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Student Loan Guidelines For Qualifying for a Mortgage Loan in Kentucky.


Loan type
Student Loan Payment Requirement
FHA
Must be included in the borrower’s liabilities regardless of the payment type or
status. The payment amount must be either:
▪ The greater of:
·        ..5% of the outstanding balance on the loan or
·        Monthly payment reported on the borrower’s credit report, or
▪ The servicer’s documented payment provided the payment will fully amortize
the loan over the repayment term period
VA
Deferred
A payment does not need to be included if written evidence supports that the
student loan debt will be deferred beyond 12 months of closing.
In Repayment
Include loans with payments starting within 12 months. Calculate threshold
payment as a rate of 5% of outstanding balance divided by 12 months. If credit
report payment is higher, use credit report payment. If current documentation
from student loan servicer reflects actual terms and payment for each loan,
the verified payments may be used even if less than the threshold payment
calculation.
USDA
Fixed Payment
A permanent amortized, fixed payment is used when documentation supports fixed payment, interest and term.
Non-Fixed payment
Use .5% of the loan balance reflected on the credit report. Payment arrangements
that are deferred or non-fixed (Income Based Repayment (IBR), graduated, adjustable, interest only, etc.) may not be used.
Fannie
Loans in Repayment Period
▪ If provided, use the credit report payment
▪ If credit report is incorrect, obtain student loan documentation from the servicer
to verify the payment used for qualification
Income Driven
Repayment Plan
Use the student loan documentation to verify the actual monthly payment. Borrower
may be qualified with a $0 payment if the documentation supports it.
Loans in Deferment or
Forbearance
▪ A payment equal to 1% of the outstanding student loan balance (even if this
amount is lower than the actual fully amortizing payment) or
▪ A fully amortizing payment using the documented loan repayment terms
Freddie
Loans in Repayment
Period
Use the greater of payment reported on credit report or .5% of the higher of original
or outstanding loan balance as shown on credit report.
Loans in Deferment or
Forbearance
Use greater of payment reported on credit report or .5% of the higher of original or
current outstanding loan balance as shown on the credit report.
Loan Forgiveness
Cancelation
Discharge
Employment Contingent
Repayment
Programs
Payment may be excluded if file contains documentation that indicates:
▪ Monthly payment is deferred and/or in forbearance and full balance of the loan will be forgiven, canceled, discharged or will be paid if qualified for an employment-contingent repayment program and
▪ Borrower currently meets requirements for the student loan forgiveness/cancelation program
Obtain documentation from the student loan servicer to show the loan will be forgiven, canceled, discharged or that the borrower qualifies and is approved under an employment contingent repayment program that will extinguish the debt.

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Joel Lobb
Mortgage Loan Officer
Individual NMLS ID #57916

American Mortgage Solutions, Inc.

Text/call:      502-905-3708
fax:            502-327-9119
email:          kentuckyloan@gmail.com




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Benefits and Drawbacks of Kentucky VA Mortgage Loans

Kentucky VA Mortgage  Loans

Kentucky VA Mortgage Loan Qualifying Requirements



Why VA Loans?

First and foremost, VA loans put homeownership within reach of a wider population.
That’s because, while they’re issued and administered through a wide range of lending institutions, all VA mortgages are federally guaranteed.

Lenders consider them lower risk than other loans. That means that people with average or even below-average credit scores are more likely to be approved for a VA loan than a traditional loan.

If you have a high debt-to-income ratio or you’ve fallen behind on your credit card payments in the past, you may be eligible for a VA loan, even if you’ve been turned down for a private mortgage in the past.

What’s more, vets and active-duty soldiers can often purchase a loan with no down payment.

Military wages aren’t the most generous. In 2020, new service members earned as little as $19,000 per year, while the median salary in the US is nearly $50,000 per year.

Particularly for people who are just starting out in their military careers, it can be tough to amass enough savings to match the down payment requirements associated with traditional loans.

If you take out a private loan and put down less than 20% of your home purchase price, you’ll be required to pay for Private Mortgage Insurance (PMI) until you’ve established 20% equity in your home. That can add $100 or more to your monthly homeownership expenses.

The government stipulates that VA loan borrowers don’t have to take out PMI.
Finally, VA loan interest rates typically track below market averages. Again, that’s because lenders consider them less risky.

What can that mean in savings for you?

Here’s just one example. A 0.5% interest rate reduction on a $200,000 30-year mortgage can save you more than $19,000 in lifetime loan costs.

And that’s before you factor in PMI payments. The more you borrow, the more you benefit from a low interest rate.

The median purchase price of a US home in 2021 is over $400,000. So chances are, you could wind up saving more with a VA loan.

(Although there are many benefits, there are some disadvantages to a VA loan too. That’s why we partnered with Chris Birk of Veterans United to explain some added drawbacks that are associated with a VA loan. Courtesy of Realtor .com and YouTube. Posted on Sep 27, 2019.)


Avoid The Most Common VA Loan Mistakes

As a home buyer, the most serious mistake you can make, of course, is not investigating VA mortgages before taking out a loan.
You earned this important benefit with your service and you deserve to access it. In fact, you can access it again and again.
There is no limit on the number of VA loans you can take out in your lifetime.
So if you find you need to upsize or downsize your home or pull up stakes every couple of years—a common experience among active service members—you can take advantage of your VA loan benefit every time you buy a home.
For current homeowners who took out a traditional mortgage, not exploring the option of refinancing under the VA loan program can be another costly misstep.
Even if you took out a VA loan a few years ago, it’s smart to look into refinancing right now because mortgage interest rates have reached a near-historic low right now.
The VA makes it easy to refinance into a lower interest loan through its VA Interest Rate Reduction Loan (IRRRL) program.

How to Secure Your Best VA Loan Deal

While VA loan interest rates can be substantially lower than traditional mortgage rates, lenders offer their best interest rates to the most qualified buyers.
That’s true of any kind of loan. Before seeking a VA mortgage, do your best to make yourself as creditworthy as possible.
Lenders judge your creditworthiness largely on your credit score.

Before you begin shopping for a mortgage, download a free copy of your credit report and if your score is lower than 620, take a look at what you can do to bring it up.

Bring all of your credit accounts up to date as a first measure, but understand that late payments will affect your score for quite a few months, or even years.

You may be able to secure a lower interest rate if you keep your accounts current for a significant period before applying for a loan.

Some homebuyers have low credit scores simply because they haven’t amassed a long or varied enough credit history.

If that’s the case, you can likely raise your score by a few points by judiciously applying for small amounts of credit, such as you might be offered by Amazon, a retail store in your neighborhood, or a traditional VISA card or Mastercard.

Make small purchases and pay them off at the end of every billing cycle to establish the pattern of consistent debt repayment lenders look for.

Although the option of applying for a no-down payment loan is available through the VA program, you can also make yourself more creditworthy by putting down as large a down payment as you can afford.
Lenders prefer when they’re not the only ones invested in your home.

Be a Smart Shopper

Even among VA lenders, mortgage rates vary. It pays to shop around. If you belong to a credit union, you might start your comparison shopping there.

You may even want to join a credit union because, as not-for-profit institutions, they’re in business to serve their members and often offer lower interest rates than their commercial counterparts.
If you have an established relationship with a bank, see what kind of deal you can get there. Banks want as much of your business as they can get.

In addition, many online lenders source mortgages with multiple institutions and can be a great resource for researching the lowest rates.




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