Can you buy a house in Kentucky with Bad Credit?

Buying A House with Bad Credit in Kentucky

When in comes to buying a house in Kentucky and getting approved for a mortgage loan a lot of buyers will have to confront their past credit issues. Credit, along with income, work history, and assets determine if you qualify for a mortgage loan. 

Below I will address the main issues you have to address when it comes to getting approved for a mortgage with past credit problems. 

 Mortgage late payments: One late payment in the last 12 months is permitted so long as it can be explained and fully documented if necessary.

• Foreclosure: Thirty-six months from the date of the foreclosure until eligibility to repurchase using the 3.5 percent down payment FHA Loan, 48 months for VA Loans (no money down required), seven years no matter the down payment on a conventional type.

• Short sale: Thirty-six months from the date of the short sale until eligibility to repurchase using the 3.5 percent down payment FHA Loan, 24 months with the VA, 24 months on a conventional money loan with a minimum down payment of 20 percent.

Bankruptcy: Chapter 7 (Chapter 13 is less common), 24 months from the date of discharge until eligibility to repurchase using the 3.5 percent down FHA Loan, 48 months on VA Loans (still no money down required),  48 months on conventional no matter the down payment. All mortgage companies have different thresholds of risk appetite. For example, the FHA (Federal Housing Administration) has no credit score requirement. Why, then, do lenders have a minimum credit score requirement of 620 for an FHA Loan? Unbeknownst to the majority of home buyers, many mortgage companies have a secret ominous business strategy.

Enter “investor overlays.” 
Investor overlays are adjustments to guidelines and/or pricing created in favor of the mortgage company. This is exactly why one lender can do the loan, and another lender cannot do the loan in some instances.
Tip: every mortgage lender has investor overlays, it’s the nature of how mortgage companies operate, key is work with the lender whose overlays are minimal.

Timing

Typically speaking, if you want to get a mortgage after bankruptcy you’ll need to allow time to pass. For conventional mortgages you’ll need to wait four years after Chapter 7 bankruptcy or two years after Chapter 13 bankruptcy. But there are some other mortgage options that require a shorter waits.

Credit Scores 

580 to 620 is the bottom score (again with few exceptions) that lenders will permit. Below a 620, then you have to look at doing a FHA loan or VA loan if you are a veteran. Even at 620, people consider you a higher risk that other folks and are going to penalize you or your borrower with a more expensive loan. 720 is when you really start to get in the “as a lender we love you” credit score. 760 is even better.

 Watch your credit scores carefully. You have three credit scores, and the lender will take your middle score. For example, let's say you have a 590 on Transunion, 679 on Experian, and a 618 on Equifax. Then your middle qualifying credit score will be 618 credits score.

If you absolutely cannot get your credit scores up to 620, then FHA will be a good option for you. FHA states that if your fico credit score is 580 or above, they will allow for a 3.5% down payment, and if below 580, you will need 10% down payment.

There are a lot of mortgage lenders that will not go below 580 to 620 range, so keep that in mind when you are shopping for a mortgage lender, because they create credit overlays.

FHA Mortgage

Two years after your Chapter 7 bankruptcy discharge you may apply for an FHA loan. If you filed Chapter 13 bankruptcy, then you’ll only need to wait until you’ve made twelve months of satisfactory payments, and you’ll need to get the approval of the bankruptcy trustee. But if you want to be given serious consideration, you’ll need to provide a clear explanation for why you filed bankruptcy. For example, maybe you filed Chapter 13 bankruptcy because you had a medical emergency and was unable to pay your medical bills.

VA Mortgage

If you’re a veteran, you can get a VA mortgage two years after your bankruptcy discharge. This VA application process can be challenging, but in some ways it’s more lenient since post-bankruptcy credit issues such as a foreclosure won’t restart the 2-year waiting period. However, credit issues after bankruptcy might affect your interest rate, so take care to keep your credit as clean as possible.

USDA Mortgage

If you live in a rural area, you may qualify for a USDA mortgage three years after your bankruptcy discharge. It’s important to note that while the USDA provides loans to rural residents it’s only for property that will serve as the borrower’s primary residence. The USDA will not finance the purchase of income property or a vacation home.

As you prepare to apply for a mortgage after bankruptcy, keep in mind that the mortgage lender will take into account the totality of your financial situation—your finances, credit history, credit score, and any extenuating circumstances

Joel Lobb  Mortgage Loan Officer

EVO Mortgage
911 Barret Ave, Louisville, KY 40204

1 -  Email - kentuckyloan@gmail.com 

2.   Call/Text - 502-905-3708

https://www.mylouisvillekentuckymortgage.com/2010/10/get-approved-for-mortgage-or-home-loan.html

NMLS 57916  | Company NMLS#173846

Bankruptcy, Foreclosure, Short-sale for Kentucky Conventional, FHA, VA, Mortgage Loan Guidelines

Buy a Home Again After Foreclosure Short Sale or Bankruptcy FHA Conventi...

What Is a Short Sale for Mortgage Loan in Kentucky Mean?

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• Short Sales (15)
• turn-down for mortgage (1)
• bad credit (12)
• Bankruptcy (14)
• bankruptcy Fannie Mae conventional (2)
• bankruptcy USDA mortgage (4)
• bankruptcy Va mortgage (4)

How long do you have to wait to buy a house again in Kentucky after a Bankruptcy or Foreclosure?

Joel Lobb

Senior Loan Officer

(NMLS#57916

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). 

Fannie Mae Waiting period for Foreclosures, bankruptcies, and short sales for a new mortgage loan approval

 CONVENTIONAL FANNIE MAE KENTUCKY LOANS 

Derogatory Item	Waiting Period
Foreclosure	Home given back to the bank – No owner participation �         7 years from date foreclosure completed and transferred back to bank – No extenuating circumstances * �         Extenuating circumstances - 3 years from date foreclosure completed and transferred back to bank with 10% down.  Primary home purchase and rate and term refinance only. No second homes or investments. Qualifying extenuating circumstances are death or well documented extended illness.
Short Sale Deed in Lieu of Foreclosure	New rule - started August 16. 2014 Short Sale = Home sold but sales price less than owned Deed in Lieu = Home returned to lender in exchange for forgiving loan �         4 years from date sale closed and transferred to a new owner or transferred back to bank
Bankruptcy – Chapter 7	Debts are discharged through BK, client does not pay any debts owing �         4 years from discharge date �         2 years from discharge date possible with extenuating circumstances *
Bankruptcy – Chapter 13	Debts are paid back on a monthly scheduled payment plan �         2 years from discharge date �         4 years from dismissal date
Bankruptcy AND Foreclosure House INCLUDED in bankruptcy	New rule - started August 16, 2014Bankruptcy AND foreclosure, with home foreclosed on included in bankruptcy. Waiting period is based on bankruptcy discharge date, not foreclosure date, regardless of how long after the bankruptcy the official foreclosure occurred. Fannie Mae only

-- 

Joel Lobb
Senior  Loan Officer

(NMLS#57916)

American Mortgage Solutions, Inc.

10602 Timberwood Circle, Suite 3

Louisville, KY 40223

 phone: (502) 905-3708

 Fax:     (502) 327-9119

kentuckyloan@gmail.com

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Kentucky VA Mortgage Guidelines after a bankruptcy, foreclosure, short sale.

Kentucky VA Mortgage Guidelines after a bankruptcy, foreclosure, short sale. 

2 years completion date needed after a short-sale, foreclosure, or deed-in lieu of foreclosure.

If extenuating circumstances exist – 12 months from completion date with re-established credit
Note: If the occurrence was on a  Kentucky VA loan, the veteran may not have full entitlement available for the new loan.

2  year completion needed after a Chapter 7 bankruptcy
If extenuating circumstances exist – 12 months from discharge or dismissal date with re-established credit.

If it was a Chapter 13 Bankruptcy, a minimum of 12 months of payments have been made, all payments have been paid satisfactorily and Trustee or Bankruptcy Judge approval of new mortgage loan.

Joel Lobb
Senior  Loan Officer

(NMLS#57916)

 phone: (502) 905-3708

 Fax:     (502) 327-9119

kentuckyloan@gmail.com

 Company ID #1364 | MB73346

http://mylouisvillekentuckymortgage.com/

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FHA Mortgage Guidelines for a Louisville Kentucky FHA Mortgage

FHA expands mortgage backing to the once bankrupt | 2013-08-16 | HousingWire.

FHA Mortgage Guidelines for a Louisville Kentucky FHA Mortgage

FHA has issued 3 mortgagee letter out this week, with big changes coming on October 15th! FHA will now allow serious job loss or income reduction (20% reduction in income)to be counted as an extenuating circumstance. Buyer might be eligible to purchase a new home after a 12 month waiting period with excellent re-established credit and documentation of income loss and credit counseling. Stay tuned! More info to come but this will certainly help get more buyers into the market in our area.

According to a letter sent to mortgage lenders, the FHA said it would offer mortgage insurance to borrowers who, during the recession, filed for bankruptcy or lost their homes through a foreclosure or short-sale proceeding.

The insurance is now available to those who can prove they are no longer financially compromised — and met all other FHA requirements.

"FHA recognizes the hardships faced by these borrowers, and realizes that their credit histories may not fully reflect their true ability or propensity to repay a mortgage," the letter says.

Besides the burden of proof on the borrower to demonstrate a recovery from the "economic event," the potential homeowner must also complete housing counseling. This event would need to result in a minimum loss of 20% of the household income.

The FHA is requiring lenders to verify at least a year has passed since the foreclosure and the economic event is responsible for the loss of the home or bankruptcy.

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Joel Lobb (NMLS#57916)
Senior  Loan Officer
502-905-3708 cell
kentuckyloan@gmail.com

http://mylouisvillekentuckymortgage.com 

Fill out my form!

Kentucky Mortgage Loan Approval for USDA, FHA, VA, and Fannie Mae with a previous short sale or foreclosure. How long do you have to wait?

Obtaining new financing after a Short Sale or Foreclosure for a Kentucky USDA, FHA, VA, and Fannie Mae Loan?   Kentucky Mortgage Short Sale: Conventional Loans Require: Minimum 2 years with restrictions up to 7 years 2 to 4 years - 80% maximum LTV 4 to 7 years - 90% maximum LTV 7 years and after allow for maximum standard financing Kentucky FHA and Kentucky VA Loans Require: 3 years, with exceptions possible for less time if borrower's credit and mortgage payments were in good standing prior and up to date of Short Sale   Kentucky Mortgage Foreclosure: Conventional Loans Require: 7 years, with exceptions considered between 3 to 7 years if significant extenuating circumstances exist Kentucky FHA and Kentucky VA Loans Require: FHA: 3 years, with exceptions possible for less time if significant extenuating circumstances exist VA: 3 years, with exceptions possible for less time if significant extenuating circumstances exist

Please contact me for a free mortgage pre-approval or with questions!

Joel Lobb
Senior  Loan Officer

(NMLS#57916)

American Mortgage Solutions, Inc.

800 Stone Creek Pkwy, Ste 7,

Louisville, KY 40223

 phone: (502) 905-3708

 Fax:     (502) 327-9119

kentuckyloan@gmail.com

 Company ID #1364 | MB73346

http://mylouisvillekentuckymortgage.com

Fill out my form!

Do you qualify for the Back to Work Program in Kentucky for home buyers with previous short sale or foreclosure less than 2 years?

Kentucky FHA HUD Back to Work Program for FHA Borrowers in Kentucky 

What is Back to Work?

FHA is continuing its commitment to fully evaluate borrowers who have experienced periods of financial difficulty due to extenuating circumstances.

Many borrowers experienced periods of recession related financial difficulty and/or credit impairment resulting from unemployment or a severe reduction in income. FHA recognizes the hardships faced by these borrowers, and that their credit histories may not fully reflect their true ability or propensity to repay a mortgage.

For Purchase transactions with case numbers assigned on or after August 15, 2013 

Are borrowers with a foreclosure, short sale, or bankruptcy eligible for Back to Work?

The alternative guidance in Mortgagee Letter 2013-26 is effective for purchase applications with 

case numbers assigned on or after August 15, 2013 through September 30, 2016.

All delinquent accounts and indications of derogatory credit, including collections and judgments, 

bankruptcies, foreclosures, deeds-in-lieu, short sales, and other credit problems must be analyzed.

The lender must review the credit report and determine whether derogatory credit was the result of 

an Economic

Event:

• The borrower exhibited Satisfactory Credit prior to the Economic Event Onset;

• The borrower’s derogatory credit occurred after the Economic Event Onset, and

• The borrower has re-established Satisfactory Credit for a minimum of twelve (12) months.

Foreclosure, Short Sale, Deed in Lieu, Bankruptcy

In all cases, the lender must verify that the derogatory credit was the result of an Economic Event 

and document that a minimum of 12 months has elapsed since the date of the:

• foreclosure

• deed in lieu

• short sale

• discharge of Chapter 7 bankruptcy

Chapter 13 Bankruptcy

The lender must verify and document that

• the Chapter 13 bankruptcy was discharged prior to loan application and all required bankruptcy 

payments were made

on-time, or

• a minimum of 12 months of the pay-out period under the bankruptcy has elapsed and all required 

bankruptcy payments were made on time, and

• the bankruptcy was the result of an Economic Event

If the bankruptcy was not discharged prior to loan application, the borrower must receive written 

permission from the

Bankruptcy Court to enter into the mortgage transaction.

Important Back to Work Definitions

HUD announced several key terms that must be reviewed in accordance with this program.

Economic Event: an occurrence beyond the borrowers control that resulted in a Loss of Employment, Loss of Income or a combination of both which resulted in a loss of Household Income of 20% or more for a period of six or more months.

Onset of Economic Event: the month of the start of or loss of income.

Recovery from an Economic Event: the re-establishment of acceptable or satisfactory credit. Satisfactory Credit equates to no derogatory credit for any mortgaged or leased property in the 12 months preceding the mortgage application. This also includes any installment or revolving debt for the same period.

Borrower: “Borrower” includes all parties including primary and/or co-borrower as listed on the loan application.

Borrower Household Income: the income of all parties on the application or Household Members as listed from the previous Economic Event and derogatory credit.

Housing Counseling: Counseling from a HUD-approved housing counseling agency related to home ownership and meets acceptable requirements.

If you feel that you might qualify or have any questions regarding this new FHA Back to Work mortgage program, then please give us a call.

Joel Lobb (NMLS#57916)
Senior  Loan Officer
502-905-3708 cell

Fill out my form!