Home Loan Options for Kentucky First-Time Home-buyers in 2020


Kentucky FHA Mortgage Loans

Kentucky FHA loans are insured to give lenders a layer of protection if you default on the mortgage. They typically have competitive interest rates, smaller down payments and lower closing costs than conventional loans. A low credit score can still warrant only a 3.5 percent down payment down to a 580 credit score.

If the score is below 580, you will need a down payment of 10%

2 years removed from bankruptcy and 3 years removed from foreclosure

Clear Cavirs Alert Number (Delinquent with Government Debts)

2 year work history usually needed.

No need for rent verification unless credit scores are derogatory.

Collections usually don’t have to be paid, but if being garnished or sued with a judgement lien, typically will need to be paid.

Max debt to income ratio centered around 50% of your total gross monthly income divided by your monthly payment on the credit report along with new house payment.

Kentucky VA Home Loans

Kentucky Mortgage  loans is backed by the  VA guarantees home loans that help active military members, veterans and surviving spouses. VA loans don’t require a down payment or minimum credit score and no monthly mortgage insurance. This is one of the biggest benefits of VA loans is that they don’t require monthly mi, like FHA (.85. .80 or .45) , USDA (.35) and some Conventional Loans (varies on credit score and equity position or down payment or as lenders call it Loan to Value.

They offer 100% Financing, 2 years removed from bankruptcy or foreclosure, a clear CAVIRS, and must meet residual income requirements.

 

VA loans is the only type of mortgage loan offered in the Secondary Market (FHA, VA, USDA, Fannie Mae and Freddie Mac Conventional Loans) that has residual income requirements based on household size and state you live in.

What is residual income?

Residual income is the amount left over after you pay your monthly utilities on home, property taxes and home insurance, mortgage payment and the FICA/Medicare, Taxes for State and Federal, Health Insurance, 401k deductions and loans on credit report to include child support.

 

Kentucky Fannie Mae and Freddie Mac

They are government-sponsored entities that back home loans for low- and moderate-income families.

Down payments can be as low as 3 percent and monthly mortgage is relativity cheap if you have a high credit score (over 720) and at least 5% down payment.

One of the biggest advantages of conventional loans when you are putting down less than 80%,  is that the mortgage insurance is not for life of loan like, FHA, USDA has, and it has no upfront mortgage insurance premium like FHA (1.75% upfront mi premium) or VA (upfront mi premium from 2.15% to 3.6% depending on usage and loan type)

Kentucky USDA Rural Housing Loan
The U.S. Department of Agriculture, or USDA, focuses on homes in rural areas and guarantees the home loan. Borrowers don’t have to buy or run a farm.

A credit score of 640 or higher typically gets an applicant streamlined processing. A lower score is allowed but may require extra documentation about payment history.

Kentucky Rural Development Mortgage Guide

No Down Payment Required, Zero NADA! – Kentucky Rural Housing USDA loans allow someone to buy a home without putting any money down.
Lower Mortgage Insurance costs – Mortgage Insurance, is much lower on KY USDA loans than on FHA This can save you a lot of money.
30 year fixed Interest Rates for Kentucky Rural Housing Loans with no prepay penalty The interest rates are lower on USDA loans, which results in lower payments, and plenty of money saved over time.

How to Qualify for a Kentucky USDA Loan

Property Eligibility – The home you want to finance with a KY USDA loan must be an eligible property. The property must be located in a rural area which is generally defined to have the following characteristics: Under certain conditions, towns and cities with populations between 10,000 and 25,000. The USDA makes the eligibility determination, which may be verified at the following link: http://eligibility.sc.egov.usda.gov/eligibility/welcomeAction.do.

Job History – Similar to all other mortgage loans, a two year employment history is required. You must show that you have been consistently employed for the past two years in order to qualify for Kentucky USDA financing; however in certain circumstances a small gap in employment may be permitted with a reasonable explanation. Additionally, if you have just completed schooling or military service and are newly employed but do not yet have a 2 year history, your income may also be eligible.

Income Limits – The Kentucky Rural Housing USDA program is intended to assist low and moderate-income Kentucky households, therefore to be eligible for a USDA loan, your household income may not exceed the moderate-income limits established for the specific county in which you are financing a home. you may view the eligibility requirements on this page of the USDA website:


New Income limits for most counties (*) in Kentucky are $86,850 for a household family of four and household families of five or more  can make up to  $114,650.



The Northern Kentucky Counties (***) of Boon, Kenton, Campbell, Brackenn, Gallatin, and Pendleton are $93,500 for a household of four or less and up to $123,400 for a family of five or more.

USDA Eligible Areas in Northern Kentucky
Burlington
Hebron
Independence
Walton
Alexandria
Highland Heights
Cold Springs
Grant County
Owen County
Pendleton County

USDA Income Limits
Boone, Kenton & Campbell Counties (N. KY)

$93,500 (family size 1-4)
$123,400 (family size 5 or more)

Grant, Owen & Pendleton Counties (N. KY)

$86,850 (family size 1-4)
$114,650 (family size 5 or more)

With the new changes for 2019 USDA Income limits, the Jefferson County Louisville, KY Metro area (**) saw an increase of $87,600 for a family of four and up to $115,650 for a family of five or more. The metro area surrounding counties of Jefferson County includes Oldham, Bullitt, Spencer are included in these higher income limits for USDA loans.

Remember,  the entire  Jefferson County and Fayette County  Kentucky counties are not eligible for USDA loans. Along with parts of the following counties Daviess (Owensboro), Mccracken (Paducah), Madison County, (Richmond), Clark County (Winchester), Warren (Bowling Green), Hardin (Fort Knox and Radcliff), Bullitt(Hillview, Maryville, Zoneton, Fairdale, Brooks), Franklin, (Frankfort), Henderson (Henderson City Limits), Christian County (Hopkinsville, Fort Campbell), Boyd County (Ashland city limits) and the most Northern Parts of Boone, Kenton, Campbell Counties of Northern Kentucky (Covington, Florence, Richwood, Hebron, Ludlow, Fort Thomas, Bellevue, Ryle, Beechwood, ) see  map below

DTI Ratio or debt to income ratios. One of the main criteria in determining if you will be approved or not is your debt-to-income ratio. While you must not make too much money, you also must not have too much debt. Your debt-to-income ratio is how much monthly debt you have (only those debts which show on your credit report are counted) compared to your qualifying income.

Credit Score – The minimum credit score for a Kentucky USDA Mortgage Loan goes down to a 581 credit score, however most loans get approved at 640 or higher .varies from lender to lender, but most want to see at least a 640 credit score for you to be approved.

Mortgage Insurance – USDA loans have their own version of mortgage insurance. It is called the “Guaranteed Fee” and works similarly to FHA loans which have an upfront and monthly mortgage insurance premium (MIP). With USDA loans, there is a 1.00% upfront guarantee fee which may be financed on top of your loan, and a 0.35% annual guarantee fee that is divided into 12 payments each year. The amount of your annual fee (paid monthly) adjusts each year and goes down as your loan balance does. Use our USDA calculator to get an idea of what your monthly payment will be

Kentucky Good Neighbor Next Door Mortgage Loan
This program sponsored by the U.S. Department of Housing and Urban Development helps law enforcement officers, firefighters, emergency medical technicians and K-12 grade teachers buy homes.

A 50 percent discount off a home’s listed price is available through the program in areas labeled “revitalization areas.” Buyers must commit to living in the home for at least 36 months.

Kentucky FHA 203(k) Rehab Loans

If a fixer-upper fits more easily into your budget, a Section 203(k) rehabilitation program loan that’s backed by FHA can help. It considers the value of the home after you’ve made improvements, and lets you borrow the money for these fixes, rolling it into your mortgage. The down payment can be as low as 3 percent!

 

The difference between a front-end and a back-end debt-to-income ratio for a Kentucky Mortgage Loan FHA, VA, KHC, USDA, Fannie Mae


The difference between a front-end and a back-end debt-to-income ratio for a Kentucky Mortgage Loan FHA, VA, KHC, USDA, Fannie Mae You should know what you can afford before beginning your search f…

Source: The difference between a front-end and a back-end debt-to-income ratio for a Kentucky Mortgage Loan FHA, VA, KHC, USDA, Fannie Mae

8 New Fannie Mae Homes in Kentucky


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$77,900Just Listed

250 Commerce St
Hardin, KY 42048

4 Beds |2 Baths | 2210 sq. ft.

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$37,500Back on Market

1618 Parkside Dr
Bowling Green, KY 42101

2 Beds |2 Baths | 1147 sq. ft.

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$119,000Active

120 Ridgemont Rd
Paducah, KY 42003

3 Beds |3 Baths | 2429 sq. ft.

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Coming Soon

1004 Alexander Loop
Mayfield, KY 42066

3 Beds |2 Baths | 1914 sq. ft.

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Coming Soon

912 Cuba School Rd
Mayfield, KY 42066

3 Beds |2 Baths | 1284 sq. ft.

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Coming Soon

2725 Grand Ave
Louisville, KY 40211

3 Beds |1 Baths | 1199 sq. ft.

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Coming Soon

3432 Peleske Dr
Louisville, KY 40216

3 Beds |1 Baths | 1511 sq. ft.

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Coming Soon

10520 Pinoak View Dr
Louisville, KY 40299

3 Beds |2 Baths | 1402 sq. ft.

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Kentucky First Time Home Buyer Mortgage Loans: Four things to know about…:

 

HARP 2.0 Refinance Guidelines for Fannie Mae and Freddie Mac Louisville Kentucky Mortgage Loans


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HARP 2.0 Frequently Asked Questions

HARP has been expanded to help more homeowners qualify for refinancing their

Louisville Kentucky Mortgage Loans

 – even those with little or no equity available.

With HARP you could take advantage of low interest rates and other refinancing benefits even if the value of your home has declined and you owe more than your home is worth.

The questions and answers below will help you better understand how this program can help you refinance your underwater mortgage:

  • What does it mean to Refinance my Louisville Kentucky Mortgage Loan?When you refinance your mortgage, you are applying for a new mortgage, which replaces your current home loan.
  • What does it mean to be upside down on my mortgage?The terms “Upside Down”or “Underwater” simply mean that you owe more on your home loan than your property may appraise or sell for.The percentage that you are upside down is factored into what’s called a Loan-to-Value(LTV) ratio. So, if you owe $125,000 on a property that is valued at $100,000, then your LTV would be 125%.With the new updates to the HARP 2.0 program, borrowers with an LTV ratio greater than 125% may now qualify for a new refinance, provided they meet the other criteria.
  • What is the difference between a refinance and a loan modification?Basically, a modification is a change to an existing loan, where a refinance is a new loan.A Refinance on your loan means that you get a new loan to pay off an existing mortgage.A modification is for borrowers who are behind on their mortgage payment, or struggling to remain current, and are either not eligible for a refinance or it will not help them maintain their payments.
  • What changes were made to HARP that may make me eligible now?There were several changes to HARP, but the primary enhancement removed the limit on the amount that homeowners could be underwater (owe more on their mortgage than their home is worth). With that change, many homeowners who were not eligible will now qualify.The amount a borrower owes on a mortgage compared to the appraised value of a property is called Loan-to-Value (LTV).With the release of “HARP 2.0” guidelines, the original 125% LTV Cap was lifted, which will essentially allow borrowers who owe more than 125% on their first mortgage the ability to qualify for a new refinance, provided they meet the other underwriting and program criteria.
  • Is HARP the only refinance program available for underwater homeowners?HARP is one of several refinancing options available to eligible homeowners. However, HARP is unique because it is the primary refinance program that enables eligible borrowers with little to no equity in their homes to take advantage of low interest rates and other refinancing benefits.Making Home Affordable is a trademark of the United States Department of the Treasury.
  • How can I find out whether my loan is owned by Fannie Mae or Freddie Mac?Only mortgages owned or guaranteed by either Fannie Mae or Freddie Mac are eligible for refinance under the enhanced and expanded provisions of HARP. You can confirm that your mortgage is owned by either Fannie Mae or Freddie Mac by checking the following Web sites:http://fanniemae.com/loanlookup/ 
    http://freddiemac.com/mymortgage
  • Who is Fannie Mae?Fannie Mae is a government-chartered company with a mission to provide a stable source of funding to the U.S. housing and mortgage markets.The company purchases and securitizes mortgage loans to ensure that money is consistently available to financial institutions that lend money to home buyers.
  • What is the difference between a lender and a servicer?Your mortgage lender is the financial institution that gave you your mortgage loan.Your servicer is the financial institution that you send your monthly payment to. Your servicer is responsible for collecting your payments and crediting your account.You can find your mortgage servicer contact information on your monthly statement or coupon book.
  • On The Fannie Mae loan lookup tool, what does “Match Found” mean?A “Match Found” response to your search in the Fannie Mae Loan Lookup means that Fannie Mae owns a loan at the address entered in the search, however, it does not guarantee or imply that you will qualify for a Fannie Mae loan refinance or loan modification.
  • My loan is owned by Fannie, but it says that I don’t qualify for HARP?This is because Fannie Mae needed to receive your loan on May 31, 2009 or before.
  • Does Fannie Mae own my first and second mortgage?Fannie Mae generally owns primary (first-lien) mortgages only. A “Match Found” on the Fannie Mae Loan Lookup Tool means that they own the primary mortgage on the address entered in the search field.To find out who owns your second mortgage, refer to your monthly mortgage statement or contact the mortgage servicer to whom you send your monthly payment to.
  • What if I have an adjustable-rate mortgage (ARM)?HARP allows you to replace your adjustable-rate mortgage and many homeowners opt for a more stable fixed-rate mortgage.Every adjustable-rate mortgage is different, but refinancing may still provide you with a lower monthly payment, and allow you to avoid the sometimes large payment increase that comes once your ARM initial rate ends. The stability of a fixed monthly payment will give you security in knowing what you’ll owe every month.
  • Will the lender require an appraisal with a new HARP loan?Maybe – Even though the new updates to this program are intended to give borrowers with a Loan-to-Value (LTV) ratio above 125% the ability to refinance, lenders will still run an online valuation or require a full appraisal.Fannie Mae and Freddie Mac are updating their systems as this program progresses, but a good rule-of-thumb to follow is that loans under 125% LTV will generally not have an appraisal.If the appraisal is not conducted because of what is called PIW (Property Inspection Waiver), there will still be a $75 fees paid to Fannie Mae. Irrespective of what the appraisal value comes out to be, the loan would go through. However, some lenders may still cap the LTV to 150% – 200% or more, mainly depending on how the market reacts to this new program. Basically, expect LTV, Appraisal and Lending Limits to vary between lenders, and the time of the month.
  • Do I have to refinance through my current lender?No – As of March 19, 2012, Fannie Mae and Freddie Mac have opened this program up to non-servicing mortgage lenders.This is a huge benefit to borrowers in the fact that you have an opportunity to find a bank or mortgage broker who specializes in the new HARP program and can offer competitive rates.
  • Am I eligible for a refinance if my current loan has mortgage insurance (MI)?Yes, and the good news is that most of the mortgage insurance companies are working with HARP lenders to make the process as seamless as possible.Your new lender will do the work to make sure your current mortgage insurance scenario is similar to what you were, or were not paying.
  • Will I have to pay MI with a HARP since my new LTV will be >80%?No – If you did not originally have mortgage insurance due to the fact that your original LTV was less than 80% when acquired that loan, you will not be required to have MI, even though your new Loan-to-Value ratio will be greater than 80%.
  • I did not put 20% down when I purchased my property, but I do not have MI?If your current loan at the time of closing was over 80% and you are not paying a monthly Mortgage Insurance, most likely you have a Lender Paid Mortgage Insurance (LPMI).And yes, you would be able to refinance if you have an LPMI. Your lender will simply need to transfer the same coverage level from your current MI company to the new HARP 2.0 Refinance.
  • Can I Combine My First And Second Mortgage Into The New HARP Refinance?No – HARP does not allow for cash-out refinances or combining a first and second.Your new lender will order a subordination from your current second mortgage holder, which may require a fee.To quote the guidelines: “The refinance will not have a cash-out component, except for closing costs and certain de minimis allowances to cover items such as association fees, property tax bills, insurance costs, and rounding adjustments.
  • Will the lender need to verify income, assets and employment?Fannie Mae doesn’t expressly ask for Income, Employment or Asset verification for HARP 2.0 Loans. But, Fannie Mae suggests that the lender must obtain a verbal verification of employment (VOE) and verify the borrower’ss source of non-employment income, plus obtain any other income documentation as required by the Underwriting Findings Report.The borrower’s ability to repay the mortgage loan is based primarily on the acceptable payment history of the existing mortgage and the borrower benefit provisions. The acceptable payment history is no late in last 6 months and no more than one 30 days late in 7-12 months.If the borrower’s principal and interest payment is increasing more than 20%, the borrower must be re-qualified for the new loan, including verification of all income sources and amounts, and verification of any assets needed to close.Basically, your new lender will run your application through an online Fannie Mae or Freddie Mac approval engine, which will then provide a list of necessary documentation you need to prepare for loan submission.
  • Can I qualify for a new loan on an investment property or second home?All occupancy types i.e. Primary Residence, Second Homes and Investment Properties are allowed with HARP, even if the occupancy type has changed since the time of the original loan.Aliquam porttitor metus felis. Curabitur euismod porta justo ut mattis. Mauris condimentum ultrices justo, ac suscipit leo tempor eget
  • Are All Borrowers on the existing mortgage required to be on the new loan?Borrower(s) may be removed through the new transaction, provided that:a) The lender obtains documented evidence that the remaining borrower has been making payments from his or her own funds for the past 12 months, andb) The borrower(s) being removed is also removed from the deed.If the borrower(s) is being removed due to death, however, evidence that the remaining borrower(s) has been making payments from his or her own funds is not required.
Joel Lobb (NMLS#57916)

HARP REFINANCE QUESTIONS?

HARP 2.0 Refinance Guidelines for Fannie Mae and Freddie Mac Louisville Kentucky Mortgage Loans

You can determine whether your mortgage is owned by either Fannie Mae or Freddie Mac by checking the following Web sites:

http://www.fanniemae.com/loanlookup/
http://www.freddiemac.com/mymortgage

Fannie Mae and Freddie Mac have adopted changes to the Home Affordable Refinance Program (HARP) and you may be eligible to take advantage of these changes. If your mortgage is owned or guaranteed by either Fannie Mae or Freddie Mac, you may be eligible to refinance your mortgage under the enhanced and expanded provisions of HARP.

We Are Not The Government. All approvals and rates are not guaranteed, and are only issued based on standard HARP or other mortgage qualifying guidelines.  Equal Opportunity Lending, Fair Credit, Truth in Lending, and their own local and state RESPA, or otherwise lending laws. Privacy Statement | Equal Housing

Making Home Affordable is a trademark of the United States Department of the Treasury.

Call us at 502-905-3708 today, or CLICK HERE to apply online.

Joel Lobb (NMLS#57916)
Senior  Loan Officer