Mortgage Approval After Your First Home Purchase in Kentucky: FHA, VA, USDA, and KHC Loans
Kentucky FHA Loans:
Federal Housing Administration (FHA) loans are popular among first-time homebuyers due to their low down payment requirements and more lenient credit score criteria. To get approved for an FHA loan in Kentucky:
- Credit Score: While FHA loans are more flexible with credit scores compared to conventional loans, having a credit score of at least 580 will improve your chances of approval. 500 credit score down to 10% down payment possible
- Down Payment: FHA loans typically require a minimum down payment of 3.5% of the purchase price. Ensure you have sufficient funds set aside for this. 10% down payment need if score below 580
- Debt-to-Income Ratio (DTI): Lenders will evaluate your DTI to ensure you can manage your monthly mortgage payments. Aim for a DTI below 43%. can go up to higher dti of 56.99% on the back-end with compensating factors like high residual income (income left after taxes and bills are paid out of paycheck), credit score over 720, large down payment or large reserves (money in bank accounts 401k, retirement and brokerage accoutns after loan is made)
- Stable Income: Having a steady source of income and 2 year employment history strengthens your mortgage application.
- Property Requirements: The property you’re purchasing must meet FHA standards for safety and livability. Must be done by a FHA approved appraiser. More about safety and meeting the livable rules .No fixer uppers with FHA
- Foreclosure-3 years removed from Foreclosure
- Bankruptcy-2 years removed from a Chapter 7
Kentucky VA Loans:
If you’re a veteran or active-duty service member, a VA loan can be an excellent option with competitive interest rates and no down payment requirement. To secure approval for a VA loan in Kentucky:
- VA Eligibility: Ensure you meet the VA’s eligibility criteria based on your military service.
- Certificate of Eligibility (COE): Obtain your COE, which verifies your VA loan eligibility.
- Credit Score: While VA loans don’t have a strict credit score requirement, a higher credit score enhances your chances of approval and better interest rates. 620 or higher with most lenders..
- Stable Income: Like FHA loans, having a stable income is crucial for VA loan approval over last two years
- Property Appraisal: The property you’re purchasing must meet VA appraisal standards. Must be done by VA approved appraiser
- Termite report required on all VA loans
- No income limits,
- residual income limits
- debt to income ratio requirements
- Primary Residence Only
- Bankruptcy- 2 years removed from Bankruptcy Chapter 7
- Foreclosure-2 years removed from a foreclosure
- Caivrs-Clear Caivrs number, not currently delinquent on government debt i.e. taxes, student loans, social security etc
Kentucky USDA Loans:
USDA loans are designed to help low to moderate-income households in rural areas achieve homeownership. To get approved for a USDA loan in Kentucky:
- Location Eligibility: Ensure the property is located in a USDA-eligible rural area.
- Income Limit: Your household income must fall within USDA’s income limits for the area.
- Credit Score: While USDA loans have more flexible credit requirements, no minimum score on paper, maintaining a good credit score is beneficial. 640 0r higher typical
- Down Payment: USDA loans typically require no down payment, making them attractive to many homebuyers.
- Property Requirements: The property must meet USDA guidelines for safety and livability.
- Appraisal must adhere to FHA standards
- Debt to income ratios maxed at 45% on back-end..
- Automated Approval through GUS
- Bankruptcy-Three years removed from Chapter 7-
- Foreclosure– 3 years removed
Kentucky Housing Corporation (KHC) Loans:
KHC offers various loan programs and down payment assistance options for Kentucky homebuyers, including first-time buyers. To qualify for a KHC loan:
- Income Limits: Your household income must fall within KHC’s income limits.
- Credit Score: KHC loans have varying credit score requirements depending on the program, so check the specific guidelines. 620 minimum requires for all government backed FHA, VA, and USDA Mortgage loans. Conventional loans requires minimum 660 score
- Down Payment Assistance: Explore KHC’s down payment assistance programs, which can help cover upfront costs.
- Homebuyer Education: Completion of a homebuyer education course may be required for certain KHC programs.
- Stable Employment: Demonstrating 2 year stable employment and income is essential for KHC loan approval.
- Debt to Income Ratio: 40% front end and 50% max back-end debt ratio
- First Time Home buyer--Cannot currently own a home, but can have owned a home in the past.
In conclusion, getting approved for a mortgage after your first home purchase in Kentucky involves understanding the requirements and options available through FHA, VA, USDA, and KHC loans. By focusing on factors like credit score, income stability, property eligibility, and program-specific criteria, you can navigate the mortgage approval process with confidence and secure financing for your next home.
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/
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).
Louisville Kentucky Mortgage Loans 