Kentucky First Time Home Buyer Mortgage Loan

HUDNo.08-23-2011KY.

HUD AWARDS $1.2 MILLION IN GRANTS TO PROMOTE AFFORDABLE HOUSING AND ECONOMIC DEVELOPMENT IN KENTUCKY’S RURAL COMMUNITIES
Grants for rural communities to address housing, poverty and jobs

loan, the property must be located in a rural designated area as defined in Rural Development Instruction §1980.312. You may view eligible areas on USDA Rural Development’s web-site at:

the value of the site must not exceed 30 percent of the total value of the property. When the value of the site is typical for the area, as evidenced by the appraisal, and the site cannot be subdivided into two or more sites, the 30 percent limitation may be exceeded.”

If a 10-year Builder Warranty is provided, only a Final Inspection and a

Thermal Certification are required

Existing properties must meet the current requirements of HUD Handbooks 4150.2 and 4905.1, typically verified through an RHS Adequacy Certification (Existing Dwelling Inspection Report), or by the appraiser certifying in the comments section of the appraisal that the property meets HUD Handbooks 4150.2 and 4905.1.

•

Required Repairs/Escrow Agreements

When repairs are required for structural or mechanical deficiencies that exceed the Seller’s contractual obligation, can assist borrowers.  allows the ability to finance required improvements based on an “as improved” appraised value, in combination with an escrow hold-back at closing.

Unless the deficiency is a significant item that negatively impacts the safety or livability of the dwelling, loan closing need not be delayed. For those deficiencies that can be corrected post-closing, Chase will require, in addition to our standard closing items:

•

A corrected FNMA 1003 (Uniform Residential Loan Application) with the amount of financed improvements listed under the “Repairs” Section.

•

Estimates/contracts for all repairs financed with loan proceeds.

•

A -approved escrow hold-back agreement signed by buyer and

seller at closing.

•

A collection of one and one-half times of the estimated repair cost

retained at closing to be disbursed by the settlement agent.

•

Final inspection of required repairs will be required.

Rural Development requires all repairs to be completed prior to their issuance of the final Loan Note Guarantee (Rural Development Form 1980- 17). However, external repairs delayed by weather related issues must be completed within 120 days of loan closing as outlined inKentucky Rural Housing USDA  Rural Development Instruction §1980.315 – Escrow accounts for exterior development.

 

Kentucky Rural Housing USDAUNDERWRITING GUIDELINES

For loans closing with  funds, it is our policy to have repairs for internal deficiencies completed within 30 days of loan closing. As Rural Development will require a final inspection once the work is completed, please include this expense as part of the escrow holdback.

•

Maximum Interest Rate (GRH Purchase Transactions Only)

The maximum interest rate for the Rural Development Guaranteed Rural Housing Program is defined as the FNMA 90-day actual-actual yield requirements plus 60 basis points, rounded up to the nearest quarter percent. 

  

RURAL HOUSINGKentucky Rural Housing USDA

UNDERWRITING GUIDELINES

•

Assumability

The Guaranteed Rural Housing loan is assumable subject to the following

conditions: Kentucky Rural Housing USDA

•

Subject property and applicant(s) must meet all criteria for the Rural

Development Guaranteed Housing Program.

•

Applicant (buyer) must be credit-approved by •

In accordance with Rural Development (FmHA) Instruction 1980-D,

no release of liability will be granted to the original Borrower(s).

•

A new title policy will be required at closing.

•

Normal application, processing, and transfer fees will apply.

 

 

RURAL HOUSINGKentucky Rural Housing USDA

UNDERWRITING GUIDELINES

•

INCOME VERIFICATION/REQUIREMENTS

•

The Guaranteed Rural Housing loan is documented with both Rural Development and FNMA forms. (Rural Development forms are provided in the Forms Section of this manual.)

•

All sources of income must be verified using FNMA Form 1005 – “Verification of Employment“. Rural Development, as outlined in Rural Development Instruction §1980.351, will typically review the past 24 months to determine both Income Eligibility, as well as compliance with Monthly Housing (29%) and Total Debt (41%) Ratios. Usually, Chase requires verified primary sources of income for a 24-month period to confirm loan approval.

•

Alternate documentation is permitted in place of FNMA Form 1005. Alternate documentation must include: two years W-2’s, 30 days paystubs with year-to-date information, and a Processor’s Certification of Employment.

•

The following should serve as a guideline for handling income-related issues:

•

Full Time – For borrowers whose income is derived from full-time

employment, two (2) years of full employment history must be verified

on FNMA Form 1005 (Verification of Employment).

•

Borrowers are not required to have 24 months continuous

employment with their current employer.

•

Where there has been a change in employers in the last 24 months, the borrower must explain any gap in employment that extends beyond one (1) month.

•

Two (2) years of tax returns will only be required for:

•

Self-employed borrowers

•

Commissioned borrowers

•

Borrowers employed by a relative or closely-held family

business.

 

 

RURAL HOUSING Kentucky Rural Housing USDA

UNDERWRITING GUIDELINES

•

Borrowers who are not commissioned, but need to

validate their expenses.

•

Part-Time – Part-time or second job income with duration of 24 months

may be used.

•

Overtime and Bonus Income – Overtime and bonus income can be

used to qualify the applicant if the employer verifies that the applicant has received it during the last 24 months and indicates that the overtime or bonus income will in all probability continue. The lender must develop an average of the last 24 months overtime and bonus income to determine the amount of income that can be considered in evaluating the borrower’s qualifications.

•

Self-Employed Income – Two (2) previous years 1040′s are required.

They must be signed and certified by the applicant. Additionally, a year-to-date Profit & Loss Statement with Balance Sheet, prepared and signed, must be submitted. If the applicant has 25 percent or more ownership interest in any business entity, the applicant must also provide the most recent two (2) years’ business tax returns (Corporate, Sub-S Corporate, or Partnership) along with a current Profit and Loss Statement with a Balance Sheet prepared and signed by an accountant.

•

Alimony, Child Support, and Separate Maintenance – Chase

requires documentation that child support, alimony, or separate maintenance will continue for three (3) years after the date of the mortgage application or it will not be considered as income. The borrower must also provide evidence that the funds have been received for the last 12 months. Acceptable evidence includes deposit slips, canceled checks, court records, or tax returns.

•

Retirement Income – Retirement income, i.e., pensions, annuities,

401K distribution, etc., may be verified by letters from the organizations providing the income, copies of the retirement award letters (with photocopies of canceled checks attached), tax returns, or IRS W-2 forms. This evidence must confirm a continuation of this income for a minimum of three (3) years.

 

RURAL HOUSING Kentucky Rural Housing USDA

UNDERWRITING GUIDELINES

•

Social Security Income – Acceptable verification includes a

photocopy of the Social Security Administration’s award letter or copies

of the borrower’s last 2 bank statements to confirm the

regular deposit of the payments. Benefits that have defined expiration dates must have a remaining term of at least three (3) years to be considered as income.

•

Disability Income – Disability income will be considered acceptable

income provided it can be documented by furnishing a recent copy of respective letter of benefits or allotment setting forth the terms of the income. The benefits must be on-going for a minimum of three (3) years.

•

Unemployment And Public Assistance Benefits – Unemployment

And Public Assistance benefits will be considered as income if they are properly documented by letters or exhibits by the paying agency. The amount, frequency and duration of payments must be stated in the verifying documents. If an individual receives unemployment benefits as a regular part of his/her income, Chase requires copies of tax returns for the past two (2) years to establish a history of receipt. This income must be documented as on-going for a minimum of three (3) years.

•

Dividends/Interest Income – Dividends and interest may be used as

income provided the assets that are generating the dividend/interest income will not be used for the down payment or closing costs on the proposed loan. The applicant must provide tax returns for the previous two (2) years along with verification of current assets via bank statements, verification of deposits, etc. This income will be averaged over two (2) years or calculated at current market interest rates, whichever is less.

 Kentucky Rural Housing USDA

 

Related articles

• 3 Things The Lender Looks At When You Apply For A Kentucky USDA Rural Development Home Loan (kentuckyfirsttimehomebuyer.com)
• Paje urges public to support rural development initiatives (tuklasinnatin.wordpress.com)
• No Down Payment Product for Rural Buyers – USDA Loans (keciabland.wordpress.com)
• $14 Billion in No Money Down Guaranteed Loans for Rural Homebuyers (theraleighmortgageguy.com)
• Sustainable Land Use and Rural Development in Mountain Areas at Hohenheim University in Stuttgart (chimalaya.org)

KENTUCKY HOUSING CORPORATION.

Home Buying And Down Payment Assistance Programs In Kentucky

If you are a low to moderate income individual or family and a first time home buyer in Kentucky, the Kentucky Housing Corporation may have the perfect mortgage program, and closing cost and down payment assistance program to help you buy a home. The Kentucky Housing Corporation has many home buyer assistance programs to help those who need financial assistance to buy a home.

First Time Home Buyer, Previous Home Buyer Mortgage Loan Programs

First Time Home Buyers or previous home buyers looking to purchase a home in Kentucky can turn to the Kentucky Housing Corporation to get assistance. KHC has several mortgage programs available to aide in buying a home. To see if you are eligible, you must apply for a KHC loan program through a participating lender.

KHC loans have low interest fixed rate mortgage programs, flexible underwriting requirements, allow for little to no down payment options, and provide access to down payment and closing cost programs for those who qualify.

How To Qualify For A Kentucky Housing Corporation Mortgage?

Qualifying for a Kentucky Housing Corporation Mortgage is as easy as qualifying for a mortgage except these loans are meant for those who have low to moderate incomes and need a little extra help paying for their mortgage. There are income limits and home purchase price limits that apply depending on the family size of the home buyer and depending on the location of the property to be purchased. Eligible home buyers must intend to live in the home being purchased as their primary residence. You must also be employed or have some sort of documentable income that will continue.

Are There Down Payment and Closing Cost Assistance Programs Available In Kentucky?

The Kentucky Housing Corporation offers a variety of down payment and closing cost assistance programs to qualified and eligible home buyers. There are primarily 4 programs that KHC offers to home buyers that use KHC’s first mortgage loans to purchase a home. To obtain and qualify for any of these programs interest home buyers must apply for these programs through participating lenders.

Here are the 4 programs (summarized from the Kentucky Housing Corporation website):

Regular Down Payment Assistance Program (DAP) – This program has a statewide purchase price cap of $237,000 and offers down payment assistance in the form of a loan that is paid back over 10 years. A qualified home buyer using a KHC first mortgage program can get up to 4% of the purchase price in this program to be applied to their down payment and closing cost needs.

HOME – Down Payment Assistance – This program has a statewide purchase price limit of $195,700. Up to $4,500 in down payment and closing cost assistance is available to qualified and eligible home buyers. There are no monthly payments for this program and if the home buyer remains in their home for 5 years the home buyer will not be required to pay any of the money back. Income limits apply based on the county or metropolitan area where the home being purchased is located.

HOME Special Program – This program has a statewide purchase price limit of $195,700, and provides up to $10,000 in assistance to eligible home buyers. The money from this program doesn’t not require repayment if the home buyer remains in the home for 5 years. No monthly payments are required for this program. Households that include a person with a permanent disability and who receives SSI, SSDI, Veterans Disability, or some other form of disability income are eligible for this program provided they meet the qualification standards of the type of mortgage they apply for. This program is also available to home buyers over the age of 62. Home buyers using this program will have to meet income cap requirements.

HOME Family Program – There is a statewide home price limit of $195,700 for this program and it is only available for single and two parent families where there is at least one dependent child under the age of 18 living in the home. Furthermore, this program is only available for first time home buyers. Eligible home buyers can get up to $10,000 in this program and if they stay in their home for at least 5 years the assistance is forgiven. There are no monthly payments for this program. Home buyers using this program will have to meet income cap requirements.

Are There Any Other Home Ownership Options In Kentucky?

Homebuyers in central and northern Kentucky can also look to the Community Ventures Corporation (CVC) for home buying options. The CVC offers three major programs to assist low income families in becoming homeowners.

These programs are:

a down payment and closing cost option;

a two year lease purchase opportunity;

a new construction loan program for those borrowers interested in purchasing a new home in rural Kentucky.

Among qualifying for a loan program, access to these loans do require home buyers to attend home buyer education classes and are available for application through participating lenders statewide.

To get additional information about down payment assistance programs, or to find out more about mortgage programs please complete the information below:

Call us today at 502-905-3708 or email us at kentuckyloan@gmail.com
Home Buying And Down Payment Assistance Programs In Kentucky