FHA vs. Conventional Loans – What is the Difference?

FHA vs. Conventional Loans – What is the Difference?: pOne of the most common questions from first-time buyers pertains to the difference between an FHA and a conventional loan, and which one is best for them. We'll clearly define each one and go into further detail about which one might be best for you in your pursuit of purchasing a home./p

What is the difference between Conventional, FHA and VA Mortgage loans in Kentucky?

 

Conventional vs. FHA vs. VA loans in Kentucky

 I will outline below the credit score, loan limits, down payment and mortgage insurance requirements for FHA, VA and Conventional Mortgage Loans in Kentucky!

			Upfront funding fee of 1.4% to 3.6%

Thank you!- Joel Lobb Licensed Loan Officer (NMLS# 57916) American Mortgage Solutions, Inc. (NMLS# 1364) Email: joel@loansolutionsnow.com Text or call: 502-905-3708

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Louisville Kentucky Mortgage Lender for FHA, VA, KHC, USDA and Rural Housing Kentucky Mortgage: What is the difference between Conventional, FHA a...

Louisville Kentucky Mortgage Lender for FHA, VA, KHC, USDA and Rural Housing Kentucky Mortgage: What is the difference between Conventional, FHA a...:   Conventional vs. FHA vs. VA loans in Kentucky  I will outline below the credit score, loan limits, down payment and mortgage insurance req...

Effective on 9/18/21, Fannie Mae announced that their Automated Underwriting System will now take an AVERAGE of the two scores for qualifying

 

Fannie Mae announced that their Automated Underwriting System will now take an AVERAGE of the two scores for qualifying

Do you and your partner have very different credit scores? Great news! You may have access to more loan program options than you thought!

Here's the deal... All lenders pull FICO scores from each of the three credit bureaus to qualify a borrower. In situations with co-applicants, we will use the lower of the two middle scores for qualifying purposes. Historically, to do a Conventional Loan, both mid-scores would have to be above 620.

Effective on 9/18/21, Fannie Mae announced that their Automated Underwriting System will now take an AVERAGE of the two scores for qualifying. This critical change may help many borrowers qualify and have increased advantages when putting an offer in on a home.

Long story short - we can help you now more than ever. Curious if this will help you? Reach out to me today, and we can investigate.

PS: These changes are effective September 18th, 2021 and there are still a lot of other variables to consider and guidelines are always subject to change. Let's start a conversation today! Message me for more details or to get started.

Mortgage Application Checklist of Documents Needed below  👇

W-2 forms (previous 2 years)
Paycheck stubs (last 30 days - most current)
Employer name and address (2 year history including any gaps)
Bank accounts statement (recent 2 months – all pages
Statements for 401(k)s, stocks and other investments (most recent)
federal tax returns (previous 2 years)
Residency history (2 year history)
Photo identification for applicant and co-applicant (valid Driver’s License







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/

NMLS Consumer Access for Joel Lobb 

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Joel Lobb, American Mortgage Solutions (Statewide)

Joel has worked with KHC for 12 of his 20 years in the mortgage lending business. Joel said, “A lot of my clients would not have been able to purchase a home of their own or possibly delayed their purchase due to lack of down payment but with the $6,000 DAP loan program, this gets them into a house sooner and starts their path to homeownership while building equity instead of throwing their money away.”

When you’re ready to purchase a home in Joel's area, contact him at:
Phone: 502-905-3708
Email: Kentuckyloan@gmail.com
Website: www.mylouisvillekentuckymortgage.com

Kentucky First Time Home Buyer Programs For Home Mortgage Loans: 5 Sneaky Ways to Improve Your Credit Score - Clark...

Kentucky First Time Home Buyer Programs For Home Mortgage Loans: 5 Sneaky Ways to Improve Your Credit Score - Clark...: 

5 Sneaky Ways to Improve Your Credit Score

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How to Raise Your Credit Score Fast

1. Find Out When Your Issuer Reports Payment History

Call your credit card issuer and ask when your balance gets reported to the credit bureaus. That day is often the closing date (or the last day of the billing cycle) on your account. Note that this is different from the “due date” on your statement.

There’s something called a “credit utilization ratio.” It’s the amount of credit you’ve used compared to the amount of credit you have available. You have a ratio for your overall credit card use as well as for each credit card.

It’s best to have a ratio — overall and on individual cards — of less than 30%. But here’s an insider tip: To boost your score more quickly, keep your credit utilization ratio under 10%.

Here’s an example of how the utilization ratio is calculated:

Let’s say you have two credit cards. Card A has a $6,000 credit limit and a $2,500 balance. Card B has a $10,000 limit and you have a $1,000 balance on it.

This is your utilization ratio per card:

Card A = 42% (2,500/6,000 = .416, or 42%), which is too high.

Card B = 10% (1,000/10,000 = .100, or 10%), which is awesome.

This is your overall credit utilization ratio: 22% (3,500/16,000 = 0.218), which is very good.

But here’s the problem: Even if you pay your balance off every month (and you should), if your payment is received after the reporting date, your reported balance could be high — and that negatively impacts your score because your ratio appears inflated.

So pay your bill just before the closing date. That way, your reported balance will be low or even zero. The FICO method will then use the lower balance to calculate your score. This lowers your utilization ratio and boosts your score.

2. Pay Down Debt Strategically

Okay, let’s build on what you just learned about utilization ratios.

In the above example, you have balances on more than one card. Note that Card A has a 42% ratio, which is high, and Card B has a wonderfully low 10% ratio.

Since the FICO score also looks at each card’s ratio, you can bump up your score by paying down the card with the higher balance. In the example above, pay down the balance on Card A to about $1,500 and your new ratio for Card A is 25% (1,500/6,000 = .25). Much better!

3. Pay Twice a Month

Let’s say you’ve had a rough couple of months with your finances. Maybe you needed to rebuild your deck (raising my hand) or get a new fridge. If you put big items on a credit card to get the rewards, it can temporarily throw your utilization ratio (and your credit score) out of whack.

You know that call you made to get the closing date? Make a payment two weeks before the closing date and then make another payment just before the closing date. This, of course, assumes you have the money to pay off your big expense by the end of the month.

Take care not to use a credit card for a big bill if you plan to carry a balance. The compound interest will create an ugly pile of debt pretty quickly. Credit cards should never be used for long-term loans unless you have a card with a zero percent introductory APR on purchases. Even then, you have to be mindful of the balance on the card and make sure you can pay the bill off before the intro period ends.

4. Raise Your Credit Limits

If you tend to have problems with overspending, don’t try this.

The goal is to raise your credit limit on one or more cards so that your utilization ratio goes down. But again, this only works out in your favor if you don’t feel compelled to use the newly available credit.

I also don’t recommend trying this if you have missed payments with the issuer or have a downward-trending score. The issuer could see your request for a credit limit increase as a sign that you’re about to have a financial crisis and need the extra credit. I’ve actually seen this result in a decrease in credit limits. So be sure your situation looks stable before you ask for an increase.

That said, as long as you’ve been a great customer and your score is reasonably healthy, this is a good strategy to try.

All you have to do is call your credit card company and ask for an increase to your credit limit. Have an amount in mind before you call. Make that amount a little higher than what you want in case they feel the need to negotiate.

Remember the example in #1? Card A has a $6,000 limit and you have a $2,500 balance on it. That’s a 42% utilization ratio (2,500/6,000 = .416, or 42%).

If your limit goes up to $8,500, then your new ratio is a more pleasing 29% (2,500/8,500 = .294, or 29%). The higher the limit, the lower your ratio will be and this helps your score.

5. Mix It Up

A few years back, I realized I didn’t have much of a mix of credit. I have credit cards with low utilization ratios and a mortgage, but I hadn’t paid off an installment loan for a couple of decades.

I wanted to raise my score a nudge, so I decided to get a car loan at a very low rate. I spent a year paying it off just to get a mix in my credit. At first, my score went down a little, but after about six months, my score started increasing. Your credit mix is only 10% of your FICO score, but sometimes that little bit can bump you up from good credit to excellent credit.

A 3D pie chart calculating the 5 categories that make up a credit score including 35% for payment history, 30% for amounts owed, 10% for credit mix, 10% for new credit and 15% for credit history

5 categories that make up your credit score

I wasn’t planning on applying for credit within the next six months, so my approach was fine. But if you’re refinancing your mortgage (or planning something else really big) and you want a quick boost, don’t use this strategy. This is a good one for a long-term approach.

Bottom Line

When you want to boost your credit score, there are two basic rules you have to follow:

First, keep your credit card balances low.

Second, pay your bills on time (and in full). Do these two things and then toss in one or more of the sneaky ways above to give your score a kickstart.

And remember — you do not have to carry a balance to build a good score. If you do that, you’re on a slippery slope to debt.

Kentucky Mortgage Terms You Should Know About.

 Annual Percentage Rate (APR)

The cost of credit on a yearly basis, expressed as a percentage. Required to be disclosed by the lender under the federal Truth in Lending Act, Regulation Z. Includes up-front costs paid to obtain the loan, and is, therefore, usually a higher amount than the interest rate stipulated in the mortgage note. Does not include title insurance, appraisal, and credit report.

Application

An initial statement of personal and financial information which is required to approve your loan.

Application Fee

Fees that are paid upon application. An application fee may frequently include charges for property appraisal ($200-$400) and a credit report ($30-50).

Appraisal

A fee charged by an appraiser to render an opinion of market value as of a specific date. Required by most lenders to obtain a loan.

Assumption of Mortgage

The agreement of a purchaser to become primarily liable for the payments on a mortgage loan. Unless otherwise specified by the lender, the seller may remain secondarily liable for payments.

Balloon Payment

A lump sum payment for the unpaid balance of the loan.

Cap

The maximum allowable increase, for either payment or interest rate, for a specified amount of time on an adjustable rate mortgage.

Cash Out

Receiving money back when refinancing your present mortgage.

Ceiling

The maximum allowable interest rate over the life of the loan of an adjustable rate mortgage.

Closing Costs

Any fees paid by the borrowers or sellers during the closing of the mortgage loan. This normally includes an origination fee, discount points, attorney’s fees, title insurance, survey, and any items which must be prepaid, such as taxes and insurance escrow payments.

Closing Disclosure

A document signed three days prior to a home sale that includes important details of a mortgage loan, including the loan’s interest rate, monthly mortgage payment, mortgage closing costs and applicable fees. A closing disclosure states the total of all payments and finance charges.

Comparable Sale

Homes that have recently sold and are alike in terms of location, zip code, neighborhood, home size, lot size, condition, features and home type. A comparable sale house is used to determine a home’s fair market value.

Conforming Loan

Generally, a mortgage loan under $203,150. Qualifying ratios and underwriting methods are standardized to a large degree.

Contract of Sale

The agreement between the buyer and seller on the purchase price, terms, and conditions necessary to both parties to convey the title to the buyer.

Credit Limit

The maximum amount that you can borrow under a home equity plan.

Debt Service

The total amount of credit card, auto, mortgage or other debt upon which you must pay.

Deed of Trust

Used in many western states, the agreement used to pledge your home or other real estate as security for a loan. Similar to a mortgage.

Discount Points (or Points)

The amount paid either to maintain or lower the interest rate charged. Each point is equal to one percent (1%) of the loan amount (i.e., two points on a $100,000 mortgage would equal $2,000).

Down Payment

The difference between the purchase price and that portion of the purchase price being financed. Most lenders require the down payment to be paid from the buyer’s own funds. Gifts from related parties are sometimes acceptable, and must be disclosed to the lender.

Due on Sale

A clause in a mortgage agreement providing that, if the mortgagor (the borrower) sells, transfers, or, in some instances, encumbers the property, the mortgagee (the lender) has the right to demand the outstanding balance in full.

Earnest Money Deposit

A deposit that is typically 1-5 percent of the purchase price of a home paid from the buyer to the seller as “good faith” money. The earnest money deposit is applied to the buyer’s costs when finalizing the home sale.

eClose

An easy to use virtual closing experience that allows homebuyers and sellers to sign mortgage documents at their convenience, from anywhere. An eclosing saves lenders, borrowers and sellers time and money.

Effective Interest Rate

The cost of credit on a yearly basis expressed as a percentage. Includes up-front costs paid to obtain the loan, and is, therefore, usually a higher amount than the interest rate stipulated in the mortgage note. Useful in comparing loan programs with different rates and points.

Encumbrance

A claim against a property by another party which usually affects the ability to transfer ownership of the property.

Equity

The difference between the fair market value (appraised value) of your home and your outstanding mortgage balance.

FHA Loan

More appropriately termed “FHA Insured Loan.” A loan for which the Federal Housing Administration insures the lender against losses the lender may incur due to your default.

First Mortgage

A mortgage which is in first lien position, taking priority over all other liens (which are financial encumbrances).

Fixed Rate

An interest rate which is fixed for the term of the loan. Payments as well are fixed at one amount.

Gift Letter

A letter that states a voluntary transfer of money from one individual to another. In terms of lending, a gift letter for a mortgage states a borrower received money from a donor as a gift and does not have to pay back the money at any time.

Good Faith Estimate

A written estimate of closing costs which a lender must provide you within three days of submitting an application.

Grace Period

A period of time during which a loan payment may be paid after its due date but not incur a late penalty. Such late payments may be reported on your credit report.

Gross Income

For qualifying purposes, the income of the borrower before taxes or expenses are deducted.

Hazard Insurance

A contract between purchaser and an insurer, to compensate the insured for loss of property due to hazards (fire, hail damage, etc.), for a premium.

Home Equity Line of Credit

A loan providing you with the ability to borrow funds at the time and in the amount you choose, up to a maximum credit limit for which you have qualified. Repayment is secured by the equity in your home. Simple interest (interest-only payments on the outstanding balance) is usually tax-deductible. Often used for home improvements, major purchases or expenses, and debt consolidation.

Home Equity Loan

A fixed or adjustable rate loan obtained for a variety of purposes, secured by the equity in your home. Interest paid is usually tax -deductible. Often used for home improvement or freeing of equity for investment in other real estate or investment. Recommended by many to replace or substitute for consumer loans whose interest is not tax-deductible, such as auto or boat loans, credit card debt, medical debt, and education loans.

HUD I Settlement Statement

A form utilized at loan closing to itemize the costs associated with purchasing the home. Used universally by mandate of HUD, the Department of Housing and Urban Development.

Index

A number, usually a percentage, upon which future interest rates for adjustable rate mortgages are based. Common indexes include the Cost of Funds for the Eleventh Federal District of banks or the average rate of a one year Government Treasury Security.

Interest Rate

The periodic charge, expressed as a percentage, for use of credit.

Jumbo Loan

Mortgage loans over $203,150. Terms and underwriting requirements may vary from conforming loans.

Loan to Value Ratio (LTV)

A ratio determined by dividing the sales price or appraised value into the loan amount, expressed as a percentage. For example, with a sales price of $100,000 and a mortgage loan of $80,000, your loan to value ratio would be 80%. Loans with an LTV over 80% may require Private Mortgage Insurance, defined below.

Lock or Lock In

A commitment you obtain from a lender assuring you a particular interest rate or feature for a definite time period. Provides protection should interest rates rise between the time you apply for a loan, acquire loan approval, and, subsequently, close the loan and receive the funds you have borrowed.

Margin

An amount, usually a percentage, which is added to the index to determine the interest rate for adjustable rate mortgages.

Minimum Payment

The minimum amount that you must pay, usually monthly, on a home equity loan or line of credit. In some plans, the minimum payment may be “interest only,” (simple interest). In other plans, the minimum payment may include principal and interest (amortized).

Mortgage Banker

Originates mortgage loans, loaning you their funds and closing the loan in their name.

Mortgage Broker

As do mortgage bankers, takes loan application and processes the necessary paperwork. Unlike a mortgage banker, brokers do not fund the loan with their own money, but work on behalf of several investors, such as mortgage bankers, S and L’s, banks, or investment bankers.

Mortgage Insurance (MIP or PMI)

Insurance purchased by the borrower to insure the lender or the government against loss should you default. MIP, or Mortgage Insurance Premium, is paid on government-insured loans (FHA or VA loans) regardless of your LTV (loan-to-value). Should you pay off a government-insured loan in advance of maturity, you may be entitled to a small refund of MIP. PMI, or Private Mortgage Insurance, is paid on those loans which are not government-insured and whose LTV is greater than 80%. When you have accumulated 20% of your home’s value as equity, your lender may waive PMI at your request. Please note that such insurance does not constitute a form of life insurance which pays off the loan in case of death.

Mortgage Loan

A loan which utilizes real estate as security or collateral to provide for repayment should you default on the terms of your loan. The mortgage or Deed of Trust is your agreement to pledge your home or other real estate as security.

Mortgagee

The lender in a mortgage loan transaction.

Mortgagor

The borrower in a mortgage loan transaction.

Negative Amortization

Amortization in which the payment made is insufficient to fund complete repayment of the loan at its termination. Usually occurs when the increase in the monthly payment is limited by a ceiling. The portion of the payment which should be paid is added to the remaining balance owed. The balance owed may increase, rather than decrease over the life of the loan.

PITI

Principal, interest, taxes and insurance, which comprise your monthly mortgage payment.

Points

The amount paid either to maintain or lower the interest rate charged. Each point is equal to one percent (1%) of the loan amount (i.e., two points on a $100,000 mortgage would equal $2,000).

Prepayment Penalty

A fee paid to the lending institution for paying a loan prior to the scheduled maturity date.

Qualifying Ratios

Comparisons of a borrower’s debts and gross monthly income.

Right to Rescission

The legal right to void or cancel your mortgage contract in such a way as to treat the contract as if it never existed. Right of rescission is not applicable to mortgages made to purchase a home, but may be applicable to other mortgages, such as home equity loans.

Security Interest

An interest that a lender takes in the borrower’s property to assure repayment of a debt.

Servicing a Loan

The ongoing process of collecting your monthly mortgage payment, including accounting for and payment of your yearly tax and/or homeowners insurance bills.

Title

The written evidence that proves the right of ownership of a specific piece of property.

Title Insurance

Protection for lenders or homeowners against financial loss resulting from legal defects in the title.

Transaction Fee

A fee which may be charged each time you draw on a home equity credit line.

Underwriting

The process of verifying data and approving a loan.

VA Loan

More appropriately termed “VA Insured Loan.” A loan for which the Veteran’s Administration insures the lender against losses the lender may incur due to your default. Available only to veterans possessing a Certificate of Eligibility.

Variable Rate

An interest rate that changes periodically in relation to an index. Payments may increase or decrease accordingly.

Kentucky First Time Home Buyer Programs For Home Mortgage Loans: Job History Requirements for a Kentucky Convention...

Kentucky Conventional Mortgage

Two year is standard but shorter employment histories may be permitted for applicants with stable jobs and incomes or other positive factors
Explainable employment gaps of six months or more are also permitted as long as the applicant has been back to work for at least six months and has a two year employment history prior to the work gap

Self-employed borrowers are typically required to demonstrate a two year job history
A self-employed job history of between one and two years is permitted if the applicant was previously employed in a similar field and earns a similar or greater income as evidenced by the borrower's tax returns
Self-employed applicants are also required to provide business tax returns for two years unless the business is at least five years old

A continuous two year history of part-time employment is typically required although part-time work history of one-to-two years may be permitted for stronger applicants
A two year history of seasonal work in the same job or line of work is required
Lenders are also required to verify with the applicant's employer that the applicant will be rehired for the next employment season
Borrowers with seasonal employment are permitted to use unemployment compensation as income as long as the compensation is due to regular, seasonal employment breaks

A two year employment history is recommended for bonus, commission or overtime income to be considered but guidelines permit an income history of one-to-two years for borrowers with strong employment, financial and credit profiles

Kentucky FHA Mortgage Program

The FHA Program does not technically have an minimum employment history requirement but lenders are required to verify applicants' employment history for the prior two years
Applicants are required to explain any employment gaps of at least one month
Explainable employment gaps of six months or more are also permitted

Self-employed borrowers are typically required to demonstrate a two year job history
A self-employed job history of between one and two years is permitted if the applicant was previously employed in a similar line of work for at least two years
A combination of one year of employment in a similar field plus one year of education or training in that field is also permitted for self-employed borrowers

An uninterrupted two year history of part-time employment is typically required although part-time work history of less than two years may be considered as long as the lender determines that the work is likely to continue
Income from seasonal employment is also permitted as long as the applicant has a two year work history and expects to be rehired for future seasons

A two year employment history is required for bonus, commission or overtime income to be considered
An employment history of less than two years is allowed if the lender justifies and documents the reason for including the income
Lenders are also required to explain any significant declines in bonus, commission or overtime income
Significant fluctuations in bonus, commission or overtime income may require the lender to use an average period of longer than two years to calculate the applicant's income

Kentucky USDA Mortgage Program

The USDA Home Loan Program does not technically have an minimum employment history requirement but lenders are required to verify applicants' employment history for the prior two years and confirm that the applicant's income is stable

Applicants are required to explain any employment gaps of at least one month
Explainable employment gaps of six months or more are also permitted as long as the applicant can document the reason for the gap, has been back to work for at least six months and has a two year employment history prior to the work gap

Self-employed borrowers are typically required to demonstrate a two year job history as documented by the applicant's tax returns

A self-employed job history of between one and two years is permitted if the applicant was previously employed in a similar line of work for at least two years or one year of work plus one year of formal education or training

The lender is required to confirm that the self-employment income is expected to continue for at least three years

A self-employed history of less than one year is not permitted

An uninterrupted two year history in the same position is typically required for part-time employment although a part-time work history of less than two years may be considered if the lender verifies with the employer that the work is likely to continue at the same compensation level

Income from seasonal employment is permitted as long as the applicant has a two year work history and expects to be rehired for future seasons

The lender is required to determine that part-time and seasonal income is expected to continue for the next three years

Income from part-time or seasonal work must be reported on the borrower's tax returns to be considered by a lender

A consecutive two year payment history and determination by the lender that the income is expected to continue for the next three years is required for bonus, commission or overtime income to be considered
Bonus, commission or overtime income earned for less than a year is not permitted without significant compensating factors such as a change in the applicant's compensation structure

Lenders are required to explain any significant declines in bonus, commission or overtime income
Significant variations in bonus, commission or overtime income may require the lender to use an average period of more than two years to calculate the applicant's income

Kentucky VA Mortgage Program

The VA Program requires lenders to verify an applicant's employment history for the prior two years although there is no minimum employment history guideline

Applicants with an employment history of less than a year may be considered if the lender determines and documents that the applicant has a high probability of continuing his or her job
The applicant's employment history is evaluated on a case-by-case basis

Active military personal who are within 12 months of their release date are required to reenlist or provide verification of a job offer after their release from the military

Self-employed borrowers are typically required to demonstrate a two year job history unless the applicant was previously employed in a similar line of work or received specialized training in that field

A self-employed history of less than one year is highly uncommon

A continuous and verified two year history of part-time employment is generally required
The applicant's income from part-time work should be steady and predictable and the lender is required to determine that the work will continue in the future

The lender is also required to confirm that applicants can handle the part-time job along with the demands of their primary job

A two year work history is required for bonus, commission and overtime income to be considered by the lender unless the borrower has extensive experience or training in their field of work

The lender must determine that the income is predictable and likely to continue in the future
Bonus, commission and overtime income with less than a two year work history is rarely permitted and requires extensive documentation by the lender

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/

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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