How Do I Qualify for An FHA Loan in Kentucky based on score, income, work history and credit?

 How to get an Kentucky FHA Mortgage Loan


FHA Home loans offer  lower down payments (3.5%) , lower credit requirements (500 credit score , and the option for financial assistance (Down payment assistance), allowing more Kentucky Homebuyers the option that may be able to qualify.

How to qualify for a Kentucky FHA loan


Kentucky FHA Mortgage Loan Options to consider




1. Low Down Payment

–  FHA Mortgage Loans only require a 3.5% down payment. And what makes that even more attractive is that it can be a gift from a relative. Do you have a parent or sibling who would “Gift” you some money for a down payment? If so, it could be time to apply for an  FHA Mortgage Loan.

2.Flexible Credit Qualifying

– HUD did NOT set a credit score requirement for qualifying for an  FHA Mortgage Loan. However many lenders in the market today have drafted “Overlays” that set minimum credit score requirements. Most lenders like to see a minimum 580 to 620  credit score, but don’t get discouraged if you are not there yet. If you are close to 620, it is often just as simple as reviewing your credit to determine how to quickly raise it. If you are not close to 620, ask your FHA Mortgage Loan Originator if they have a program for you. Chances are, there is! Bankruptcies and prior foreclosures do not automatically disqualify you either.

3.The Seller Can Pay Your Closing Costs

– That’s right. You need to have a quality Realtor who will help you negotiate not only the best price for the home, but also that the seller will pay your closing costs. HUD allows FHA Mortgage Loans to have the seller pay up to 6% of the purchase price. Sounds good so far, a down payment gift and seller paying closing costs!

4.Flexible Income Qualifying

– The standard for income qualifying ratios is 31/43 which means that up to 31% of your monthly income can be used to pay your monthly household mortgage payment; and up to 43% of your monthly income can be used to qualify for ALL monthly expenses. Those ratios can go up to 55% if you have good credit and a good income history allowing you to qualify when others might not.

5.Qualify Without Your Spouse’s BAD Credit –

This is a tricky one but it is also not well known. You can effectively qualify for an FHA Mortgage Loan without your spouse’s Bad Credit. FHA will look at your spouse’s credit but cannot decline your loan due to your spouse’s debt or credit score. So if you have a spouse with a crummy credit profile, you should take a look at  FHA Mortgage Loans to see if it will work for you.

Kentucky FHA Mortgage Requirements 


An FHA loan is a mortgage issued by federally qualified lenders and insured by the Federal Housing Administration (FHA). FHA loans are designed for low-to-moderate income borrowers who are unable to make a large down payment.

Minimum Credit Score is 500 with at least 10% down
Minimum Credit Score is 580 if you put less than 10% down
The FHA Kentucky Maximum loan for 2023 is $472,030
Upfront and Monthly Mortgage Insurance is required regardless of the Loan to Value
FHA Loans are only available for financing primary residences
Maximum Debt to Income Ratio of 50% (unless mitigating factors justify allowing a higher DTI)


Borrowers must have a steady employment history of the last two years within the same industry or line of work. Recent college graduates can use their transcripts to supplant the 2-year work history rule as long as it makes sense
Self-Employed will need a 2-year history of tax returns filed with IRS. They will take a 2-year average.

FHA requires a 3.5% down payment. Can be gifted from family member or from retirement savings plan, or money saved-up. Any type of cash deposits is not allowed for down payments. No exceptions to this rule!! This is one of the biggest issues I see in FHA underwriting nowadays.

 FHA loans are for primary residence occupancy. Not rental houses.

Borrowers must have a property appraisal from a FHA-approved appraiser.

Borrowers’ front-end ratio (mortgage payment plus HOA fees, property taxes, mortgage insurance, homeowners’ insurance) needs to be less than 31 percent of their gross income, typically. You may be able to get approved with as high a percentage as 43 percent. If the Automated Underwriting System gives you an Approved Eligible you can go higher on the debt ratios
Borrowers must have a minimum credit score of 580 for maximum financing with a 3.5% down payment

Borrowers must have a minimum credit score of 500-579 for maximum LTV of 90 percent with a minimum down payment of 10 percent. Most lenders will not go below 580 to 620 score, and very few lenders will go to 580 score. It’s best to work on getting your scores up before you apply or work with a loan officer to improve them.
2 years removed from Chapter 7 is required with good pay history after bankruptcy

1 year removed from Chapter 13 is okay with an excellent pay history with the Chapter 13 plan and permission from trustee. You will need to qualify with the Chapter 13 payment along with new house payment. Again, scores will play into your loan pre-approval.

Typically, borrowers must be three years out of foreclosure and have re-established good credit. Exceptions can be made if there were extenuating circumstances and you’ve improved your credit. If you were unable to sell your home because you had to move to a new area, this does not qualify as an exception to the three-year foreclosure guideline.

How Do I Qualify for An FHA Loan in Kentucky based on score, income, work history and credit?




Low Down Payment which can be 100% gift from family member or Grant Program
Seller can pay closing costs-Maximum 6% of purchase price
There is maximum mortgage amount for each county. Check FHA loan limit for your county.
Non-occupant co-signers are allowed on this program.
FHA Approved Condos-Single family home-2-4 unit properties, and PUDs are eligible.
Fast automated underwriting approval available. Also, the file can be manually underwritten by a live person to get loan approval if you do not receive approval through automated underwriting system.


How to get approved for FHA loan in Kentucky



FHA loans vs. conventional mortgages
CONVENTIONAL LOANFHA LOAN
Credit score minimum620500
Down payment3% to 20%3.5% for credit scores of 580+; 10% for credit scores of 500-579
Loan terms8- to 30-year terms15- or 30-year terms
Mortgage insurance premiumsPMI (if less than 20% down): 0.58% to 1.86% of loan amountUpfront premium: 1.75% of loan amount; annual premium: 0.45% to 1.05%
Interest typeFixed-rate or adjustable-rateFixed-rate

Pros and cons of Kentucky FHA loans

Pros

  • You can have a lower credit score: If you haven’t established much of a credit history or you’ve encountered some issues in the past with making on-time payments, a 620 credit score — the typical magic number for consideration of a conventional mortgage — might seem out of reach. If your credit score is 580, you’re in good standing with most FHA-approved lenders.
  • You can make a lower down payment: FHA loans also give the option for a smaller down payment. With a credit score of at least 580, you can make a down payment of as little as 3.5 percent. If your credit score is between 500 and 579, you may still be able to qualify for an FHA-backed loan, but you will need to make a 10 percent down payment.
  • You can stop renting earlier: Since FHA loans make buying a home easier, you can start building equity sooner. Instead of continuing to rent while trying to save more money or improve your credit score, FHA loans make the dream of being a homeowner possible sooner.

Cons

  • You won’t be able to avoid mortgage insurance: Since your credit score is lower, you’re a bigger risk of default. To protect the lender, you have to pay mortgage insurance. You can roll the upfront insurance premium into your closing costs, but your annual premiums will be divided into 12 installments and show up on every mortgage bill. If you put down less than 10 percent, you have to pay those annual premiums for the entire life of the loan. There’s no escaping them. That’s a big difference from conventional loans: Once you build up 20 percent equity, you no longer have to pay for private mortgage insurance.
  • You’ll have to meet property requirements: If you’re applying for an FHA loan, the property has to meet some eligibility requirements. The most important is the price: FHA-backed mortgages are not allowed to exceed certain amounts, which vary based on location. You have to live in the property, too. FHA loans for new purchases are not designed for second homes or investment properties.
  • You could pay more: When you compare mortgage rates between FHA and conventional loans, you might notice the interest rates on FHA loans are lower. The APR, though, is the better comparison point because it represents the total cost of borrowing. On FHA loans, the APR can sometimes be higher than conventional loans.
  • Some sellers might shy away: In the ultra-competitive pandemic housing market, sellers weighing multiple offers often viewed FHA borrowers less favorably.

Kentucky FHA Loan Limits

 All counties in Kentucky have the same loan limit of $472,030 for a single-family home. 

What credit score do you need for an Kentucky FHA Mortgage  loan in Kentucky?

FHA home buyers in Kentucky borrowers need to have a minimum mortgage specific credit score of 580. A credit score of 580 can qualify you for a 3.5% down payment.

Some lenders may accept a credit score of 500-579 with a 10% down payment. Not all lenders will go this low on a credit score. Some FHA Mortgage Lenders will not go below 580 credit score or in some cases, 620 credit score. Check with your FHA mortgage lender in Kentucky on this before you apply.

 Kentucky first-time homebuyer programs below to consider 




Conventional Mortgage Loan in Kentucky.


620 credit score or higher needed for this loan program. 4 years removed from bankruptcy minimum sometime longer. Private mortgage insurance required for over 80% loan to value on a refinance or down payments less than 20%. Tighter debt to income requirements with max backend-ratio usually not over 45% with less than 20% down payment. Easier on properties to qualify if they have deferred maintenance or need some fixing up to pass Government standards like FHA, VA, USDA loans. Down payment requirements are as little as 3% down payment. Better rates and lower mortgage insurance with a larger down payment and pmi is not for life of loan. 

This is for stronger borrowers with good credit (above 680 or 720) and at least 3-5% down payment with no foreclosures or bankruptcies in he last 4-7 years. Can go higher on the loan amount too versus FHA. Max loan in Kentucky for 2023 for conventional loans is $726,200


FHA Loans in Kentucky

500 minimum credit score with 10% down payment, and credit scores above 580 can do 3.5% down payment. Don't have to be a first-time home buyer and no foreclosures in the last 3 years or Chapter 7 bankruptcies in the last 2 years. Possible to get a FHA loan with a Chapter 13 active as long as it has been open for 12 months with a good pay history and permission from the trustee. 

This type of loan is insured by the Federal Housing Commission. Low to moderate-income borrowers can be approved to get this loan. First-time homeowners prefer this too because you can get an interest rate of as low as 3.5 percent for this loan.

Kentucky Max FHA loan for 2023 is $472,030

Kentucky VA Home Loans

This is something you could qualify for as a service member, veteran, or surviving spouse. A VA loan or mortgage is generous when it comes to providing competitive rates. Sometimes, a down payment and mortgage insurance isn’t even necessary for you to get approved for this. Just make sure that you have a good credit standing of at least 580.

USDA Loans in Kentucky

This is a zero-down payment mortgage that is usually approved for rural and suburban homebuyers. This type of loan is handled and issued by the US Department of Agriculture through the USDA Rural Development Guaranteed Housing Loan Program.  A credit score of at least 620 will also be needed for this even though USDA says they have no minimum score it is hard to get them pre-approved for scores below 620---***640 is really the preferred score for mortgage approval usually through GUS, the USDA underwriting automated system.

There is no max USDA loan just maximum household income limits based on number of people in the household.





Kentucky Housing Loan Program



2023 KHC first-time home buyer programs

Conventional Preferred Program for low-income borrowers with a down payment of just 3%.

Conventional Preferred Plus 80 Program for a down payment of just 3%.

Home Buyer Tax Credit for reimbursement of a portion of the annual mortgage interest payments.

Regular Down Payment Assistance Program for a down payment loan of up to $10.000.

Knowing about national and Kentucky state loan programs to help buy a home is a good start; now it’s time to dig into the details. For specifics, visit the Kentucky Housing Corp. website. There you’ll find information about all the loan programs, including eligibility requirements, how to enroll in home buyer counseling and a list of approved lenders in your county.


There are max income limits and max loan amounts and max purchase price limits.

See link below for more info:πŸ‘‡






Have Questions or Need Expert Advice? Text, email, or call me below:





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 approvalnor 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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Louisville Kentucky First Time Home Buyer Programs


Kentucky First Time Home Buyer Programs



Qualifying for a Kentucky Mortgage Loan


If you are a potential Louisville Kentucky First Time home buyer first time home buyer in Louisville Kentucky, we welcome you! It is our utmost desire to assist you in reaching the goal of buying your first home. 

We've gathered the most helpful, beneficial resources together on this page to make things as easy as possible for you.


We have access to all the Louisville Kentucky First Time home Buyers programs including, FHA, VA, KHC, and USDA, Rural Housing Zero Down home loans--


What is available for first time home buyer financial programs in Kentucky?

First-Time Homebuyers Louisville Kentucky Mortgage Programs


The first place to start in that search is the Kentucky Housing Corporation. They provide generous assistance to first time home buyers in the form of grants to help with the down payment as well as closing costs.

The Kentucky Housing Corporation has a down payment assistance program for eligible homebuyers who meet specific moderate-income limits to help with down payment and/or closing costs. Check and see what is available and if you qualify....



There are other Louisville, Kentucky first time homeownership programs available through the Kentucky Housing Corporation

In addition to the state programs, there are federal funds and grants available to residents and first time home buyers in Kentucky through the Homes and Communities program of the US Department of Housing and Urban Development

On their website you'll find complete grant information, application forms, description of available funds, as well as many other helpful tools.

Every potential first time home buyer should investigate what they have to offer. 

You can visit the website by clicking on US Dept. of Housing and Urban Development. 

Finally, there is a website that lists all grant programs available through the federal government, Grants.gov

Louisville, Kentucky First time home buyers should plan to spend the required time investigating to determine how many specific grants they may qualify for.

You can visit the website by clicking here.


Kentucky First Time Home Buyer Grants and Loan Programs


Your household income and expenses

Lenders look at your income in ways other than the total amount; how you earn it is also important. For example, income from bonuses, commissions and overtime can vary from year to year. If these sources make up a large percentage of your income, your lender will want to know how reliable they are.

Your lender will also consider the relationship between your income and expenses. Generally, your fixed housing expenses (mortgage payment, insurance, and property taxes, but not repairs or maintenance) should not be more than 28 percent of your gross monthly income, although this is not an absolute rule. Your lender will also consider other long-term debts, such as car loans or college loans. It is a good idea to bring the following when you meet with your lender:

Income

Employment, salary and bonuses, and any other source of income for the past two years (bring your most recent pay stub, previous year’s W-2 forms, and tax returns if possible)
The most recent account statement showing the amount of any dividend and interest income you received during the past two years 

Official documentation to support the amount of any other regular income you may receive (alimony, child support, etc.) Job stability is a factor that a mortgage lender will look for, and two years at your current job helps, but this also is not an absolute requirement. If you change jobs but stay in the same line of work, you should not have a problem — especially if the job change is an advancement or increase in income.

Credit score

Your credit score also helps to predict how likely you are to repay the mortgage debt. Credit scores will determine if you qualify for the loan, what your rate is, and mortgage insurance payments each month. Typical fico scores wanted for an automated approval run around 580 for an FHA loan and VA loan, 620 for a USDA, 620 for a KHC Loan with Down Payment Assistance, and 620 for an AU approval for Fannie Mae Loan.

Personal assets

Current balances and recent statements for any bank accounts, including checking and savings
Most recent account statement showing current market value of any investments you may have, such as stocks, bonds or certificates of deposit
Documentation showing interest in retirement funds
Face amount and cash value of life insurance policies
Value of significant pieces of personal property, including automobiles
Debt Information
The balances and account numbers of your current loans and debts, including car loans, credit card balances and any other loans you may have 

Underwriting

The lender does the best possible job of ensuring that a borrower qualifies for a loan. The final decision, however, rests with the lender's underwriter, who measures the total risk that the specific investor, who backs up the loan, is taking. Each investor (or investment company) has its own underwriting guidelines (often using statistical models), so while the underwriters evaluate many of the same factors as the lenders, they may look more closely at some areas than others, depending on the guidelines.

 For example, while the lender may have pre-approved you before you chose a home, by the time you get to underwriting, you will have chosen the property you want to buy, and the underwriter will review the property details closely. 

However, most of the information used is the same as that used by the lender, but it may be evaluated differently. The underwriter will evaluate the borrower's ability to pay (income), willingness to pay (credit history), and the collateral (property). As underwriters analyze each of these risks (although this is not a complete list), here are some possible guidelines they may use:

Income

Is the income sufficient to repay the loan? Ratio guidelines of 31 percent payment-to-income and 43 percent total debt-to-income are standard, but some programs allow for higher ratios. This is the typical manual underwrite for a score that does not fit the current Automated Underwriting Engines used for Fannie Mae (DO), FHA, VA, USDA and Rural Housing (GUS) 

Is the income stable from month to month and year to year? 


Has the borrower been on his/her current job and in the same industry for a sufficient amount of time? 

A minimum of two years is the standard guideline, but exceptions can be made.

Can the income be verified? 

2 years taxes, last 30 days of paystubs 


Credit

Does the borrower have a good credit score-Typically 760 or higher will yield the best rates and lowest mortgage insurance for a conventional loan? FHA mortgage insurance and VA mortgage insurance is the same no matter what your credit score is. 
 

Does the borrower have late payments, collections, or a bankruptcy? 


If so, is there an explanation that can be provided for the late payments/collections/bankruptcy? 
FHA, VA requires 2 years removed from bankruptcy and USDA requires 3 years removed from bankruptcy. 
 
Fannie Mae requires 4-7 years after a bankruptcy. 
 
Does the borrower have excessive monthly debts to repay? Typical Debt to income ratios for a no money down loan are limited to 45% of your total gross monthly income for a USDA or KHC loan.
Is the borrower maxed out on credit cards? 

Pay down your credit card balances to less than 25% of your credit limits before you apply for a mortgage loan.


The down payment

A down payment is a percentage of your home's value. The type of mortgage you choose determines the down payment you will need. It can range from zero to 20 percent, or more if you wish.
A number of loans are available that do not require high down payments, particularly for first-time home buyers. 

FHA loans, for example, may require less than 5 percent down, and veterans or those on active duty in the military can obtain loans with no down payment at all. 

USDA loans are offered to rural home buyers with a no down payment option just like VA loans.

In addition to down payment assistance offered through Kentucky Housing where you don't have to put a down payment down with income caps for both KHC and USDA loans.

First-Time Home Buyer Louisville Kentucky Mortgage Programs




American Mortgage Solutions, Inc.

10602 Timberwood Circle Suite 3

Louisville, KY 40223


Company ID #1364 | MB73346


Text/call 502-905-3708


kentuckyloan@gmail.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). I lend in the following states: Kentucky