Kentucky FHA Mortgage Guidelines
In “100% Financing Zero Down”
FHA Handbook 4000.1 Updates
Administration (FHA) Single Family Housing Policy Handbook 4000.1. These updates are effective September 30, 2016 and
Clarification that an Upfront Mortgage Insurance Premium (UFMIP) refund calculation applies even if original UFMIP was
not financed.
Mortgage Debt Not Included in Credit Report: Clarification that a manual downgrade is not required when there is no history of late payments, as detailed below.
o Not currently delinquent; and
o No 30 day late payments within 12 months of the case number assignment date; and
o No more than 2 x 30 day late payments within 24 months of the case number assignment date.
A link has been added in the FHA Product Description from Mortgage Payment History requirements to “Credit History
Requirements for Manually Underwritten Loans.”
Appliances that add contributory value must be operable.
Mechanical components and utilities: The appraiser must report the utility, safety, and capacity of the mechanical systems.
The appraiser must observe and operate all applicable mechanical systems and utilities. In conjunction with this guidance,
existing FHA Handbook guidance on the following topics will be added:
o Electrical System
o Heating and Cooling
o Plumbing
o Utilities
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For commitments issues on or after October 1, 2016:
USDA charges the lender, who can pass the charge to the borrower, a one-time up-front cost, which is known as a Guarantee Fee. The Guarantee Fee can be financed in addition to the maximum base loan amount. The Guarantee Fee is calculated as follows as of October 1, 2016:
PURCHASE TRANSACTION CALCULATION:1.00% of the TOTAL loan amount for commitments issued on or after 10/1/16.
Calculation: Base loan amount divided by .99 = Total loan amount (round down to nearest dollar). Total loan is then multiplied by 1.00% to get the amount of the guarantee fee.
A Guarantee Fee & Annual Fee (monthly) Calculator can be found on the USDA training resource website.
CALCULATION FOR REFINANCE TRANSACTIONS:1.00% of the TOTAL loan amount for commitments issued on or after 10/1/16.
Calculation: Base loan amount divided by .99 = Total loan amount (round down to nearest dollar). Total loan is then multiplied by 1.00% to get the amount of the guarantee fee.
A Guarantee Fee & Annual Fee (monthly) Calculator can be found on the USDA training resource website.
ANNUAL FEE:
All loan transactions will include an annual fee of .35%REPAYMENT RATIOS REFINANCE
FOR BOTH GUARANTEED LOAN TO GUARANTEED LOAN AND DIRECT LOAN TO GUARANTEED LOAN:
USDA – GUS Approved
USDA – Manual Underwrite – Must meet USDA guideline maximum debt ratios of 29 & 41%–No Exceptions Allowed.TERM OF NEW LOAN
FOR BOTH GUARANTEED LOAN TO GUARANTEED LOAN AND DIRECT LOAN TO GUARANTEED LOAN:
TERM OF THE NEW LOAN WILL BE A 30 YEAR FULLY AMORTIZED FIXED RATE MORTGAGE ONLY.INTEREST RATE
Interest rate of the new loan must be a fixed rate.
The interest rate must be lower than the existing loan to be refinanced.
Funded buy down accounts are not permitted.
HOUSEHOLD INCOMETotal adjusted income for the household cannot exceed the moderate level for the area as established in HB-1-3555.
LOAN SECURITY
Loan security must include the same property as the original loan.
The security property must be owned and occupied by the applicants as their principal residence.
RURAL / NONRURAL AREASSFHGLP refinance loans are permissible for properties in areas that have been determined to be non-rural since the existing loan was made.
PROPERTY VALUATION
The value of the new mortgage loan request must be supported by a new appraisal. The loan amount cannot exceed the present market value plus the one-time 2 percent guarantee fee. The new loan amount can include closing costs or lender fees if supported by market value.
INSPECTIONSThe lender must confirm the property meets or continues to meet the current requirements of HUD Handbook 4150.2 and 4905.1.
No further inspections or repairs required by Rural Development.
Lender may require inspections or repairs. Expenses related to inspections or repairs may not be financed.
NET TANGIBLE BENEFITEvery refinance
You can refinance your existing USDA Rural Housing Loan. See details below:
Can you refinance a Rural Housing Loan? The short answer is yes. See below for qualifying criteria
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Kentucky Housing Corporation’s (KHC) master commissioner sales or Foreclosure Sales
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