Kentucky VA Loan Credit Score Requirements

Basics needed to qualify for a VA loan

It should be known that VA loan eligibility doesn’t necessarily translate into loan approval. Even if you are eligible, you still need to meet all lender requirements. Among other things, these can include the following:

Income verification

A lender will need to know how much you make to ensure you can pay back the home loan. Typically, mortgage underwriters look for consistent earnings, so you’ll be asked to submit W2s or pay stubs for the past few years. This helps the underwriter gauge income stability and your likelihood to stay on top of loan payments.

Debt-to-income ratio

Lenders look at a borrower’s debt-to-income (DTI) ratio to assess whether you’re someone they want to loan money to. To calculate DTI, they’ll add your current monthly expenses (car payments, recurring credit card charges, internet bills, etc.) to your future monthly expenses related to your new mortgage. Then, they’ll divide that number by your monthly income and multiply by 100. The higher your DTI, the less favorable the terms or interest rate may be. As a benchmark, a DTI of 41% is the standard guideline for VA loans.

A good credit score

For a 30-year fixed-rate mortgage through the VA loan program, Movement Mortgage requires a minimum credit score of 620.

Kentucky VA Mortgage Lender.

All types of income, credit and employment issues taken into consideration. 620 minimum Fico Score from Fico Score versions 2,4, and 5 respectably from Transunion, Equifax . and Experian Credit Bureaus. Middle credit score of three taken.

Type of residence

A home you buy with a VA loan must be your primary residence.
Guarantees

The VA loan program guarantees 25% of the lender’s potential loss should the borrower default on the loan. This amount, called an entitlement, is what allows for a low-or-no down payment to be acceptable.

Veterans and military members purchasing in more expensive housing markets may have even more VA loan entitlements available.
Tax benefits

Depending on where you’re looking to live, military borrowers may be eligible for property tax reductions.
Insurance

Another overlooked benefit is that there is no requirement to take out private mortgage insurance (PMI) with a VA loan, unlike some other low-or-no down payment loans.
Down payment

With a VA loan, eligible applicants can purchase a new home with 0% down.
Fees

First-time VA loan applicants:

If you’re looking for 100% financing (i.e., no down payment), a fee of 2.30% on the total loan amount is charged.

If you can make a down payment of at least 10%, the fee is 1.40%.

Second-time VA loan applicants:

3.6% of the total loan amount is applied if the applicant still has an active VA loan, and if no down payment is made.

VA loan applicants receiving disability:

Funding fees are waived.

Seller contributions

It’s perfectly allowable for the seller to show their appreciation by chipping in up to 4% toward closing costs.

Louisville Kentucky Mortgage Loans

What is a VA Loan?

The Veterans Administration helped to make special mortgages available for veterans who meet the guidelines referenced below. The VA is not the lender, but they just insure or guarantee the loans for the lenders who are willing to make these special loans available. In simple terms, the VA takes on the risk if the lenders are willing to lend money to the veterans.

VA Loan Pros and Cons

Pros

• 100% loan to vaue ratio – or zero down!
• No mortgage insurance – No PMI
• Lower interest rates
• Debt to Income ratio much higher than other loan products
• Lower closing costs
• Easier to qualify for

Cons

• VA Funding Fee is an added expense
• VA loans are only for primary residences, not second homes or investments
• Some sellers prefer not to accept offers from borrowers who are using VA funding. However, what they do not know will not hurt them.

VA Loan…

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Kentucky VA Home Loans for 2021

 

 

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•  No down payment in most cases for purchase loans (up-front money toward your home purchase), and easier borrower credit requirements.

•  No monthly mortgage insurance premiums or private mortgage insurance (PMI).

•  Lower homebuyer closing costs, and limits to what borrowers can be charged.

•  The opportunity to roll your “VA funding fee” into your mortgage.

• The ability to refinance a non-VA loan into the VA mortgage program.

•  The opportunity to: ask a home seller to contribute up to 4 percent of the mortgage amount to cover some of the closing costs; ask your lender to cover some of the closing costs; seek closing cost assistance through state homebuying programs created for veterans and first-time buyers.

• The right to become a VA borrower for life. In most cases you can use VA mortgage programs forever, and sometimes you can have more than one VA loan.

•  Eligibility of financing for spouses of service-members who died in the line of duty or from a service-related disability.

You can review all types of Kentucky VA Home Loans here, including purchase mortgages, refinance mortgages (called Interest Rate Reduction Refinance Loans or IRRRLs), and cash-out refinance loans.

To qualify for a Kentucky VA Home Loan, usually a military veteran or service-member must have 90 consecutive days of active service during wartime, or 181 straight days of service during peacetime, or six years in the national guard or reserves of a particular military branch. You can find out if you’re eligible here.

Kentucky  VA mortgage comes with an additional closing cost called a “VA funding fee” of between 1.4 to 3.6 percent on the amount borrowed (depending on your circumstance). This special fee that non-VA borrowers never have to pay helps partially fund the “government backed” part of the VA borrower program, and many VA borrowers can roll it into their mortgage.

 

VA Loan Quick Facts

0% Down

Minimum Down Payment

620 Credit

Minimum Credit Score

41% DTI

Max Debt-to-Income Ratio

 

 

What is a VA Loan?

VA Loans are designed to assist veterans purchase a home. Active duty military and veterans across the nation will enjoy the desirable loan terms and low interest rates that often come with a VA loan. Additional benefits like no down payment requirement help make home buying an affordable and cost-effective reality for those who have served and continue to serve our country.

What are the benefits of a VA Loan?

VA Loan benefits and features:

• Zero down payment
• Buyers may finance the funding fee into the loan
• Closing costs may be covered
• Buyers may use gifts and seller contributions to cover closing costs

Who may benefit from a VA Loan?

A VA Loan may the right fit for you if:

• You’re an eligible veteran or active-duty military
• You’re buying a first home or are a repeat homebuyer

Kentucky VA Lending Guide

Kentucky VA loans are typically the best solution for our honored veterans and service members. Contrary to popular belief, VA loans are fairly easy to process and tend to not be any more complicated than any other loan program that we offer. Here are some of our favorite features of Kentucky VA loans: No Down Payment – VA is a true 100% financing loan with no minimum investment required. No Monthly Mortgage Insurance – VA loans do not require monthly mortgage insurance, providing significant cost savings to our Veterans. They do require an upfront Funding Fee of 0 to 3.6% that is paid directly to the VA. This funding fee is financed into the loan and may be waived for some buyers based on their scenario. Credit scores – Interest rates and underwriting requirements are less credit score sensitive than other loan programs. In some scenarios, we are able to lend to buyers with scores in the mid-500s. Buyers without a credit score may be eligible with additional requirements. Renovation loans – We can do purchase and refinance loans that roll the cost of minor and cosmetic repairs into the loan amount. Property Types – VA Loans can be used on 1-4 unit properties, primary residence only. They can also be used on VA approved condominiums and qualifying manufactured homes. VA Loans are issued by federally qualified lenders and are guaranteed by the United States Veterans Administration.  VA Loans are available to military personnel and veterans, including Reservists and members of the National Guard. Surviving spouses may be eligible in specific circumstances. VA Loan eligibility is determined using the Certificate of Eligibility (COE) document. We work directly with the VA on the buyer’s behalf to obtain this document. A buyer can take advantage of the VA loan program more than once!