Kentucky First Time Home Buyer Questions and Answers


Kentucky First Time Home Buyer Questions Answered:

Kentucky First-Time Home Buyer Loan Programs


KHC loan – Kentucky First-Time Homebuyer Loan Programs for FHA, VA, KHC and USDA Mortgage Loans in KY

Home Loans Preapproval Checklist

  • A driver’s license or U.S. passport
  • A Social Security number or card. If not a U.S. citizen, a copy of the front and back of your green card(s)
  • Verification of employment
  • Copy of their credit reports from the three national credit bureaus
  • Recent pay stubs covering the last 30 days
  • W-2 forms from the previous two years
  • Proof of any additional income
  • Last two years of personal federal income tax returns with all pages and schedules. If self-employed, last two years of individual federal income tax returns with all pages and schedules, as well as a business license, a year-to-date profit and loss statement (P&L), a balance sheet, and a signed CPA letter stating you are still in business
  • Bank account statements proving that you have enough to cover the down payment and closing costs. If someone is helping you with the down payment, a gift letter stating that the fund is a gift and not an IOU
  • Last quarterly statements for asset accounts (401(k), IRA, stock accounts, mutual funds)

Mortgage Preapproval: What To Know

What affects your home loan preapproval

Your income and saving are two key factors that lenders will consider during the mortgage process. However, other factors can affect how long preapproval will take and whether or not you’ll be preapproved at all.

Employment Status

Self-employed individuals almost always have a more challenging time getting preapproved. In addition to meeting standard loan requirements, they are asked to prove their line of work and/or the ownership of their business.

Only borrowers who have an ownership interest of 25% or more in a business and are not W-2 employees are considered “self-employed.” However, there is an exception if the borrower can show a two-year history in a similar line of work, which includes having documentation that proves an equal or higher income in the new role compared to the W2 position.

2 year work history asked for every mortgage loan application. Does  not have to same job, but work for 2 years with steady employment is liked and if you have job gaps over 6 months, they may require you to be on current job for 6 months.

Again, we only go back the last two years for work history and gross income.

Debt-to-Income Ratio

The debt-to-income ratio is the percentage of your monthly gross income that goes toward paying debts. There are two types of DTI that lenders will consider during the mortgage process: front-end and back-end. The first consists only of your housing-related expenses, whereas the latter also includes all your minimum required monthly debts.

The lower your DTI, the better your chances of securing a home loan. Anything over 50% is considered unacceptable by lenders, but keep in mind that the specific DTI requirements will vary depending on the type of loan you’re getting.

For example, FHA loans secured by the government have more lenient requirements — you can have a DTI of up to 56.9% and still get approved for an FHA home loan. USDA loans used to buy homes in rural areas have a lower maximum DTI of 45%.

Loan-to-Value Ratio

The loan-to-value ratio (LTV) is a number lenders use to determine how risky a loan to a potential borrower might be. It measures the relationship between the loan amount and the market value of the property you want to buy, and it can also determine whether mortgage insurance will be required.

All mortgages have a maximum LTV to qualify. However, just like with DTI, the LTV varies depending on the loan. FHA loans, for example, have an LTV of 96.5% since they allow down payments of as little as 3.5%.

Going for an LTV of 80% or less is “ideal” because you get unique benefits as a buyer, but that requires a down payment of 20%. Ultimately, each buyer will need to figure out their own LTV based on how large a down payment they can afford.

Credit History and FICO Score for Kentucky First Time Home Buyers for FHA, VA, USDA ,Conventional and KHC Down Payment Assistance loans

Your credit history is one of the most important factors when it comes to getting a mortgage.

Type of Loan of Kentucky Mortgage Loan Minimum Credit Score
Conventional Loan 620
KHC Down Payment Assistance 620
FHA loan with 3.5% down payment 580
FHA loan with 10% down payment 500
VA Loan None, but 580 is preferred
USDA Loan None, but 640 is preferred

Joel Lobb
Mortgage Loan Officer
Individual NMLS ID #57916
 
American Mortgage Solutions, Inc.
 

Text/call:      502-905-3708

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