Kentucky VA Home Loan Mortgage Lender: Understanding Your Kentucky VA Home Loan Benefits

Louisville Kentucky VA Home Loan Mortgage Lender: Understanding Your Kentucky VA Home Loan Benefits

Kentucky VA Home Loan Mortgage Lender:

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Is your credit score high enough for a  Kentucky VA Home Loan Approval?

Usually, 620 or Higher is better for 2 reasons lower rate and less
stipulations from the underwriter

Do you have sufficient credit depth for a Kentucky VA Home Loan Approval?

Generally, all on-time payments in the last 12 months. They like to see two-three paid on time  for the last 12 months


Do you make enough money to cover all your debts, including the new
Kentucky VA mortgage?

Debts divided by your gross monthly income is lower than 50%. I have
seen many exceptions to this with compensating factors. I have seen as high as 78% debt ratio get approved through the AUS if you have high credit scores (720 or higher, good residual income, a lot of assets, ie money in the bank, retirement, etc.

-Do you have a high probability of continuing to make that same income?

Two years of stable job history is the best. If you were off work sometimes a good letter of explanation will suffice for a job gap. i.e. hurt, medical, etc.


What is a credit score required for a Kentucky VA Home Loan? 

There is no minimum credit score in the VA guidelines.
But, the lender may have a minimum score. It is called credit "overlays".
Most Kentucky VA Home lenders will require a 620 middle credit score.
You have three fico scores from Experian, Equifax, and Transunion.
They will use the middle score of the three. For example, if you have a 675,689,619,
your qualifying fico score to be used would be 675. you can possibly get a VA home
loan approval with a lower score, but you will
have to provide a lot of other information to get that approval

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 What does Debt to income mean for a Kentucky VA Home Loan Approval?

Your ratio of total monthly debt payments on the credit report divided by your gross
monthly income. They do not include, utilities, car insurance, cell phone bills,
only credit reporting items. Typically on a VA home loan, they like to see that number around 43% on the back-end ratio for loan approval. You can go above this with high credit scores, good residual income, assets in the bank, etc. Conversely, if you have a low fico score, no money in the bank, going up in house payment from your current housing payment, or low va residual income. then you will need to be under this.

Mortgage Loans In Kentucky for Conventional, FHA, and VA Mortgages for 2020

Mortgage Loans In Kentucky 

Kentucky Conventional Mortgages – These mortgages are not insured by the government, but they do conform to the government standards known as Freddie Mac and Fannie Mae. One thing to note about a conventional mortgage is that they require mortgage insurance unless you can put down at least 20%; once the loan’s principal balance drops below 78% of the home’s value, you no longer have to pay mortgage insurance.

• Qualifying credit: 620-740
• Loan terms: 15 or 30 years
• 3% Down Payment minimum

Kentucky FHA Loans – An FHA loan is insured by the Federal Housing Administration, who guarantees a portion of the loan should the borrower default. This minimizes the lender’s risk and allows them to expand their borrowing parameters to the benefit of first-time homebuyers who might not have large savings or strong credit. Keep in mind that closing costs will be much higher for this type of mortgage and the home must meet rigorous appraisal standards.

• Qualifying credit: 500 minimum with 10% down payment and 580 score higher 3.5% down payment 

Kentucky VA Loans If you are an active duty military personnel (or veteran in California and Hawaii), you may be eligible for this mortgage plan backed by the Dept. of Veteran Affairs. Income and credit requirements are significantly lower than other loans, making the approval process much easier, but be prepared to face longer closing periods than you would experience through a private lender.

• Qualifying credit: No minimum Credit score for va loans

• Outstanding debt---debt ratios usually around 45% on the backend 

• Credit background-----looking at last 2-4 years mostly in regards to bankruptcies, foreclosures, short-sales,

• Employment history--2 year work history not really the same job but same line of work and pay being consistent. 

Debt-to-Income Ratio: What It Is and Why You Should Care for A Kentucky Mortgage Loan

Think back to the last time you financed a purchase — be it a home, automobile, or what have you… You may remember having heard the term “debt-to-income ratio.” Today I want to spend some time going over exactly what this ratio is, and to also touch on how it can effect your personal finances.

What is your debt-to-income ratio?

Commonly referred to as your “DTI,” your debt-to-income ratio is a personal finance benchmark that relates your monthly debt payments to your monthly gross income.

As an example… Let’s say that your gross monthly salary is $5,000 and you are spending $2,800 of it toward monthly debt payments. In that case, your DTI would be an unhealthy 56%.

This version of your DTI is sometimes referred to as your “back-end” DTI. This is often broken down further to give a front-end debt-to-income ratio, which is a component of your back-end DTI.

How to calculate your front-end DTI for a Kentucky Mortgage Loan Approval

Your front-end DTI is calculated by dividing your monthly housing costs by your monthly gross income. Front-end DTI for renters is simply the amount paid in rent, whereas for homeowners it is the sum of mortgage principal, interest, property taxes, and home insurance (i.e., your PITI) divided by gross monthly income.

From above, if that $2,800 in debt payments is attributable to $1,500 in housing costs and $1,300 in non-housing costs, then your front-end DTI is $1,500/$5,000 = 30% (and your back-end ratio is still 56%, as calculated above).

How lenders use your DTI for a Kentucky Mortgage Loan Approval

Kentucky Mortgage lenders typically use DTI (along with other variables) to determine whether or not you qualify for a loan, and to help determine your Kentucky mortgage rate. A high front-end DTI raises red flags with lenders because it is commonly associated with borrower default. In fact, reducing front-end DTI to reduce the risk of homeowner default was one of the main objectives of the loan modification programs introduced by the government in 2009.

There are specific limits for DTI that are used as cut-off points when evaluating borrowers. Current DTI limits for conventional conforming mortgage loans are typically 28% on the front end and 36% on the back end, though these limits are slightly higher for government subsidized Kentucky FHA loans.

While there are certainly other factors to consider w

Debt-to-Income Ratio: What It Is and Why You Should Care for a Kentucky Mortgage Loan for Kentucky Mortgage Loan Approval

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.

Getting your Louisville Kentucky VA Loan Approval.

Getting your Louisville Kentucky VA Loan Approval

Step 1: Determine If You Are Eligible

We will cover the Proof of Eligibility Process below but in general, the following people are eligible for a VA-Backed Home Loan:

    * Veterans
    * Active duty personnel
    * Reservists/National Guard members
    * Some surviving spouses

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 Get The Proof You Need To Show You Are Eligible For The VA Loan Program

You’ll need a Certificate of Eligibility before you can get a VA-backed loan.  This section shows how you can apply for one. 

Among categories A, B, and C below, find the one that matches your situation.

Category A:  Veterans, Active Duty, and Reservists/National Guard Members Who Have Served on Active Duty You can get a Certificate of Eligibility in any of three ways: 1. Apply online.  Go to the Veterans Information Portal (http://vip.vba.va.gov) and click on User Registration. Click Here for user instructions for applying online. 2. Apply through us.  In many cases, we can obtain a Certificate online in minutes.  Check the table below entitled, “Evidence Needed for the Certificate of Eligibility.” 3. Apply by mail.  Use VA Form 26-1880.  Return it to the address shown on the form. If you can’t print the form, just call 1-888-244-6711 and follow the prompts for Eligibility. Evidence Needed for the Certificate of Eligibility:
If you are:	You need to submit:
Veteran (Includes a member or former member of the National Guard or Reserves who was once activated for Federal Service)	DD Form 214; We are required to have a copy showing the character of service (item 24) and the narrative reason for separation (item 28).
Active Duty Servicemember	A current statement of service signed by (or by the direction of): the adjutant, personnel office, or commander of the unit or higher headquarters showing: Your full name Social Security Number Date of birth Entry date on active duty The duration of any lost time The name of the command providing the information

11) Not Active: Please include copy of DD214 if not currently active

Active: Copy of Current “Service Statement” (obtained from base personnel or online) and PCS Orders to Michigan

12) Copy of VA Certificate of Eligibility (or fill out VA form 26-1880) and fax to me.

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Louisville Kentucky VA Mortgage Requirements for income and debt to income ratios:

Louisville Kentucky VA Mortgage Requirements for income and debt to income ratios:

Kentucky VA lenders  use debt ratios to help determine affordability. The VA Underwriting uses a debt ratio of 41% when approving a Kentucky VA home loan application. That simply means if someone makes $4000 per month, before withholdings, VA loans require mortgage payments plus other revolving and installment debt payments be no greater than $6,000 X .41 = $1640 a month.

Sometimes VA lenders will allow for you to have a debt to income ratio over 41%, but that usually entails you have a credit score of 680 or higher, with at least 6 months reserves.

With most Kentucky VA mortgage Lending tied to the automated underwriting thru Desktop Originator, most Kentucky VA home buyers will get a refer if the score is below 680.

If happen to get a refer eligible on your Kentucky VA loan approval thru DU, then you must make sure your debt to income ratio is not over 41%, and you will have to prove a good payment history on your last 12 months of housing history. 

Significant Increases or Decreases in Income

Increase: When a borrower has experienced a significant increase in income, the higher income may not be used to qualify the borrower, unless there is sufficient documentation to determine that the increase is stable and likely to continue at the level used for qualifying (e.g. that the income in not a one-time incentive payment).

Decrease: When the borrower has experienced a significant decrease in income, the income cannot be averaged using a previous higher level unless there is documentation of a one-time occurrence (e.g., injury) that prevented the borrower from working or earning full income for a period of time and proof that the borrower is back to the income amount that they previously earned. The underwriter must focus the analysis on the most recent earnings and the income that is most likely to be received at the level used for qualifying.

Residual Income for A  Kentucky VA Loan 

Residual income is the amount of net income remaining (after deduction of debts and obligations and monthly shelter expenses) to cover family living expenses such as food, health care, clothing and gasoline. See tables below for residual income requirements.



Count all members of the household (without regard to the nature of the relationship) when determining "family size," including:

An applicant's spouse who is not joining in title or on the note, and
Any other individuals who depend on the applicant for support. For example, children from a spouse's prior marriage who are not the applicant's legal dependents.
Reduce the residual income figure (from the following tables) by a minimum of 5 percent if:
The applicant or spouse is an active-duty or retired serviceperson, and
There is a clear indication that he or she will continue to receive the benefits resulting from use of military-based facilities located near the property.

Use 5 percent unless the VA office of jurisdiction has established a higher percentage, in which case, apply the specified percentage for that jurisdiction.

 

Understanding the Calculation of Debt to Income Ratio for FHA Loans

Understanding the Calculation of Debt to Income Ratio for FHA Loans

One of the main pieces of an FHA loan approval is the borrower’s debt to income calculation. It is important that home buyers understand how this number is calculated and what they can do to improve their chances of getting approved.

Payments Included in Debt Ratios

Certain payments must be considered as part of a person’s overall debt when calculating the ratios. Items such as:

• Payments for car loans
• Payments on credit cards
• Payments on unsecured loans
• Child support payments
• Alimony

Items Excluded from Debt Ratios

There are also some items not included in the debt to income ratio for FHA loans. Common examples would be:

• Current rent payment
• Money spent on entertainment
• Expenses paid for child care

How to Overcome High Debt to Income Ratios

If a borrower has a compensating factor, it is possible for people with ratios higher than the proposed guidelines to get an approval for an FHA loan. Here are some examples of compensating factors:

• Paying more than 10% of the purchase price as a down payment
• Using income and expense records from the past two years to demonstrate that you have the ability and discipline to pay the housing expense
• Having a large balance in a savings, investment or retirement account

For people that have a high debt to income ratio, it is possible to reduce the numbers. Paying off debt, such as credit cards or car loans can help. Sometimes it may be necessary to sell an expensive vehicle and get a cheaper payment in order to qualify for a loan.

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