What is your debt-to-income ratio?
How to calculate your front-end DTI for a Kentucky Mortgage Loan Approval
How lenders use your DTI for a Kentucky Mortgage Loan Approval
|2013 Credit Requirements for A Kentucky Rural Housing RHS Mortgage Loan|
1. Equifax Beacon 5.0
2. Transunion FICO Risk Score, Classic 04
3. Experian/Fair Isaac Risk Model V2.
GUS Approved: Each credit report must contain 2 acceptable tradelines with at least 12 month history and last active within the last 24 months (see below regarding acceptable tradelines).
Manual Underwrite: As determined acceptable by the underwriter.
o Middle of 3
o Lower of 2
o If only one score is provided, that score is the qualifying credit score for that borrower.
Minimum credit score for:
LIABILITIES & CREDIT HISTORY
|OPEN CHARGE ACCOUNTS|
|ALIMONY, CHILD SUPPORT, OR SEPARATE MAINTENANCE||
|DEFERRED INSTALLMENT DEBT||May not be omitted from debt ratio. If the credit report does not reflect a monthly payment due at the end of the deferment period, the lender may request a copy of the applicant’s payment letter, or utilize the industry standard of estimating student loan payments as 1% of the loan balance.|
|NON-REIMBURSED EMPLOYEE EXPENSES||If the borrower claims any non-reimbursed employee expenses (IRS Form 2106 or 1040 Schedule A), the borrowers monthly income should be reduced by the annualized monthly average.|
|BUSINESS DEBT IN BORROWER’S NAME||When the account in question does not have a history of delinquency, the debt may be excluded with satisfactory evidence the obligation was paid out of company funds (such as 12 months cancelled company checks). If the account in question has a history of delinquency, the full debt obligation must be included in the borrower’s debt ratio.|
|FINANCED PROPERTIES||Additional financed properties are generally not permitted as borrower may not own any other suitable housing at time of closing.|
|DEBTS WITH <6 REMAINING PAYMENTS||The total debt ratio should include revolving debt regardless of when the debt will be retired. Installment loans will only be considered if the debt will be retired in more than six months. However, if the monthly payment on the debt is substantial, the payment will also be included in long term debt. The GUS system will automatically exclude debt that is eligible to be excluded. If not excluded by GUS the debt must be included in the debt ratio.|
|“PAYING DOWN” ACCOUNTS||Not permitted. Settlement offers will not be considered as proof of balance|
|SETTLEMENT OFFERS||Are acceptable on accounts that will be paid in full at closing as long as the offer is in writing from the creditor reporting on the credit report.|
|PAST DUE ACCOUNTS (NOT A COLLECTION OR CHARGE OFF)||Recent derogatory credit >1×30 within the previous 12 months is not permitted unless approved by GUS. All past due accounts must be current at time of closing.|
|COLLECTIONS/ CHARGE OFFS||
Any unpaid Collections/Charge offs will require a satisfactory letter of explanation from the borrower.
|OUTSTANDING FEDERALLY INSURED OR GUARANTEED DEBT||Borrower(s) must have an acceptable existing repayment plan (minimum of 12 months), and/or be required to pay account in full prior to, or at closing. Borrower must also be cleared through CAIVRS.|
|BANKRUPTCY (ALL)||3 years seasoning required from Discharge or Dismissal date.|
|FORECLOSURE||3 years seasoning required.|
|DEED-IN-LIEU OF FORECLOSURE||3 years seasoning required.|
|SHORT SALES||3 years seasoning required.|
|COMPENSATING FACTORS||Some compensating factors include:
|MULTIPLE RISK LAYERING||Multiple risk layering is not allowed on manually underwritten loans: