Qualifying for A VA Home Loan in KY

Kentucky VA Mortgage Question and Answers for Qualifying for A VA Home Loan in KY?

Does the Kentucky VA Home Loan benefit expire?   NO Can the Kentucky VA Home Loan Benefit be used more than once?  YES Can you have MORE than one active Kentucky VA loan at one time?  YES Is there a limit to the size of the Kentucky VA loan?  NO Are VA appraisals difficult?  NO Are VA loans expensive?  NO Do you need to be a combat veteran to be eligible?  NO Do National Guard or Reservists qualify?  YES Do VA loans take longer to close?  NO Can my service-connected disability reduce my VA loan costs?  YES ­ ­

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KENTUCKY VA MORTGAGE LOAN INFORMATION

 COMMON KENTUCKY VA LOAN MYTHS FOR KENTUCKY VETERANS

1. VA loans are difficult to qualify for.
2. All VA loans require a down payment.
3. VA loans require private mortgage insurance (PMI).
4. You can't refinance a VA loan.
5. You can only have one VA loan.
6. You can use a VA loan once.
7. VA loans are not assumable.
8. You can't buy land with a VA loan.
9. You can't build a house with a VA loan.
10. VA loans only apply to the home purchase itself.

Is it hard to qualify for a VA loan?

Myth #1: Kentucky VA loans are difficult to qualify for.

Fact: VA loans have fewer credit restrictions compared to conventional loans. These reduced restrictions, like a higher debt-to-income (DTI) ratio and more leniency regarding credit scores, mean it can be easier to qualify. VA has no minimum credit score but lenders will have overlays with most being 620 and some going down to 580, with a few going all the way down to 500 but it is very difficult to get approved at this level --- though each individual case and lender will vary.

Do VA loans require a down payment?

Myth #2: All Kentucky VA loans require a down payment.

Fact: While conventional loans generally require down payment options that can reach up to 20%, no such thing is required with a VA home loan at or under the local conforming limit. Down payments are still an option, of course, but they are not a requirement.

The VA allows you to purchase jumbo loans, but the down payment depends on your entitlement:

• Full entitlement - 100% LTV (loan-to-value) maximum
• Partial entitlement - Maximum loan must be calculated using 25% guarantee of 1 unit county loan limit. Max LTV is lesser of max allowed or LTV required to meet 25% guaranty

Do VA loans have PMI?

Myth #3: VA loans require private mortgage insurance (PMI).

Fact: Private mortgage insurance is not required for VA loans. PMI typically adds 0.2%-0.9% of expenses to your monthly mortgage payments when you put less than 20% down. That’s a big additional expense you don’t have to worry about when you get a VA loan. Remember, VA loans do come with a funding fee.

Can you refinance a VA loan?

Myth #4: You can’t refinance a Kentucky VA loan.

Fact: Thanks to VA streamline and cash-out loan programs, VA loans are actually easier to refinance than conventional mortgages. The streamline version lowers the mortgage rate of an already existing VA loan, usually for less than the current principal and interest. This means it doesn't require a credit check or appraisal. The cash-out option involves a credit check and appraisal, since the home’s value represents the maximum loan amount and the new loan will be larger than the existing loan.

How many VA loans can you have?

Myth #5: You can only have one Kentucky VA loan.

Fact: There is no limit to the number of VA loans you can have. While it is possible to have multiple VA loans at once, this depends on VA loan entitlement. VA loan entitlement refers to the amount that the VA will pay your lender if you default on your loan. There is a limit on your VA entitlement. It can be split across multiple loans but the limit remains the same. For full entitlement, the VA covers:

• Up to $36,000 for loans < $144,000
• Up to 25% for loans > $144,000

If, however, you’ve used a portion of your entitlement in one loan that you’re still actively paying off (or defaulted on), the amount of entitlement you have on any new loan is reduced. This means that you may need to put money down yourself instead of having the usual benefit of a zero down payment for VA loans. To learn about VA loan limits and entitlement, visit us here.

How many times can you use a VA loan?

Myth #6: You can only use a Kentucky VA loan once.

Fact: There is no limit on the number of times you can use the VA loan benefit. You can use the benefit an unlimited number of times throughout your life, as long as you still qualify. To qualify, you need to meet certain requirements, which you’ll already be aware of if you’ve taken out a VA loan in the past. For those who haven’t taken out a VA loan prior, you can learn how to qualify here.

Are VA loans assumable?

Myth #7: Kentucky VA loans are not assumable.

Fact: Federally insured and guaranteed loans are usually assumable. This includes VA loans. What does it mean if a loan is assumable? An assumable mortgage is when the lender allows you, the buyer, to take over the current mortgage that the seller has. This can save a lot of money if the interest rates are lower on the existing mortgage than they would be to take out a new mortgage. Assumable mortgages allow buyers, who otherwise wouldn’t qualify for a VA loan, to take over a VA mortgage. This means that you would get most, if not all, of the benefits that come with VA loan eligibility. In order to assume a VA mortgage, you will need to meet certain requirements, such as:

• acceptable credit history and  credit score
• debt-to-income ratio to meet guidelines 
• No Bankruptcies or foreclosures in last 2 years ( Chapter 7) --Chapter 13 is possible within one year in the plan.
• acceptable work history for last two years
• residual income requirements
• property passing VA standards

You will also be required to pay the VA funding fee that comes with VA loans. This equates to 0.5% of the total loan amount. This may be waived if you’re an eligible military borrower who qualifies for an exemption. Other fees may be required as well.

For sellers, if a non-military borrower assumes your mortgage, your VA entitlement won’t be restored until the loan is paid in full. You will want to request that the lender releases you from liability on the loan to avoid dips in your credit reports if the buyer defaults or makes a late payment.

Can you buy land with a VA loan?

Myth #8: You can’t buy land with a Kentucky VA loan.

Fact: The VA doesn’t authorize buyers to singularly purchase land with a VA loan. However, you can purchase land and build a home on it. This is partially because VA loans are granted with a required occupancy period — you must use the property as your primary residence for at least one year. If there is already a home on the land, this is acceptable. Another acceptable scenario is if you plan to immediately build a home on the land after purchase. This may require a purchase/construction loan.

You can also purchase land with a conventional loan or certain other types of loans. Then you can build a home on the land using a VA construction loan. Upon completion, military borrowers can refinance VA construction loans into permanent VA loans. Builders must be VA-approved.

Finally, you can purchase land and build a property using a non-VA purchase/construction loan. Then you can refinance the loan upon completion of the build into a permanent VA loan (as long as the property meets the VA’s requirements).

Can you use a VA loan to build a house?

Myth #9: You can’t build a house with a Kentucky VA loan.

Fact: VA construction loans do exist, as mentioned above, and under the right circumstances, they can be refinanced into permanent VA loans. Ask your lender about VA purchase/construction loan options.

Can you use a VA loan for home improvement?

Myth #10: Kentucky VA loans only apply to the home purchase itself.

Fact: The VA allows for increases to purchase loans for the purpose of making renovations. The VA’s Energy Efficiency Mortgage program, for instance, lets borrowers add up to $6,000 to their home loan amount to install solar heating, insulation and storm windows, among other features.

In conclusion

Applicant subject to credit and underwriting approval. Not all applicants will be approved for financing. Receipt of application does not represent an approval for financing or interest rate guarantee does not guarantee the quality, accuracy, completeness or timelines of the information in this publication. While efforts are made to verify the information provided, the information should not be assumed to be error free. 

--

Joel Lobb
Mortgage Loan Officer

Individual NMLS ID #57916

American Mortgage Solutions, Inc.

10602 Timberwood Circle 

Louisville, KY 40223

Company NMLS ID #1364

click here for directions to our office

Text/call:      502-905-3708

fax:            502-327-9119
email:          kentuckyloan@gmail.com

https://www.mylouisvillekentuckymortgage.com/

 

Louisville Kentucky VA Home Loan Mortgage Lender: How to Get Approved for a Kentucky VA Home Mortgag...

Louisville Kentucky VA Home Loan Mortgage Lender: How to Get Approved for a Kentucky VA Home Mortgag...: Basic Understanding of a Kentucky VA Mortgage Loan Approval Process. The VA makes a guarantee to the lending institution (the insurance)-for...

Basic Understanding of a Kentucky VA Mortgage Loan Approval Process.

The VA makes a guarantee to the lending institution (the

insurance)-for 25% of the loan amount (from a lenders

perspective the effective LTV is 75%).

Because the risk to the bank is reduced, the bank can provide

more affordable loans to the Veteran:

• Eliminating the need for a down payment (100% Mortgage)

• Provides the Veterans favorable interest rates

• Eliminating Mortgage Insurance (NO PMI)

Crushing the Myths of the VA Loan

• VA Mortgage Benefits do not expire.

• You can use your VA benefits as many times as you wish.

• You can have more than 1 at a time. (See occupancy rules)

• There is no limit to the size of a VA loan. (There is a county

loan limit, but veterans can purchase above the county loan

limit with a 25% down payment)

• Credit and risk is reviewed differently by each bank

and lender.

• Even with a foreclosure or short sale, the veteran may still be

able to buy a house with a VA loan. (See burnt entitlement,

veteran might have reduced buying power, but can still

use the VA loan). The VA understands that bad things can

happen to good people.

• VA Appraisals are significantly different than they use to be.

What military documents would I need
to have in order to get a VA mortgage?

I don’t know if I still have my documents from when I

served. How can I retrieve them?

There are three websites that should be able to help you, they are:

vetrecs.archives.gov

archives.gov/veterans/military-service-records/

ebenefits.va.gov

*If you have difficulty retrieving information from any of these sites,

the local recruiting office for your branch would be able to assist.

I have my discharge paperwork, but would like help

obtaining my Certificate of Eligibility

Contact your lender.

I served, but it was a very long time ago. Do my VA
benefits for a mortgage expire?

No, VA Home Loan benefits never expire. You can use your

VA benefit as long as you’re alive.

I used my VA mortgage along time ago to buy a
home. That means I can’t use it again, right?

The VA Mortgage can be used several times over. If the previous

home was sold, your entitlement should be fully reinstated.

What is the minimum credit score to obtain
a VA mortgage?

The VA does not have a minimum credit score, but lenders will

have their own internal overlay. If your score is greater than 580,

you are likely a candidate for the VA mortgage.

Can I use the VA loan to buy a condo?

You can, with the same terms as buying a detached single family

residence. However, we do have to see if the condo association

is VA approved. Check this website:

vip.vba.va.gov/portal/VBAH/VBAHome/condopudsearch

I relocated here and have a home in my hometown. I

kept the home and it has a VA mortgage on it now.

Can I get another VA mortgage?

You can get another VA Mortgage. Mortgage

will calculate your remaining entitlement to compute your

maximum loan amount with no money down and/or what

you would have to put down if you exceed the remaining

entitlement.

Can I build a home with a VA Home Loan?

Yes, but there are several clauses that may make this difficult

to accomplish. Many veterans use their VA Home Loan

Certificate of Eligibility to negotiate in good faith a private home

construction loan and then refinance the completed home using

VA Home Loans.

I heard the VA Mortgage was more expensive than
other mortgage types. Is that true?

There is a mandatory funding fee on all VA mortgages (unless

the borrowing veteran is receiving a VA related disability, then

the funding fee is waived). The funding fee is built over and

above the loan amount and the fees are as below.

It's Military May, and that means Permanent Change of Station (PCS) season for military families is upon us. However, some brokers will miss out on opportunities to help more Veterans due to a few commonly held misconceptions regarding Kentucky VA loans. Separating fact from fiction can make all the difference this season for your business. Here are a few myths around Kentucky VA loans: Myth: Kentucky VA Loans Are Credit Risks Reality: Kentucky Veterans and military members tend to have higher credit scores and savings. Myth: The Seller Pays the Closing Costs Reality: In a well-structured Kentucky  VA loan, the benefits include no down payment and ideally no closing costs to the seller. Myth: There Is a Maximum VA Loan Amount   Reality: There has never been a maximum Kentucky  VA loan amount, though it's often confused with maximum VA loan guarantee. Myth: VA Loans Are Complicated With Many Restrictions Reality: The expertise of our Kentucky VA lending team makes the process simple so you can focus on your borrower.

Kentucky VA Loan Guidelines

VA Loan Credit Issues

VA will analyze a borrower’s past credit performance in determining the loan for approval. A borrower who has made timely payments for the last 12 months serves as a guide and demonstrates their willingness to repay future credit obligations. On the opposite side, a borrower who reflects continuous slow payments, judgments and delinquent accounts is not a good candidate for loan approval.
Below is a list of items concerning the borrower’s credit:

 

LATE MORTGAGE PAYMENTS

In circumstances not involving bankruptcy, satisfactory credit is generally considered to be reestablished after the veteran, or veteran and spouse, have made satisfactory payments for 12 months after the date of the last derogatory credit item(s).
When the underwriter analyzes the borrowers credit; it is the overall pattern of credit behavior that must be reviewed, rather than isolated cases of slow payments. A period of financial difficulty does not disqualify the borrower if a good payment pattern has been maintained since then.
Account balances reduced to judgment by a court must either be paid in full or subject to a repayment plan with a history of timely payments.

 

NO CREDIT HISTORY

In the area of credit, the lack of an established credit history should not be a deterrent to loan approval. As provided in the credit standards, a satisfactory payment history on items such as rent, utilities, phone bills, etc., may be used to establish a satisfactory credit history.

 

CHAPTER 7 BANKRUPTCY

The Kentucky VA guidelines state that a minimum of two years must elapse since the discharge date of the borrower and / or spouse’s Chapter 7 bankruptcy, not the filing date. A full explanation of the bankruptcy will be required. The borrower must also have re-established good credit, qualify financially and have good job stability.

 

CHAPTER 13 BANKRUPTCY

The Kentucky VA guidelines state that they will consider a borrower still paying on a Chapter 13 Bankruptcy if the payments to the court have been satisfactorily made and verified for a period of one year. In addition, the court trustee will need to give written approval to proceed. A full explanation of the bankruptcy will be required. The borrower must also have re-established good credit, qualify financially and have good job stability.

 

COLLECTIONS, JUDGEMENTS AND FEDERAL DEBTS

The Kentucky VA guidelines state that if a collection is minor in nature, it usually does not need to be paid off as a condition for loan approval. Judgments must be paid in full prior to closing. A borrower is not eligible for the loan if they are delinquent on any federal debt. This can include tax liens, student loans, etc. Payment arrangements that would bring the borrower up to date may be considered for loan approval.

 

FORECLOSURE

A borrower whose previous residence or other real property was foreclosed on or given a deed-in-lieu of foreclosure within the previous two years since the disposition date is generally not eligible for a VA insured mortgage. If the foreclosure was on a Kentucky VA loan, the applicant may not have full entitlement available for the new loan.

 

In order to verify your credit history, your lender will obtain a credit report containing 

information as reported by all 3 of the major credit bureaus: Trans Union, Equifax and Experian.

Most people will have 3 credit scores but it is possible that you may have only 1 or two scores if 

you have limited credit history.

This report will also include information on any public records such as bankruptcies,

judgments and tax liens.

Credit Scores

Though VA does not have a set minimum credit score requirements, lenders will have a minimum credit

score requirement.

Collection account may need to be paid off in order to close your loan

It is preferable that the most recent 12 months show satisfactory payments and no other derogatory 

information.

Credit History

If you experienced a major derogatory credit event, there will be waiting periods that will have to 

be observed before you can be eligible to qualify for a loan.

Bankruptcy Chapter 7

2 years from discharge date

Bankruptcy Chapter 13

Immediately after discharge or

After 12 months of payments***

Foreclosure*

2 years from completion date

* If the foreclosure or short sale was on a VA loan, you may not have full entitlement available 

for the new loan

*** Must obtain written permission from the bankruptcy court/trustee and provide proof of 

satisfactory payment history

Income and Employment

Minimum History of Employment

A minimum of 2 year history in the same industry/line of work is required in most instances but 

it’s not a universal rule.

Recent graduates can satisfy the two year requirement by providing proof of schooling with a degree 

for the line of work you are now

employed in.

Active duty members do not need a two year history as long as the minimum service requirement for 

eligibility has been met.

Self employed borrowers must always have a two year history of self employment and must show a two  year history of filed tax returns to meet the 24 month requirement.

Income Calculations

If you are salaried, your base income will be used to qualify you for the loan.

However, if you are an hourly employee with varied hours, more than likely, your income will be 

averaged over an extended period such as 18 or 24 months depending on the situation.

Overtime, bonuses, commission and part time employment must have a 24 history in order to be 

included in the qualifying income. 

The income will be averaged out over 24 months. Verification of 

likelihood to continue will also be required.

Non taxable income can be grossed up to account for the non-taxable status.

Retirement, Disability, alimony and child support income does not require a 2 year history but 

verification that it will continue for at least 3 years is required in order for it to be included.

ASSETS

No down payment does not mean no cash needed

VA does not require additional cash to cover a certain number or mortgage payments or unplanned 

expenses (cash reserves), however, your ability to accumulate liquid assets and the amount of 

assets currently available is taken into consideration in the overall credit worthiness analysis.

Allowable source of funds

Funds for your down payment, closing costs and other expenses can come from:

•    Checking/savings accounts

•    Investment accounts

•    Retirement account

Gift funds from a relative are an allowed source of funds to cover down payment and or closing 

costs.

The gift will need to be verified and paper trailed via bank statements and a gift letter will need 

to be signed

by your and the gift donor .

Funds from unsecured loans (signature loans, credit card advances) or funds that can not be 

documented are not acceptable source of funds.

Federal regulations require that all deposits into your account be documented.

In the instance of payroll deposits, nothing will need to be done if the deposit shows as a Direct 

Deposit from your employer.

All other deposits will need to be explained and documented.

A debt to income ratios

-A debt to income ratios is the percentage of your total debt obligation, including the new estimated

mortgage payment, all debts shown on your credit report, as well as alimony, child support etc, as

compared to your gross qualifying income.

EXAMPLE

The rule of thumb is that your debt to income ratio should not exceed 50% of the usable, gross monthly

income. However, higher percentages can be approved.

In addition to the debt to income ratio requirements, VA also has residual income requirements. VA residual

income looks at how much income is available after all monthly liabilities, including tax withholdings,

utilities and child care, are accounted for.

Residual Income By Region

For loan amounts of $80,000 and above

Family

Size

Northeast Midwest South West

1 $450 $441 $441 $491

2 $755 $738 $738 $823

3 $909 $889 $889 $990

4 $1025 $1033 $1033 $1117

5 $1062 $1039 $1039 $1158

over 5 Add $80 for each additional member up to a family of

seven

2400/5000= 48%

Deferred student loans

If student loan repayments are scheduled to

begin within 12 months of the date of loan

closing, the anticipated monthly payment will

be included.

If you are able to provide evidence that the

loan(s) will be deferred for a period outside

that time frame, the payment will not be

included.

Qualifying income: $5000

New mortgage payment: $2000

All other obligations: $400

Monthly debt payments

The payments shown on

your credit report will be

used to qualify you. If the

payments are incorrect,

you will be asked to

provide proof of the correct

payment.

Co-signed loans

If you co-signed for someone on a loan and

that loan is showing on your credit report, the

payment will be included in the ratios unless

you are able to provide evidence that the other

person on that loan has been making the

monthly payments from an account that you

are NOT a co-owner on.

Alimony/child support

You will be expected to

truthfully declare that

you pay alimony or child

support. You will be asked

to provide your divorce

decree and/or child support

order to verify the amounts.

Non-purchasing spouse

You should be aware that if you purchasing a home

in a community property state such as California

and are married, your spouse’s credit report will be

required. His/her debts will be included in the ratio

calculations even if he/she is not going to be on the

purchase or loan.

Home

Documentation Checklist

Joel Lobb
Mortgage Loan Officer

Individual NMLS ID #57916

American Mortgage Solutions, Inc.

10602 Timberwood Circle 

Louisville, KY 40223

Company NMLS ID #1364

click here for directions to our office

Text/call:      502-905-3708

fax:            502-327-9119
email:          kentuckyloan@gmail.com

https://www.mylouisvillekentuckymortgage.com/

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