Kentucky Mortgage Insurance requirements for Kentucky homebuyers for FHA and Fannie Mae Conventional loans.
When it comes to Kentucky home loans, understanding the differences between Kentucky FHA and conventional mortgage insurance is crucial for potential homebuyers. This article will break down the key distinctions in terms of credit score requirements, down payments, upfront premiums, monthly premiums, duration, and cancellation policies.
Kentucky Mortgage Credit Score Requirements
Kentucky FHA Mortgage Insurance
- Minimum credit score: 580 for a 3.5% down payment
- Scores between 500-579 may qualify with a 10% down payment
Kentucky Conventional Mortgage Insurance
- Typically requires a minimum credit score of 620
- Higher scores often result in better rates and terms
Kentucky Mortgage Down Payment Requirements
FHA Mortgage Insurance
- Minimum down payment of 3.5% with a credit score of 580 or higher
- 10% down payment required for credit scores between 500-579
Conventional Mortgage Insurance
- Typically requires a minimum of 3% down payment
- Lower down payments often result in higher insurance premiums
Upfront Premiums for Kentucky Mortgage Loans
FHA Mortgage Insurance
- Upfront Mortgage Insurance Premium (UFMIP) of 1.75% of the loan amount
- Can be financed into the loan
Conventional Mortgage Insurance
- No upfront premium required
Monthly Premiums for Kentucky Mortgage Loans
FHA Mortgage Insurance
- Annual MIP (divided into monthly payments) ranges from 0.45% to 1.05% of the loan amount, depending on the loan term and loan-to-value ratio
Conventional Mortgage Insurance
- Monthly premiums vary based on credit score, down payment, and loan-to-value ratio
- Generally range from 0.17% to 1.86% of the loan amount annually
Duration for Kentucky Mortgage Insurance
FHA Mortgage Insurance
- For loans with an LTV greater than 90% at origination, MIP lasts for the life of the loan
- For loans with an LTV of 90% or less, MIP lasts for 11 years
Conventional Mortgage Insurance
- Typically required until the loan-to-value ratio reaches 78% through normal amortization
Cancellation Policies
FHA Mortgage Insurance
- Cannot be canceled for loans originated after June 3, 2013, if the initial down payment was less than 10%
- For down payments of 10% or more, MIP can be canceled after 11 years
Conventional Mortgage Insurance
- Can be canceled when the loan-to-value ratio reaches 80%, either through home value appreciation or additional payments
- Automatically terminates when the loan balance reaches 78% of the original value
Conclusion
While FHA mortgage insurance offers more lenient credit requirements and lower down payment options, it often comes with higher costs and longer durations. Conventional mortgage insurance, though potentially more challenging to qualify for, offers more flexibility in terms of cancellation and can be less expensive in the long run for borrowers with good credit. Prospective homebuyers should carefully consider their financial situation and long-term goals when choosing between FHA and conventional loans.
Joel Lobb Mortgage Loan Officer
American Mortgage Solutions, Inc.10602 Timberwood Circle
Louisville, KY 40223
Company NMLS ID #1364
Text/call: 502-905-3708
email: kentuckyloan@gmail.com
http://www.
NMLS ID# 57916, (www.nmlsconsumeraccess.org).