Kentucky VA Mortgage Guidelines For Approval

Kentucky Mortgage VA Underwriting

Major changes are as follows, but the documents have been revised throughout so it is recommended that everyone review them

Borrowers using rental income from a non-subject property to qualify need to document a minimum 2 year rental history and 3 months reserves PITI for each rental property (excluding property being vacated and turned into a rental). When no mortgage exists on a rental property, 3 months reserves must still be provided that cover taxes, insurance, HOA dues, and any other fees documented for the property. These reserves cannot come from equity, gift funds, or any loan proceeds.

• Rental income from boarders can now be used as qualifying income provided
  • A 2 year history of tax returns can be provided showing boarder income generated by the property; AND
  • The use of the property for boarder rental cannot impair the residential nature of the property and cannot exceed 25% of the property's total floor area
• Alimony, child support, and maintenance require at least 3 years continuance to be considered effective income.
• For payment plans after a judgment, VA will generally require 12 months of timely payments before credit is considered reestablished. A shorter repayment history may be considered if it can be determined that the borrower addressed the judgment responsibly and began a repayment plan immediately after it was filed. If borrower has missed payments within the last 12 months, they will be ineligible for financing even if the debt is paid in full.
• For voluntary short sales or deeds-in-lieu where the borrower was current on their payments at the time the property was surrendered, no minimum derogatory credit waiting period will be required.
• VA's list of required Appraisal Report Contents has been updated and now includes specific photographs required on the appraisal (refer to VA Chapter 11: Topic 3: Appraisal Report Contents for full list).
• VA Chapter 11: Topic 4: Gross Living Area has been added to provide direction in determining the Gross Living Area of the property.
• Other sections have been updated to include guideline changes from previous VA Circulars.

Louisville Kentucky Mortgage Lender VA, can you have 2 Kentucky VA Loans?

Louisville Kentucky Mortgage Lender for FHA, VA, KHC, USDA and Rural Housing Kentucky Mortgage: Can you have 2 Kentucky VA Loans?: Did You Know  A Kentucky Veteran Can Have Multiple VA Loans: That’s right. VA will allow a Kentucky Veteran to have multiple Kentucky ...

Your Complete Guide to the VA Loan

Your Complete Guide to the VA Loan: The VA Loan isn't just for active duty military. Check out this complete guide to see if you might be eligible to use the VA Loan.

Eligible Parties:
While everyone always associates the VA loan as the loan for those who served in the military or veterans, there are eight parties that are eligible for the VA loan.

1. Veterans.
2. Current or former National Guard or Reserve member who has been activated Federal active service.
3. Active Duty Service member.
4. Current National Guard or Reserve member who has been Federal active service.
5. Discharged member of the National Guard who has never been activated for Federal active service.
6. Discharged member of the Selected Reserve who has never been activated for Federal active service.
7. Surviving Spouse in Receipt of DIC (Dependency &  Indemnity Compensation) benefits.
8. Surviving Spouse and not receiving DIC (dependency & Indemnity Compensation) benefits.

You can find more information and how to prove your eligibility on the VA benefits website. The specific service requirements and time periods can be found here.

Use
Unfortunately, the VA loan cannot be used for ANY type of purchase. Like many federally sponsored programs there are very specific requirements to what can be bought with a VA loan.

As defined by the VA, the loan can be used for five types of homes, all of which must be your personal home. The specific VA wording can be found here.

1. Buy a home or condominium unit in a VA approved project.
2. Build a Home.
3. Simultaneously purchase and improve a home.
4. Improve a home by installing energy-related features or making energy efficient improvements.
5. Buy a manufactured home and/or lot.

My Thoughts: 

Condominiums – Personally, I will not buy a condominium. The VA, FHA and other government approved loans have very specific requirements regarding condominiums. At one point (not sure if it is still in play), complexes that had more than 30% that were rentals were not eligible for these programs.

Once these complexes were no longer eligible to meet these requirements these units sat longer and even lost value. To further exasperate the problem, many condo communities have or create rules regarding the number of rentals allowed or they forbid it all together. This creates a huge issue regarding an exit plan. This is why I don’t buy condos and I check all HOA’s very closely to make sure there are no laws against making my home a rental once I move out of the area.

Multi-plex – The VA allows you to buy a single family, duplex (2 units), triplex (3 units) and a quadplex (4 units). The key is that you have to live in one unit, however, you are still allowed to rent the other unit(s) out.

Eligibility
Once you know that you qualify, the next step is to figure out your eligibility. Unfortunately, it’s not as simple as it sounds because it’s based on your location.All the numbers after that are based on location and the number of times the loan has been used. The VA location list to check eligibility can be found here.

Multiple Loans
The great thing about the new VA rules is not only are you given a set amount, but you can buy as many houses under the amount of the last local place. You entitlement includes the purchase price AND the funding fee (described below) of your location.

This is the Equation: Current Location Entitlement – Previous Entitlement(s) if you have multiple (Funding Fee included) = amount you have left.

So just because you are “out” in one location in regards to your VA loan eligibility, does not mean you should not have your mortgage broker check your eligibility in the next place you go. It never hurts to ask, you could be missing out on an opportunity!

Financing Above Your VA Loan

The VA loan does allow you to finance above your VA loan amount. The key thing to note is anything above the VA funding amount requires a down payment of 25%. So if you go above your funding amount by 10,000 you will now owe a down payment of $2,500.

It important to check all the rates. The last time I checked, mortgage rates for the VA loan they were MUCH lower than many of the of the rates available. Even with the funding fee, and having a down payment amount, this might have a lower payment than another type of loan–ESPECIALLY if you qualify for the funding fee to be raised.

VA Funding Fee

The VA funding is the only downside to the VA loan and using it for multiple loans. The VA loan charges a funding fee for all their loans. The rates depends on a couple of different variables so certainly look at this chart to figure out your funding fee.

Waiving of the Funding Fee

If you have a VA disability rating then you should definitely check out this article. I explain all the regulations and how all those fees/other expenses could be waived.

The VA loan is truly an amazing loan. There are so many nuances and great benefits. I highly recommend you find a great mortgage broker who can walk you through all the different possibilities. Did I miss anything regarding the VA loan? What has been your experience?

Kentucky VA Home Loan Frequently Asked Questions for Qualifying for a VA Mortgage loan?

Does a manufactured home qualify for a 30-year loan?

Yes. However, the manufactured home will have to be permanently installed on a foundation.
This includes removal of the tongue and wheels, and anchoring the manufactured home to a
masonry perimeter foundation wall with interior masonry mortared piers on concrete footings.
The home will also have to be taxed as real estate in the county in which it is set up.

Can a veteran build a home and finance it VA?

Yes. The veteran can hire a builder or act as his/her own general contractor.

Can a VA loan on a house in a Condominium or Planned Unit Development (PUD) be
obtained?

Yes. However, if there is a mandatory homeowner’s association fee to cover the amenities,
certain legal documents establishing the condominium association will have to be submitted to
VA for approval prior to guaranty. If HUD has already approved the condominium development,
then VA will accept HUD’s approval.
PUDs are no longer reviewed and approved by VA. This task is the lender’s responsibility.

Are lenders required to ask for “green cards” when one or both applicants may be noncitizens?

Presently, VA has no requirement for lenders to establish legal residency of a party who may not
be a citizen.

What documentation is needed when considering potential employment (for example, an
active duty person due to be released and planning to start employment)?

In cases where a person is relying on potential employment, the lender must obtain verification of
a valid offer of employment. All data pertinent to sound underwriting (procedures, date
employment will begin, earnings, etc.) must be included.

Can a lender grant a borrower some or all of the closing costs?

Yes. Some lenders have programs targeted at low to moderate-income borrowers that grant
closing costs to borrowers to enable the transaction to be completed. This is not considered a
seller’s concession and VA has no objections to this type of program



What is VA’s position on “trailing spouses”?

Trailing spouse issues should be treated on a case by case basis. For example, if the spouse of an
active duty member who gets transferred is a physician, it is reasonable to assume she or he will
be able to quickly generate employment income at the new location. However, most cases will
not be as obvious as this and will need to be looked at on their own merits.

If a reservist fails to complete six years in the Selected Reserves, but is later determined to
have incurred a service-connected disability, is home loan eligibility established?

No. Unless the individual is specifically discharged due to a service-connected disability,
eligibility is not established.

Is a veteran exempt from the funding fee if his/her compensation is being withheld to pay a
debt (overpayment, etc.)?

Yes. In cases like this, the veteran is considered to be in receipt of compensation. It is merely
being redirected temporarily to liquidate a receivable.

Is a veteran still exempt from the funding fee if recalled to active duty?

No. The veteran stops receiving disability compensation when called back to active duty. The
requirement for exemption from the funding fee is that the veteran is “in receipt” of disability
compensation. After discharged from the call-up, the veteran will again have to apply for
disability compensation.

Is a “General” discharge acceptable for a person establishing eligibility based on six years’
service in the Reserves/National Guard?

No. The law states the person must have received an “Honorable” discharge. This is different
from service in the “regular” military where a discharge or release only has to be under other than
dishonorable conditions.

In joint loan cases where the parties are not married and one wishes to convey his/her
interest to the other party, does the lender or VA process the assumption?

The lender, if they have automatic authority, must process these cases. If the parties had been
married and title was being transferred as a result of dissolution of marriage (i.e. divorce), lender
processing would not be allowed. In those cases, the parties have the option of applying directly
to VA for any desired release of liability.

Does VA still use maintenance and utility charts for each state?

No. The calculation for maintenance and utilities is now 14 cents a square foot, all inclusive,
nationwide.

Can a “Cash-Out” refinance loan, with a subordinated second mortgage exceed VA’s 90
percent loan limit?

Yes, as long as the VA “first” mortgage does not exceed 90 percent and the second lien holder
agrees to subordinate.

When can the borrower receive cash at a closing from an Interest Rate Reduction Refinance
Loan?

An IRRRL cannot be used to take equity out of the property or pay off debts, other than the VA
loan being refinanced. The general rule is that the borrower cannot receive cash proceeds from
the loan. However, the veteran may be reimbursed for energy efficient modifications made to the
home within 90 days of closing the IRRRL.

Is a new loan number required for an IRRRL?

Yes. Do not use the old VA case number. When ordering a number in TAS, select "requester"
then "assignment" then "loan number only". Make sure the new VA case number is higher than
the old VA case number.

Is a CAIVRS screening required for an IRRRL?

Yes. A CAIVRS screening is required for all VA guaranteed loans.

Joel Lobb
Mortgage Loan Officer

Individual NMLS ID #57916

American Mortgage Solutions, Inc.

10602 Timberwood Circle 

Louisville, KY 40223

Company NMLS ID #1364

Text/call:      502-905-3708
email:          kentuckyloan@gmail.com

http://www.mylouisvillekentuckymortgage.com/

Text/call 502-905-3708 kentuckyloan@gmail.com

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