Student Loan Guidelines For Qualifying for a Mortgage Loan in Kentucky.

Loan type	Student Loan Payment Requirement
FHA	Must be included in the borrower’s liabilities regardless of the payment type or status. The payment amount must be either: ▪ The greater of: ·        ..5% of the outstanding balance on the loan or ·        Monthly payment reported on the borrower’s credit report, or ▪ The servicer’s documented payment provided the payment will fully amortize the loan over the repayment term period
VA	Deferred A payment does not need to be included if written evidence supports that the student loan debt will be deferred beyond 12 months of closing. In Repayment Include loans with payments starting within 12 months. Calculate threshold payment as a rate of 5% of outstanding balance divided by 12 months. If credit report payment is higher, use credit report payment. If current documentation from student loan servicer reflects actual terms and payment for each loan, the verified payments may be used even if less than the threshold payment calculation.
USDA	Fixed Payment A permanent amortized, fixed payment is used when documentation supports fixed payment, interest and term. Non-Fixed payment Use .5% of the loan balance reflected on the credit report. Payment arrangements that are deferred or non-fixed (Income Based Repayment (IBR), graduated, adjustable, interest only, etc.) may not be used.
Fannie	Loans in Repayment Period ▪ If provided, use the credit report payment ▪ If credit report is incorrect, obtain student loan documentation from the servicer to verify the payment used for qualification Income Driven Repayment Plan Use the student loan documentation to verify the actual monthly payment. Borrower may be qualified with a $0 payment if the documentation supports it. Loans in Deferment or Forbearance ▪ A payment equal to 1% of the outstanding student loan balance (even if this amount is lower than the actual fully amortizing payment) or ▪ A fully amortizing payment using the documented loan repayment terms
Freddie	Loans in Repayment Period Use the greater of payment reported on credit report or .5% of the higher of original or outstanding loan balance as shown on credit report. Loans in Deferment or Forbearance Use greater of payment reported on credit report or .5% of the higher of original or current outstanding loan balance as shown on the credit report. Loan Forgiveness Cancelation Discharge Employment Contingent Repayment Programs Payment may be excluded if file contains documentation that indicates: ▪ Monthly payment is deferred and/or in forbearance and full balance of the loan will be forgiven, canceled, discharged or will be paid if qualified for an employment-contingent repayment program and ▪ Borrower currently meets requirements for the student loan forgiveness/cancelation program Obtain documentation from the student loan servicer to show the loan will be forgiven, canceled, discharged or that the borrower qualifies and is approved under an employment contingent repayment program that will extinguish the debt.

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Joel Lobb
Mortgage Loan Officer

Individual NMLS ID #57916

American Mortgage Solutions, Inc.

10602 Timberwood Circle 

Louisville, KY 40223

Company NMLS ID #1364

click here for directions to our office

Text/call:      502-905-3708

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

https://www.mylouisvillekentuckymortgage.com/

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How to qualify for a Kentucky FHA, VA, USDA and Fannie Mae Mortgage loan with Student Loans

Guidelines for KY FHA, VA, USDA and VA Mortgage loans with Student Loans on A Credit Report:

Kentucky Fannie Mae or Conventional Guidelines for Student Loans: If a monthly payment is on the credit report, the lender may use that amount for qualifying purposes.  If a monthly payment is on the credit report is incorrect, the lender may use the monthly payment on the most recent student loan statement If the monthly payment on the credit report is zero, the lender must use one of the following options to calculate the payment for qualifying purposes Document the borrower is on an income driven payment plan and the actual monthly payment is zero  Use 1% of the outstanding student loan balance as the monthly payment Calculate a fully amortized payment using documented loan repayment terms Kentucky FHA Mortgage Loans Guidelines: Regardless of the payment status (currently in payment or deferred), the lender must use either: The greater of: .5 % of the outstanding balance; or The monthly payment reported on the credit; or  Calculate a fully amortized payment using documented loan repayment terms Kentucky USDA or Rural Housing Guidelines: Regardless of the payment amount reporting on the credit, the lender must include the payment as follows: A permanent amortized, fixed payment may be used in the debt ratio when the lender retains documentation to verify the payment is fixed, the interest rate is fixed, and the repayment term is fixed. Payments for deferred loans, Income Based Repayment (IBR), Graduated, Adjustable, and other types of repayment agreements which are not fixed cannot be used in the total debt ratio calculation. .5% of the loan balance reflected on the credit report must be used as the monthly payment. No additional documentation is required. Kentucky  VA Mortgage Guidelines for Student Loan: If the borrower can document the student loan will be deferred 12 months from the closing date, the monthly payment does not need to be considered If a student loan is in repayment or scheduled to begin repayment within 12 months from the closing date, the threshold payment amount must be calculated by  using 5% of the loan balance divided by 12 months If the payment reporting on the credit report is greater than the threshold payment calculation amount, then the credit report payment must be used for ratios. If the payment reporting on the credit report is less than the threshold payment calculation and the lender is using the lower payment to qualify the borrower then: A statement from the student loan servicer reflecting the actual loan terms and payment information must be included in the file.  The statement must be dated within 60 days of closing It is the underwriter’s discretion to use the lower payment

As you can see, Fannie Mae or Conventional loans is the most lenient when it comes to qualifying for a mortgage loan with someone that has a lot of student loans on their credit report.

 

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

 

 

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.

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Kentucky USDA and Rural Housing Loan Information

Kentucky USDA and Rural Housing Loan Information

 Frequently Asked Questions For Kentucky USDA Qualifying Criteria

1 What is the guarantee?


USDA Rural Development provides the full faith and assurance of the U.S

Government that any financial loss resulting from servicing the loan will be

reimbursed in full up to an amount not exceeding 90% of the original loan

amount. All loss up to an amount not exceeding 35% of the original loan is fully

reimbursed. Losses exceeding 35% are 85% reimbursed.


2 What is the advantage to the customer?

100 percent financing, fixed interest rate, no first time homeowner requirement, and no restrictions on size or design are a few advantages.


3 What are the eligibility requirements?


Have adequate and dependable income (up to 115 percent of adjusted area median

income), have acceptable credit, do not own a dwelling in the local commuting

area, US Citizen or permanent resident, have the ability to personally occupy the

home on a permanent basis, and do not have funds for a 20% down payment loan

plus closing and moving expenses.


4. What is the maximum loan amount?

The Loan amount is limited by the market value and repayment ability.


5.  What is the maximum Loan to Value?

It can be up to 100% LTV plus the Agency guarantee fee


9 What is the Guarantee Fee?

The upfront guarantee fee is 1 percent of the “Total” loan amount. The Lender also has an annual fee of .35 percent based on principal.


10 What are the qualifying ratios?


PITI Ratio 29 percent, TD Ratio 41 percent
Higher ratios may be approved with compensating factors through the Automated Underwriting System Called GUS.


11 Do we show deferred student loans in the debt ratio?

Deferred student loans must be included in the debt ratio calculations for

Guaranteed Loans regardless of the deferment period.

12 What is the minimum credit score?


Under certain criteria, middle credit score of 680 and above no comment required.

For middle credit score of 679 and below document circumstances were

temporary in nature beyond the applicants control and have been removed. In

most cases, loans will not be guaranteed for applicants who have a middle credit

the score of 581 & below. 

13 What about location?


The dwelling must be located in eligible rural area (See eligibility site)

http://eligibility.sc.egov.usda.gov/eligibility/welcomeAction.do


14 What about refinancing?
Limited to existing USDA Rural Development guaranteed or direct loans.

15 Can loans include acreage? 

Possibly. The acreage must not contain any income producing facilities and the value of acreage may not exceed 30% of the total property value.


17 What about an in-ground swimming pool?

In-ground pools permitted if the value is NOT financed; Appraiser must document

value.


18 What are the required inspections?

Property must meet HUD Handbook 4905.1 & 4150.2. A FHA roster appraiser

can verify adequacy/working order of electrical, plumbing, heating, water & waste

disposal on existing dwellings.


19 Will the USDA Rural Development issue a letter asking the Approved Lender to make a loan?


No. This is the Approved Lender’s loan. They underwrite the loan and decide if

it meets their standards and Agency standards before submitting them.


21 Are seller concessions allowed?

Yes. Rural Development does not restrict the amount of seller concessions.


22 Who approves the Appraiser? The appraiser must be licensed by the State to complete appraisals.


24 Are alternate documents verifying income allowed?

Yes. Paycheck stubs, payroll earnings statements and W-2 tax forms for previous

2 tax years, and telephone verification of employment.

 

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