threshold, most being 620, and secondly, if your credit score is below 580, you would need 10% minimum down payment, and if the credit score is over 580, then you can go with the minimum 3.5% down payment.
Obviously, if you have a higher credit score, this will increase your chances of getting approved for a Kentucky FHA Mortgage and possibly better rates and closing costs options.
Kentucky VA Mortgage loans requirements :
VA does not have a minimum credit score requirement, but if the credit score is below 620 few lenders will do the loan, but I am set up with several Kentucky VA lenders where I have closed them down to a 560 credit score, but the borrower had good compensating factors such as large down payment, low dti ratios, good job history and good residual income with no previous bankruptcies or foreclosures.
I would suggest if your credit scores are below 580, I would suggest on working on getting the scores up before you applied for a VA mortgage loan.
A lot of lenders will do a rapid rescore which in some cases can increase your credit scores in as little as 7-10 working days.
The federal Department of Veterans Affairs (VA) guarantees loans for current and former members of the military and their families. VA loans provide very favorable terms to eligible borrowers and have limited qualifying requirements.
You can get a VA loan with no down payment so long as the home isn’t worth more than you pay for it, and there’s no minimum credit score to qualify. You also don’t have to pay for mortgage insurance, although you do have to pay an up-front funding fee of between .5% and 3.3% of the loan amount unless you fall within an exception for disabled vets or military widows or widowers.
Kentucky USDA Mortgage credit score requirements:
According to their guidelines, USDA will go down to a 580 credit score, but most lenders will want a 640 credit score. USDA uses an online system to underwrite the risk of the loan, and scores under 640 are very difficult to get approved.
Validating the Credit Score. Two or more eligible tradelines are necessary to validate an applicant’s credit report score. Eligible tradelines consist of credit accounts (revolving, installment etc.) with at least 12 months of repayment history reported on the credit report. At least one applicant whose income or assets are used for qualification must have a valid credit report score
The Rural Housing Service (RHS) operates under the federal Department of Agriculture to guarantee loans for rural home-buyers with limited income who can’t obtain conventional financing. The upside is that Kentucky USDA loans require no down payment. The downside is that they charge a steep up-front fee of 1% of the loan amount (which can be paid off over the entire loan term) and an annual fee of 0.35%.
Kentucky Fannie Mae and Freddie Mac Conventional Credit Score Requirements
These are considered “conventional loans’ that can be often be obtained with a 3% to 5% down payment. Of course, there are higher standards for conventional home financing. The most common minimum credit score requirement to get approved today is a 620 FICO.
This type of score is typical for people that have high credit card balances or a few delinquent payments in their past. The general consensus on Freddie Mac and Fannie Mae loans in Kentucky is that a 620 score is the entry-point to qualify, but you will need thorough documentation of income with credit scores in the 620 to 640 range. You will have a better shot to be approved for a mortgage-backed by Fannie or Freddie with a 680-credit score and less strenuous underwriting.
Competitive Mortgage Rates and Fees
Monthly Mortgage Insurance Is Not Always Required
Ideal for First Time Home Buyers with Good Credit
Down Payments For Mortgage Loan Approval
Down payments are fairly straightforward: it’s the amount you pay out initially when agreeing to buy a home, and the more you put down, the less you have to borrow from a mortgage lender to continue gaining equity in a home.
The minimum down payment to get a mortgage is 3.5 percent of the home’s cost, although unless you put down 20 or more percent on a conventional loan (more on that later) or get a mortgage backed by a federal agency, you’ll be subject to paying for mortgage insurance, according to the Consumer Financial Protection Bureau.
Down Payment Closing Cost Assistance
KHC recognizes that down payments, closing costs, and prepaids are stumbling blocks for many potential home buyers. Here are several loan programs to help. Your KHC-approved lender can help you apply for the program that meets your need.
Regular DAP
Purchase price up to $314,827 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.
Affordable DAP
Purchase price up to $314,827 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.
KHC is used for mostly applicants in urban areas of Kentucky that don’t have access to USDA or other government agencies to buy a home with no down payment.
A minimum of 3.5% down payment is required with this loan. Down payment assistance loans are available from $4500-$6,000, and are paid back over a period of ten years. They are typically offered to buyers with limited cash reserves and carry an interest rate of 1 to 5.5%. These loans can make a critical difference to buyers for whom the down payment is an obstacle. Buyers whose 3.5% down payment is less than the $6000 limit may choose to use the remainder of a down payment loan to pay closing costs, further reducing the amount needed to bring to closing.
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.
The debt-to-income (DTI) ratio is particularly key for lenders.
Debt consists of how much you currently owe such as student loans, car payments and credit card payments, compared to your gross monthly income (before taxes are taken out).
Fannie Mae, a federally backed company that purchases and guarantees mortgages for borrowers, allows a debt-to-income ratio of up to 45 percent, although it may be as high as 50 percent for people with phenomenal credit scores and incomes.
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.
Call us today for a free pre-qualification for your next mortgage loan in Kentucky. We are available 7 days a week to take your call..502-905-3780 or email us at kentuckyloan@gmail.com
KENTUCKY FANNIE MAE CONVENTIONAL LOAN MINIMUM BORROWER CONTRIBUTIONS CHANGES FOR 2019
Fannie Mae New Loan Limits for Kentucky in 2019
Fannie mae has just announced an increase to Kentucky's County Loan Limits for 2019. Effective Thursday November 29th, Fusion will be updated to allow Kentucky Conventional loans to be locked using the 2019 Loan Limits.
The new loan limits are listed below. Individual County Loan Limits for 2019 can be found on Kentucky Fannie Mae Conventional Loan Limit Look-Up Table HERE.
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.
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/
-- 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.
Down Payment Assistance for Ky First Time Home Buyers
Kentucky Down payment assistance loans are available up to $6,000 for Mortgage
KHC is used for mostly applicants in Kentucky that don't have access to money for a down payment on their home.
Down payment assistance loans are available up to $6,000, and are paid back over a period of ten years. They are typically offered to buyers with limited cash reserves and carry an interest rate of 1 to 5.5% based on applicants gross income.
These loans can make a critical difference to buyers for whom the down payment is an obstacle. Buyers whose 3.5% down payment is less than the $6000 limit may choose to use the remainder of a down payment loan to pay closing costs, further reducing the amount needed to bring to closing.
KHC recognizes that down payments, closing costs, and prepaids are stumbling blocks for many potential home buyers. Here are several loan programs to help. Your KHC-approved lender can help you apply for the program that meets your need.
Regular DAP
Purchase price up to $346,644 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.
Affordable DAP
Purchase price up to $346,644 with Secondary Market.
KHC Down payment Assistance for Kentucky First time home buyers
Down payment Assistance Program (DAP)
1. Make sure the property is existing (previously occupied) and below the purchase price
limit of $195,700. If not, HOME DAP is eliminated. Proceed to question 3.
2. To ensure HOME DAP eligibility, ensure the following requirements are met:
• Household income below the HOME DAP income limits, available in the MRB
Program Guide, page 10.
• Borrower requires a minimum of $1,000 assistance, up to a max of $4,500, based on
need. Must use their own liquid funds in excess of two months’ PITI before they
look to HOME DAP.
• Must go maximum allowed LTV on the first mortgage.
• Property must pass HQS inspection (Lead Paint).
• Cannot be used in conjunction with REO properties or FHA 203K streamline
program.
If all of these are met, you must determine how much HOME DAP can be accessed.
This is total cash needed to close, minus seller concessions, minus borrower funds in
excess of two months’ PITI. Whatever remains, rounded to the nearest $100, is the
HOME DAP loan amount.
3. Does the borrower or property meet one of the three Neighborhood DAP qualifiers?
• Is the property being purchased as an REO, foreclosure, bank-owned, or
short sale property?
• Has the property been marketed for six months or more?
• Has the borrower experienced a foreclosure, short sale, or deed-in-lieu in the
past and now credit qualifies?
If yes to any of these, the borrower qualifies for the $10,000 Neighborhood DAP.
Funds can be used toward the down payment or for closing costs and prepaids. Loan is
amortized over 30 years at 1 percent interest rate. The borrower must qualify with
second mortgage payment. If not, proceed to Regular DAP in question 4.
4. Borrower is eligible for Regular DAP up to $6,000 in $100 increments with a minimum
$500 loan amount. Regular DAP is amortized over ten years at 6 percent. Must go to
maximum LTV allowed on first mortgage amount. Borrower must qualify with second
mortgage payment.
First Mortgage Quick Reference Card
To successfully originate KHC mortgages, begin with prequalified applicants and
properties that meet FHA, VA, RHS, or Conventional guidelines. They must be
purchasing or refinancing a single-family, one-unit, owner-occupied property, in
Kentucky. If so:
1. Make sure the property or refinance is below $243,000.
2. Make sure they meet KHC’s simple credit overlays: • 640 credit score for FHA, VA, and RHS. • 680 credit score for Conventional. • Max ratio caps of 40% / 45%. • AUS Approval required, except on RHS.
3.Does the borrower require down payment and closing costs assistance with their
FHA, VA, or RHS first mortgage? If yes, proceed to the DAP
Joel Lobb (NMLS#57916)Senior Loan Officer 502-905-3708 cell 502-813-2795 fax jlobb@keyfinllc.com
Key Financial Mortgage Co. (NMLS #1800)* 107 South Hurstbourne Parkway* Louisville, KY 40222*
