Showing posts with label income. Show all posts
Showing posts with label income. Show all posts

Variable Income for A Mortgage Loan Approval in Kentucky

How to get approved for a Kentucky FHA, VA, USDA and Fannie Mae Mortgage loan with Variable Income 


 Variable INCOME if your borrower is not hourly at 40 hours a week or salary do you fall within VARIABLE INCOME?? Yup we all dislike that is calculated by an averaging method..


☁️Examples of income of this type include income from hourly workers with fluctuating hours, or income that includes commissions, bonuses, or overtime.

☁️History of Receipt: Two or more years of receipt of a particular type of variable income is recommended; however, variable income that has been received for 12 to 24 months may be considered as acceptable income, as long as the borrower’s loan application demonstrates that there are positive factors that reasonably offset the shorter income history.

☁️Frequency of Payment: us as a lender must determine the frequency of the payment Examples:
If a borrower is paid an annual bonus on March 31st of each year, the amount of the March bonus should be divided by 12 to obtain an accurate calculation of the current monthly bonus amount.

☁️Note that dividing the bonus received on March 31st by three months produces a much higher, INACCURATE monthly average.

☁️If a borrower is paid overtime on a biweekly basis, the most recent paystub must be analyzed to determine that both the current overtime earnings for the period and the year-to-date overtime earnings are consistent and, if not, why.

☁️There are legitimate reasons why these amounts may be inconsistent yet still eligible for use as qualifying income. For example, borrowers may have overtime income that is cyclical (transportation employees who operate snow plows in winter, package delivery service workers who work longer hours through the holidays).

☁️We must investigate the difference between current period overtime and year-to-date earnings and document the analysis before using the income amount in the trending analysis.

☁️Income Trending: After the monthly year-to-date income amount is calculated, it must be compared to prior years’ earnings using the borrower’s W-2’s or signed federal income tax returns (or a standard Verification of Employment completed by the employer or third-party employment verification vendor).

☁️If the trend in the amount of income is stable or increasing, the income amount should be averaged.

☁️ If the trend was declining, but has since stabilized and there is no reason to believe that the borrower will not continue to be employed at the current level, the current, lower amount of variable income must be used.

☁️If the trend is declining, the income may not be stable.

☁️Additional analysis must be conducted to determine if any variable income should be used, but in no instance may it be averaged over the period when the declination occurred.

How to get approved for a Kentucky FHA, VA, USDA and Fannie Mae Mortgage loan with Variable Income

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
Get Approved Now Click Here

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).


Can you use Foster Income for a Kentucky Mortgage Loan Approval?

 Foster Income for a Kentucky Mortgage 



Yes, if it can be documented that foster care income has been received for the last 2 years that income is likely to continue for at least 3 years from the date of the Note, then it can be used to qualify.  If it can be verified that income is not taxable, it can be grossed up per 4000.1 II.A.4.c.xii.(P) or II.A.5.b.xii.(P) by either borrower's actual tax rate or 115% whichever is lower.



Yes, we need to show 24 moths receipt of this income, possible exception if only received for 12 months, and we would need something from the agency showing this will continue for 3 years.

Foster-Care Income for a Mortgage Loan Approval


What are the guidelines?


Income received from a state- or county-sponsored organization for providing temporary care for one or more children may be considered acceptable stable income if the following requirements are met.
Verification of Foster-Care Income
Verify the foster-care income with letters of verification from the organizations providing the income.
Document that the borrower has a two-year history of providing foster-care services. If the borrower has not been receiving this type of income for two full years, the income may still be counted as stable income if
  • the borrower has at least a 12-month history of providing foster-care services, and
  • the income does not represent more than 30% of the total gross income that is used to qualify for the mortgage loan.







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


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/

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Kentucky FHA Loans Are Offering New Flexibilities for Borrowers Previously Affected by Covid-19


FHA Offering New Flexibilities for Borrowers Previously Affected by Covid-19

FHA has announced that the guidelines are being updated when calculating effective income after a reduction or loss of income for borrowers affected by the COVID-19 pandemic. These changes are effective for all case numbers on or after 09/05/2022, but may be implemented immediately.


ML 2022-09 reflects policies that will be incorporated into the 4000.1, providing updates for the following:


Additional Required Analysis of Stability of Employment Income
Additionally, flexibility when calculating income for borrowers who experienced a gap in employment and/or a reduction of loss of income due to the COVID-19 pandemic has been updated allowing a borrower to be employed in the same line of work for at least six months at the time of case assignment.

https://www.hud.gov/press/press_releases_media_advisories/HUD_No_22_129

Kentucky USDA Rural Housing Mortgage Lender: Kentucky Rural Housing USDA Maximum Income by Coun...

Kentucky USDA Rural Housing Mortgage Lender: Kentucky Rural Housing USDA Maximum Income by Coun...: 2022 Kentucky USDA Loan Income Limits for Kentucky Counties  Kentucky USDA loan income limits vary by location and household size wit...


#usdaloan #mortgage #ruralhousing #usdaloan #kentuckymortgage #firstimebuyer #rhsloan

Kentucky Rural Housing USDA Loan Program for 2022 ust recently increased their income limits Families of 4 or less people can now have a maximum annual income of $103,500 (used to be $90,000) in most counties and 5 or more people in the household income can now be a maximum of $136,600  What does that mean? It means if before you were told you make too much to qualify for a Kentucky USDA loan, you might qualify now



New Income limits for most counties (*) in Kentucky are $103,500 for a household family of four and household families of five or more  can make up to $136,600 with the new changes for 
2022 Kentucky USDA Income limits, the Jefferson County Louisville, KY Metro area (**) saw an increase of $103,500 for a family of four and up to $136,600 for a family of five or more. The metro area surrounding counties of Jefferson County includes Oldham, Bullitt, Spencer are included in these higher income limits for USDA loans.
Remember,  the entire  Jefferson County and Fayette County  Kentucky counties are not eligible for USDA loans. Along with parts of the following counties Daviess (Owensboro), Mccracken (Paducah), Madison County, (Richmond), Clark County (Winchester), Warren (Bowling Green), Hardin (Fort Knox and Radcliff), Bullitt(Hillview, Maryville, Zoneton, Fairdale, Brooks), Franklin, (Frankfort), Henderson (Henderson City Limits), Christian County (Hopkinsville, Fort Campbell), Boyd County (Ashland city limits) and the most Northern Parts of Boone, Kenton, Campbell Counties of Northern Kentucky (Covington, Florence, Richwood, Hebron, Ludlow, Fort Thomas, Bellevue, Ryle, Beechwood, ) 

The Northern Kentucky Counties (***) of Boon, Kenton, Campbell, Bracken, Gallatin, and Pendleton are $109,850 for a household of four or less and up to $145,000 for a family of five or more.
USDA Eligible Areas in Northern Kentucky
Burlington
Hebron
Independence
Walton
Alexandria
Highland Heights
Cold Springs
Grant County
Owen County
Pendleton County
USDA Income Limits
Boone, Kenton & Campbell Counties (N. KY)

$109,850 (family size 1-4)
$145,000 (family size 5 or more)
Grant, Owen & Pendleton Counties (N. KY)

$103,500 (family size 1-4)
$136,600  (family size 5 or more)




Most are familiar with USDA Rural Housing Loan Program  being a great no money down program available and it is not just for Kentucky first time buyers.

Kentucky Mortgage Guidelines for Income, Employment, and credit scores

Kentucky Mortgage Lender for First Time Home Buyers for FHA, VA, USDA, KHC Kentucky Housing







Kentucky Home Loans Preapproval Checklist
  • A driver’s license or U.S. passport
  • Verification of employment
  • Recent pay stubs covering the last 30 days
  • W-2 forms from the previous two years
  • Last two years of personal federal income tax returns with all pages and schedules. If self-employed, last two years of individual federal income tax returns with all pages and schedules, as well as a business license, a year-to-date profit and loss statement (P&L), a balance sheet, and a signed CPA letter stating you are still in business
  • Bank account statements proving that you have enough to cover the down payment and closing costs. If someone is helping you with the down payment, a gift letter stating that the fund is a gift a
  • Last quarterly statements for asset accounts (401(k), IRA, stock accounts, mutual funds)

Kentucky Mortgage Loan Preapproval: What To Know

What affects your home loan preapproval

Your income, work history, credit score, money down and  saving are key factors that lenders will consider during the mortgage process.

Employment Status for Kentucky Mortgage Pre-Approval

Self-employed individual requires two-year tax returns'.

Only borrowers who have an ownership interest of 25% or more in a business and are not W-2 employees are considered “self-employed.” However, there is an exception if the borrower can show a two-year history in a similar line of work, which includes having documentation that proves an equal or higher income in the new role compared to the W2 position.

Debt-to-Income Ratio

The debt-to-income ratio is the percentage of your monthly gross income that goes toward paying debts. There are two types of DTI that lenders will consider during the mortgage process: front-end and back-end. The first consists only of your housing-related expenses, whereas the latter also includes all your minimum required monthly debts.

The lower your DTI, the better your chances of securing a home loan. 

For example, FHA loans secured by the government have more lenient requirements — you can have a DTI of up to 57% and still get approved for an FHA home loan. USDA loans used to buy homes in rural areas have a lower maximum DTI of 45%.

Loan-to-Value Ratio

The loan-to-value ratio (LTV) is a number lenders use to determine how risky a loan to a potential borrower might be. It measures the relationship between the loan amount and the market value of the property you want to buy, and it can also determine whether mortgage insurance will be required.

All mortgages have a maximum LTV to qualify. However, just like with DTI, the LTV varies depending on the loan. FHA loans, for example, have an LTV of 96.5% since they allow down payments of as little as 3.4%.

Going for an LTV of 80% or less is “ideal” because you get unique benefits as a buyer, but that requires a down payment of 20%. Ultimately, each buyer will need to figure out their own LTV based on how large a down payment they can afford.

Credit History and FICO Score for Kentucky Mortgages 

Your credit history is one of the most important factors when it comes to getting a mortgage.

Credit History and FICO Score for Kentucky Mortgages





Best Kentucky Mortgage Lender for First Time Home Buyers in Kentucky

You don’t need a perfect credit score to buy a house, but those with outstanding scores are usually rewarded with lower interest rates and a greater variety of payment options. Buyers with very poor credit have the option of finding a co-signer who has better credit than them to help secure the loan.

Why Getting Preapproved Is Such a Big Deal

Getting preapproved for a mortgage helps you shop for homes that you can afford and shows you are a serious buyer.

But a letter of preapproval is more than just a way to look good to sellers. It also helps you find the right mortgage lender and provides some flexibility in bargaining or negotiating for a better price range or specific costs, repairs, and improvements to a home.

Getting preapproved makes the entire closing process faster, too. It takes an average of 30 to 45 days to close on a house in Kentucky, and part of that period is due to the process of mortgage approval, title search, appraisal report, home inspections, verifying employment and bank account info along with taxes and w-2s and paystubs to validate the pre-approval.

What are standard continuity of employment requirements?

A borrower will need to verify a two-year cumulative employment history. Less than two year may be 

offset via school transcripts; if guaranteed hourly (40) or salaried in nature, the base income 

will be allowable. Variable earnings will require at minimum 12 months receipt on current position; 

OT, Bonus and commission are considered variable however, must reflect a cumulative two- year 

history of receipt.


What income can I use for a traveling nurse?

A minimum 12-month history of contract nursing work is required. Income documentation must

 include  copies of applicable contracts and WVOE’s for each position. The income will be averaged. 

Standard two- year employment history required.


Do we allow one score on a conventional transaction? No score?

Yes! If the borrower has three scores, the middle score is to be used; two scores, the lower score 

is to be used; one score, that score is to be used.  If no score, only allowable with AUS A/E and 

less than 50% of transactional income contributions. We do not average scores.


Can I use part time or secondary income for qualifying purposes?

Yes! Conventional~ secondary employment will require a two- year history of receipt to use in 

conjunction with the primary employment earnings. Multiple second jobs over this time frame are 

allowable however the borrower may not have a job gap > one month in length. Part time employment 

alone will be considered variable in nature and will require a minimum 12- month history; earnings 

will be averaged. FHA~ will require an uninterrupted two- year history for utilization.


When must a borrower start a new job in conjunction with future employment?

Conventional requires a start date within 90 days of the Note date. FHA requires a start date 

within 60 days of note date. VA max 60 days of note date. Non contingent contract required for each 

entity.


What type of income(s) are considered illegal?

Foreign shell banks; medical marijuana dispensaries; any business or activity related to 

recreational marijuana-use , growing, selling or supplying- even if permitted by state or local law.

 Policy is not limited to  owner of business.


Joel Lobb
Mortgage Loan Officer
Individual NMLS ID #57916

American Mortgage Solutions, Inc.

Text/call:      502-905-3708
fax:            502-327-9119
email:
          kentuckyloan@gmail.com


The Dos & Don’ts of Applying for a Mortgage in Kentucky



DO maintain up-to-date records The mortgage application process is paperwork-heavy, and lenders could ask you to pull up records at a moment’s notice. To make things easier for yourself, make sure you have the following records readily available:

  • Income: Underwriters typically verify income and tax documents through your employer, so hold onto new paystubs as you receive them.
  • Assets: It’s best practice to save all incoming account statements in the order in which you receive them; keep all numbered pages of each statement.
  • Gifts: If you’re receiving any gift money from relatives, they’ll need to sign a gift letter (which your loan officer will provide) and an account statement evidencing the source, which must be “seasoned” funds.
  • Current Residence: If you’re currently renting, continue to pay your rent on time and save proof of payment. If you intend to sell your current residence, be prepared to show your HUD-1 Settlement Statement. If you plan on renting out your home, you may need to show sufficient equity, a lease, and receipts for the security deposit and first month’s rent.

DO keep your credit score in mint condition. Continue to make payments on time. The lender might pull your credit report again, and any negative change to your score could jeopardize your approval.

DO understand that things change. The requirements to receive approval for a home loan are always changing, and underwriters require more documentation now than they have in the past. Even if requests seem silly, intrusive or unnecessary, keep in mind that if they didn’t need it, they wouldn’t ask for it.

DON’T apply for new credit. Changes in credit can cause delays, change the terms of your financing or even prevent you from closing on a home. If you must open a new account (or even borrow against retirement funds), be sure to consult your loan officer first.

DON’T change jobs midway through the process. Probationary periods and career or status changes — such as from a salaried to a commission-based position, leave of absence or new bonus structure — can be subject to strict rules.

DON’T make undocumented deposits. Large (and sometimes even small) deposits must be sourced unless they’re identified. Make copies of all checks and deposit slips, keep your deposits separate and small, and avoid depositing cash.

DON’T wait to liquidate funds from stock or retirement accounts. If you need to sell investments, do it now and document the transaction. Don’t take the risk of the market working against you, leaving you short on funds for closing.


Do's and Don't of Getting A Mortgage Approved and Closed in Kentucky?.

Dos & Don’ts of Applying for a Mortgage in Kentucky 

Mortgage Overlays Explained

Overlays Explained


Kentucky Mortgage Overlays




What’s an Overlay? An Overlay is a mortgage industry term that highlights an additional qualifying requirement(s) beyond what the guidelines issued by Fannie Mae and Freddie Mac. FHA, VA and USDA loans can also have overlays. These guidelines are set forth for several reasons, but one is to provide lenders with mortgage program stability as well as allowing lenders to sell loans, either individually or ‘in bulk.

Think about that for a moment. If there were no secondary market at some point the mortgage company would run out of money to lend. When a lender makes a loan, it draws down some money from its credit line and replenishes that credit line once the loan(s) is sold. This process occurs over and over again.

Overlays can also be used to target a specific type or class of borrower. To reduce risk, a lender might ask for a greater down payment than is originally required. Let’s look at credit scores as an example. While Fannie might ask for a minimum credit score to be 680 a lender might decide to up the ante a bit and set the minimum score at 700.

Catering to different groups means catering to a particular market or class of borrower. One lender may continue to stand firm with a 680 score while another decides 700 is better. Many borrowers may not know about this dynamic. This can mean applying for a mortgage at a mortgage company, getting declined and thinking that all lenders are the same and stop their search for a new home. All they really needed to do was to continue shopping for a lender who would approve the very same loan, just without the harsher overlays.

If a lender asks for a 680 score your loan officer will know where to send a loan with a sub-700 FICO. These overlays can be placed on both conventional as well as government-backed mortgages. The government-backed mortgages are those underwritten to FHA, VA and USDA program guidelines.

Overlays can come and go over time. A lender might set forth a new overlay and then a year later remove it or even enhance it. It’s completely up to the individual lender as long as the loan is approved using established guidelines. What lenders can’t do is weaken guidelines. There are no overlays to drop the minimum score requirement from 680 to 650, for example. Doing so would mean the mortgage didn’t meet program guidelines and the loan could no longer be sold. Overlays help protect the lender while at the same time providing borrowers with additional choices.

Finally, lenders can’t dilute loan program requirements. In other words, lenders can’t apply an overlay to lessen the requirements. Reducing approval requirements means the loan won’t have the minimum features that secondary markets require. If a lender does in fact reduce the requirements the loan can still be made, it’s just that the lender can expect to keep the loan in its own possession for the life of the loan.


One important concept you should familiarize yourself with is the “lender overlay,” which is essentially an expanded guideline (or set of guidelines) on top of what Fannie Mae, Freddie Mac, or the FHA/VA will allow.

Think of it as a second coat of paint, applied after the primer. The primer is the bare minimum necessary, but you don’t see people driving around too often without that second coat.

The same goes for mortgages. Fannie Mae, Freddie Mac, and the FHA/VA all set underwriting guidelines for residential mortgages, but they don’t actually lend directly to consumers.

Their job is to purchase and/or securitize the home loans that fit their guidelines, which is why they exist to begin with. Essentially, to keep the mortgage market liquid.

By doing so, lenders are able to sell their loans more easily, knowing they fit certain pre-determined criteria, which allows them to originate more loans via that increased liquidity.


Written by David Reed for www.RealtyTimes.com Copyright © 2022 Realty Times All Rights Reserved. Reed is from Austin, Texas and is the author of The Real Estate Investor’s Guide to Financing, Your Guide to VA Loans and Decoding the New Mortgage Market. A Senior Loan Officer and Mortgage Executive for more than 20 years, he has also appeared on CNN, CNBC, Fox Business, Fox and Friends and the Today In New York show.