Kentucky FHA, VA, USDA Government Mortgage Updates for 2023

Kentucky FHA, VA, USDA Government Underwriting Guideline Updates

Effective immediately, for all loans, the FHA, VA, and USDA Underwriting Guides have been updated with the below information. USDA Updates to HB-1-3555 Delinquent Federal Debt All borrowers must be screened using HUD’s Credit Alert Interactive Voice Response System (CAIVRS) except those borrowers financing a Streamlined-Assist or Streamlined Refinance. CAIVRS will return the following results: A: Approved by CAIVRS (no issues exist) B: Multiple cases from one or more Federal agencies C: Claim filed D: Default on loan F: Foreclosure of loan J: Judgment filed The only acceptable result is A: Approved by CAIVRS (no issues exist). Borrowers with delinquent federal non-tax debt are not eligible for a USDA loan until the debt is paid in full or a release of liability is documented. Appraisal Validity The effective date of the appraisal report must not be more than 180 days of the Note date (previously 150 days). Credit Non-Federal Judgements Added that open and unpaid non-federal judgments are eligible when the borrower is not delinquent and has a payment arrangement with the creditor and has made regular and timely payments for the three (3) months prior to application date. This update clarifies that the borrower cannot be delinquent, not previously specified. Court-Ordered Child Support Below highlights the current and new guideline. Current Guideline New Guideline Delinquent court-ordered child support must meet one (1) of the following: Must have an approved repayment agreement with three (3) timely payments made prior to closing; The arrearage is paid in full; or A release of liability is documented. Delinquent court ordered child support, subject to the collection by an administrative offset (allows for federal payments in order to collect past due child support) must meet one (1) of the following: Must have brought payments current prior to closing; The debt is paid in full; or A release of liability is documented. Appraisal Requirements Multiple Parcel Requirements Clarified that when multiple parcels are not adjoined, the parcel without a residence must be non-buildable (such as waterfront properties where the parcel without the residence provides access to the water) and the entire property will contain only one (1) dwelling but may have non-residential, non-income producing buildings, such as a garage. Accessory Dwelling Unit (ADU) Clarified that an ADU should support household members and not create potential rental income. Individual Water Supply System (Well) Updated the requirement that a valid water test from the local health authority or a lab qualified to conduct water testing in the jurisdictional state or local authority must be obtained and that the water analysis report must be no greater than 150 days old as of the Note date. FHA and VA Underwriting Guideline Updates and Clarifications Maximum Number of Borrowers The FHA and VA Underwriting Guide has been updated with the maximum number of borrowers allowed for submission to DU or LPA. Up to four (4) borrowers may be on a loan application and submitted to DU. Up to five (5) borrowers may be on a loan application and submitted to LPA. If the number of borrowers exceeds four/five, the loan must be manually underwritten. Inquiries and Undisclosed Debt (FHA) Updated the FHA Underwriting Guide to require the following: When the credit report reveals a significant debt not listed on the application, a written explanation from the borrower addressing the omission is required. The absence of a written explanation from the borrower may render the loan ineligible. Future Income (VA) For Future Income, when a borrower’s employment will begin after the Note date, employment must begin within 90 days after the Note date (previously 60 days). 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 fax: 502-327-9119 email: kentuckyloan@gmail.com http://www.mylouisvillekentuckymortgage.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).

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2023 Loan Limits for Kentucky VA and Kentucky FHA Loans

 

New 2023 Loan Limits for Kentucky VA and Kentucky FHA Loans

Kentucky VA loan limits received a massive increase for 2023. The standard Kentucky VA loan limit in 2023 is $726,200 for most U.S. counties, increasing from $647,200 in 2022. Kentucky VA loan limits also increased for high-cost counties to $1,089,300 for a single-family home.   Kentucky VA loan limits do not represent a cap or max loan amount. Veterans with their full entitlement can get as much as a lender is willing to give them without needing a down payment. However, Veterans with one or more active VA loans or who have defaulted on a previous VA loan will encounter the limits, which will in part determine their zero-down buying power.   For Kentucky FHA loan limits, please click here to consult this page on the Hud.gov website as Loan Limits for FHA loans vary by county in Kentucky each 120 counties.

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Kentucky FHA Loans with Bad Credit in 2023.

How to get approved for a Kentucky FHA Mortgage Loan with Bad Credit in 2023.

Below details the DTI requirements The maximum Front and Back ratios applicable to manually underwritten Kentucky FHA Mortgages are detailed below. 

Maximum DTI allowed for Manual UW is 40/50 

**IMPORTANT – any loan where ALL borrowers have No Fico Score, the Maximum DTI is 31/43 per HUD DTI and Compensating Factor Requirements: 

560 FICO and Above – DTI up to 31/43.Comp Factors Required - NONE. 

560 FICO and Above - DTI up to 37/47Comp Factors Required– 1 Required 

560 FICO and Above – DTI up to 40/50Comp Factors Required– 2 Required

ACCEPTABLE COMPENSATING FACTORS:

RESERVES – 3 mo (1-2 Unit) 6 Mo (3-4 Unit)

HOUSING DECREASE – new PITI is no more than $100 or 5%, the lesser of the two

RESIDUAL – Meet VA residual requirements

ADDITIONAL INCOME – Income not reflected in DTI (this comp factor is only permitted when DTI is over 37/47 and if income were used, it would decrease DTI under 37/47)

MANUAL UNDERWRITE REQUIREMENTS ON ALL LOANS

12 Months verified housing history OR rent free letter,

Reserves, AND

1 month reserves for 1-2 Unit

3 month reserves for 3-4 Unit

NOTE: If you use reserves as a compensating factor, then you do not need these reserves in addition

Letter of explanation for all derogatory credit, including any NSFs and/or overdrafts in bank accountIf applicable, 2 months for all bank statements in the file (60 days activity)

Maximum DTI 40/50 (HUD guideline, no exceptions

Instructions for Residual Income as Compensating Factor

Residual income may be used as compensating factor when it meets or exceeds the stated amounts in

the table below. Note that all household members must be counted for ‘family size’ except for individuals

who are fully supported from a verified source of income not included in the effective income of the loan.

Residual Income Calculation When Needed as a Compensating Factor

Gross Monthly Income1 2

- (State income taxes3)

- (Federal income taxes3)

- (Municipal or other taxes3)

- (Retirement deductions and/or Social Security deductions)

- (Total monthly housing payment)

- (Estimated maintenance and utilities4)

- (Job related expenses (e.g., childcare)5)

= Monthly Residual Income for Family Support.

[When using Residual Income as a compensating factor, the “Monthly Residual Income for Family Support” must

meet or exceed the dollar amount in the “Residual Income Table” above.

1 Income from occupying borrowers only

2 Non-taxable income may not be grossed up

3 Federal and state taxes must be used to determine appropriate deductions or paystub if taxes are not available

4 Multiply total living area (sq ft) x 14

5 Childcare letter is not required (as it is for VA) and should not be requested

Exceptions to the Required Residual Income

You may reduce the residual income figure from the above tables by 5% if:

1. The borrower(s) is an active duty or retired serviceperson, OR

2. There is a clear indication that a borrower will receive the benefits resulting from use of military-based

facilities located near the property.

Examples of military service for reduced residual income are:

Guard and Reserve military retirees, 100% disabled Veterans and their family members, or Medal of Honor

recipient.

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

http://www.mylouisvillekentuckymortgage.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).