Kentucky FHA Lenders: FHA Loan Requirements And Guidelines

by Gustan Cho

This Article Is About Kentucky FHA Lenders and the FHA loan requirements and guidelines for homebuyers.

Not all Kentucky FHA Lender has the same lending requirements and guidelines. Many Kentucky homebuyers will be told they do not qualify for an FHA loan due to one or many other reasons. HUD allows Kentucky homebuyers with a 580 credit score to qualify for a 3.5% down payment FHA loan. However, borrowers are confused because they get conflicting lending requirements from Kentucky FHA lenders on credit scores, debt to income ratios, or other credit/income requirements. A substantial number of homebuyers and real estate agents think all Kentucky FHA lenders have the same lending requirements and guidelines on FHA loans because FHA mortgages are government-backed loans. However, this is not the case. Kentucky FHA lenders can have different lending requirements. Individual lenders can require higher credit score requirements and other lending guidelines that surpass the minimum agency HUD mortgage guidelines.  Lenders need to follow the minimum agency mortgage guidelines on FHA loans.

Understanding Lender Overlays Of Kentucky FHA Lenders

Understanding Lender Overlays Of Kentucky FHA Lenders

Each individual lender can have higher lending standards and requirements that surpass the minimum HUD agency guidelines called lender overlays. This is why it is important for Kentucky homebuyers need to fully understand the minimum agency mortgage guidelines on FHA loans. Capital Lending Network, Inc. is one of the few mortgage companies in Kentucky that has no lender overlays on FHA loans. As long as you meet the minimum agency HUD mortgage guidelines on FHA loans, you can qualify for an FHA loan with a lender with no lender overlays. CLN Mortgage has zero lender overlays on FHA loans. As long as you meet the minimum agency lending guidelines on FHA loans and get an approve/eligible per automated underwriting system, Capital Lending Network, Inc. will approve and close your loan. If you cannot get an approve/eligible per AUS and get a refer/eligible per AUS, we can approve you via manual underwriting on an FHA loan. This holds true if you meet the HUD agency manual underwriting guidelines. In this article, we will discuss and cover how you can qualify for an FHA loan in Kentucky as long as you meet the agency minimum mortgage guidelines on FHA loans.

Kentucky FHA Loan Requirements On Credit Scores 

Credit scores play an important factor when qualifying for an FHA loan in Kentucky. Lenders view lower credit score borrowers as riskier borrowers. Riskier borrowers mean higher mortgage rates for lenders. The minimum credit score required to qualify for a 3.5% down payment home purchase FHA loan is 580 FICO.  The minimum credit score required to qualify for an FHA loan in Kentucky is 500 FICO. Borrowers with credit scores between 500 to 579 FICO require a 10% down payment versus a 3.5% down payment on FHA mortgages. Most lenders will require a higher credit score than the minimum 580 FICO required by HUD on FHA loans in Kentucky. These is called lender overlays. Most Kentucky FHA lenders will not take any borrower with under 580 credit scores and down to 500 FICO. Lenders do not have to take on a file with lower credit and/or income profiles as part of their overlays. Capital Lending Network, Inc. is a no-lender overlay mortgage company. We will accept any borrower that meets the minimum agency mortgage guidelines including borrowers with credit scores down to 500 FICO. If a Kentucky FHA lender says you do not qualify for a mortgage, you know a different lender with no lender overlays will approve you if you meet the minimum HUD mortgage guidelines. Again, Capital Lending Network, Inc. has zero lender overlays on FHA loans. Over 75% of our borrowers are folks who could not qualify at other mortgage companies due to their lender overlays.

Kentucky FHA Loans For First-Time Homebuyers

The team at Gustan Cho Associates dba Capital Lending Network, Inc. are experts in helping first-time homebuyers with little to no credit. Most recent college graduates have no credit scores. The main reason for no credit scores is due to having no traditional credit tradelines. Capital Lending Network, Inc. can use non-traditional credit tradelines in lieu of traditional tradelines for recent college graduates or first-time homebuyers with no credit scores. It needs to be a manual underwrite. Recent college graduates or students who have been in school full-time do not need employment history for the past 24 months. The years being full-time students are equivalent to the past two-years work experience.

What Are Non-Traditional Credit Tradelines

What Are Non-Traditional Credit Tradelines

No-traditional credit tradelines are creditors who do not report the consumer payment history to the three credit reporting agencies. Examples of non-traditional credit tradelines are verification of rent, utilities, cell phone carriers, cable and internet providers, insurance companies, and other creditors that do not report to the three credit bureaus. In order for non-traditional credit to be valid and be able to be used, the borrower needs to have been timely for the past 12 months with no late payments. If the lender uses non-traditional credit tradelines in lieu of traditional credit tradelines due to no credit scores, the file needs to be a manual underwrite.

Kentucky FHA Loans Bad Credit With Outstanding Collections And Charged-Off Accounts

FHA loans are the best loan program for borrowers with a substantial amount of outstanding collection and/or charged-off accounts. The automated underwriting system is more forgiving in rendering an approve/eligible per AUS for borrowers with prior collection accounts and bad credit versus other loan programs. However, the key in getting an approve/eligible per automated underwriting system is to have been timely in the past 12 months. Many Kentucky FHA lenders will have lender overlays on outstanding collections and/or charged-off accounts. Even though HUD allows borrowers with outstanding collections and/or charged-off accounts and the borrower gets an AUS approval, the lender can deny the FHA loan and require all collections and/or charged-off accounts to be paid. Capital Lending Network, Inc. will not require any outstanding collections and/or charged-off accounts to be paid. We just follow HUD agency guidelines and have zero lender overlays on FHA loans.

Kentucky FHA Loans After Chapter 7 Bankruptcy

Borrowers can qualify for FHA loans in Kentucky after bankruptcy. There is a two-year waiting period after the Chapter 7 Bankruptcy discharge date to qualify for an FHA loan in Kentucky. The borrower needs to have been timely on all of their payments after Chapter 7 Bankruptcy discharged date with no late payments. Borrowers should have rebuilt and/or re-established credit after Chapter 7 Bankruptcy discharged date. The bankruptcy will not affect the borrower’s mortgage rates.

Kentucky FHA Loans During Chapter 13 Bankruptcy

Kentucky FHA Loans During Chapter 13 Bankruptcy

Homebuyers can qualify for an FHA loan during Chapter 13 Bankruptcy repayment plan with bankruptcy trustee approval. The file needs to be a manual underwrite. HUD manual underwriting agency guidelines apply. The borrower needs to have been in the repayment plan for at least 12 months. All monthly payments to the trustee and any payments to creditors outside of the bankruptcy repayment plan need to have been timely.

Kentucky FHA Loans After Chapter 7 Bankruptcy Discharged Date

There are no waiting period requirements after the Chapter 13 Bankruptcy discharge date. If the Chapter 13 Bankruptcy discharge has been seasoned for less than 24 months, it needs to be a manual underwrite. Manual underwriting guidelines apply. Late payments after bankruptcy are a definite deal killer. People should never be late on any of their payments after bankruptcy if they want to qualify for an FHA loan in Kentucky or any other mortgage. Borrowers should rebuild and re-establish their credit after bankruptcy. The team at Capital Lending Network, Inc. are experts in helping rebuild and re-establish their credit after bankruptcy. We have helped thousands of people boost their credit scores to over 700 FICO after bankruptcy in less than one year.

Qualifying For An FHA Loan In Kentucky After Foreclosure, Deed In Lieu Of Foreclosure, Short-Sale

Homebuyers with a prior housing event are eligible to qualify for FHA loans in Kentucky after meeting the mandatory waiting period. There is a three-year waiting period after the recorded date of foreclosure, and/or deed in lieu of foreclosure. The start date of the waiting period is the date where the title of the home has changed names and not the surrender date or the date of the sheriff’s sale. There is a two-year waiting period after the date of a short sale which is reflected on the Closing Disclosure. The wating period starts from the date reflected on the closing disclosure (CD). Lenders expect the borrower has rebuilt and re-established credit after foreclosure, deed in lieu of foreclosure, short sale. No late payments after a housing event.

Kentucky FHA Lenders With No Lender Overlays

Kentucky FHA Lenders With No Lender Overlays

If you have any questions on rebuilding your credit after a foreclosure, deed in lieu of foreclosure, short sale, bankruptcy, periods of bad credit, please contact us at Gustan Cho Associates dba Capital Lending Network, Inc. at 262-716-8151 or email us at gcho@gustancho.com. Text us for a faster response. The team at Gustan Cho Associates dba Capital Lending Network, Inc. is available 7 days a week, evenings, weekends, and holidays. Capital Lending Network, Inc. has a national reputation of being able to do loans other lenders cannot due to their lender overlays. CLN Mortgage has zero lender overlays on FHA, VA, USDA, and conventional loans. We have alternative and special mortgage loans programs such a non-QM loans one day out of bankruptcy and foreclosure, no doc mortgages, 12-month bank statement loans for self employed borrowers, non-QM jumbo mortgages with credit scores down to 500 FICO, and dozens of other non-QM loan programs.

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