Kentucky VA loans Compared to Kentucky USDA, FHA, and Fannie Mae loans in Kentucky

When comparing Kentucky VA loans to Kentucky USDA, FHA, and Fannie Mae loans in Kentucky, several factors come into play, including credit score requirements, income considerations, work history, debt ratios, and how each loan type treats bankruptcy and foreclosure. Let's delve into the benefits and differences of each loan type:

Kentucky Mortgage Credit Score Requirements:

• Kentucky VA Loan: VA loans typically have more flexible credit score requirements compared to conventional loans. While there's no specific minimum score set by VA , most Kentucky VA lenders often look for a credit score of 620 or higher. I can do VA loans down to a 580 credit score.
• Kentucky USDA Loan: USDA loans also offer flexibility, with no minimum score required per USDA guidelines, but most Kentucky USDA lenders will want a 640 score or higher. I Can do Kentucky USDA loans down to a 580 credit score on a manual underwrite.
• Kentucky FHA Loan: FHA loans are known for accommodating borrowers with lower credit scores, often accepting scores as low as 500 with a 10% down payment or 580 with a 3.5% down payment.
• Kentucky Fannie Mae Loan: Fannie Mae loans usually require a minimum credit score of 620 or higher, although some lenders may have slightly different requirements.

Kentucky Mortgage Income and Work History:

• Kentucky VA Loan: VA loans consider your stable income and employment history but may be more lenient if you have a history of military service or steady employment. 2 years of employment needed for loan application-minimal job gaps
• Kentucky USDA Loan: USDA loans often have income limits based on the area's median income, and you need a stable income source. 2 years of employment needed for loan application-minimal job gaps
• Kentucky FHA Loan: FHA loans consider your income stability and work history, with guidelines that vary by lender. 2 years of employment needed for loan application-minimal job gaps
• Kentucky Fannie Mae Loan: Fannie Mae loans typically require a stable income and employment history, similar to conventional loans. 2 years of employment needed for loan application-minimal job gaps

Kentucky Mortgage Debt Ratio Requirements:

• Kentucky VA Loan: VA loans generally have more lenient debt-to-income (DTI) ratio requirements, often allowing for a higher DTI compared to conventional loans. VA loans can get approved on much higher debt to income ratios vs FHA, USDA and Fannie Mae loans. 65% or higher in some situations but if manual underwrite, will want the ratios closer to 41% with good residual income for VA loan. VA loans are the only type of loans that require a residual income...FHA, Fannie Mae, USDA does not have residual income requirements
• Kentucky USDA Loan: USDA loans have very strict DTI ratio limits, typically around 41% to 45% max on the backend ratio and 33% or less on the front end. By far the most restrictive on debt ratios vs FHA, VA, and Fannie Mae loans
• Kentucky FHA Loan: FHA loans also have relatively flexible DTI ratio limits (56% back end ratio possible on a AUS approval), making them accessible to borrowers with moderate levels of debt. Front end ratio max 45%
• Fannie Mae Loan: Fannie Mae loans follow standard DTI ratio guidelines similar to conventional loans. TYpically the second most restrictive on debt ratios right behind USDA loans on tighter debt to income ratio requirements, with the max back-end ratio no more than 50% --Front end ratio max 45%

Kentucky Mortgage Bankruptcy and Foreclosure Requirements:

• Kentucky VA Loan: VA loans are more forgiving of past bankruptcy or foreclosure, often requiring a waiting period of 2 years for Chapter 7 bankruptcy and 1-2 years for foreclosure.
• Kentucky USDA Loan: USDA loans have specific waiting periods after bankruptcy (3 years for Chapter 7) and foreclosure (3 years).
• Kentucky FHA Loan: FHA loans have shorter waiting periods after bankruptcy (2 years for Chapter 7) and foreclosure (3 years).
• Kentucky Fannie Mae Loan: Fannie Mae loans typically require longer waiting periods after bankruptcy (4-7 years) and foreclosure (7 years).

Advantages and Disadvantages of Kentucky VA loans, USDA, Fannie Mae and FHA:

• Kentucky VA Loan Advantages: Zero down payment, competitive interest rates, no private mortgage insurance (PMI) requirement, lenient credit and DTI ratios, and flexible eligibility criteria for veterans and active-duty service members.
• Kentucky VA Loan Disadvantages: Funding fee (although it can be rolled into the loan), limited to eligible veterans, service members, and some spouses.
• Kentucky USDA Loan Advantages: Zero down payment, lower interest rates, flexible credit requirements, and available in eligible rural areas.
• Kentucky USDA Loan Disadvantages: Limited to rural properties, income limits, and property eligibility criteria.
• Kentucky FHA Loan Advantages: Low down payment (3.5%), flexible credit requirements, competitive interest rates, and accessible to first-time homebuyers.
• Kentucky FHA Loan Disadvantages: Mortgage insurance premiums (MIP), stricter property standards, and limits on loan amounts.
• Kentucky Fannie Mae Loan Advantages: Available for a wide range of properties, competitive interest rates, and options for low down payments.
• Kentucky Fannie Mae Loan Disadvantages: Stricter credit and DTI requirements, potential for private mortgage insurance (PMI), and limited flexibility for borrowers with past financial challenges.

In summary, choosing the right loan type depends on your specific financial situation, eligibility criteria, and property location. VA loans offer excellent benefits for eligible veterans and service members, while USDA, FHA, and Fannie Mae loans provide alternatives with their own advantages and considerations.

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

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).

How to Qualify For a Kentucky FHA Mortgage Loan

General Kentucky FHA loan requirements include:

• The loan must be for a property used for your primary residence.
• The property must be appraised by an FHA-approved appraiser.
• The property must be safe, sound and secure, in compliance with minimum property standards as defined by the U.S. Department of Housing and Urban Development, or HUD.
• You must have a valid Social Security number and be a legal resident of the U.S.
• You must have a minimum credit score of 580 with a down payment of at least 3.5 percent, or a minimum credit score of 500 with a down payment of at least 10 percent.
• You may not have delinquent federal debt or judgments, or debt associated with past FHA loans.
• You must have steady employment history.
• You must make a down payment of at least 3.5 percent of the purchase price. If the down payment was gifted by a family member, documentation is required.
• You must have a DTI ratio that does not exceed limits.
• Any judgments or collections on the credit report must be resolved or satisfactorily explained.
• Any required waiting period has passed, as follows:

Event	Waiting period	Waiting period with extenuating circumstances (nonrecurring events beyond your control that result in sudden, significant, prolonged reduction in income or a catastrophic increase in financial obligations)
Chapter 7 or 11 bankruptcy	Four years	Two years
Chapter 13 bankruptcy	Two years from discharge, or four years from dismissal	Two years
Multiple bankruptcies	Five years if more than one filing in last seven years. Most recent bankruptcy must have been caused by extenuating circumstances.	Three years from most recent discharge or dismissal
Foreclosure	Seven years	Three years, with additional requirements after three years up to seven years: 90 percent maximum loan-to-value purchase, principal residence, limited cash-out refinance
Deed-in-lieu of foreclosure, preforeclosure sale (short-sale), or charge-off of mortgage account	Four years	Two years

Debt-to-Income Ratio Limits for Kentucky FHA Loans

Two DTI ratio figures are calculated when considering an Kentucky FHA mortgage. The front-end DTI ratio is your total monthly housing expense, which includes the mortgage principal and interest, mortgage insurance, homeowners insurance, property taxes and applicable homeowners association fees, divided by your total monthly income. The back-end DTI ratio is your total monthly debt obligation, including housing, minimum credit card payments, auto loans, student loans and any other required monthly debt payment, divided by your total monthly income.

Standard FHA front- and back-end DTI limits are 31 percent and 43 percent, respectively. If you earn $3,500 per month, your front-end DTI cannot exceed $1,085 and the sum of all your monthly debt obligations cannot exceed $1,505.
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Applications for Kentucky FHA borrowers with lower salaries and higher DTIs are manually underwritten. Manual underwriting means that your lender assigns a person to review your loan application and documents, versus running your information through an automated underwriting system. Manually underwritten FHA loans allow for front- and back-end DTI ratios of up to 40 percent and 50 percent, respectively. To qualify for these higher DTI limits, you will need to meet other requirements.

Joel Lobb
Mortgage Loan Officer

Individual NMLS ID #57916

American Mortgage Solutions, Inc.

10602 Timberwood Circle 

Louisville, KY 40223

Company NMLS ID #1364

click here for directions to our office

Text/call:      502-905-3708

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

https://www.mylouisvillekentuckymortgage.com/

 

Can a person have more than one Kentucky FHA loan?

Can You Have Two Kentucky FHA Loans at One Time?

FHA will not insure more than one Property as a Principal Residence for any Borrower, except as noted below. FHA will not insure a Mortgage if it is determined that the transaction was designed to use FHA mortgage insurance as a vehicle for obtaining Investment Properties, even if the Property to be insured will be the only one owned using FHA mortgage insurance.

Properties previously acquired as Investment Properties are not subject to these restrictions.

Listed below are the only circumstances in which a Borrower with an existing FHA-insured Mortgage for a Principal Residence may obtain an additional FHA-insured Mortgage on a new Principal Residence:

RELOCATION - A Borrower may be eligible to obtain another FHA-insured Mortgage without being required to sell an existing Property covered by an FHA-insured Mortgage if the Borrower is:
- relocating or has relocated for an employment-related reason; and
- establishing or has established a new Principal Residence in an area more than 100 miles from the Borrower’s current Principal Residence.

If the Borrower moves back to the original area, the Borrower is not required to live in the original house and may obtain a new FHA-insured Mortgage on a new Principal Residence provided the relocation meets the two requirements above.

INCREASE IN FAMILY SIZE - A Borrower may be eligible for another house with an FHA-insured Mortgage if the Borrower provides satisfactory evidence that:
- the Borrower has had an increase in legal dependents and the Property now fails to meet family needs; and
- the Loan-to-Value (LTV) ratio on the current Principal Residence is equal to or less than 75% or is paid down to that amount, based on the outstanding Mortgage balance and a current residential appraisal.
  
VACATING A JOINTLY-OWNED PROPERTY - A Borrower may be eligible for another FHA-insured Mortgage if the Borrower is vacating (with no intent to return) the Principal Residence which will remain occupied by an existing co-Borrower.

NON-OCCUPYING CO-BORROWER - A non-occupying co-Borrower on an existing FHA-insured Mortgage may qualify for an FHA-insured Mortgage on a new Property to be their own Principal Residence.

For additional information see Handbook 4000.1 II.A.1.b.iii.(A) at https://www.hud.gov/program_offices/administration/hudclips/handbooks/hsgh

All policy information contained in this knowledge base article is based upon the referenced HUD policy document. Any lending or insuring decisions should adhere to the specific information contained in that underlying policy document.

Joel Lobb
Senior  Loan Officer

(NMLS#57916)

American Mortgage Solutions, Inc.

10602 Timberwood Circle, Suite 3

Louisville, KY 40223

text or call my phone: (502) 905-3708
email me at 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). Mortgage loans only offered in Kentucky.

All loans and lines are subject to credit approval, verification, and collateral evaluation and are originated by lender. Products and interest rates are subject to change without notice. Manufactured and mobile homes are not eligible as collateral.

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Kentucky FHA Child Support Income Guidelines For Mortgage Loan Approval

 FHA Child Support Income Guidelines for a Mortgage

For the child support to count as income, you must be receiving it for least 6  months and there must be a 3 year continuance.  Child support payments can be used up until the child’s age of 18. The exception is the state of Kentucky where child support can be received for children up through the age of 19.

If the payments are voluntary and not ordered by a divorce decree or court order, there must be a 12 month history of receiving the child support payments.

If the child support payment is variable, it will be up to the discretion of the underwriter to determine how much can be used on the application.

Although the details above outline the Kentucky FHA guidelines for child support income, if the divorce decree indicates payments should extend beyond the age of 18, the lender must accept those terms as they would override the Kentucky FHA Loan Requirements.

Kentucky FHA guidelines Child Support Income Grossed Up

When the lender calculates your child support income, they may gross it up to 115% if it is not taxed. For example, if your child support payment is $100 per month, the lender may use $115 as income on your FHA loan application.

Kentucky FHA guidelines FHA Child Support Documentation

When applying for an Kentucky FHA loan using child support income, the lender may ask for one or more of the following documented items:

• Fully executed copy of the divorce decree
• Documented receipt of prior child support payments
• Voluntary child support payments must be documented for the past 6 months
• Document indicating the payments will continue for the next 3 years
• • Payments are likely to be received consistently for the first three years of the 
  mortgage; 
  • A copy of the divorce decree, legal separation agreement, voluntary agreement, or 
  court order specifying the amount of support and the period of time over which it will 
  be received is required; and 
  • Evidence that the funds have been received for the last 6 months using cancelled 
  checks, deposit slips, Federal tax returns, or court records.

This documentation is just for child support income and is in addition to the other documents needed for an Kentucky FHA loan.

How Alimony/child support income is eligible if the income will continue for a minimum of 3 years and subject to the following:

Court Ordered
Length of Receipt

Alimony/child support income received as part of a divorce decree, legal separation documents or court order is eligible for qualifying as follows:
• Must be received for a minimum of 3 months. Document receipt and amount received with bank statements or cancelled checks.
Qualification
• If funds have been received consistently for the most recent 3 months the current payment received may be used for qualifying, or
• If not received consistently, the average of the income received over the previous 2 years must be used to calculate the eligible income for qualifying (< 2 years receipt use the average over the time period received)

Voluntary
Length of Receipt

Voluntary alimony/child support income received is eligible for qualifying as follows:
• A minimum of 12 months receipt is required. Document receipt with cancelled checks, deposit slips or tax returns.
Qualification
• If funds have been received consistently for the most recent 6 months the current payment may be used for qualifying, or
• If funds have not been received consistently for the previous 6 months the average of the income received over the previous 2 years is used for calculating the eligible income for qualifying (< 2 years receipt use the average over the time period received)

Kentucky FHA Child Support Income is Calculated

The lender is going to look at the child support income received for the past three months to determine the effective income.  If voluntary payments are made, the lender will look at the most recent 6 months to determine the effective income.

If there were missed payments or inconsistent payments over the past 6 months, the lender will use the average child support income received over the past two years to determine the effective income. If child support income has been in place for less than two years, then it will be averaged for whatever time the payments have been made.

Kentucky FHA Child Support in Arrears

The child support income can disqualify you if there are missed payments in the past three months. If you are making the payments and you are late or have missed payments, then you may be disqualified from applying for an FHA loan.

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

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).