Kentucky Housing FHA Manual Underwriting Guidelines
See illustration matrix below for credit score and debt to income requirements
• Loan receiving a “Refer” finding; and
• Loan receiving an “Approve/Accept” finding but which have been downgraded to a Refer by the underwriter; and
• Loan receiving an “Approve/Accept” is downgraded to a “Refer”, loan must be a manual underwrite.
Minimum Credit Score
The minimum credit score for all FHA Manually underwritten loans is 620.
Maximum Qualifying Ratio Matrix Lowest Minimum Decision Credit Score Maximum Qualifying Ratios (%) Acceptable Compensating Factors
All manual underwritten loans require a VOR If paid to a management company or 12 months cancelled checks if from an individual.
If the borrower does not pay any rent a letter from the individual where the borrower is living rent free is required.
620 & Above Credit Score
31/43 Debt to Income Ratios
• No compensating factors required.
• Energy Efficient Homes may have stretch ratios of 33/45.
620 & Above Credit Score
37/47 Debt to Income Ratios
One of the following:
• Verified & documented cash reserves equal to at least three total monthly mortgage payments.
• New total monthly mortgage payment is not more than $100 or 5% higher than previous total monthly housing payment, whichever is less; and there is a documented twelve-month housing payment history with no more than one thirty-day late payment.
• Residual Income per VA chart.
620 & Above Credit Score
40/40 Debt to Income Ratios•
Borrower has established credit lines in his/her own name (open for at least six months) but carries no discretionary debt (monthly total housing payment is only open installment account and borrower can document that revolving credit has been paid off in full monthly for at least the past six months).
620 & Above Credit Score
40/50 Debt to Income Ratios
Two of the following:
• Verified & documented cash reserves equal to at least three total monthly mortgage payments.
• New total monthly mortgage payment is not more than $100 or 5% higher than previous total monthly housing payment, whichever is less; and there is a documented twelve-month housing payment history with no more than one thirty-day late payment.
• Verified and documented significant additional income that is not considered effective income and likely to continue (part-time or seasonal income verified for more than 1 year but less than 2 years). The income if it were included in gross effective income is sufficient to reduce the qualifying ratios to not more than 37/47.
• Residual Income per VA chart.
Mortgage Loan Officer
Text/call: 502-905-3708
email:kentuckyloan@gmail.com
Kentucky Housing- KHC Loan Programs
Kentucky Housing Corporation (KHC)
The Kentucky Housing Corporation provides purchase financing funds for qualified buyers in Kentucky who have not owned their own home in the most recent three years or who buy in defined, Target Areas. The KHC program interest rate is typically below market and may be used with Conventional, FHA, VA or RHS loans. Down payment assistance may also be available from KHC. Household income limits and price limits apply. We were the first lender to be delegated by KHC to underwrite loans for approval and closing and are the Top Lender for KHC.
•All 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 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 Kentucky Housing 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.
•No monthly mortgage insurance payments.
Mortgage Credit Certificates (MCC)
A Mortgage Credit Certificates (MCC) reduces 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.
KENTUCKY HOUSING CORPORATION
Louisville Kentucky Mortgage Loans 
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