What are the qualification for a Kentucky VA Home Loan?
Consistent Job and Income Stability
- For a currently serving service member, your service will immediately qualify as a stable job.
- For Kentucky veterans no longer on active duty, you’ll want to have at least 12 months at your current job or be in a similar line of work to your most recent work. Two years or more with an employer is the ideal job history for a mortgage.
- If you started a new job recently, you may be able to reference your previous work history, work in the service, or educational background to support the stability of your new job. In addition to standard paperwork, if it’s a brand new job, we’ll also be looking for an offer letter.
- Some types of jobs are inherently less stable than others. If you’re receiving a salary, your income is guaranteed short of job loss. If you’re receiving an hourly pay, then there is a good idea of what you’ll likely be making. But if you’re working any type of commission related job, your income is volatile. It could be high one month and zero the next month. For commission jobs, you’ll want to have at least two years of history reported to your tax returns. We’ll then be able to use a two-year average to determine what we can use as your monthly income.
Good credit scores and credit history
- There is no minimum credit score for VA, but most Kentucky VA lenders that I work with will want a 580 to 620 minimum with no foreclosure or bankruptcies in the last 2 years
- You should have zero late payments on either your rent or mortgage within the last 12 months – preferably having zero late payments. If this isn’t possible, focus on keeping all current accounts paid on time. Your new history will eventually bury the old late payments.
- If you have no credit score, we can use alternative trade lines like rent, utility bill and car insurance.
Debt to Income Ratios under 41% for lower credit score, or higher than 41% for good credit scores
- DTI will be referenced commonly throughout the loan process. This determines how much house you can afford as it’s your monthly debts considered against the gross monthly income (GMI) we’re able to use for your mortgage.
- Ideally, your total DTI will be below 41% of your gross monthly income. This means someone who makes $5,000 monthly would want all of their collective credit related debts + new mortgage to be below $2,050 for the month. For example, According to CNBC, the average car loan is $523 a month. If you add in another $27 for a credit card, that would be $550 in credit debts + housing. So, your mortgage payment would want to be under $1,500. You can potentially be approved for more, but this would be the ideal number to aim for.
- Residual Income requirements of $1000 or more a month for most veteran borrowers in Kentucky
- Your veteran status.
- You must have at least 90 days of active duty service.
- For Reserves, at least six years of service.
- For veterans, you must have a discharge other than dishonorable.
How you apply for a VA Home loan In Kentucky
The first step is to get your (COE and DD Form 214 for A Kentucky VA Mortgage Loan) in order as well as reviewing your information to make sure you qualify. If you don’t, we can get you on the right track.
Determining your eligibility and the maximum purchase price is the first step you’ll need to take for your Kentucky VA Loan. VA Loans don’t technically have a maximum mortgage/loan limit, but they do have a maximum amount they’ll 100% finance. On the other hand, FHA does have a maximum mortgage. This is an actual limit on the amount you can borrow.
Using a VA Loan allows you to finance up to 103.3% of the purchase price, with 100% going towards the purchase and the remaining 3.3% eligible to go towards your closing costs. Determining your eligibility will involve reviewing your veteran status, Certificate of Eligibility (COE), county limits, income, credit, and job stability. These factors will all contribute to your VA maximum mortgage.
The first thing you’ll need to do is to make sure you’re an eligible veteran and confirm your Certificate of Eligibility is ready for your VA Loan. If you’ve already got that sorted out, then you’re ready to start shopping for how much you’ll qualify for.
Mortgage Loan Officer