credit scores FHA loan – Page 3 – Kentucky FHA Mortgage Lender

Kentucky FHA Loans in the State of Kentucky for 2022

Advantages of Kentucky FHA Mortgage Loans

You can often make a down payment as low as 3.5 percent down to a 580 credit score
You can finance a home with a 500 credit score with 10% down payment.
Kentucky FHA loans are assumable meaning that if you have a good rate on your current mortgage and the potential buyer of your home meets FHA guidelines, then he can assume your low rate mortgage
Kentucky FHA loans offer streamline refinancing without credit score minimums, verification of income, and no appraisals to refinance to a lower rate making it easier to qualify.
Kentucky FHA loans offer flexible terms when it comes to previous bankruptcy or foreclosures. 2 years removed from Chapter 7 with reestablished
credit, or if a Chapter 13, one year in the payment plan is eligible for FHA financing.
Foreclosures on a past home. FHA will finance a home 3 years removed from the sale date of your foreclosure property
30 year fixed rate mortgage with usually the best going rates on government insured loans like FHA, VA, USDA etc.
No prepayment penalty on Kentucky FHA loans.
Higher debt to income ratio requirements when compared to Conventional loans because most Fannie Mae Conventional loans cannot have a higher debt to income ratio than 45% on the back-end
You can make an FHA loan anywhere in the state of Kentucky with no geographical restrictions.
Will allow for down payment assistance and grants for borrowers minimum down payments in the State of Kentucky through the likes of KHC, Welcome Home Grant, and Kentucky Housing Down Payment Second Mortgage loans.
Kentucky FHA loans allow for unoccupied cosigner. For example, lets say you have a daughter that is getting ready to graduate college and does not have the income or credit history established yet to buy a home. FHA allows a family-member to co-sign for them to buy a home and you don’t have to occupy as primary residence. Note, FHA co-singers are not allowed to makeup for some that has bad credit, because they will take the lowest credit scores of both applicants. FHA usually allows for co-singers lack of income purposes only.
Can usually close within 30 days just like a regular conventional mortgage. No extra time to close an FHA loan in Kentucky versus other secondary market loans like VA, USDA, Fannie Mae.
You can use the FHA loan over and over. You can actually have two FHA loans open at the same time, but it gets tricky on this. Call or text me with more info if you have an FHA loan currently and would like to use FHA Financing again.
FHA loans aren’t just for first time home buyers in Kentucky.

Disadvantages of Kentucky FHA Mortgage Loans

There are loan limits in the State of Kentucky on FHA Mortgage loans. The maximum FHA loan in the state of Kentucky is $$420,680 for 2022. So if you were needing to finance a loan over this amount, you would need to look at doing a Conventional loan with the updated 2021 Kentucky State Loan Limits for a Fannie Mae loan being $647,250
If buying a condo in Kentucky, FHA requires the condo development be FHA approved. There is a >>>list here of Kentucky FHA approved condos here.
Seller must have own the home for 90 days before you can make an offer on the home. This comes into play where the seller bought the home as an investor and rehabbed the property and wants to sell for a quick profit. FHA mandates seller must maintain for 90 days before you can write up an offer on it. Also called FHA Flipping Policy. Read more here
There is mortgage insurance. This is one of the biggest disadvantages for FHA loans. But as I tell most people, nobody rarely has a loan for 30 years, so if it meets your payment and your cash to close requirement, I tell people to go with it because it can be refinanced down the road and you are getting one of the lowers 30 year fixed rates out there. Both upfront and monthly mortgage insurance premiums you have to pay HUD/FHA. These premiums change whenever FHA/HUD replenish their insurance pool to pay claims from defaults, but currently the FHA upfront mortgage insurance premium is 1.75% and monthly is .85% and .80% of the loan amount. If you happen do a 15 year term or shorter, the mortgage insurance is cheaper monthly with .45 and .70 respectively each month. The upfront mortgage insurance is the same for a 30 year and 15 year at 1.75%
FHA Mortgage insurance can be on the loan for life of loan. This is a recent change made in 2016 when FHA lowered there premiums for upfront and monthly mi premiums, but made the mortgage insurance for life of loan for some FHA loans.
If you put down more than 10% on the loan, or have at least 10% equity in the home for a refinance, you only have to pay mortgage insurance for 11 years before it automatically falls off.
Obviously you can refinance out of an FHA loan at anytime, since it does not a prepayment penalty, and you can potentially get a refund of your upfront mortgage insurance if paid off within 3 years on sliding scale.
I have incorporated some charts below to illustrate the different Kentucky FHA Mortgage Insurance premiums to explain it better.
The upfront mortgage insurance is usually financed into the loan, so it will look like you are borrowing more than the standard 3.5% down payment because this is financed into the loan. Some borrowers elect to pay it out of pocket upfront, but I have never seen this done in my 20 years of doing FHA loans in the State of Kentucky
Kentucky FHA Loans Greater Than 15 Years MIP Chart

👇

Base Loan Amt.	LTV	Annual MIP
≤$625,500	≤95.00%	80 bps (0.80%)
≤$625,500	>95.00%	85 bps (0.85%)
>$625,500	≤95.00%	100 bps (1.00%)
>$625,500	>95.00%	105 bps (1.05%)

Kentucky FHA Loans Less Than or Equal to 15 Years MIP Chart👇

Base Loan Amt.	LTV	Annual MIP
≤$625,500	≤90.00%	45 bps (0.45%)
≤$625,500	>90.00%	70 bps (0.70%)
>$625,500	≤78.00%	45 bps (0.45%)
>$625,500	78.01% – 90.00%	70 bps (0.70%)
>$625,500	>90.00%	95 bps (0.95%)

When can I get the FHA mortgage insurance off my Mortgage Loan? See chart below 👇👇

Image result for fha cancellation of mortgage insurance chart kentucky

Appraisals. On an FHA appraisal, the FHA appraiser has to turn on the utilities to make sure they are in worked order when he gets there. This is different that Conventional loan appraisals. A lot of realtors or buyers think that FHA loans are harder due to appraisals, but honestly, they’re really not. FHA puts these minimum HUD standards in place to make sure the home is in good working order and SAFE to live in. I.e.is there any lead based paint or chipping paint that could lead to poisoning It is all about Safety with FHA and HUD on these appraisals. The value is determined just like a regular Conventional, USDA, VA appraisals whereas they compare the house to 3 recent homes sold in the area to get a value.
Some lenders don’t offer FHA loans due to their complexity and sale on the secondary market, so if you call a local lender in Kentucky and they don’t offer FHA loans, the reason is usually they don’t have the team in place to do them or don’t want to do them due to lack of experience on the secondary government market.
Government Liens. FHA will not be an option for you usually if you have unpaid federal tax liens, delinquency on federal backed-government loans, or a claim with social security etc. FHA loans are ran through aCAVIRS alert system to check to see if you are delinquent on any federal oblation. If so, this swill stop you until you can clear the CAVIRS alert system. For example, I did a loan for a buyer that had a delinquent federal debt with his student loan that happened over 14 years old. It was off the credit report and title search, so I had to switch to a conventional loan to make the home loan work.
FHA loans are not good for second homes or investment properties. FHA loans are mainly for single family residence 1-4 unit, that are going to occupied primarily as main home.

In summary, FHA loans have few drawbacks other than the mortgage insurance in my opinion. It is a great first time home buyer program or borrowers with past credit problems to get into a house of their own with very little out of pocket, at a low 30 year fixed rate, and no prepayment penalty

Questions about qualifying for a FHA loan in Kentucky . Give me text, call or email below. Love to help you out on your next home or refinance in Kentucky

Read more below about specific FHA Loans in Kentucky.👇👇👇

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

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.

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KENTUCKY FHA MORTGAGE GUIDELINES FOR 2020

FHA – 620+ Min Fico Approve Eligible / NO OVERLAYS-NONE!
FHA – 620+ FICO for PURCH, RT, C/O including Flips & High Balance
FHA – 640+ REFERS OK!—no overlays -u/w directly to 4000.1
FHA – 640+ MANUALS up to 50% DTI (with 2 comp factors)
FHA – 620+ No DTI CAP – Follow AUS Findings!!! (with approved eligible)
FHA – 620+ NO Minimum Credit History or Trades with AUS Approval!
FHA – 620+ – No VOR Unless Required by DU Findings!
FHA – Transfer appraisals from ANY lender/AMC OK!
FHA – ORDER YOUR APPRAISAL FROM 20+ AMCs YOU CHOOSE!
FHA – Collections – HUD Guides Apply –
FHA – Mortgage Lates OK if AUS Approved!!!
FHA – ESCROW STATE – Non Purchasing Spouse derogs ignored – only affects DTI
FHA – Borrower w/ Work Permits, Non-Resident Alien OK!
FHA – 1 Day off Market for Cashout Refi! – Must be off market before date of loan application!
FHA – Rental Income on 2-4 units ok FTHB
FHA – STREAMLINE – 620 Minimum
FHA – Streamline – 620 Score – No Appraisal, No Income, No AVM, No Credit Qualifying!!!
FHA – Streamline -Investment and 2nd Homes OK!
FHA – Streamline – Mtg only on subject property only!

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Kentucky FHA Home loan programs for people with bad credit

Score Requirement on Kentucky FHA Loans for people with bad credit

Lowers Minimum Credit Score Requirement on Kentucky FHA Loans

Kentucky FHA Home loan programs for people with bad credit

FHA loans are designed to make housing more affordable with lower down payment requirements than conventional loans on purchases and less home equity requirements on refinances. Less stringent qualification guidelines and the security of a government-insured loan makes FHA a popular choice for consumers.

Kentucky FHA Loans with 580 Credit scores and – Low Down Payment – 3.5% which can be gifted from relatives or borrowed off one’s retirement account. If your scores is between 500-579, 10% down needed for home loan and subject to underwriting approval.

Low down payment
500 minimum credit score from 10% down, to 580 above credit score with 3.5% down payment
Can be used with Grants for Down payment through Eligible Sources
FHA max loan – $336,750 in the State of Kentucky
FHA approved condos eligible
Entire Down payment can be a gift, a down payment assistance program or grant funds
Seller can pay 6% of purchase price toward closing costs

Quick guide to checking your credit score for Kentucky FHA loans

If you’re just starting to shop for home mortgages, it pays to know if banks think you have bad credit or not. Here’s how FICO, the main credit score provider in the U.S., breaks down credit scores:

800-plus: Exceptional
740-799: Very good
670-739: Good
580-699: Fair
579 and lower: Poor

Kentucky FHA loans

Kentucky FHA Loan Details
Credit score required	500, but banks have minimum underwriting standards
Down payment required	Credit score between 500-579: 10 percent Credit score above 580: 3.5 percent
Upfront financing fee	1.75 percent, which can be financed
Mortgage insurance	0.45 to .85 percent
Mortgage limits	Generally, $336,766 for single-family units, but it varies by location and you should check the limits in your area
Fine print	Mortgage insurance premiums are paid for the life of the loan, except when putting 10 percent or more down. If your down payment is less than 20 percent but 10 percent or more, you must have mortgage insurance for 11 years.

Quick take

If you have bad credit, an Kentucky FHA loan offers a more accessible mortgage. While credit standards vary by lender, you may qualify for the Kentucky FHA loan with a credit score as low as 500. With a credit score above the 580 threshold, you may qualify for the 3.5 percent down payment.

Unfortunately, an Kentucky FHA loan can be expensive because of mortgage insurance fees. In addition to paying ongoing mortgage premiums for the life of the loan, you’ll have to pay a 1.75 per

Pros:

3.5 percent down payments (for those above the 580 credit-score mark)
Credit scores as low a 500
Can buy up to four units

Cons:

1.75 percent upfront mortgage premium
Ongoing mortgage insurance for life of loan at .85% and .80%
Smaller loan limits $314,000 in Kentucky

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Text/call: 502-905-3708

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

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Kentucky FHA Mortgage Qualifying Guidelines

The FHA is actually not the lender. They insure the loans that are issued by FHA-approved lenders. FHA loans are gear more toward borrower’s with less than 20% down payment and credit issues in the past.

Qualifying for a FHA Loan Mortgage In Kentucky

Credit Scores and Down Payment Percentages – Each year, the rules for qualifying for these loans changes. For 2020, applicants need a minimum credit score of 580 in order to get the low down payment, which is 3.5 percent.

For those whose credit score is less than 580, they will have to come up with 10 percent for their down payment. This does not guaranteed a mortgage loan approval if you have the certain credit scores, just a the minimum required.

Compensating Factors for FHA loan Approval

The credit score is just one part of the story. The FHA will also evaluate the borrower’s bankruptcies, foreclosures, prior payment history on other debts. They will also want information on difficulties that kept the borrower from making payments on other debts in the past.

Negative strikes against qualifying for the loan include not having any credit history or a bankruptcy.

Someone with a bankruptcy will have to wait for two or more years after their bankruptcy before applying for an FHA-insured loan.

If you have late payments on debt obligations, it is best to wait until you have had a full year of on-time payments before you apply for a FHA-insured loan.

If you have had a foreclosure in the past, you may still be able to get a FHA-insured loan three years after your foreclosure. The lender will be looking at the circumstances behind the foreclosure.

If you have had any civil judgement against you for money owed, collections actions or unpaid/unresolved federal debt, the FHA-approved lender will be required by the FHA to establish that all of these outstanding issues are resolved or paid before you can go through closing.

Watch out for student loans if they are delinquent because sometime this can cause a lien against you in the form of a CAVIRS Alert with HUD

As you can see, many types of borrowers who would not be eligible for a traditional mortgage, or who would face exorbitant interest rates, will be able to qualify for a FHA-insured loan at attractive interest rates.

Employment and Income for a Kentucky FHA Loan

You must have an employment history that is steady for the last two years. Does not have to be same employer.

Your income has to be verifiable in some way, whether that be through pay stubs, your income tax returns. No bank statements or cash deposits , or undocumented income can be used for income qualifying purposes.

Image result for Employment and Income for a Kentucky FHA Loan

Debt-to-Income Ratio Requirements –

Depending on the automated underwriting system from Desktop Originator, your Debt-to-income ratio is the percentage of your income before taxes that you spend on monthly debt.

Taking into account the proposed mortgage payment as well as the other debts, the FHA requires that these debts all total less than 43 percent of your pretax income in order to qualify for the loan.

If your debt load is too high, you will struggle to pay all of your bills and mortgage expenses and care for yourself and your family.

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Property Requirements for a Kentucky FHA Loan

It must be the place where you intend to reside. You must move into the home within 60 days of closing the loan. The home cannot be an investment. There will be an inspection to ensure that the home is safe and habitable.

It is really not too hard to pass FHA loans and the appraisal process.

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Pros of FHA Loans –

New homebuyers and those who have lower credit scores or who have other blemishes on their credit history will often qualify for FHA-insured loans.
Even though these borrowers are considered “subprime” to a traditional lender, they will receive attractive interest rates through the FHA-insured mortgage programs.
The down payments required from borrowers are lower than those required by traditional mortgage lenders.
These loans can be combined with other forms of public assistance for lower income or new borrowers so that the borrower will not need to come up with a down payment of any kind.

Cons of FHA Loans –

Since the FHA is not actually the lender, and you have to go through FHA-approved lenders, you may not qualify due to stricter standards that the lender has for the loan.
Because you are not paying 20 percent as a down payment, the FHA requires two mortgage insurance premiums to be paid. One is an upfront premium that is 1.75 percent of the loan amount. Lenders often will allow you to make that mortgage insurance premium a part of your loan. The second is an annual mortgage insurance premium that is .45 percent or 1.05 percent. This premium is paid monthly.

FHA FINANCING

What credit score do I need to qualify for a Kentucky FHA loan is one of the most common questions I hear from Kentucky homebuyers?

The short answer is you must have a minimum credit score of 500 to be eligible for an FHA loan in Kentucky. Anything lower than 500 disqualifies you from consideration for an FHA loan.

There are two sets of credit score requirements for a Kentucky FHA Loan

One important thing to understand is that the Federal Housing Administration (FHA) does not lend money directly to home buyers. You will fill out an application with a regular lender just as you would if you were applying for any other type of mortgage. What the FHA does is ensure your loan to help protect the lender in case you default.

You will be required not only to meet the FHA guidelines to qualify for a loan but also meet any additional qualifications required by the lender. This means there are two sets of requirements you have to meet with your credit score.

1. The first set of requirements comes from the Department of Housing and Urban Development (HUD). HUD oversees the FHA and determines what a borrower’s minimum eligibility requirements will be to obtain an FHA loan.

2. The second set of requirements comes from the mortgage lender. The mortgage lender has the right to add its requirements to those mandated by HUD.

What HUD requires of borrowers to be eligible for an FHA loan

The HUD Handbook 4000.1 includes the official guidelines when it comes to the FHA mortgage insurance program.

It states that in 2020 the Kentucky FHA borrowers with credit scores of 580 or higher are eligible for a 96.5% loan with 3.5% down.

Borrowers with credit scores from 500 to 579 are eligible for a 90% loan with 10% down.

Individuals with credit scores below 500 are not eligible for the FHA program.

What lenders may require of borrowers to be eligible for an Kentucky FHA loan

Lenders have the right to add requirements over and above the minimum requirements of HUD. These additional requirements are called overlays. Your lender may or may not require them.

This is not something that should come as a surprise to you, however. Requiring a credit score of 580 to 620 is not unusual. In addition to your credit score, you must have a manageable debt level that lenders are comfortable with and enough income to repay your loan.

What credit score do I need to qualify for FHA loan?

Each month Ellie Mae, the software company processing more than ⅓ of America’s mortgage loans, publishes an insight report for mortgage trends and standards. One of the things they track is average credit scores. The following is their report for November 2019 which shows what percentage of successful borrowers fall into what credit score ranges.

500 – 549    2.14%
550 – 599    5.20%
600 – 649    23.01%
650 – 699    34.74%
700 – 749    21.88%
750 – 799    10.87%
800+    1.89%

These percentages show that the majority of borrowers who successfully qualify for FHA loans fall into the 600 to 799 range. While it is true that some successfully qualify in the low range of 500 to 599, you have a much better chance of being approved for a loan with good terms and a low down payment if you fall into the higher range.

For your free credit report and analysis call us today at 502-905-3708 or email us at kentuckyloan@gmail.com