Here are action steps you can take right now to buy a home in Kentucky in 2019
1. Focus on your credit score
FICO credit scores are among the most frequently used credit scores, and range from 350-800 (the higher, the better). A consumer with a credit score of 750 or higher is considered to have excellent credit, while a consumer with a credit score below 620 is considered to have poor credit.
To qualify for a mortgage and get a low mortgage rate, your credit score matters.
Each credit bureau collects information on your credit history and develops a credit score that lenders use to assess your riskiness as a borrower. If you find an error, you should report it to the credit bureau immediately so that it can be corrected.
2. Manage your debt-to-income ratio
Many lenders evaluate your debt-to-income ratio when making credit decisions, which could impact the interest rate you receive.
A debt-to-income ratio is your monthly debt payments as a percentage of your monthly income. Lenders focus on this ratio to determine whether you have enough excess cash to cover your living expenses plus your debt obligations.
Since a debt-to-income ratio has two components (debt and income), the best way to lower your debt-to-income ratio is to:
First Ratio – The first ratio, top ratio or housing ratio. Basically that means out of all the gross monthly income you make, that no more that X percent of it can go to your housing payment. The housing payment consists of Principle, Interest, Taxes and Insurance. Whether you escrow or not every one of these items are factored into your ratio. There are a lot of exceptions to how high you can go, but let’s just say that if your ratio is 33% or less, generally, across the board, you’re safe.
Second Ratio- The second ratio, bottom ratio or debt ratio includes the housing payment, but also adds all of the monthly debts that the borrower has. So, it includes housing payment as well as every other debt that a borrower may have. This would include, Auto loans, credit cards, student loans, personal loans, child support, alimony….basically any consistent outgoing debt that you’re paying on. Again, if you’re paying less than 45% of your gross monthly income to all of the debts, plus your proposed housing payment, then……generally, you’re safe. You can go a lot higher in this area, but there are a lot of caveats when increasing your back ratio.
3. Keep credit utilization low on your credit cards
Lenders also evaluate your credit card utilization, or your monthly credit card spending as a percentage of your credit limit.
Ideally, your credit utilization should be less than 30%. If you can keep it less than 10%, even better.
For example, if you have a $10,000 credit limit on your credit card and spent $3,000 this month, your credit utilization is 30%.
Here are some ways to manage your credit card utilization:
set up automatic balance alerts to monitor credit utilization
ask your lender to raise your credit limit (this may involve a hard credit pull so check with your lender first)
pay off your balance multiple times a month to reduce your credit utilization
4 . Look for down payment assistance in Kentucky
There are various types of down payment assistance, even if you have student loans.
Here are a few:
FHA loans – federal loan through the Federal Housing Authority
USDA loans – zero down mortgages for rural and suburban homeowners
VA loans – if military service
Kentucky Housing Down Payment Assistance of $6000
There are federal, state and local assistance programs as well so be on the look out.
If you want a personalized answer for your unique situation call, text, or email me or visit my website below:
Joel Lobb
Mortgage Loan Officer Individual NMLS ID #57916
American Mortgage Solutions, Inc. 10602 Timberwood Circle Louisville, KY 40223 Company NMLS ID #1364
What is the Welcome Home Program? The Welcome Home Program (WHP) offers grants to fund reasonable down payments and closing costs incurred in conjunction with the acquisition or construction of owner-occupied housing by low- and moderate-income homebuyers. The grants are limited to $5,000 per homebuyer and Members are subject to an aggregate limit of $200,000 per offering. All funds are reserved for specific homebuyers purchasing specific homes and cannot be transferred to other homebuyers or to other homes. Welcome Home funds will be available for reservation on a first-come, first-served basis beginning at 8:00 AM ET on March 1, 2018, and will remain available until all funds have been reserved. Who Can Use the WHP? The FHLB has established a set-aside of Affordable Housing Program (AHP) funds to help create homeownership. These funds are available to Members as grants to assist their mortgage loan applicants in the home buying process. This is our most widely used program, ideally suited to the needs of community lenders and their customers. What are the Program Requirements? Below is an abbreviated list of program eligibility requirements: The total income for all occupants must be at or below 80 percent of the Mortgage Revenue Bond (MRB) limit for the county and state where the property is located. The FHLB has an Income and Affordability Workbook to assist in determining household income eligibility. Homebuyers must contribute at least $500 of their own funds towards down payment and/or closing costs. WHP applicants do not have to be first-time homebuyers. However, all first-time homebuyers are required to complete a homeownership counseling program. WHP grant funds are intended only for homebuyers who qualify for the first mortgage based on their own merit. Co-signors and co-borrowers are not allowed unless they will occupy the home as their primary residence and their incomes are included in determining eligibility. WHP grant funds may be used in conjunction with other local, state and federal funding sources and with the FHLB Cincinnati’s Community Investment Cash Advance Programs. The Member who reserves the WHP funds must originate the first loan, but the loan may close in the name of a third party. The interest rate for the first mortgage may not exceed 7.50 percent. The interest rate for the second mortgage may not exceed 11.00 percent. Only second mortgages provided by formal organizations, community development financial institutions, housing finance agencies, non-profit organizations, etc. are acceptable. All eligible property assisted with WHP funds is subject to a five-year retention mechanism (Retention Agreement), which may require the household to repay all, or a portion, of the subsidy, if the home is sold or refinanced within five years from the closing of the transaction. How Do I Apply? Information for Homebuyers Reserving WHP Funds Homebuyers must apply with one of our Member institutions. Click here to search our Member Directory. Members may reserve funds via the Welcome Home Program link through the FHLB’s Members Only portal by submitting an online Reservation Request with supporting documentation. Instructions for accessing Members Only may be found here. The FHLB will perform a preliminary review of the Reservation Request and the documentation submitted to determine eligibility of the homebuyer, availability of funds in the program, and availability of funds for the Member. If any of the information is incomplete, additional documentation or information may be required. Note: The Reservation Request will be denied upon receipt if a fully executed loan application is not included. Written notification will be provided to the Member as to the homebuyer’s eligibility. Submission of a Reservation Request does not constitute an approval of funds. Funds are reserved only upon written notification of approval from the FHLB. Please allow four weeks for the FHLB to review the Reservation Request and supporting documentation. Disbursing WHP Funds Welcome Home funds will only be disbursed after closing. The FHLB has some general guidance and specific instructions that Members and Closing Agents should use in closing mortgages using Welcome Home funds. Funds will be disbursed only to the extent they are required to fill the gap for down payment, closing costs, and counseling fees. Members may submit a Request for Payment of Reserved Funding with supporting documentation via the Welcome Home Program link through the FHLB’s Members Only portal. Submission of a Request for Payment of Reserved Funding is not an approval of funds disbursement. Once the Request for Payment of Reserved Funding has been reviewed and approved, funds will be disbursed to the Member. In the event the FHLB determines that funds were used for an ineligible expense, the grant will be reduced by the amount of the ineligible expense unless the household brings adequate funds to the closing to cover the amount of the ineligible expense. Under no circumstances will cash back to the homebuyer be permitted. Please allow four to six weeks for the FHLB to review the Request for Payment of Reserved Funding and supporting documentation.
What is the Welcome Home Program?
The Welcome Home Program (WHP) offers grants to fund reasonable down payments and closing costs incurred in conjunction with the acquisition or construction of owner-occupied housing by low- and moderate-income homebuyers. The grants are limited to $5,000 per homebuyer and Members are subject to an aggregate limit of $200,000 per offering. All funds are reserved for specific homebuyers purchasing specific homes and cannot be transferred to other homebuyers or to other homes. Welcome Home funds will be available for reservation on a first-come, first-served basis beginning at 8:00 AM ET on March 1, 2018, and will remain available until all funds have been reserved.
Who Can Use the WHP?
The FHLB has established a set-aside of Affordable Housing Program (AHP) funds to help create homeownership. These funds are available to Members as grants to assist their mortgage loan applicants in the home buying process. This is our most widely used program, ideally suited to the needs of community lenders and their customers.
What are the Program Requirements?
Below is an abbreviated list of program eligibility requirements:
The total income for all occupants must be at or below 80 percent of the Mortgage Revenue Bond (MRB) limit for the county and state where the property is located. The FHLB has an Income and Affordability Workbook to assist in determining household income eligibility.
Homebuyers must contribute at least $500 of their own funds towards down payment and/or closing costs.
WHP applicants do not have to be first-time homebuyers. However, all first-time homebuyers are required to complete a homeownership counseling program.
WHP grant funds are intended only for homebuyers who qualify for the first mortgage based on their own merit. Co-signors and co-borrowers are not allowed unless they will occupy the home as their primary residence and their incomes are included in determining eligibility.
WHP grant funds may be used in conjunction with other local, state and federal funding sources and with the FHLB Cincinnati’s Community Investment Cash Advance Programs.
The Member who reserves the WHP funds must originate the first loan, but the loan may close in the name of a third party.
The interest rate for the first mortgage may not exceed 7.50 percent.
The interest rate for the second mortgage may not exceed 11.00 percent.
Only second mortgages provided by formal organizations, community development financial institutions, housing finance agencies, non-profit organizations, etc. are acceptable.
All eligible property assisted with WHP funds is subject to a five-year retention mechanism (Retention Agreement), which may require the household to repay all, or a portion, of the subsidy, if the home is sold or refinanced within five years from the closing of the transaction.
Homebuyers must apply with one of our Member institutions. Click here to search our Member Directory.
Members may reserve funds via the Welcome Home Program link through the FHLB’s Members Only portal by submitting an online Reservation Request with supporting documentation. Instructions for accessing Members Only may be found here.
The FHLB will perform a preliminary review of the Reservation Request and the documentation submitted to determine eligibility of the homebuyer, availability of funds in the program, and availability of funds for the Member. If any of the information is incomplete, additional documentation or information may be required. Note: The Reservation Request will be denied upon receipt if a fully executed loan application is not included.
Written notification will be provided to the Member as to the homebuyer’s eligibility. Submission of a Reservation Request does not constitute an approval of funds. Funds are reserved only upon written notification of approval from the FHLB.
Please allow four weeks for the FHLB to review the Reservation Request and supporting documentation.
Disbursing WHP Funds
Welcome Home funds will only be disbursed after closing. The FHLB has some general guidance and specific instructions that Members and Closing Agents should use in closing mortgages using Welcome Home funds. Funds will be disbursed only to the extent they are required to fill the gap for down payment, closing costs, and counseling fees.
Members may submit a Request for Payment of Reserved Funding with supporting documentation via the Welcome Home Program link through the FHLB’s Members Only portal. Submission of a Request for Payment of Reserved Funding is not an approval of funds disbursement. Once the Request for Payment of Reserved Funding has been reviewed and approved, funds will be disbursed to the Member.
In the event the FHLB determines that funds were used for an ineligible expense, the grant will be reduced by the amount of the ineligible expense unless the household brings adequate funds to the closing to cover the amount of the ineligible expense. Under no circumstances will cash back to the homebuyer be permitted.
Please allow four to six weeks for the FHLB to review the Request for Payment of Reserved Funding and supporting documentation.
Income limits for Welcome Home and DRP for 2019
Income limits are obtained from the state housing finance agency for each state.
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.
All MRB Kentucky Housing first mortgage loans are for a 30-year term at a fixed rate of interest.
The home you purchase through Kentucky Housing must be the only residential property you own and you must occupy the home as your principal residence while the loan debt is still outstanding.
To qualify, you must meet KHC’s regular MRB income guidelines, make a down payment or qualify for down payment assistance, be a US citizen or legal alien and have an acceptable credit history.
Some MRB KHC loans are subject to a federal recapture tax. Recapture is a federal income tax that the borrowers may have to pay if they have considerable growth in their income and they sell or transfer their KHC-financed home within 9 years. However, KHC has implemented a Recapture Tax Guarantee Program for all loans that close after October 1, 2006. The Recapture Tax Guarantee Program will reimburse homeowners if they are subject to pay the Federal Recapture Tax on their KHC mortgage loan upon the sale of their home.
Conventional
Insured by approved mortgage insurance company.
Minimum credit score of 660 or better.
Quick turnaround time, 20 percent down payment and no up-front or monthly mortgage insurance.
FHA
Insured by the Federal Housing Administration.
Down payments as little as 3.5 percent.
Can use DAP for 3.5 percent down payment requirement.
Upfront and monthly mortgage insurance.
Minimum credit score of 620.
VA
Guaranteed by the Veterans Administration for qualified military veterans.
No down payment if the property appraises for the sale price or greater.
Credit underwriting is flexible.
Minimum credit score of 620.
No monthly mortgage insurance payments.
RHS
Guaranteed by Rural Housing Services (RHS).
Home must be located in a rural area as defined by RHS.
No down payment if the property appraises for the sale price or greater.
Minimum credit score of 620.
GNMA Secondary Market
All GNMA KHC first mortgage loans are for a 30-year term at a fixed rate of interest.
The home you purchase through KHC must be occupied as your principle residence while the loan debt is outstanding.
To qualify, you must meet KHC’s GNMA income guidelines, make a down payment, or qualify for down payment assistance, be a U.S. citizen or legal alien and have an acceptable credit history.
FHA
Insured by the Federal Housing Administration.
Down payments as little as 3.5 percent.
Can use DAP for 3.5 percent down payment requirement.
Upfront and monthly mortgage insurance.
Minimum credit score of 620.
VA
Guaranteed by the Veterans Administration for qualified military veterans.
No down payment if the property appraises for the sale price or greater.
Credit underwriting is flexible.
Minimum credit score of 620.
No monthly mortgage insurance payments.
RHS
Guaranteed by Rural Housing Services (RHS).
Home must be located in a rural area as defined by RHS.
No down payment if the property appraises for the sale price or greater.
Minimum credit score of 620.
Two FHA Refinance Options
Credit qualifying Streamline Refinance and Rate/Term Refinance
Insured by the Federal Housing Administration
Cash back to borrower not to exceed $500
Upfront and monthly mortgage insurance
Minimum credit score of 620
Home Buyer Tax Credit
KHC’s Home Buyer Tax Credit is available through Mortgage Credit Certificates (MCC), which reduce the amount of federal income tax you pay, giving you more available income to qualify for a mortgage loan. MCCs are NOT mortgages. They are tax credits that put extra cash in your pocket each month, so you can more easily afford a house payment. That means fewer tax dollars will be withheld from your regular paycheck, increasing your take-home pay. The federal government allows every homeowner an income tax deduction for all the interest paid each year on a mortgage loan. But an MCC gives you a tax credit of 25 percent (not to exceed $2,000). You can still deduct the remaining 75 percent interest on your income taxes. A tax credit is not the same as a tax deduction. A tax deduction reduces the portion of your income that is taxed, so you pay less. A tax credit is a direct, dollar for dollar reduction in the total tax you owe. The MCC is effective for the life of the loan as long as you live in the home. If you sell your home in the first nine years of ownership, you may be subject to Federal Recapture Tax. One-time fee of $500 or reduced to $200 if through KHC’s GNMA Secondary Market First Mortgage Program. Not valid with MRB loan programs.
Special First Mortgage Loan Programs
The Lottery for Special Funding is opened once a year. The funds are allocated for persons meeting income and all MRB Guidelines. These limited funds are available, usually in July, on a first-come, first-served basis.
Guidelines
Must be a first time home buyer, unless property is located in a targeted county.
Interest rate fixed at 3.00 percent based on minimum ratios 29/41 percent.
Eligible households:
Single parents (at least one dependent under the age of 18 must live in the home.)
Households with a person who has a permanent disability and who receives some form of disability income (SSI, SSDI, Veterans Disability etc.).
Households where at least one of the home buyers is age 62 or older.
Gross Annual Household Income guidelines:
$28,000 for a household of 1 or 2 people; or
$33,000 for a household of 3 or more people.
All household occupants (18 years and older) with income must be included on loan and be credit ready.
Must use all but two months’ reserves of borrower’s own funds.
Existing or new construction property with a purchase price limit of $115,000
Zero Point Rate
Only FHA, VA and RHS – 620 credit score and AUS Approval
60 Day Lock
Kentucky Housing’s Regular and HOME DAP loan program may be used for down payment and closing cost assistance.
Applying for a Kentucky Housing loan is easy. Just contact one of our approved lenders near you and ask for a Kentucky Housing loan.
Down Payment Closing Cost Assistance
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.
Not Available – Hardest Hit Fund (HHF) DAP
Zero percent interest rate for first-time home buyers.
A non-repayable second mortgage for $10,000.
Forgiven after five years.
Home purchase must be located in Christian, Hardin, Jefferson, or Kenton counties.
New construction properties are not allowed.
Property has to have been previously occupied
Applicants must meet Secondary Market or MRB Income and Purchase Price Limits based on funding source.
Regular DAP
Purchase price up to $301,294 with Secondary Market or $271,164 with MRB.
Assistance in the form of a loan up to $6,000 in $100 increments.
Repayable over a ten-year term at 5.50 percent. A DAP of $6,000 over ten years at 5.50 percent interest would equal a payment of $65.12.
Available to all KHC first-mortgage loan recipients.
Affordable DAP
Purchase price up to $301,294 with Secondary Market or $271,164 with MRB.
No liquid asset review and no limit on borrower reserves.
Specific credit underwriting standards may apply to down payment programs.
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
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.
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