What does debt to income ratio mean for a Mortgage Loan Approval in Kentucky?

Debt ratios and mortgage guidelines for approval in Kentukcy?


via What does debt to income ratio mean for a Mortgage Loan Approval in Kentucky?

 

How does your debt to income ratio play into a Kentucky Mortgage Loan Approval for FHA, VA, USDA and Fannie Mae Mortgage Loans

When it comes to getting approved for a Kentucky Mortgage loan, lenders will look at your current gross monthly income versus your current debts to qualify up to your maximum spending limits for a mortgage loan. Also called your dti or debt to income ratios.

There are two ratios they use: Front end ratio and back-end ratio

The first ratio is measured using your new house payment, taking into account your principal and interest payment, property taxes and home insurance premiums along with the mortgage insurance. That ratio typically needs to be less than 1/3 of your gross monthly income to fit most KY mortgage programs for FHA, VA, USDA and Fannie Mae guidelines.

I have attached below a picture with  a general overview of qualifying ratios for a Kentucky Mortgage loan approval when it comes to income vs debts or debt to income ratios.

Debt-to-Income Ratio Guide for Kentucky FHA, VA, USDA and KHC Loans: 

Acceptable Ratios
Housing Debt to Income
Conventional 28% 41-50%
FHA 29% 41-56.5%
VA
USDA/RHS
KHC 
29%
29%
40%
41-65%
41-45%
50%
Higher ratios may be accepted with compensating factors: low loan value, large cash reserves after closing, high credit scores, etc,

So for example, let’s say you make $3000 gross a month, then your max house payment on the new loan would equal about $1000 for your new house payment.

Your current rent payment, utility bills, car insurance, cell phone bills, don’t go into account when figuring your max ratios.

The second ratio, called the backend-ratio measures your new house payment, plus your current monthly debts listed on the credit report.  Most Kentucky Mortgage programs will want to cap this at 45% to 50%, with some going a little higher with compensating factors.

For example, let’s say you make $3000 gross a month, and your new house payment is $1000, taking you up to your max limits on the front end ratio of 1/3.  and let’s say you have a $300 car payment, $100 in credit card payments and $150 student loan payment.

What is your maximum qualifying house payment with a back-end ratio of 50% with the current debts above? Let’s look at the math: Take $3,000 x 50% =$1,500 — this is going to be your max limits on the backend ratio with new house payment and current debt load. So let’s see what this amounts to:

($1500-$300-$100-$150=$950)

So if we take the $1500 minus your current monthly bills on the credit report, this is going to equal a max house payment of $950. As you can see, even though the front end ratio allows for $1000 max house payment, the back-end ratio is going to be $950, so you would go with the lowest of the two.

If you pay or receive child support  or child support this can be added or deducted to affect your max qualifying ratios for a mortgage loan, along with 401k loans.

As stated above, car insurance, cell phone bills, current rent payments, utility bills, insurance, does not come into play when qualifying for a max mortgage loan approval.

Curios about how much you would qualify for a mortgage loan in Kentucky?

Call, text or email me your questions and I would be glad to help you.

 
American Mortgage Solutions, Inc.
10602 Timberwood Circle Suite 3
Louisville, KY 40223
Company ID #1364 | MB73346
 


Text/call 502-905-3708
kentuckyloan@gmail.com

http://www.nmlsconsumeraccess.org/
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.

Kentucky VA Loans for Kentucky First-Time Home Buyers


via Kentucky VA Loans for Kentucky First-Time Home Buyers

The Big Change with the Removal of Tax Liens and Judgments – Continental Credit


The Big Change with the Removal of Tax Liens and Judgments

Believe it or not there is a lot of sarcasm in the title because the change is expected to be minuscule. However, our mortgage professional hot line has been ringing off the hook with our referral sources want to know anywhere from how much the scores will go up, to, if the lending criteria will change to offset the increases. Therefore, let me provide the full scoop so we are all very educated on the subject.

This all went in to effect on July 1st, 2017. As of that day all judgments and tax liens that were existing already or to be added in the future must pass THREE of FOUR of the most detailed, scrutinizing audits known to mankind. The first one makes me shudder; these public records must have your Name! Crazy, right? Next, your SS#! It gets deeper from there, next, your address and yes, finally, even your DOB! Do I live in coocoo land? In what world isn’t this just the basic information one should need to even consider starting to report a tax lien or judgment? And you only need THREE of them, so we can just throw out something trivial like your NAME after all.

In all seriousness, what does this actually equate to when it’s all said and done? It definitely varies from which source has conducted what survey. I’ve researched anywhere from 2% of credit reports being impacted at an average of 15 points to Vantage’s recent release of 6% of reports being impacted with an average of 10 points. Either way, it’s not worth much time thinking about it unless you want to think of the laughable situation that this took forever to pass and the final criteria was the most basic 3/4 things you should possible ever have to begin with in the first place.

In this credit specialist’s opinion which nobody seems to want talk about, I foresee many scores going down due to this! This has to do with credit score card calculations. It’s an advanced subject, but in a nutshell, your score to a degree is based on other people in a similar situation as you, therefore if you are with people with tax liens your score range is within that score card. Remove the lien, BUT don’t fix anything else (which is what this is), now you are with people with no tax liens putting yourself in a more difficult bracket. Call us for a better explanation, it’s certainly more interesting than this Big Change! Most importantly however, this allows us to work religiously on any of your turn downs. 

 

 

 

 

 

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

 

Debt-to-Income Ratio for Kentucky Mortgage Loans:


via Debt-to-Income Ratio for Kentucky Mortgage Loans:

 

How Much Debt Do You Currently Have?

It only makes sense that the more debt you have the riskier the loan is for the lender. There is a finite amount of income in all of our households and it all gets allocated every month. Lenders use a “debt-to-income” ratio to determine how qualified you are for the loan based on how much debt you already have.

debt_to_income_ratioYour Debt to Income Ratio (DTI) is the percentage of your incomethat you owe in debt on a monthly basis. For example, if you make $5,000 per month, and have debt payments (car loans, credit cards, student loans, etc.) of $2,000, your DTI ratio is 40%. The higher this ratio is, the less likely you will be to qualify for a low interest rate.

Conventional loans typically have a qualifying ratio of 28/36. FHA loans will sometimes allow for a higher debt load of 29/41 qualifying ratio.

The first number in a qualifying ratio is the maximum percentage of your gross monthly income that can be applied to your mortgage. That includes the loan principal and interestprivate mortgage insuranceproperty taxeshomeowners insurance, and homeowner’s association dues.

The second number is the maximum percentage of your gross monthly income that can be applied to housing expenses and recurring debt. Recurring debt includes monthly payments for carsboatsmotorcycleschild support payments and monthly credit card payments.

 Example:  of a 28/36 qualifying ratio:

Gross monthly income of $5,000 x .28 = $1400 can be applied to housing.

Gross monthly income of $5,000 x .36 = $1,800 can be applied to recurring debt plus housing expenses

Example: of a 29/41 qualifying ratio:

Gross monthly income of $5,000 x .29 = $1,450 can be applied to housing.

Gross monthly income of $5,000 x .41 = $2,050 can be applied to recurring debt plus housing expenses

 
American Mortgage Solutions, Inc.
10602 Timberwood Circle Suite 3
Louisville, KY 40223
Company ID #1364 | MB73346
 


Text/call 502-905-3708
kentuckyloan@gmail.com

http://www.nmlsconsumeraccess.org/
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.

Kentucky USDA Rural Development Loans


7b5db11e-22d1-4997-a4b4-ad4e73780719-original (2).pngvia Kentucky USDA Rural Development Loans

USDA Rural Development mortgages for Kentucky Home buyers

The U.S. Department of Agriculture mortgage program is for Kentucky home buyers that have no money to put down, have a stable 2 year job history,  no bankruptcies or foreclosures in last 3 years and the new house payment should be close to or not more than 1/3 of your gross monthly income, this is called effective income.

There is also a test for compliance income meaning cannot make more than a certain amount to use the USDA loan program in Kentucky. Most Kentucky counties are limited to $82k for a household of four, and up to $109k household income for a family of five or more.

 

Thy used an automated underwriting system called GUS to pre-approved Kentucky home Buyers. If your score, middle credit score of the three main bureaus of experian, equifax, and trans union is below 640, you will automatically get downgraded to a refer and it will make it more difficult to get approved for the USDA loan.

I would suggest to get your scores up to 640 before submitting your loan application, however a lot of lenders including myself will go down to a 620 score, but be ready to hand over your blood type and other documents. 😂😂

You don’t have to be a Kentucky first time home buyer people with low to moderate incomes who want to buy a home in an eligible area. They typically don’t want you to own another piece of real estate and if you have access to 20% down payment they will not let you use the program.

 

This program is not intended for working farms, so if the property has farm income, i.e. crops, cattle, livestock, or other income this will not work for USDA loan programs.

They will do loans on mobile homes that meet FHA standards and that are brand new. They will not finance a used mobile home.

 

To get a Kentucky USDA loan, you work with a bank or other lender. The loan is backed by the USDA. You must be within certain income requirements — which depend on your area — and agree to use the home solely as a primary residence.

 

Like Kentucky FHA loans , Kentucky Rural Development USDA mortgages have fees. There is an upfront guarantee fee, which can be as much as 1.0 percentile of the principal loan amount, which is added to your loan. You also will have to pay a mortgage insurance fee which is .35% and this is called the annual fee. This is way cheaper than mortgage insurance premiums of 1.75% and .85% for the same comparison.

I you have questions about qualifying as first time home buyer in Kentucky for a Rural Housing or USDA loan , please call, text, email or fill out free qualification below for your next mortgage loan pre-approval.
http://www.emailmeform.com/builder/form/0bfJs9b6bK8TGoc6mQk9hIu
http://www.emailmeform.com/builder/form/0bfJs9b6bK8TGoc6mQk9hIu
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#57916 http://www.nmlsconsumeraccess.org/

 

Kentucky Rural Housing USDA Loans


via Kentucky Rural Housing USDA Loans

What are the Kentucky USDA Mortgage Loan Requirements?
To decide if you qualify for an USDA Mortgage Loan, we will look at:
•Your income and your monthly expenses. Standard debt-to-income ratios are 29/41 for USDA Loans. These ratios may be exceeded with compensation factors.
•Your credit history (this is important, but USDA’s credit standards are flexible). A FICO score of 620 or above is required for all loans
•Your overall pattern rather than to individual problems you may have had.
To be eligible for an USDA mortgage, your monthly housing costs (mortgage principal and interest, property taxes and insurance) must meet a specified percentage of your gross monthly income (29% ratio). Your credit background will be fairly considered. At least a 620 FICO credit score is required to obtain an USDA approval through Lending. You must also have enough income to pay your housing costs plus all additional monthly debt (41% ratio). These percentages may be exceeded with compensating factors. Applicants for loans may have an income of up to 115% of the median income for the area. Maximum USDA Loan income limits for your area can be found at here. Families must be without adequate housing, but be able to afford the mortgage payments, including taxes and insurance.
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Can I get an USDA Mortgage Loan after bankruptcy?
Criteria for USDA loan approvals state that if you have been discharged from a Chapter 7 bankruptcy for three years or more, you are eligible to apply for an USDA mortgage. If you are in a Chapter 13 bankruptcy and have made all court approved payments on time and as agreed for at least one year, you are also eligible to make an Kentucky USDA loan application.
What are the USDA Down Payment Requirements?
USDA Mortgages have no down payment requirement. Other loan programs don’t allow this.
What types of property are eligible?
While USDA Mortgage Guidelines do require that the property be Owner Occupied (OO), they do allow you to purchase condos, planned unit developments, manufactured homes, and single family residences.
What is the maximum amount that I can borrow?
The maximum amount for an Kentucky USDA Mortgage Loans are determined by:
Maximum loan amount: The is no set maximum loan amount allowed for an USDA Mortgage. Instead, your debt-to-income ratios will dictate how much home your can afford (29/41 ratios). Additionally, your total household monthly income must be within USDA allowed maximum income limits for your area. Maximum USDA Loan income limits for your area can be found at here.
Maximum financing: The maximum USDA Mortgage amount will be 100% of the appraised value of the home.
What kinds of loans does USDA offer?
Fixed rate loans – All USDA loans are fixed-rate mortgages. In a fixed rate mortgage, your interest rate stays the same during the whole loan period, normally 30 years. The advantage of a fixed-rate mortgage is that you always know exactly how much your monthly payment will be, and you can plan for it.
What is Considered a Rural Area by the USDA?
Rural areas include open country and places with population of 10,000 or less and—under certain conditions—towns and cities. There is an automated rural area eligibility calculator at:http://eligibility.sc.egov.usda.gov.
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Kentucky USDA Loans
What are USDA Home Loans?
USDA stands for United States Department of Agriculture. A USDA Mortgage provides a low-cost insured home mortgage loan that suits a variety of options. A USDA mortgage is likely the best home loan option if you want to purchase a home with no down payment. If you’re unsure about your credit rating, or have concerns about a down payment when you’re doing a home loan comparison
What Types of Loans does USDA offer in Kentucky?
Currently, there are two kinds of USDA Home Loans available in Kentucky for single family households:
USDA Guaranteed Rural Housing Loans
USDA Guaranteed Home Mortgage Loans are the most common type of USDA Loanin Kentucky and allow for higher income limits and 100% financing for home purchases. USDA Guaranteed Loan applicants may have an income of up to 115% of the median household income for the area. Area income limits for this program can be viewed here. All USDA Guaranteed Loans carry 30 year terms and are set at a fixed rate.
USDA Direct Rural Housing Loans
USDA Direct Housing Loans are less common than USDA Guaranteed Loans and are only available for low and very low income households to obtain homeownership, as defined by the USDA. Very low income is defined as below 50 percent of the area median income (AMI); low income is between 50 and 80 percent of AMI; moderate income is 80 to 100 percent of AMI. Click here to see area income limits for this program.
What factors determine if I am eligible for a USDA Loan in Kentucky?
To be eligible for A USDA Rural Loan in Kentucky, your monthly housing costs (mortgage principal and interest, property taxes, and insurance) must meet a specified percentage of your gross monthly income (29% ratio). Your credit background will be fairly considered. A 620 FICO credit score is required to obtain a USDA Rural Housing Loan approval through most USDA lenders
. You must also have enough income to pay your housing costs plus all additional monthly debt (41% ratio). These ratios can be exceeded somewhat with compensating factors. Applicants for loans may have an income of up to 115% of the median income for the area. Maximum USDA Guaranteed Loan income limits for your area can be found at here. Maximum USDA Direct Loan income limits for your area can be found at here. Families must be without adequate housing, but be able to afford the mortgage payments, including taxes and insurance.
What is the maximum amount that I can borrow?
The maximum amount for an USDA home loan is determined by:
Maximum Loan Amount: The is no set maximum loan amount allowed for USDA Rural Home Loans. Instead, your debt-to-income ratios will dictate how much home your can afford (29/41 ratios). Additionally, your total household monthly income must be within USDA allowed maximum income limits for your area. Maximum USDA Guaranteed Loan income limits for your area can be found at here.
Maximum financing: The maximum USDA Rural Development Loan amount is 102% of the appraised value of the home (100% plus the 2% USDA RD Loan guarantee fee).
How much money will I need for the down payment and closing costs?
USDA Rural Development Mortgage Loans require no down payment and they allow for the closing costs to be included in the loan amount (appraisal permitting).
What property types are allowed for USDA Rural Loan Mortgages?
While USDA Mortgage Guidelines do require that the property be Owner Occupied (OO), they do allow you to purchase condos, planned unit developments, manufactured homes, and single family residences.
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if you have questions about qualifying as first time home buyer in Kentucky, please call, text, email or fill out free prequalification below for your next mortgage loan pre-approval.
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Five strategies for first time home buyers Kentucky 2018


via Five strategies for first time home buyers Kentucky 2018

 

Kentucky FHA, VA ,USDA, KHC, Conventional and Jumbo mortgage loans. I am based out of Louisville Kentucky. For the first time buyer with little money down, we offer Kentucky Housing or KHC loans with down payment assistance.