Category: FHA
via Kentucky FHA Guideline Update
via Kentucky FHA Guideline Update
In “2019 Kentucky FHA Loan Limits”
$10,000 Down payment Assistance Grant for Kentucky First Time Home buyers 2019
∘ What kind of credit score do I need to qualify for different first time home buyer loans in Kentucky?
Answer. Most lenders will wants a middle credit score of 620 for KY First Time Home Buyers looking to go no money down. The two most used no money down home loans in Kentucky being USDA Rural Housing and KHC with their down payment assistance will want a 620 middle score on their programs.
If you have access to 3.5% down payment, you can go FHA and secure a 30 year fixed rate mortgage with some lenders with a 580 credit score. Even though FHA on paper says they will go down to 500 credit score with at least 10% down payment, you will find it hard to get the loan approved because lenders will create overlays to protect their interest and maintain a good standing with FHA and HUD.
Another popular no money down loan is VA. Most VA lenders will want a 620 middle credit score but like FHA, VA on paper says they will go down to a 500 score, but good luck finding a lender for that scenario.
A lot of times if your scores are in the high 500’s or low 600’s range, we can do a rapid rescore and get your scores improved within 30 days.
∘ Does it costs anything to get pre-approved for a mortgage loan?
Answer: Most lenders will not charge you a fee to get pre-approved, but some lenders may want you to pay for the credit report fee upfront. Typically costs for a tri-merge credit report for a single borrower runs about $50 or less. Maybe higher if more borrowers are included on the loan application.
∘ How long does it take to get approved for a mortgage loan in Kentucky?
Answer: Typically if you have all your income and asset documents together and submit to the lender, they typically can get you a pre-approval through the Automated Underwriting Systems within 24 hours. They will review credit, income and assets and run it through the different AUS (Automated Underwriting Systems) for the template for your loan pre-approval. Fannie Mae uses DU, or Desktop Underwriting, FHA and VA also use DU, and USDA uses a automated system called GUS. GUS stands for the Guaranteed Underwriting System.
If you get an Automated Approval, loan officers will use this for your pre-approval. If you have a bad credit history, high debt to income ratios, or lack of down payment, the AUS will sometimes refer the loan to a manual underwrite, which could result in a longer turn time for your loan pre-approval answer
∘ Are there any special programs in Kentucky that help with down payment or no money down loans for KY First Time Home Buyers?
Answer: There are some programs available to KY First Time Home Buyers that offer zero down financing: KHC, USDA, VA, Fannie Mae Home Possible and HomePath, HUD $100 down and City Grants are all available to Kentucky First Time Home buyers if you qualify for them. Ask your loan officer about these programs
∘ When can I lock in my interest rate to protect it from going up when I buy my first home?
Answer: You typically can lock in your mortgage rate and protect it from going up once you have a home picked-out and under contract. You can usually lock in your mortgage rate for free for 90 days, and if you need more time, you can extend the lock in rate for a fee to the lender in case the home buying process is taking a longer time. The longer the term you lock the rate in the future, the higher the costs because the lender is taking a risk on rates in the future.
Interest rates are kinda like gas prices, they change daily, and the general trend is that they have been going up since the Presidential election in November 2016.
∘ How much money do I need to pay to close the loan?
Answer: Depending on which loan program you choose, the outlay to close the loan can vary. Typically you will need to budget for the following to buy a home: Good faith deposit, usually less than $500 which holds the home for you while you close the loan. You get this back at closing; Appraisal fee is required to be paid to lender before closing. Typical costs run around $400-$450 for an appraisal fee; home inspection fees. Even though the lender’s programs don’t require a home inspection, a lot of buyers do get one done. The costs for a home inspection runs around $300-$400. Lastly, termite report. They are very cheap, usually $50 or less, and VA requires one on their loan programs. FHA, KHC, USDAS, Fannie Mae does not require a termite report, but most borrowers get one done.
There are also lender costs for title insurance, title exam, closing fee, and underwriting fees that will be incurred at closing too. You can negotiated the seller to pay for these fees in the contract, or sometimes the lender can pay for this with a lender credit.
The lender has to issue a breakdown of the fees you will incur on your loan pre-approval.
How long is my pre-approval good for on a Kentucky Mortgage Loan?
Answer: Most lenders will honor your loan pre-approval for 60 days. After that, they will have to re-run your credit report and ask for updated pay stubs, bank statements, to make sure your credit quality and income and assets has not changed from the initial loan pre-approval.
How much money do I have to make to qualify for a mortgage loan in Kentucky?
Answer: The general rule for most FHA, VA, KHC, USDA and Fannie MAe loans is that we run your loan application through the Automated Underwriting systems, and it will tell us your max loan qualifying ratios.
There are two ratios that matter when you qualify for a mortgage loan. The front-end ratio, is the new house payment divided by your gross monthly income. The back-end ratio, is the new house payment added to your current monthly bills on the credit report, to include child support obligations and 401k loans.
Car insurance, cell phone bills, utilities bills does not factor into your qualifying rations.
If the loan gets a refer on the initial desktop underwriting findings, then most programs will default to a front end ratio of 31% and a back-end ratio of 43% for most government agency loans that get a refer. You then take the lowest payment to qualify based on the front-end and back-end ratio.
So for example, let’s say you make $3000 a month and you have $400 in monthly bills you pay on the credit report. What would be your maximum qualifying house payment for a new loan?
Take the $3000 x .43%= $1290 maximum back-end ratio house payment. So take the $1290-$400= $890 max house payment you qualify for on the back-end ratio.
Then take the $3000 x .31%=$930 maximum qualifying house payment on front-end ratio.
So now your know! The max house payment you would qualify would be the $890, because it is the lowest payment of the two ratios.
Kentucky Mortgage Programs For First-Time Buyers in Kentucky
Apply Here Free!
There are basically 5 popular programs that Kentucky Home buyers use to purchase their first home.
• At least 3%-5% down
• Closing costs will vary on which rate you choose and the lender. Typically the higher the rate, the lesser closing costs due to the lender giving you a lender credit back at closing for over par pricing. Also, called a no-closing costs option. You have to weigh the pros and cons to see if it makes sense to forgo the lower rate and lower monthly payment for the higher rate and less closing costs.
Fico scores needed start at 620, but most conventional lenders will want a higher score to qualify for the 3-5% minimum down payment requirements Most buyers using this loan have high credit scores (over 720) and at least 5% down.
The rates are a little higher compared to FHA, VA, or USDA loan but the mortgage insurance is not for life of loan and can be rolled off when you reach 80% equity position in home.
Conventional loans require 4-7 years removed from Bankruptcy and foreclosure.
Max Conventional loan limits are set at $484,500 for 2019 in Kentucky
If you meet income eligibility requirements and are looking to settle in a rural area, you might qualify for the KY USDA Rural Housing program. The program guarantees qualifying loans, reducing lenders’ risk and encouraging them to offer buyers 100% loans. That means Kentucky home buyers don’t have to put any money down, and even the “upfront fee” (a closing cost for this type of loan) can be rolled into the financing.
Fico scores usually wanted for this program center around 620 range, with most lenders wanting a 640 score so they can obtain an automated approval through GUS. GUS stands for the Guaranteed Underwriting system, and it will dictate your max loan pre-approval based on your income, credit scores, debt to income ratio and assets.
They also allow for a manual underwrite, which states that the max house payment ratios are set at 29% and 41% respectively of your income.
They loan requires no down payment, and the current mortgage insurance is 1% upfront, called a funding fee, and .35% annually for the monthly mi payment. Since they recently reduced their mi requirements, USDA is one of the best options out there for home buyers looking to buy in an rural area.
A rural area typically will be any area outside the major cities of Louisville, Lexington, Paducah, Bowling Green, Richmond, Frankfort, and parts of Northern Kentucky .
There is a map link below to see the qualifying areas.
There is also a max household income limits with most cutoff starting at $76,000 for a family of four, and up to $98,000 for a family of five or more.
USDA requires 3 years removed from bankruptcy and foreclosure.
There is no max USDA loan limit.
FHa loans are good for home buyers with lower credit scores and no much down, or with down payment assistance grants. FHA will allow for grants, gifts, for their 3.5% minimum investment and will go down to a 580 credit score.
The current mortgage insurance requirements are kinda steep when compared to USDA, VA , but the rates are usually good so it can counteracts the high mi premiums. As I tell borrowers, you will not have the loan for 30 years, so don’t worry too much about the mi premiums.
THe mi premiums are for life of loan like USDA.
FHA requires 2 years removed from bankruptcy and 3 years removed from foreclosure.
Maximum FHA loan limits in Kentucky are set around $314,725 and below.
VA loans are for veterans and active duty military personnel. The loan requires no down payment and no monthly mi premiums, saving you on the monthly payment. It does have an funding fee like USDA, but it is higher starting at 2% for first time use, and 3% for second time use. The funding fee is financed into the loan, so it is not something you have to pay upfront out of pocket.
VA loans can be made anywhere, unlike the USDA restrictions, and there is no income household limit and the max loan is $484,500 in Kentucky
Most VA lenders I work with will want a 620 credit score though I am setup with lenders that will go down to a 560 credit score if I can get it approved.
VA requires 2 years removed from bankruptcy or foreclosure.
This type of loan is administered by KHC in the state of Kentucky. They typically have $4500 to $6000 down payment assistance year around, that is in the form of a second mortgage that you pay back over 10 years.
Sometimes they will come to market with other down payment assistance and lower market rates to benefit lower income households with not a lot of money for down payment.
KHC offers FHA, VA, USDA, and Conventional loans with their minimum credit scores being set at 620 for all programs. The conventional loan requirements at 660
Kentucky Home Buyers
Effective with new reservations as of Monday, January , 2019, properties located in one of the counties considered Middle Appalachia or Lower Mississippi Delta will have access to a $1,500 closing cost grant. Borrowers must be under the specific income limits per the Duty to Serve (DTS) program.
KHC recognizes that down payments, closing costs, and prepaids are stumbling blocks for many potential home buyers. Here are several loan programs to help. Your KHC-approved lender can help you apply for the program that meets your need.
Hardest Hit Fund (HHF) DAP For Kentucky 2019
Available to Christian County only 11/15/2018
- Zero percent interest rate for first-time home buyers.
- A non-repayalbe second mortgage for $10,000.
- Forgiven after five years.
- Home purchase must be located in Christian county.
- No other counties will be eligible.
- New construction properties are not allowed.
- Property has to have been previously occupied.
- Applicants must meet Secondary Market Income and Purchase Price Limit.
Regular DAP for Kentucky Home Buyers in 2019
- Purchase price up to $301,294 with Secondary Market.
- Assistance in the form of a loan up to $6,000 in $100 increments.
- Repayable over a ten-year term at 5.50 percent.
- Available to all KHC first-mortgage loan recipients.
Affordable DAP for Kentucky Home Buyers in 2019
- Purchase price up to $301,294 with Secondary Market.
- Assistance up to $6,000.
- Repayable over a ten-year term at 1.00 percent.
- Borrowers must meet Affordable DAP income limits.
More about down payment and closing costs
- No liquid asset review and no limit on borrower reserves.
- Specific credit underwriting standards may apply to down payment programs.
This type of loan is administered by KHC in the state of Kentucky. They typically have $4500 to $6000 down payment assistance year around, that is in the form of a second mortgage that you pay back over 10 years.
Sometimes they will come to market with other down payment assistance and lower market rates to benefit lower income households with not a lot of money for down payment.
KHC offers FHA, VA, USDA, and Conventional loans with their minimum credit scores being set at 620 for all programs. The conventional loan requirements at KHC requires 660 credit score.
The max debt to income ratios are set at 40% an 50% respectively.
Text/call 502-905-3708
kentuckyloan@gmail.com
Customer Testimonials
We just moved here the first of January in 2017 from Ohio to the Louisville, KY area and we found Joel’s website online. He was quick to respond to us and got back the same day on our loan approval. He was very knowledgeable about the local market and kept us up-to date throughout the loan process and was a pleasure to meet at closing. Would recommend his services.
Angela Forsythe
“We were searching online for mortgage companies in Louisville, Ky locally to deal with and found Joel’s website, and it was a godsend. He was great to work with, and delivered on everything he said he would do. I ended up referring my co-worker at UPS, and she was very pleased with his service and rates too. Would definitely vouch for him.” September 2016
Monica Leinhardt
“We contacted Joel back in July 2011 to refinance our Mortgage and he was great to work with. We contacted several lenders locally and online, and most where taking almost 60 days to close a refinance, Joel got it done in 23 days start to finish,I would definitely recommend him. He got us 3.75% with just $900 in closing costs on our FHA Streamline loan.
Kayle Griffin
“Joel is one of the best Mortgage Brokers I have ever worked with in my sixteen years in the real estate and mortgage business.” May 25, 2010
Tim Beck
“Joel has always worked very hard to keep his word and to work out seasonable solutions to difficult problems. He is truly an expert in FHA and other type loans.” September 1, 2010
Nancy Nalley
“I have worked with Joel since 1998. He is a great loan professional.” I refer most of my Louisville, Kentucky area home buyers to him and he always take special care of them. August 23, 2012
Jon ClarK
“Joel Lobb is a real professional in the lending industry, with many years of experience, he is the one to go to for any mortgage lending needs.” August 22, 2011
RICHARD VOLZ , Residential Sales , Remax Foursquare Realty
“When looking to purchase our new home in 2006, I had the pleasure of meeting Joel Lobb. Not only was he personable and easy to reach, he was extremely knowledgable in his field and made sure to find us the best rate and a top notch mortgage company. We were able to complete the process in less than 3 weeks with his expertise. I find Joel to have the utmost high integrity and I recommend him to anyone who say’s they are need of mortgage assistance. He is also fantastic and keeping everyone up to date on the latest in the housing industry through his twitter posts. He provided great results for our family and we still communicate to this day!” August 21, 2010
Stacie Drake
“We first use Joel on our new home purchase in 2007 in St Matthews, Kentucky area and he was great to work with. We have since refinanced our home with him in 2010 when rates got really low and he has always delivered on what he says. I could not imagine using anyone else.”
Melody Glasscock March 2014
Absolutely Amazing!! I emailed Joel after I had just got a denial from a bank and just thought i would try to get some advice on what my next steps would be to get a house. I honestly didn’t expect to even get a reply because my credit is not great. That was about a week and a half ago. I just signed a contract on a house last night. ONLY because of Joel Lobb. He even worked with us throughout the weekend, which shocked me. Best decision I have ever made. THANK YOU SO MUCH FOR WORKING WITH US THROUGHOUT THE ENTIRE PROCESS.
Cee Bellisle August 2017
Contacted him about buying a home and he was great to work with. I was moving to Louisville Ky to take a new job and he walked me through the entire process. He explained to me all the different options for FHA, VA, USDA mortgage loans and credit score requirements versus Fannie Mae. Since I was a first time home buyer I needed alot of help and guidance. I would definitely recommend him. Fast to respond and available to answer questions that I or my realtor had after hours.
Anderson Johnson June 2018
We moved from Michigan to Northern Kentucky area and we were really impressed. We got a USDA loan no money down and closed in less than 3.5 weeks. We shopped around online with other lenders but Joel was always first to respond and his rates were just a little better than other lenders. He kept us informed through the process along with our realtor and there was absolutely no surprises like we heard from other co-workers and friends that they experienced in their loan process. We have already referred another co-worker to Joel . He’s AWESOME!
Patty Kingston
American Mortgage Solutions, Inc.
10602 Timberwood Circle Suite 3
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.
—
Text/call: 502-905-3708
fax: 502-327-9119
email:kentuckyloan@gmail.com
email:kentuckyloan@gmail.com
Credit Scores Needed To Qualify For A Kentucky Mortgage Loan Approval?
via Credit Scores Needed To Qualify For A Kentucky Mortgage Loan Approval?
How to qualify for a Kentucky FHA Home Loan ?
via How to qualify for a Kentucky FHA Home Loan ?
How do I qualify for an FHA loan in Kentucky?
Kentucky FHA loans allow buyers with down payments as little as 3.5% to buy a home, and with many state-sponsored down payment assistance programs like KHC or Kentucky Housing Agency down payment asssitance program of up to $6000 currently to use for your own down payment, Kentuck borrowers using FHA loans can can get the loan with zero money down.
They’re are other down payment assistance programs in KEntucky see below:
KACO Down Payment Assistance Program
Louisville Metro Housing Grant
Covington Kentucky Grants and Northern Kentucky Grants to Buy a Home
Chenoa Fund Down Payment Assistance
Kentucky FHA loans allow up to a higher debt to income ratio than conventional loans which are restricted to 45 to 50% debt to income ratio, which is much lower than most Kentucky FHA loans. That means more Kentucky FHa buyers can qualify for a home loan in case if your co-borrower cannot go on the loan due to credit issues.
Do I qualify for an FHA loan in Kentucky?
They’re are many FHA Kentucky loans requirements, which can be confusing. Some lenders are tougher and will not lend even though FHA will insure the loan. So check around on your FHA loan questions
- Buy a property you will use as your primary residence
- Your credit score must meet the minimum requirements of the FHA and the lender (FHA requires a minimum of 500 for 10% down and 580 for 3.5% down; however, lenders often require higher minimums)
- The property you want to buy has to meet the FHA criteria and get approved
- Must meet debt-to-income requirements
- Clear Cavirs number
- 3 years removed from foreclosure sale date
- 2 years removed from Chapter 7 Bankruptcy
- 1 year in Chapter 13 plan with good pay history and permission from trustee
For a detailed explanation of the requirements, you can read the HUD handbook and check with prospective lenders.
Joel Lobb
Senior Loan Officer
Senior Loan Officer
(NMLS#57916)
Company ID #1364 | MB73346
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). USDA Mortgage loans only offered in Kentucky.
All loans and lines are subject to credit approval, verification, and collateral evaluation
Joel Lobb
Senior Loan Officer
Senior Loan Officer
(NMLS#57916)
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.
FHA’s New Student Loan Rule Could Impact Mortgage Borrowers
via FHA’s New Student Loan Rule Could Impact Mortgage Borrowers
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“Grossing-Up” Non-Taxable Income for a Kentucky Mortgage Loan Approval
“Grossing-Up” Non-Taxable Income
Did you know that you can gross up non-taxable income?
You may gross up non-taxable income for income qualifying purposes. The non-taxable income source being “grossed-up” must be documented.
Non-taxable income refers to types of income not subject to federal taxes, which includes, but is not limited to:
- some portion of Social Security Income;
- some federal government employee Retirement Income;
- Railroad Retirement benefits;
- some state government Retirement Income;
- certain types of disability and Public Assistance payments;
- Child Support;
- military allowances; and
- other income that is documented as being exempt from federal income taxes.
The percentage to be grossed-up varies by agency:
- FHA – the greater of 15% or the appropriate tax rate for the income amount
- USDA – 25%
- VA – 25%
- Freddie Mac – 25% or the amount of the current federal and state income tax withholdings tables
- Fannie Mae – 25% or the amount of the current federal and state income tax withholdings tables
- Jumbo – 25% (see guidelines for specific restrictions)
Now let’s talk about what it takes to qualify for a mortgage.
First off, you’ll need an adequate credit score, along with sufficient income to make the proposed mortgage payment each month.
[What credit score do I need to get a mortgage?]
Generally speaking, a credit score below 620 is considered subprime in the mortgage world and will make qualifying for a mortgage that much more difficult. But it’s still possible depending on lender and loan type.
If you’ve got previous foreclosures on your credit report, things will get even more problematic and you may not even be eligible for a certain period of time.
But if your credit score is above 740 and you’ve got some decent credit history to back it up, you should have access to the lowest mortgage rates and a wide array of loan options.
Credit scores in between should still work, though there might be pricing hits associated, which all else being equal, may bump up your interest rate.
Tip: Lenders want to see a minimum of 3 active credit tradelines with two-year history on each to assess your creditworthiness.
As far as job history goes, it’s important to show the mortgage underwriteryou’ve had (and still have!) a steady job, typically for two years or longer.
This essentially proves that you will continue to receive regular income to make those costly mortgage payments each month for the next 30 years.
If you just graduated and have held a job for a mere two months, don’t expect to qualify for a mortgage unless your new position directly correlates with what you studied in school.
For example, if you went to medical school, and now have a job as a doctor, this might be sufficient to qualify for a mortgage.
But if you were an art history student who has been working as a flight attendant for two months, mortgage lenders probably won’t feel comfortable lending to you just yet. Make sense?
When seeking out your mortgage, you’ll also need to consider the mortgage down payment requirements, which vary depending on the type of loan you’re after.
While there are still some zero down mortgages around, namely VA loans and USDA loans, it certainly helps to set aside some assets so you’ve got something to put into your home purchase.
Obviously, the amount of money needed will also vary based on the purchase price of the home. If you want a more expensive house, expect to put more down in order to qualify.
If we’re talking about a mortgage refinance, you’ll need a certain amount of home equity to qualify for the mortgage, as determined by loan-to-value ratioconstraints.
Use Common Sense and Think Like the Mortgage Lender
- Would you approve YOU for a mortgage?
- If not, address those red flags immediately
- Don’t guess, run the actual numbers with a professional
- And ask plenty of questions if you’re unsure about anything early on
When it comes down it, it’s all pretty much common sense. Do you think you can/should qualify for a mortgage?
Do you have a track record of making on-time payments, carrying large amounts of debt and paying it down, holding a job, and saving money?
Are you ready to make a big commitment? If you were the bank, would you lend you a mortgage…hmm.
[How much house can I afford?]
I would guess that most prospective homeowners could assess the situation beforehand and determine if they should be granted a mortgage.
But without running the numbers, you won’t know for certain. So be sure to do plenty of calculations and speak with a loan officer or two to see where you stand.
They’ll be able to get you a quick answer so no one’s time is wasted.
What You Need to Qualify for a Mortgage
Here’s a general list of what you need to qualify for a mortgage. Keep in mind that qualification requirements vary greatly by lender and loan type.
In some cases, you won’t need all of these things, but it should certainly make life easier to satisfy everything on this list.
- Credit History – minimum of 3 active tradelines with 2-year history on each (credit score minimums vary)
- Job History – at least 2 years on same job or in same line of work (recent graduates with new jobs in certain fields like doctors and lawyers may be exempt)
- Income – verifiable income (tax returns, pay stubs) for the past two years that satisfies debt-to-income ratio limits
- Assets – enough to cover down payment, closing costs, and at least two months of mortgage payments (known as reserves)
- Rental History – proof of clean rental history for the past two years is also important to show the lender you have a propensity to pay on time each month (those currently living with their parents may be excluded from this rule).
If you can’t satisfy these basic requirements, you may want to keep renting, saving, and working on your credit until you can.
Or consider adding a co-signer who is better qualified to apply for a mortgage.
Either way, don’t be discouraged. There are lots of home loan programs and creative options out there to suit all different needs. As noted, one lender may say no while another says YES.
Read more: Tips for first-time homebuyers.
Joel Lobb
Mortgage Loan Officer
Mortgage Loan Officer
Individual NMLS ID #57916
American Mortgage Solutions, Inc.
Text/call: 502-905-3708
fax: 502-327-9119
email: kentuckyloan@gmail.com
email: kentuckyloan@gmail.com
Latest FHA shift to mitigate risks may shut out some Kentucky home buyers wanting FHA Loans in 2019
via Latest FHA shift to mitigate risks may shut out some Kentucky home buyers wanting FHA Loans in 2019
Last week, the Federal Housing Administration took steps to mitigate risks to its single-family portfolio, announcing updates to its TOTAL Mortgage Scorecard that may flag some loans for manual underwriting.
The change applies to all loans with case numbers assigned on or after March 18th, meaning that it is likely to affect some of the loans currently sitting in an FHA lender’s pipeline.
Chatter among members of the lending community suggests a number of originators are unhappy about the changes, fearing that the end result may be that some of their borrowers will be shut out of FHA financing.
Some said the FHA did not go about implementing the changes the right way, creating confusion about how the risk is being mitigated, while others said they felt as if the rug had been pulled out from under them, and fear that borrowers who no longer qualify will be angry, according to email exchanges between lenders and mortgage brokers, shared with HousingWire.
For its part, the FHA said it is taking necessary steps to address some of the risk trends apparent in its single-family portfolio and flagged as concerning in its 2018 Report to Congress.
Specifically, FHA loans have seen a substantial increase in cash-out refinances, a drop in the average borrower credit score, and an increase in borrowers with high debt-to-income ratios.
In its letter about the Scorecard updates, the FHA said that the number of FHA refinances that are cash-outs increased 60% in 2018, and that almost a quarter of all FHA loans in 2018 had a DTI ratio above 50%.
The average credit scores for FHA borrowers has also declined, falling to 670 in 2018 – the lowest average since 2008.
Combined, these factors are signaling untenable risk for the agency as they flag the potential for the program to drain the Mutual Mortgage Insurance Fund.
“Federal Housing Commissioner Montgomery has publicly stated numerous times in recent months that FHA must seek the right balance between managing risk and fulfilling its mission of supporting sustainable home-ownership,” the FHA said in its letter.
“To be successful long term, FHA must maintain the integrity of its insurance endorsements,” it continued. “This includes assessing the causes of the increase in higher-risk credit characteristics in the portfolio and making prudent and necessary changes to re calibrate and adjust its policies as warranted to manage credit risk.”
The agency said the updates to its Scorecard are just the first step it will be taking to address these risk factors.
“FHA will carefully monitor the impact of this change and is preparing to implement additional changes to maintain a better balance of managing risk and fulfilling its mission,” the agency stated.
I can answer your questions and usually get you pre-approved the same day.
Call or Text me at 502-905-3708 with your mortgage questions.
Email Kentuckyloan@gmail.com
Call or Text me at 502-905-3708 with your mortgage questions.
Email Kentuckyloan@gmail.com
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Joel Lobb
Mortgage Loan Officer
Mortgage Loan Officer
Individual NMLS ID #57916
American Mortgage Solutions, Inc.
10602 Timberwood Circle
Text/call: 502-905-3708
fax: 502-327-9119
email: kentuckyloan@gmail.com
email: kentuckyloan@gmail.com
Joel Lobb (NMLS#57916)
Senior Loan Officer
Senior Loan Officer
American Mortgage Solutions, Inc.
10602 Timberwood Circle Suite 3
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/
— 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.
AFR announces homebuyer program to grant 2% of purchase price, 6% of closing costs
American Financial Resources announced its new down payment assistance program that will provide grants for homebuyers, and caters especially to teachers, military members and first responders. The program will grant up to 2% of the purchase price and up to 6% of closing costs.
Source: AFR announces homebuyer program to grant 2% of purchase price, 6% of closing costs
DPA Advantage Program Guidelines
Borrower Eligibility – Must meet one of the following three categories outlined below
- First-time Home Buyer
- Purchasing the subject property
- Will reside in the subject property as their principal residence
- Has no ownership interest in any residential property, for a period three years prior to the date of application.
- The exception will be for an individual who is a homemaker or single parent with no ownership interest in a principal residence, other than a jointly owned property with a former spouse, during the three-year period prior to the date of the application
- Borrower(s) Income
- The borrower, or borrowers if multiple applicants on the loan application, income must be equal or less than 140% of the state or county median income regardless of family size
- To determine the median income use the following web tool to determine median income https://homeready-eligibility.fanniemae.com/homeready/
- Borrower(s) income must be less than the median income * 1.4
- If overtime income is not used to qualify the borrower, then the overtime income doesn’t not count towards the 140%
- The income that the underwriter will use to qualify the borrower is what will be compared to the 140%
- The borrower, or borrowers if multiple applicants on the loan application, income must be equal or less than 140% of the state or county median income regardless of family size
- Current or Retired Employment or Volunteer/Non-Paid Member
- Any borrower on the loan application is a current, retired, or volunteer, which includes:
- First responder (includes police officer, firefighter, public safety officer, paramedic, EMT)
- Educator (includes Sunday school teacher, tutor, day care provider)
- Medical personnel (includes nurse, doctor, phlebotomists, health ambassador, Red Cross worker)
- Civil Servant in Federal, State, or Local Municipality
- Military Personnel
- Any borrower on the loan application is a current, retired, or volunteer, which includes:
- Borrower(s) must complete an 8 hour, first-time Homebuyer education course from a HUD approved Housing Counseling Agency. Click Here for a list of HUD approved counseling agencies
- Online counseling is acceptable. Click Here for an example of one national counseling agency
- Only one borrower must take the first-time Homebuyer education course
- If the borrower has already completed another approved course that will be acceptable provided the course expiration is after the closing on the loan
Down Payment Requirements from Homebuyer
- When factoring in the DPA Advantage grant the borrower is responsible for a down payment equal to 1.50% of the purchase price (FHA 3.50% down payment, minus DPA Advantage Programs 2.00 Grant)
- The borrowers 1.50% down payment responsibility can come from flexible sources such as a family member gift or a loan against a 401k retirement account
Eligible Properties
- Existing homes
- New Construction
- Includes: single-family one-unit residence, townhomes, detached, condominiums, and modular homes
Interest Rate
- The interest rate on the DPA Advantage Program is significantly higher than a standard FHA Loan
Loan Type:
- FHA 203 (b)
- FHA 203 (k) Standard
- FHA 203 (k) Limited
- FHA Repair Escrow
Maximum Purchase Price
- The maximum purchase price is the lower of FHA maximum County loan limit or the conforming loan limit, which is currently $484,350
- Click Here to determine the maximum base loan amount for a FHA Loan, based on the County in which the property is located
Maximum Debt-To-Income (DTI)
- Maximum DTI limit is 48.99
Minimum Credit Score
- FHA: 580
Multiple Property Ownership
- Not permitted
Occupancy Type
- Primary residence only
- Non-occupant co-signers allowed, so long as the primary borrower meets one of the three requirements for the DPA Advantage Program
Repayment Requirements and Affordability Period
- None. Completely forgivable grant
Repair Escrows for Kentucky USDA, FHA, VA, Fannie Mae Home loans
via Repair Escrows for Kentucky USDA, FHA, VA, Fannie Mae Home loans
Maximum Repair Escrow Amounts for Kentucky Mortgages:
Kentucky Fannie Mae Loans:
The cost of completing improvements must not represent more than 10% of the “as completed” appraised value of the property.
Kentukcy FHA Loans:
There is no maximum amount to be held in escrow for the cost of repairs required by appraiser.
Kentucky FHA Loans: (HUD REO):
The maximum limit of cost of repairs for escrow holdback is $10,000, plus $1,000 contingency included in the loan amount.
Kentukcy VA Loans:
There is no maximum amount to be held in escrow for the cost of repairs required by appraiser.
Kentucky USDA Loans:
The maximum amount to be held in escrow for repairs required by appraiser cannot exceed $5,000.
