- Kentucky VA Loan Analysis
In order to calculate the residual income, the Kentucky VA loan Analysis must be complete and accurate- Include the Square Footage of the property
- Enter number of dependents (including spouse if applicable) correctly on the 1003 in order to correctly allocate dependents on the VA Loan Analysis
- Select correct COE eligibility, exemption code, and whether borrower is active or reserves
Compensating Factors for a Kentucky VA Mortgage Loan
- Are used to strengthen a manual underwrite
- Are used when borrower does not meet 120% of the residual income guideline
- Compensating factors include: excellent credit history, conservative use of consumer credit, minimal consumer debt, long term employment, significant liquid assets, sizable down payment, the existence of equity in refinancing loans, little or no increase in shelter expense, military benefits, satisfactory homeownership experience, high residual income, low DTI ratio, tax credit for child care, and tax benefits of home ownership
Kentucky VA Mortgage Loan Cash-Out Refinances
- All refinances except IRRL’s are considered Cash Out Refinances
- At least 6 monthly payments must have been made on the original loan being refinanced; AND
- The first payment due date of the new loan must be at least 210 days after the first payment due date of the original loan being refinanced
VA Cash-Out Refinances greater than 90% LTV
- Max LTV is 100%
- The cash-out loan must be paying off a current mortgage loan (VA or otherwise), a second (seasoned or unseasoned) mortgage, and/or any other non-mortgage debt.
- Minimum Fico 620
- Have a DU approval Must have (no manual underwrites)
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What Is a VA Guaranteed Loan?
A VA-guaranteed loan can be used to:
• Buy a home as a primary residence (This can be either existing or new construction.)
• Refinance an existing loan
Benefits of a VA Guaranteed Loan
• No down payment, unless:
o It is required by the lender.
• The purchase price is more than the reasonable value of the property
• No mortgage insurance
• Reusable
• One-time VA funding fee (can be included in the loan)
o If you receive VA disability compensation, you are exempt from the VA funding fee.
• Minimum property requirements
o Ensure the property is safe, sanitary and sound
• VA staff assistance if you become delinquent on your loan
• Can be assumed by qualified persons
• Equal opportunity for all qualified Veterans
Updated October 2018 2
Who Is Eligible?
In general, the following people are eligible:
• Veterans who meet service length requirements
• Service members on active duty who have served a minimum period
• Certain Reservists and National Guard members
• Certain surviving spouses of deceased Veterans
Apply at
www.ebenefits.va.gov to determine your eligibility or call 877-827-3702 for more information.
Key Underwriting Criteria
• There is no maximum debt ratio. However, the lender must provide compensating factors if the total debt ratio is more than 41 percent.
• There is no maximum loan amount. However, VA does limit its guaranty. Veterans can borrow up to $484,350 without a down payment in most of the country. You can find out the limit in any county at
www.benefits.va.gov/homeloans/purchaseco_loan_limits.asp.
• VA’s residual income guidelines ensure Veteran borrowers can afford the loan. These guidelines establish how much money a Veteran must have left over after all debts and living expenses are considered.
• There is no minimum credit score requirement. Instead, VA requires a lender to review the entire loan profile.
For more information, see the complete VA credit guidelines at
www.benefits.va.gov/warms/pam26_7.asp.
How Can You Start the Process?
VA provides policy, guidelines and oversight of the program. Lenders provide financing for eligible Veterans. The guaranty allows Veterans to obtain a loan without a down payment or mortgage insurance premiums. Veterans need to obtain a Certificate of Eligibility (COE) to prove entitlement. You can obtain the COE online through eBenefits
Updated October 2018 3 at
www.ebenefits.va.gov.
Lenders also have the ability to request the COE on your behalf.
You should talk to several lenders to find the one that fits your needs. They should know the VA loan program. They should also offer competitive rates and terms.
Note: The VA appraisal is not intended to be an “inspection” of the property.
Before committing to a purchase agreement, you should get expert advice. Talk to a qualified residential inspection service. You should also have radon testing performed.
Can VA Help If You’re Having Trouble Making Payments?
VA loan technicians may be able to help you retain your home and avoid foreclosure. Call 877-827-3702 to speak to a VA loan technician. For more information, visit
www.benefits.va.gov/homeloans/resources_payments.asp.
The Department of Veteran Affairs does not set a minimum credit requirement for a VA home loan. However, there may be credit requirements established by the lender who funds it.
As a benefit of military service, a VA home loan helps U.S. veterans and their spouses become homeowners without having to make a down payment and regardless of having less than fair credit scores. Lenders all over the country offer these loans, which the United States Department of Veterans Affairs (VA) insures. Aside from having no obligation to make a down payment, there are other significant benefits of a VA mortgage:
No Minimum Credit Score Required
Each VA home loan gets insured by the VA, and they do not need veterans to have any particular credit score. However, the loans offered by private lenders may have the requirement for a minimum score, which usually ranges from 580 to 620. Veterans need to be eligible for a credit. That is determined when lenders analyze their credit profile. Typically, lenders pull reports from the three primary agencies for credit-reporting: TransUnion, Experian, and Equifax. For qualification, the median or middle rating gets used as your credit score.
Since the VA is not funding the loan, it is the lender who sets a specific benchmark for the credit score. Not all vendors use the same parameter, but reports indicate the average credit score requirement is a FICO score of 620.
Credit scores aren’t the only things checked within the qualifying credit profile. Also, your past patterns with credit get used in the establishment of your repay willingness. If for at least 12 months, a veteran has made payments on time, he or she shows a readiness to repay any credit obligations to come.
Contrarily, a borrowing veteran who has a history of making payments late, delinquent accounts, or judgments, lenders may not consider him or her a satisfactory applicant to receive a loan.
Good Credit Means Better Mortgage Rates Today
While having a low credit score does not completely disqualify you from getting a VA home loan, but having a higher score is helpful. You can get better loan terms and better mortgage rates today than you would with less than fair credit. It is at the discretion of the lender to decide the percentage offered to each borrower. In general, those individuals with the excellent credit get offered the best rates. However, many homeowners and homebuyers are taking advantage of the current mortgage rates trend which shows the rates retreating.
Other Factors Affecting Approval of VA Loans
There are other financial considerations lenders make to help them determine if you can repay a VA home loan. They consider various factors, such as current income and employment record. Additionally, there are veteran requirements that need to be met, like the character of service, duty status, and length of service. Having a VA Certificate of Eligibility (COE) is an essential component of your loan application. To qualify for a VA loan, you must meet at least one of these conditions:
- You are the spouse of a service member who is no longer alive because of a service-related disability or died while in active duty.
- During wartime, you have served in active service for 90 consecutive days.
- You have over six years of Reserves or National Guard service.
- During peacetime, you have served in active service for 181 days.
There are six items which could negatively affect your ability to obtain a VA loan and impact your credit profile:
Foreclosure
If a borrower’s past residence or real property got foreclosed on or you were given a deed-in-lieu of foreclosure in the last two years after the date of disposition, a person would generally not be eligible to receive a VA loan. FHA loan defaults can lead to waiting of three years for a VA loan. If it was a VA loan foreclosure, full entitlement for a new mortgage might not be available.
Late Payments on Mortgage
In cases unrelated to bankruptcy, a Veteran or spouse and Veteran can have reestablishment to satisfactory credit if for 12 months after the derogatory credit item there were adequate payments made. Having more than one 30-day late payments may be acceptable by some lenders. The policies regarding late payments are different for each vendor. If the court has made a judgment on account balances, it is subject to a plan with timely repayments or it must be paid in its entirety. Judgment policies can vary from lender to lender
Federal Debts and CollectionsDerogatory and collection debt may be allowable within a threshold of which the caps would vary by other factors but primarily the lender. There needs to be a history of timely repayments on a plan for federal debt delinquency or default. It is possible for lenders to put a halt to a VA loan until the borrower is no longer in CAIVRS, which is the federal debt database.
Chapter 7 Bankruptcy
Chapter 7 Bankruptcy
According to VA guidelines, at least two years must pass by after the date of discharge for the borrower or spouse’s Chapter Seven bankruptcy. It is not the date it got filed. The borrower would need to provide a detailed explanation of the bankruptcy. Also, he or she must have a stable income, be eligible for the loan financially and have re-established decent credit.
Chapter 13 Bankruptcy
Under the VA guidelines, a borrower is still paying on a Chapter 13 bankruptcy if it’s verifiable that satisfactory payments got made to the court for one year. To proceed, the court trustee must provide written approval to do so. There needs to be a complete explanation of the bankruptcy, and the borrower must have secure employment, re-established good credit, and financially qualify.
No Credit to Report
Lenders do not find a lack of established credit history favorable. If a borrower has only one credit score, it must meet the lender’s in-house benchmark for some to see it as permissible. Without a credit score, borrowers will have to spend a lot of time building a credit profile before getting the ability to secure a VA home loan. Consideration of a borrower’s non-traditional credit tradelines may have guidelines that vary by lender.
American Mortgage Solutions, Inc.
10602 Timberwood Circle Suite 3
Louisville, KY 40223
Company ID #1364 | MB73346
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#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.
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