KENTUCKY VA HOME LOANS

KENTUCKY VA HOME LOANS

Kentucky VA loans require little to no money down. Also, you will not pay a monthly mortgage insurance premium (MIP) or an upfront fee like you would with a conventional, low-down-payment home loan.

The VA does not have a private mortgage insurance (PMI) requirement.

Kentucky VA Loan Eligibility Requirements

Only certain veterans and their spouses qualify for VA-backed mortgages. The good news is the qualifications are not as strict as you think. Here are the VA’s eligibility requirements:

• Active-duty service for 181 days during peacetime
• Active-duty service for 90 consecutive days during wartime
• Member of the Reserves or National Guard for six consecutive years
• Married to a veteran who died as a result of a service-connected disability or in the line of duty

Remember that it is ultimately up to the lender to decide to give you a loan. You will still need to meet certain requirements outlined by the bank or mortgage company.

Basic and Bonus Entitlement

The VA refers to your eligibility to borrow money using a VA-backed mortgage as your basic and bonus entitlement. The word “entitlement” is another word for insurance. However, your basic and bonus entitlement are not the same, but you can use them at the same time. Here is how they work:

When you receive your certificate of eligibility (COE) from the VA, it will show you are eligible for $36,000 in basic entitlement. Fortunately, the $36,000 on your COE is not the maximum amount you can borrow. The figure is how much the VA will pay if you default on your loan.

Most banks and mortgage lenders will lend you up to four times your basic entitlement, which is $144,000 ($36,000 x 4 = $144,000). So, using your basic entitlement, you can borrow up to $144,000 to buy a home. You might be thinking $144,000 is not enough to buy a home in most places, and you are right. This is where your bonus entitlement kicks in.

Kentucky VA Home Loan Refinance Information

You can use your VA home loan entitlement for more than just buying a house. You can use it to reduce the interest rate on an existing loan (known as an IRRRL), or you can take out some equity in your home with a 90% to 100 percent cash-out refinance.

Additionally, you can use a VA home loan more than once as long as you have not used all of your basic and bonus entitlement. Now that you know the facts behind VA mortgages, you should comfortably find the loan program that fits your needs.

 

How To Qualify For An Kentucky VA Loan

VA loans help active duty, reserves, and veterans buy a house with no down payment and no mortgage insurance monthly making it one of the best loans out there while getting a low 30 year fixed rate loan based on market trends.

 

VA loans help you buy a home with limited credit or no credit if you can provide alternative trade lines
The VA loan program makes it possible to purchase a home with as little as 0 percent down and with a lower credit score than required by traditional mortgages.

 

VA loans are not just for first-time home buyers, and they’re not restricted to low-income applicants. Here are the requirements you’ll need to meet to qualify for an VA loan

1. Consistent income and work history for last two years to support mortgage payment

In general, lenders want to see that you’ve worked for a year or two in the same field (if not the same employer). Consistent two year history needed, does not have to be same employer.

2. Debt to income ratio for VA loans. 

The biggest factor in qualifying for an VA loan is whether you can afford the payment. As a rough guideline:

  • your mortgage payment must not be more than 1/3 of your income (before taxes) and
  • your mortgage payment PLUS other monthly debt payments (car loan, credit cards) must not be more than 43 percent of your income for a manual underwrite, or can go higher on the debt ratios if you get an automated approval through Desktop Underwriting AUS system.
  •  Car insurance, cell phone bills, utility bills are not included in the debt to income ratio just the monthly payments on the credit report and child support .

3. Zero Down Payment

There is no minimum credit score for VA loans, but in reality most lenders will wants a 620 score. However, we deal with some lenders that will go down to a 560 credit score but be prepared to get a lot of documentation to support your lower credit score.

 

When Can I Get a VA Loan After Foreclosure, Bankruptcy, or Short Sale?

Every once in a while, bad things happen to good people. Whether credit issues result from financial mismanagement or other circumstances, VA home loan guidelines are very forgiving. So, how long after a foreclosure, short sale, or bankruptcy can you get a VA loan?

  • Foreclosure seasoning = 2 years, 1 year if proven out of borrower’s control
  • Short sale seasoning = Same as foreclosure, but if not lates prior to short sale then no seasoning required
  • Bankruptcy waiting period = Chapter 7 seasoning is 2 years from discharge date. Chapter 13 seasoning is at least 12 months from filing

A key VA home loan requirement after major credit events like these is re-established credit. Therefore, showing on-time rent and other credit references may show recovery from a foreclosure, short sale, or bankruptcy.

Rent Verification for VA Loans With Low Scores

For lower credit scores on VA or any other type of mortgage loan, rent or mortgage history is very important.  A previous housing history is a good indicator of how someone will pay a new house payment.  So lenders take rent very seriously.  The most weight is given to a rent history proven by cancelled checks.  Then a buyer proving on time payment history through checks shows the buyer is the one who actually made the payments.  Plus it shows they were made on time and there is no disputing this.  Next, rent payments verified through a rental company is good.  The weakest would be rental payments made to an individual.  In cases where payments are made to individuals, additional documentation may be required.  For instance, cancelled checks or proof of withdrawal from a bank account for 12 months would help.

Keep in mind, using alternative credit is not a way to ignore a bad credit report or score.  Alternative credit is a way of proving a more solid or in depth payment history than the credit report shows.

VA Mortgage Loan Checklist

  1. Signed and dated Statement of Service Letter (Ask us if we need it though)
  2. DD214 (if no longer in the military)
  3. Current LES
  4. Most recent W2 and Tax Return
  5. Most recent bank statement (all pages of actual monthly statement)
  6. Photo identification
  7. Military transfer orders – if transferring to a new base

We will request your COE, status report, complete your application, and discuss your mortgage options.  Our goal is to have educated, confident, and approved buyers!

 

Kentucky VA Mortgage Loan Limits for 2020 for Kentucky Veterans

 

 New Kentucky VA Mortgage Loan Limits for 2020 for Kentucky Veterans

VA loans no longer have a maximum loan amount.

  • Veterans, active-duty service members, National Guard members, and surviving spouses (those who qualify) will be able to get a VA home loan for any amount, with no required down payment.
  • Income guidelines are still in place.
  • With loan limits now gone you can borrow 100% of what you financially qualify for.
  • Loan limits will still be applied if you have one or more active VA loans or if you’ve defaulted on a previous VA loan.
  • Mortgage insurance is not needed..

 Funding Fees for VA Loans Are Not Going Away

Even with the loan limits going away, there is still an upfront funding fee for all VA loans (unless you are getting a VA home loan as an active-duty service member who’s received a Purple Heart). 2020 brought changes to these funding fees.

Here’s the updated funding fee percentages for VA loans:

 

To explain further, the fee for first-time use went up from 2.15% in 2019 to 2.30% in 2020. The fee for subsequent use went up from 3.3% in 2019 to 3.6% of the loan in 2020. These fees will stay in place until 2022, and you can choose to pay the funding fee up front or just roll it into the total cost of the home loan.

 

Additional VA Loan Benefits:

  • You can reuse your VA mortgage benefits over and over
  • You don’t have to be a first-time home buyer
  • No pre-payment penalty so you’re free to consider future home purchases and refinancing options
  • Can be used to buy a house, condo, newly-built home, and other types of properties
  • Your eligibility never expires

How Do You Know If You’re Eligible for a VA Loan?

Eligibility is based on specific guidelines established through the U.S. Department of Federal Affairs. These guidelines are typically based on service and discharge requirements.

 

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