Louisville Kentucky Mortgage Lender for FHA, VA, KHC, USDA and Rural Housing Kentucky Mortgages: Job History and Income Requirements for a Kentucky...

Louisville Kentucky Mortgage Lender for FHA, VA, KHC, USDA and Rural Housing Kentucky Mortgages: Job History and Income Requirements for a Kentucky...: 

  Job History and Income Requirements Kentucky Government Mortgage FHA, VA, USDA and Fannie Mae   Mortgage Home Loan Job History

Kentucky Government Mortgage FHA, VA, USDA and Fannie Mae  Mortgage Home Loan Job History & Income Requirement Breakdown

How much money do I have to make to qualify for a Kentucky Rural Housing Loan?

Kentucky Rural Housing Loans and Debt To Income Calculations (DTI)

Add caption How Much House Can I Afford if I use the USDA loan in Kentucky? Answering this question is determined based on calculating what are known as the borrower’s Debt-to-Income or DTI ratios. The established maximum DTI ratio used for a Kentucky Rural Housing USDA Loan is based on two sets of ratios, which are as follows: Front-end or housing ratio - the monthly mortgage payment cannot exceed 29% of the gross monthly income. Back-end or total debt ratio – the total debts, including the new monthly mortgage payment, cannot exceed 41% of the gross monthly income. A monthly mortgage payment includes the principal and interest payment on the mortgage note, as well as the monthly prorated portion of the annual property tax and homeowner insurance premium. Specific to the Kentucky USDA Rural Loan program is the pro-rate portion of the USDA Annual Fee, which is often referred to as a monthly mortgage insurance payment. If there are any Condominium And or Homeowner Association (HOA) fees, these fees must be included in the monthly mortgage payment as well. Total debts include the anticipated monthly mortgage payment and all monthly re-occurring credit obligations. Examples of reoccurring credit obligations include monthly car payments, minimum payment on credit cards, and student loan payments. If the borrower is obligated to make any alimony or child support payments, these payments will be included within the total debt calculations as well. If the total debts exceed 41% of the gross monthly income, the maximum monthly mortgage payment must be reduced in order to bring total DTI back down to 41%. For example, assume a monthly income of $5,000. Based on the 29%/41% ratio requirements, the maximum housing expense will be $1,450 and total debts will be $2,050. If the non-housing expense exceeds $600 ($2,050 - $1,450), the housing expense will need to be reduced by an equal amount to keep the total ratio at 41%. While the 29%/41% ratio is considered to be the Underwriting standard guideline, the Kentucky USDA Loan Program will allow for DTI ratios as high as 33.99%/45.99%. What determines the ability to qualify at a higher ratio is a combination of factors, such as an approval through Guaranteed Underwriting System, which is Kentucky Rural Housing USDA’s automated approval, and other compensating factors such as: 680 or higher credit score No or low "payment shock" - less than a 100% increase in proposed mortgage payment vs. current rental housing expenses Fiscally sound use of credit Ability to accumulate savings Stable employment history with 2 or more years in current position or continuous employment history with no job gaps Cash reserves available for use after settlement Career advancement as indicated by job training or additional education in the applicant’s profession Trailing spouse income - as a result of a job transfer, in which the house is being purchased, prior to the secondary wage-earner obtaining employment. This assumes that the secondary wage-earner has an established history of employment and has a reasonable chance to obtain new employment in the area upon relocating to the area Low total debt load Joel Lobb (NMLS#57916) Senior Loan Officer American Mortgage Solutions, Inc. 10602 Timberwood Circle Suite 3 Louisville, KY 40223 Company ID #1364 | MB73346 Text/call 502-905-3708 kentuckyloan@gmail.com If you are an individual with disabilities who needs accommodation, or you are having difficulty using our website to apply for a loan, please contact us at 502-905-3708. Disclaimer: No statement on this site is a commitment to make a loan. Loans are subject to borrower qualifications, including income, property evaluation, sufficient equity in the home to meet Loan-to-Value requirements, and final credit approval. Approvals are subject to underwriting guidelines, interest rates, and program guidelines and are subject to change without notice based on applicant’s eligibility and market conditions. Refinancing an existing loan may result in total finance charges being higher over the life of a loan. Reduction in payments may reflect a longer loan term. Terms of any loan may be subject to payment of points and fees by the applicant Equal Opportunity Lender. NMLS#57916 http://www.nmlsconsumeraccess.org/

Kentucky Rural Housing USDA's Income Requirements for Mortgage Approval

 USDA Loans require that the borrower's income meet both "Income Eligibility" and "Income Qualifying" requirements. 

Income Eligibility is income used to determine whether the income of all adult household members exceeds USDA's county specific and household size allowable limit. Income Qualifying is the income used to determine whether the income is appropriate to support the loan request. The components used to determine the income for both criteria differ.

A common list of areas that should be reviewed by the Loan Officer with the borrower is as follows:

Income Type	Income - Eligibility	Income - Qualifying
Household Income	Income of all adult members of the household are considered for qualifying purposes even if they are not on the loan application	Use only income from borrower(s) on the loan application
W-2 Annual Income	Use Box 3 – Social Security Income	Use Box 1 – Wages, tips, other comp
Court Ordered Child Support and Alimony	Use court ordered amount even if not receiving income regularly. This is for all members of the household	Must document on-time receipt over the previous 12 months
Part-Time, Overtime, and Bonus Income	Any income earned is extrapolated over a 12-month period of time	Need a one-year documentable history with the same employer to be considered
Business Income/Loss	Business income or loss from a previously filed tax return will be used to determine income	Need a two-year documentable history provided by tax return information obtained directly from the IRS
Unemployment Income	Benefit received from current year (and possibly previous year even if non-reoccurring) will be added to income eligibility	Only unemployment income derived from seasonal planned layoffs will be considered as qualifying income. All other unemployment income will be disregarded
Unreimbursed Business Expense	Reduce income eligibility income	Reduce income qualifying income

Employment job history requirements for a USDA Loan Approval In Kentucky

 Kentucky USDA Mortgage Program

The USDA Home Loan Program does not technically have an minimum employment history requirement but lenders are required to verify applicants' employment history for the prior two years and confirm that the applicant's income is stable

Applicants are required to explain any employment gaps of at least one month
Explainable employment gaps of six months or more are also permitted as long as the applicant can document the reason for the gap, has been back to work for at least six months and has a two year employment history prior to the work gap

Self-employed borrowers are typically required to demonstrate a two year job history as documented by the applicant's tax returns

A self-employed job history of between one and two years is permitted if the applicant was previously employed in a similar line of work for at least two years or one year of work plus one year of formal education or training

The lender is required to confirm that the self-employment income is expected to continue for at least three years

A self-employed history of less than one year is not permitted

An uninterrupted two year history in the same position is typically required for part-time employment although a part-time work history of less than two years may be considered if the lender verifies with the employer that the work is likely to continue at the same compensation level

Income from seasonal employment is permitted as long as the applicant has a two year work history and expects to be rehired for future seasons

The lender is required to determine that part-time and seasonal income is expected to continue for the next three years

Income from part-time or seasonal work must be reported on the borrower's tax returns to be considered by a lender

A consecutive two year payment history and determination by the lender that the income is expected to continue for the next three years is required for bonus, commission or overtime income to be considered
Bonus, commission or overtime income earned for less than a year is not permitted without significant compensating factors such as a change in the applicant's compensation structure

Lenders are required to explain any significant declines in bonus, commission or overtime income
Significant variations in bonus, commission or overtime income may require the lender to use an average period of more than two years to calculate the applicant's income

Kentucky Rural Housing USDA Income Eligibility guidelines.

Today I will like to discuss what income is allowed by USDA Lenders in Kentucky  when calculating your income, as well as income that is used to determine whether you meet Kentucky Rural Housing  USDA Income Eligibility guidelines.
USDA Loans in Kentucky equire that the borrower's income meet both "Income Eligibility" and "Income Qualifying" requirements.  Income Eligibility is income used to determine whether the income of all adult household members exceeds USDA's county specific and household size allowable limit.  Income Qualifying is the income used to determine whether the income is appropriate to support the loan request.  The components used to determine the income for both criteria differ.

A common list of areas that should be reviewed by the Loan Officer with the borrower is as follows:

Income Type	Income - Eligibility	Income -Qualifying
Household Income in Kentucky	Income of all adult members of the household are considered for qualifying purposes even if they are not on the loan application	Use only income from borrower(s) on the loan application
W-2 Annual Income in Kentucky	Use Box 3 – Social Security Income	Use Box 1 – Wages, tips, other comp
Court Ordered Child Support and Alimony	Use court ordered amount even if not receiving income regularly. This is for all members of the household	Must document on-time receipt over the previous 12 months
Part-Time, Overtime, and Bonus Income	Any income earned is extrapolated over a 12 month period of time	Need a two year documentable history with the same employer to be considered
Business Income/Loss	Business income or loss from a previously filed tax return will be used to determine income	Need a two year documentable history provided by tax return information obtained directly from the IRS
Unemployment Income	Benefit received from current year (and possibly previous year even if non-reoccurring) will be added to income eligibility	Only unemployment income derived from seasonal planned layoffs will be considered as qualifying income.  All other unemployment income will be disregarded
Unreimbursed Business Expense	Reduce income eligibility income	Reduce income qualifying income

Loan Officers that are inexperienced with USDA Loans in Kentucky often incorrectly calculate income eligibility, which may lead to a subsequent loan denial.  Furthermore, the actual borrower should review this information as well. Borrowers need to realize there are variables identified through the loan approval process that the Loan Officer has no way of knowing when providing an initial pre-qualification letter. For instance, the Underwriter will not know if there are any unreimbursed business expenses until tax returns are obtained directly from the IRS, unless the borrower proactively communicates the information to the Loan Officer during the initial loan pre-qualification interview. 

Most are familiar with USDA Rural Housing Loan Program  being a great no money down program available and it is not just for Kentucky first time buyers. 

Joel Lobb
Senior Loan Officer
(NMLS#57916
text or call my phone: (502) 905-3708
email me at kentuckyloan@gmail.com

The view and opinions stated on this website belong solely to the authors, and are intended for informational purposes only. The posted information does not guarantee approval, nor does it comprise full underwriting guidelines. This does not represent being part of a government agency. The views expressed on this post are mine and do not necessarily reflect the view of my employer. Not all products or services mentioned on this site may fit all people. NMLS ID# 57916, (www.nmlsconsumeraccess.org). USDA Mortgage loans only offered in Kentucky.

All loans and lines are subject to credit approval, verification, and collateral evaluation and are originated by lender. Products and interest rates are subject to change without notice. Manufactured and mobile homes are not eligible as collateral.

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What are the income and employment guidelines for a Kentucky Rural Development Loan Housing Approval?

What is an acceptable income and employment for a KY USDA Loan Approval?

 There is no minimum length of time an applicant must have held a position to
 consider employment income as dependable.
 Lender must verify the applicant’s employment for the most recent 2 full years
& verify that the applicant’s income has been stable.
 The applicant should not have any gaps in employment of more than a month
 within the 2 year period prior to making the loan application.
 Applicants that have not been employed for 12 months with their current
employer or have experienced a significant earnings increase are considered high
risk.

• Second jobs, full 2 year history
• Unearned income, 3 year continuance
• Self‐employed applicants, 2 year history


Newly Employed:

Less than a 2-year employment & income history can be considered when documentation = applicant was attending school immediately prior to current employment.
School Program/Classes must correlate to job!
For those applicants about to start a new job:
Firm offer letter from new employer indicating the job will begin within 60 days of loan closing

Re-entering the Workforce:

Applicants who re-enter the workforce after an absence to care for a family member or minor child,
extended medical illness, or other reasonable circumstances & less than 2-year employment &income history: May be considered for repayment income if the applicant has been at the current employer for a minimum of six months and there is evidence of a previous employment history

Significant increases or decreases in income level:

Experienced a Significant Decrease?

Previous higher income cannot be averaged for repayment purposes
 unless there is documentation of a one-time occurrence (e.g. injury)
that prevented working or earning full income for a period of time & proof that the applicant
is back to the income amount that they previously earned. Focus on the most recent earnings
and income that is likely to be received at the level used for qualifying.

 Experienced a Significant Increase?

 Proposing to qualify the applicant at the higher amount?

 NEED: sufficient documentation to confirm the increased income is stable and likely to
continue at the level used as part of the written analysis


Fixed Income like Social Security, SSI, non-taxable income:

• May be grossed up 25% for repayment
• Do not gross up for annual income
• No other adjustments are authorized

If you have questions about qualifying as first time home buyer in Kentucky using the USDA Home Loan Program, please call, text, email or fill out free prequalification below for your next mortgage loan pre-approval.

I have successfully originated over 200 USDA Home loans in Kentucky. Put my experience to work for you. Your Kentucky USDA Rural Housing Loan Expert.

Joel Lobb
Senior  Loan Officer

(NMLS#57916)

 Text or call phone: (502) 905-3708

email me at kentuckyloan@gmail.com

http://www.mylouisvillekentuckymortgage.com/

The view and opinions stated on this website belong solely to the authors, and are intended for informational purposes only.  The posted information does not guarantee approval, nor does it comprise full underwriting guidelines.  This does not represent being part of a government agency. The views expressed on this post are mine and do not necessarily reflect the views of my employer. Not all products or services mentioned on this site may fit all people