​Kentucky FHA vs ​Kentucky Conventional Mortgage Insurance: A Comprehensive Comparison

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.mylouisvillekentuckymortgage.com/

NMLS 57916  | Company NMLS #1364/MB73346135166/MBR1574

The view and opinions stated on this website belong solely to the authors, and are intended for informational purposes only. The posted information does not guarantee approval, nor does it comprise full underwriting guidelines. This does not represent being part of a government agency. The views expressed on this post are mine and do not necessarily reflect the view of my employer. Not all products or services mentioned on this site may fit all people.
NMLS ID# 57916, (www.nmlsconsumeraccess.org).

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Can a person have more than one Kentucky FHA loan?

Can You Have Two Kentucky FHA Loans at One Time?

FHA will not insure more than one Property as a Principal Residence for any Borrower, except as noted below. FHA will not insure a Mortgage if it is determined that the transaction was designed to use FHA mortgage insurance as a vehicle for obtaining Investment Properties, even if the Property to be insured will be the only one owned using FHA mortgage insurance.

Properties previously acquired as Investment Properties are not subject to these restrictions.

Listed below are the only circumstances in which a Borrower with an existing FHA-insured Mortgage for a Principal Residence may obtain an additional FHA-insured Mortgage on a new Principal Residence:

RELOCATION - A Borrower may be eligible to obtain another FHA-insured Mortgage without being required to sell an existing Property covered by an FHA-insured Mortgage if the Borrower is:
- relocating or has relocated for an employment-related reason; and
- establishing or has established a new Principal Residence in an area more than 100 miles from the Borrower’s current Principal Residence.

If the Borrower moves back to the original area, the Borrower is not required to live in the original house and may obtain a new FHA-insured Mortgage on a new Principal Residence provided the relocation meets the two requirements above.

INCREASE IN FAMILY SIZE - A Borrower may be eligible for another house with an FHA-insured Mortgage if the Borrower provides satisfactory evidence that:
- the Borrower has had an increase in legal dependents and the Property now fails to meet family needs; and
- the Loan-to-Value (LTV) ratio on the current Principal Residence is equal to or less than 75% or is paid down to that amount, based on the outstanding Mortgage balance and a current residential appraisal.
  
VACATING A JOINTLY-OWNED PROPERTY - A Borrower may be eligible for another FHA-insured Mortgage if the Borrower is vacating (with no intent to return) the Principal Residence which will remain occupied by an existing co-Borrower.

NON-OCCUPYING CO-BORROWER - A non-occupying co-Borrower on an existing FHA-insured Mortgage may qualify for an FHA-insured Mortgage on a new Property to be their own Principal Residence.

For additional information see Handbook 4000.1 II.A.1.b.iii.(A) at https://www.hud.gov/program_offices/administration/hudclips/handbooks/hsgh

All policy information contained in this knowledge base article is based upon the referenced HUD policy document. Any lending or insuring decisions should adhere to the specific information contained in that underlying policy document.

Joel Lobb
Senior  Loan Officer

(NMLS#57916)

American Mortgage Solutions, Inc.

10602 Timberwood Circle, Suite 3

Louisville, KY 40223

text or call my phone: (502) 905-3708
email me at kentuckyloan@gmail.com

The view and opinions stated on this website belong solely to the authors, and are intended for informational purposes only. The posted information does not guarantee approval, nor does it comprise full underwriting guidelines. This does not represent being part of a government agency. The views expressed on this post are mine and do not necessarily reflect the view of my employer. Not all products or services mentioned on this site may fit all people. NMLS ID# 57916, (www.nmlsconsumeraccess.org). Mortgage loans only offered in Kentucky.

All loans and lines are subject to credit approval, verification, and collateral evaluation and are originated by lender. Products and interest rates are subject to change without notice. Manufactured and mobile homes are not eligible as collateral.

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Mortgage Insurance Requirements for Kentucky FHA, VA, USDA and Fannie Mae Home Loans

When does PMI stop on Kentucky FHA, USDA, and Conventional Loans?

How Can I Get Rid of PMI? 

Does PMI stop on my loan once I am under 80%? Not on all loans!

When does PMI stop on my loan? Will PMI drop off? How can I remove PMI off my loan? Each type of mortgage loan treats PMI ( Private Mortgage Insurance) differently. See below for a quick summary!

Kentucky USDA Loans- PMI is for the life of the loan

PMI private mortgage insurance advantages & strategies for lower down payment and payment USDA has an annual fee which is similar to PMI. The annual fee is recalculated each year based on the new balance of the mortgage. The annual fee is currently only .35 which began October 1, 2016. The annual fee percentage on USDA loans stays for the entire 30 year term but because it is based on the annual mortgage balance. Therefore, the dollar amount decreases each year.

 

How to calculate monthly PMI for USDA loans: Loan amount x 1.0101% (USDA funding fee) x .0035 / 12 = monthly fee to include in the monthly mortgage payment.

Kentucky FHA Loan PMI often continues for the life of the loan, but depends!

FHA has an annual fee but the percentage varies depending on the LTV and the loan term. The monthly amount of PMI is recalculated each year based on the new balance of the mortgage and the PMI percentage.

The length of time that FHA PMI stays on the loan varies depending on the loan term and LTV as shown below:

 

 Loans over 90% LTV or more will pay the annual PMI for the complete term – On a purchase, this means less than 10% down

 Loans equal to or less than 90% LTV will pay the annual PMI for 11 years – Purchases over 10% down payment

Loan terms greater than 15 years < $625,500: effective 1/26/15

 > 95% LTV =.85 PMI

 -< 95% LTV =.80 PMI

 

Loan terms 15 years or less < $625,500:

 -< 90% LTV =.45 PMI

 > 90% LTV =.70 PMI

 

Even though FHA PMI currently continues for the life of the loan with less than 10% down payment, it is still a great loan for buyers. It offers low down payment, very competitive rates, and flexibility on many guidelines.

Kentucky VA home loans DO NOT have monthly PMI

 

VA loans do not have monthly PMI on any of the terms so you don’t have to worry about when it continues. Like all government loans, VA does have a funding fee which is an up-front fee that is customarily financed on top

of the loan amount and required by the VA. Although VA does allow the Veteran or even the seller pay this fee! Additionally, qualified, disabled Veterans may be exempt from the VA funding fee. Ask about the requirements re: the waiver of the funding fee.

Kentucky Fannie Mae or Freddie Mac conventional loans have PMI when the LTV is greater than 80% with either primary, second homes, or investment properties. To cancel PMI on a conventional loan, the following typically needs to be met. Here are some of the details to have PMI stop as clarified by the Consumer Financial Protection Bureau in August 2015.

 Borrower Requested PMI Cancellation: Once balance is paid to under 80% of the original price, the borrower may request that PMI be cancelled on the cancellation date. The cancellation date means either the date when the principal balance is first scheduled to reach 80% of the original value (lower of purchase price or

appraised value) for the property or date on which the principal balance reaches 80% of the original value based on actual payments. The borrower may make extra payments to move the cancellation date earlier.

 Automatic PMI Cancellation: Once balance is paid to under 78% of the original price, the lender must cancel the PMI on the termination date. The termination date is defined as the date which the principal balance is first scheduled to reach 78% of the original value for the property. Although before cancelling PMI, the loan must be current.

“Good payment history” means no payments 60 or more days past due within 2 years and no payments 30 or more days past due within 1 year of the later of the cancellation date or the date you submit a request for cancellation.

 

** PMI could be cancelled on a conventional mortgage if the following conditions are satisfied:

 You submit a written request for cancellation  Borrower must be current on the loan.

 You are current on the payments required by your loan and if requested and at the borrower’s expense, evidence satisfactory to the note holder that the value of the property has not declined below it’s original value (value at the time of the mortgage initiation), and that there are no subordinate liens on the property

Joel Lobb  Mortgage Loan Officer

American Mortgage Solutions, Inc.
10602 Timberwood Circle
Louisville, KY 40223
Company NMLS ID #1364

Text/call: 502-905-3708
fax: 502-327-9119
email: kentuckyloan@gmail.com

http://www.mylouisvillekentuckymortgage.com/

NMLS 57916  | Company NMLS #1364/MB73346135166/MBR1574

The view and opinions stated on this website belong solely to the authors, and are intended for informational purposes only. The posted information does not guarantee approval, nor does it comprise full underwriting guidelines. This does not represent being part of a government agency. The views expressed on this post are mine and do not necessarily reflect the view of my employer. Not all products or services mentioned on this site may fit all people.
NMLS ID# 57916, (www.nmlsconsumeraccess.org).