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New Kentucky VA Loan Guidelines for 2021

New Kentucky VA Loan Guidelines for Entitlement 

•   As opposed to lending the money directly, the VA provides a financial guaranty on these loans
which are made by private companies. The guaranty is a type of insurance for  lenders (pledging to repay a percentage of the loan if the borrower defaults) which is typically
25% of the loan.
•   The guaranty is reflected in a dollar amount which is called “entitlement.” The borrower’s
amount of entitlement determines how much may be borrowed without a down payment.  This calculation  is determined during the origination process using a document called the Certificate of Eligibility
(COE).
•   There are two layers of entitlement:
$36,000 (basic entitlement) + $91,600 (secondary entitlement) = $127,600
(maximum entitlement in most of the country)
•   Since the VA guarantees 25% of the loan amount, borrowers can borrow up to 4 times their
entitlement which is now $510,400 in most of the country (1 unit).
•   In high cost areas of the country, qualified Veterans can take advantage of
even more entitlement (up to $765,600 for 1 unit).

Kentucky Entitlement, VA Guaranty & VA Loan Amounts

As discussed, published county loan limits are no longer a factor for Veterans
seeking a jumbo loan with full entitlement. So, for Veterans with full entitlement, the
maximum amount of guaranty for a loan above $144,000 is 25% of the loan amount,
regardless of the county loan limit.
•
However, the county loan limits and possible down payment requirements continue to
apply for those who have more than one active VA loan, only partial entitlement
available or those who have defaulted on a previous loan.
•
If the Certificate of Eligibility (COE) shows any unrestored entitlement or the loan
amount is less than $144,000, the regular calculation will still be used to determine if
a down payment is needed, the loan amount needs to be lowered, or if the
entitlement should be restored to receive the 25% guaranty.
•
For Veterans who have previously used entitlement and such entitlement has not
been restored, the maximum amount of guaranty is the lesser of 25% of the loan
amount OR the maximum amount of guaranty entitlement available.

Louisville Kentucky Mortgage Lender for FHA, VA, KHC, USDA and Rural Housing Kentucky Mortgage: How to get approved for a Kentucky VA Mortgage Loan?

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Kentucky VA Mortgage Loans Financing up to 100%

 

Purchase, Type 1 Cash-Out Refinance, and Interest Rate Reduction Refinance Loans (IRRRL) 620 minimum credit scores** Standard and high-balance loan limit of $1,500,000 15, 20, and 30-year fixed-rate terms DU or LP findings accepted  Maximum 41% debt-to-income ratio (DTI)*** for AUS Refer/downgrades, unless residual income is exceeded by 20% and underwriting determines that there are other compensating factor

These are general credit guidelines for VA loans.  They do not represent the only requirements but 

do provide a general overview

Credit Report

Credit Scores

In order to verify your credit history, your lender will obtain a credit report containing 

information as reported by all 3 of the major credit bureaus: Trans Union, Equifax and Experian.

Most people will have 3 credit scores but it is possible that you may have only 1 or two scores if 

you have limited credit history.

This report will also include information on any public records such as bankruptcies, judgments and 

tax liens.

Though VA does not have a set minimum credit score requirements, lenders will have a minimum credit score requirement.

General Credit Score Requirements

Minimum Credit Score

620

In addition to the credit scores, your actual credit history is also analyzed. Collection account 

may need to be paid off in order to close your loan

It is preferable that the most recent 12 months show satisfactory payments and no other derogatory 

information.

If you experienced a major derogatory credit event, there will be waiting periods that will have to 

be observed before you can be eligible to qualify for a loan.

Bankruptcy Chapter 7

2 years from discharge date

Bankruptcy Chapter 13

Immediately after discharge or

After 12 months of payments**

Foreclosure*

2 years from completion date

Short Sale*

2 years from completion date

* If the foreclosure or short sale was on a VA loan, you may not have full entitlement available 

for the new loan

*** Must obtain written permission from the bankruptcy court/trustee and provide proof of 

satisfactory payment history

Income and Employment

Minimum History of Employment

A minimum of 2 year history in the same industry/line of work is required in most instances but 

it’s not a universal rule.

Recent graduates can satisfy the two year requirement by providing proof of schooling with a degree 

for the line of work you are now employed in.

Active duty members do not need a two year history as long as the minimum service requirement for 

eligibility has been met.

Self employed borrowers must always have a two year history of self employment and must show a two  year history of filed tax returns to meet the 24 month requirement.

Retirement, Disability, alimony and child support income does not require a 2 year history but 

verification that it will continue for at least 3 years is required in order for it to be included.

Income Calculations

If you are salaried, your base income will be used to qualify you for the loan.

However, if you are an hourly employee with varied hours, more than likely, your income will be 

averaged

over an extended period such as 18 or 24 months depending on the situation.

Overtime, bonuses, commission and part time employment must have a 24 history in order to be 

included in the qualifying income. The income will be averaged out over 24 months. Verification of 

likelihood to continue will also be required.

Non taxable income can be grossed up to account for the non-taxable status.

ASSETS

No down payment does not mean no cash needed

As mentioned in the closing cost section, there are fees that will need to be paid as part of your 

home

purchase or refinance.

You must have sufficient funds to cover any closing costs or fees not paid by the

seller or lender credit.

VA does not require additional cash to cover a certain number or mortgage payments or unplanned 

expenses (cash reserves), however, your ability to accumulate liquid assets and the amount of 

assets currently available is taken into consideration in the overall credit worthiness analysis.

Allowable source of funds

Funds for your down payment, closing costs and other expenses can come from:

•    Checking/savings accounts

•    Investment accounts

•    Retirement account

Gift funds from a relative are an allowed source of funds to cover down payment and or closing 

costs.

The gift will need to be verified and paper trailed via bank statements and a gift letter will need 

to be signed

by your and the gift donor .

Funds from unsecured loans (signature loans, credit card advances) or funds that can not be 

documented are not acceptable source of funds.

Federal regulations require that all deposits into your account be documented.

In the instance of payroll deposits, nothing will need to be done if the deposit shows as a Direct 

Deposit from your employer.

All other deposits will need to be explained and documented.

Debt to Income Ratios

A debt to income ratios is the percentage of your total debt obligation, including the new 

estimated mortgage payment, all debts shown on your credit report, as well as alimony, child 

support etc, as compared to your gross qualifying income

Deferred student loans

If student loan repayments are scheduled to begin within 12 months of the date of loan closing, the 

anticipated monthly payment will be included.

If you are able to provide evidence that the loan(s) will be deferred for a period outside that 

time frame, the payment will not be included.

Alimony/child support You will be expected to truthfully declare that you pay alimony or child

support. You will be asked to provide your divorce decree and/or child support order to verify the 

amounts.

Documentation Checklist

The following is a general list of documentation required for a home loan application.

Not all items will apply to your situation

CREDIT / IDENTIFICATION/ ELIGIBILITY

🏭 Copy of driver’s license or other photo I.D.

🏭 Copy of divorce decree

🏭 Copy of bankruptcy papers, including all schedules and discharge, and credit 

explanation letter for reason for bankruptcy.

🏭 Letter of explanation on any late payments, collections, charge off’s or derogatory 

credit

🏭 Letter of explanation for all recent credit inquiries

🏭 DD214 if not active duty or Statement of service if active duty

EMPLOYMENT/INCOME

🏭 Pay stubs (LES) for the most recent 30 days available

🏭 W-2's for the previous two years

🏭 Federal tax returns for the previous two years. All pages and schedules must be 

included

🏭 If self-employed, provide all pages and schedules of last two years’ business tax 

returns and corporate K-1's

🏭 Award letter for Social Security benefits, disability or Pension

🏭 Proof of receipt of child support,  alimony or any other non-employment source of 

income

ASSETS

🏭 Provide ALL pages of most recent 2 months’ statements for all accounts; including all 

checking, savings, stocks, IRA, 401k, etc. The statements must show your name, account number and 

the name of the banking institution. Any non-payroll deposits will have to be explained and 

documented.

🏭 If funds to close will come from a gift, complete the gift letter (will be provided to 

you) and the following:

🏭 From the donor - bank statements showing the funds in the donor's account and a copy 

of the check from the donor's account

🏭 From you - a copy of the deposit slip showing the gift check deposited into your 

account

🏭 If funds to close are from sale of home

🏭 Estimated closing statement showing anticipated proceeds

🏭 Copy of final closing statement and deposit slip showing proceeds deposited into bank 

account

PROPERTY

🏭 Select your insurance agent and provide agent's name, address, and phone number

🏭 If refinance, or if you will be retaining your current home or own other property

🏭 Current mortgage statement

🏭 Copy of insurance declaration page

🏭 If you’re currently renting, provide your Landlord’s name, phone number and address.

🏭 12 months canceled rent checks will be necessary for private landlords. If you live 

with a family member, letter stating you live rent-free will be required

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Using Your Veterans Benefit to Buy a Home In Kentucky

Probably one of the most talked about GI benefits is the Kentucky VA Home Loan. You’ve probably heard of it, but have you ever thought of it using it? Learn what it is & how can it help you here.

Those eligible for VA loans should at least look into taking advantage of this benefit

Probably one of the most talked about GI benefits is the VA Home Loan. You’ve probably heard of it, but have you ever thought of it using it? What is the benefit, how can it help you, and what’s the process?

Experience tells me that in our area, this is an under-utilized tool by many real estate agents and loan officers. Why? Because like anything having to do with the government, there are a few internal twists. But fear not—if you hire an experienced agent and have the right loan officer, you won’t even be aware of these.

What’s the Benefit? 

While there are other housing-related programs that will help assist in repairing, retaining, or adapting a personal home, we’re specifically referring to the VA home loan. This type of loan is available through private lenders to service members, veterans, and qualifying surviving spouses. In a nutshell, the VA stands behind the loan, guaranteeing a portion of it, and either eliminating the need for or in lieu of a 20% down payment, as well as costly private mortgage insurance. It can be used to buy, build, or refinance a primary residence.

    

How Can It Help You?

• Limited or Zero Down payment for veterans
• No Mortgage Insurance monthly  (there is a one-time funding fee)
• Re-Usable & Assumable by other eligible VA Mortgage buyers  
• No minimum credit score
• Past Bankruptcies and Foreclosure over 2 years you can apply again
• Can be used in any county of Kentucky there is no max VA loan anymore beginning in 2020
• No income limits on how much you can make 
• can refinance up to 100% of the home's value if it passed the VA Net Tangible Worksheet  
• Very low 30 year fixed rate loans when compared to conventional loans 
• VA loans require termite inspection on all loans.

What’s the Process?

The first question to ask is, do you qualify? If the answer is yes:

• 
  
• Get financially pre-qualified by a lender that does VA backed loans, since not all banks do them, it is best to shop around and ask if the lender does a lot of VA loans in Kentucky 
• Obtain your Certificate of Eligibility (COE). The lender can help you with this.
• Find your home
• Negotiate the terms of your transaction
• Apply for your loan
• Closing

Those eligible for Kentucky VA loans, should at least look into taking advantage of this benefit. 

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

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/

-- Some products and services may not be available in all states. Credit and collateral are subject to approval. Terms and conditions apply. This is not a commitment to lend. Programs, rates, terms and conditions are subject to change without notice. The content in this marketing advertisement has not been approved, reviewed, sponsored or endorsed by any department or government agency. Rates are subject to change and are subject to borrower(s) qualification.

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