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January 29, 2015
Secondary Market Programs
Investing in quality housing solutions.
KHC Program Guide
Secondary Market Programs
January 29, 2015
Changes/Additions
New FHA Streamline Non-credit Qualifying Refinance / No Appraisal
Effective immediately, KHC is offering a FHA Streamline Non-credit Qualifying
Refinance without an appraisal.
New FHA Single-Family Annual Mortgage Insurance Premium (MIP)
Effective for FHA Case Numbers assigned on and after January 26, 2015.
KHC’s Secondary Market Conventional Products
30-Year Loan Term
Conventional No MI Program --- HFA Preferred Risk Sharing
Conventional With MI Program --- HFA Preferred
PARAMETER
Loan Terms
Eligible Occupancy
Eligible Purpose
Eligible Property Types
Ineligible Property Types
Down Payment of 3%
Maximum LTV/CLTV
Minimum LTV
Minimum Credit Score
Ratio Guidelines
Borrower Contribution/Reserves
Income Limit
Manual Underwriting
Maximum Seller Contributions
Other Real Estate Property
Subordinate Financing
***if property is a KHC REO, none of KHC’s
DAPs can be used***
Home Buyer Education
Follow DU Findings
Documentation
Mortgage Insurance
KHC will order ALL MI for TPO
Lenders
See page 6 for specific
guidelines
KHC Approved MI Companies
Desktop Underwriter (DU)
Only allowable AUS system
Must receive an Approved/Eligible
recommendation
Conventional No MI
Program
Conventional With MI
Program
30-Year, Fixed Interest Rate
Owner Occupied
Purchase
One-unit dwellings or approved condominiums
Manufactured housing or co-ops
Borrower’s Funds, Gift, KHC DAPs, or Welcome Home Monies
97/105%
81%
680
40/45%
None
KHC’s Secondary Market Income Limits
Not Permitted
3% for CLTV > 90% and 6% for CLTV < or = 90%
Cannot own any other real estate property including manufactured
housing
Community Seconds per FNMA Guidelines, All KHC DAPS
Applicable.
Special Feature Code 118 Community Seconds
If all borrowers obtaining the loan are first-time homebuyers (no
ownership interest in a residential property in the last three years), at
least one person on the loan must complete pre-purchase
homebuyer education in the form of an online, telephone, or face-toface workshop
Most Recent Year Tax Transcripts
Verbal VOE for borrower(s) within 10 days of the note date
Required – Charter Coverage
None Required
97% - 95.01% 18%
95% - 90.01% 16%
90% - 85.01% 12%
85% - 81.00%
6%
Genworth, MGIC, Radian &
N/A
United Guaranty
In the “ADDITIONAL DATA”
In the “ADDITIONAL DATA”
screen, select
screen, select
“HFA PREFERRED RISK
“HFA PREFERRED”
Special Feature Code: 358
SHARING”
Special Feature Code: 820
Effective 1/1/2015 Special Feature Code: 741
KHC will not purchase conventional loans that are determined to be High Priced Mortgage Loans.
Borrower must meet BOTH KHC and MI Company guidelines. UG has additional restrictions when a DAP is used.
Secondary Market Programs–KHC Program Guide—January 29, 2015
Page 2 of 14
KHC’s Secondary Market
Purchase Programs
30-Year Loan Term
Federal Housing Administration (FHA)
 Minimum
640 credit score
 Financing to 96.50% of lesser of sales price or appraised value
 All KHC DAPs and other KHC-approved secondary financing applicable
 Maximum ratios of 40/45 with AUS approve/eligible, accept/accept through TOTAL
Upfront and Annual Mortgage Insurance Premiums
30-Year Loan Term
LTV less than or equal to 95%
LTV greater than 95%
1.75% UFMIP
.80 Annual (1/26/2015)
1.75% UFMIP
.85 Annual (1/26/2015)
Rural Housing Services (RHS)
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Minimum 640 credit score
Financing to 100% of the appraised value, plus guarantee fee of 2.0%/0.50% annual fee
All KHC DAPs and other KHC-approved secondary financing applicable
Ratio requirements per agency guidelines
KHC will accept GUS findings, including reduced documentation and, with approval, expanded ratios up to
40%/45%
Veteran’s Administration (VA)
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Minimum 640 credit score
Financing to 100% of the lesser of the appraised value or sale price
All KHC DAP programs and other KHC-approved secondary financing may be used
Ratio requirements and funding fee per agency guidelines
Maximum ratios of 40/45% with AUS Approval
Secondary Market Programs–KHC Program Guide—January 29, 2015
Page 3 of 14
KHC’s Secondary Market FHA Refinance Programs
30-Year Term
Streamline
Non-Credit Qualifying
Refinance
Streamline
Credit-Qualifying
Refinance
Rate / Term
Refinance
AUS
Manual Underwrite
No Ratio Calculation
Manual Underwrite
31/43% Ratios
DU or LP Approval
40/45% Ratios
Maximum LTV / CLTV
125% CLTV
**Based on Original
Appraised Value**
97.75% (125% CLTV)
97.75% LTV/CLTV
Parameters
Minimum Credit Score
Appraisal
640
No Appraisal Required
Appraisal required
Mortgage Term
30 Year Term
Eligible Loan Types
Documentation
Cash Back to Borrower
Verbal VOE & Most Recent YTD Paystub
$ Zero
Less than or equal to $500
Seasoning
Mortgage Calculation
Conventional, FHA, VA &
RHS
FHA
Per Agency Guidelines
Principal Balance and
New UFMIP
Per Agency Guidelines
Up Front Mortgage
Insurance Premium
1.75%
Annual Mortgage
Insurance Premium
LTV > 95%: .85 basis points
LTV < or = to 95%: .80 basis points
Single Family Streamline refinance transactions that are refinancing FHA loans endorsed on or before May 31,
2009, Annual MIP will be 55 bps, regardless of base loan amount. The UFMIP will decrease from 1% to 0.01%
of the base loan amount.
FHA 203K Streamline Refinance Program is a Rate Term – Full Credit Qualifying First Mortgage
KHC can subordinate DAPs when refinancing the first mortgage back through KHC
Secondary Market Programs–KHC Program Guide—January 29, 2015
Page 4 of 14
KHC’s Secondary Market
RHS Refinance Pilot Program
30-Year Loan Term
Rural Housing Services (RHS)
Eligibility Requirements
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Must meet KHC and RHS Guarantee’s household income limitations
Must reside in eligible rural location and remain as principle residence
Must have made timely mortgage payments for the last 12 months
Must have a minimum 640 credit score
New interest rate must be 1% below current interest rate
Existing loan must be a 502 guaranteed loan only
Ratio calculation not required
Must be a manual underwrite and not processed through GUS
Borrower must be employed at time of closing or have alternative sources of income, such as retirement,
social security, disability, alimony, or child support
Borrowers may NOT be added or removed (unless deceased) from the current loan
Refinance balance consists of principal balance of loan plus the full upfront guarantee fee and funds to
close. The applicable upfront fee is 2.00%. No cash out is permitted. Annual fee is applicable. For 2015
the annual fee is .50%.
Income: Verification of all sources of income eligibility only – not for repayment
Streamlined Benefits
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With this RHS Pilot Program Compensation is limited to 2% for Delegated and Correspondent
Lenders and 1.5% for TPO Lenders
No appraisal required
Reduced documentation
No credit or ratio underwriting
Reduced fees with all closing costs included in loan amount
Quicker closings
Secondary Market Programs–KHC Program Guide—January 29, 2015
Page 5 of 14
Kentucky Housing Corporation – www.kyhousing.org – 502-564-7630, extension 291
Lender Partnerships
 Delegated Lender – Originate, process, responsible for
program compliance, credit and property underwrite, close
and fund KHC’s Secondary Market loan products, register
loan in MERS and obtain insuring document.
 Correspondent Lender – Originate, process, credit
underwrite, close, and fund KHC Secondary Market loan
products, register loan in MERS, and obtain insuring
document.
 Third-Party Originators – Originate and process Kentucky
Housing Corporation loan products. KHC performs the
underwriting, closing and table funds the loans. The loan will
close in KHC’s name.
Lender Compensation
All Lenders may NOT charge Origination or Discount
Points.
Delegated Lender: May make a maximum of 2.50% plus
customary and reasonable fees.
May charge a MCC Review Fee of $225 when offering a MCC.
Correspondent Lender: may make a maximum of 2.50%
plus customary and reasonable fees to include the
underwriting fee of $495 paid to KHC (netted out at time of
purchase) for Conventional and RHS loans.
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2.50% paid to Delegated or Correspondent Lender at
time of loan purchase
For both Delegated and Correspondent Lenders the RHS
Refinance Pilot Program lender compensation is limited to
2%.
Third-Party Originators: may make a maximum of 2.00%:
 2.00% paid to the lender at closing
 All Loans close in KHC’s name
For TPO Lenders the RHS Refinance Pilot Program lender
compensation is limited to 1.5%.
Additional Fees
Administrative Fee: On EVERY loan an Administrative Fee
of $105 must be disclosed paid to KHC.
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There is no longer a Tax Service or other misc. fees
KHC Second Mortgage Fees
Listed on a separate GFE, TIL, and HUD-1.
 Regular and Affordable DAP Document Preparation Fee to
the Closing Agent -- $50
 DAP Recording Fee -- $25
 Regular and Affordable DAP Odd Days Interest
 Delegated and Correspondent Lenders can fund the DAP
or have KHC fund the DAP.
 If KHC is to fund the DAP the Delegated or
Correspondent Lender will need to notify KHC by 1:00
p.m. EST prior to the day of closing.
 KHC will not allow high-cost mortgages under the revised
HOEPA coverage test.
Third-Party Originator Lender – GFE Breakdown
Block 1: “Our Origination Charge” fees include:
 Origination Charge: 2.00% Origination Charge, the UW Fee
of $495 and Administrative Fee of $105.
Block 2: “You receive a credit of $___ for this interest rate of
___%.This credit reduces your settlement charges.
2.00 percent credit given.
Block A: The Underwriting Fee of $495 + Administrative Fee
of $105
Home Buyer Eligibility
 Must be U.S. citizen or resident alien.
 Applicant’s gross annual income must be within Secondary
Market applicable limits.
 Income is determined by using the gross annual income of
the mortgagor(s).
Gross Annual Income Limitation
 Compliance Income
Gross annual income for compliance is the sum of the total
anticipated income from all sources received by the
applicant(s) during the 12-month period commencing with
the date of initial occupancy (closing). Non-borrowing
occupant’s income will not be considered.
 Qualifying Income
Qualifying income includes income from the applicant(s)
that is considered stable (continuing for at least three years,
“effective income”) and is used to calculate household’s debt
ratios.
To assist the lender in calculating all types of income, an
income calculator is located on KHC’s Web site under
Lender/Realtor tab.
Mortgage Insurance with Conventional
Preferred Product
KHC allows Charter Coverage for the 97% Conventional
Product with Mortgage Insurance. KHC will order ALL MI
Certificates for TPO Lenders. TPO Lenders will have the
ability to choose the MI Company when making a loan
reservation. KHC Delegated and Correspondent Lenders will
order their own MI Certificates. KHC Delegated and
Correspondent Lenders can continue their existing delegated
MI relationship with MI Companies or send the file to the MI
Company for approval. KHC will accept both based on the
company’s preference. Correspondent Lenders will need to
provide the Final MI Certificate prior to KHC’s Loan Approval.
Listed below are the MI Companies and the portal names to
access the Conventional Preferred Product.
Genworth: Simply Underwrite
MGIC: MGIC Go!
Radian: One Underwrite
United Guaranty: Full File Underwriting – UG has additional
restrictions when a DAP is used. Borrower must contribute the
lesser of 1% or $1,000, maximum DTI ratio 41%, and reserves
of 2 months PITI.
Borrower must meet BOTH KHC and MI Company
guidelines.
Credit Standards
KHC will require all originating lenders to comply with the
general Ability-To-Repay (ATR) standards and consider DTI in
making reasonable, good faith determinations that the
consumer has the ability to repay the loan. KHC’s credit
standards and maximum ratio requirements are listed down
below.
 Insuring Agency credit standards for the loan type
 640 minimum credit score required for FHA, VA and RHS
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680 minimum credit score required for Conventional and
must receive an Approve/Eligible recommendation from
DU through HFA Preferred Risk Program for Conventional
No MI Program or Conventional with MI must receive an
Secondary Market Programs–KHC Program Guide—January 29, 2015
Page 6 of 14
Kentucky Housing Corporation – www.kyhousing.org – 502-564-7630, extension 291
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Approve/Eligible recommendation from DU through the
Preferred Program.
AUS approval (DU or LP) required for FHA Rate/Term
Refinance Program, FHA and VA Purchase Program.
 KHC will accept GUS findings for RHS Purchases.
 FHA Streamline Refinance – must not use AUS.
Maximum debt ratios allowed are 40/45, with AUS approval.
 Maximum debt ratios for RHS of 29/41 for manual
underwriting w/o GUS approval.
Collections, bankruptcy, and foreclosure follow insuring
agency guidelines.
Electronic signatures allowable on purchase contracts per
agency guidelines.
Non-taxable income can be grossed-up by 15%.
Maximum age for credit documents:
 Government Loans is 120 days
 Conventional Loans is 120 days
IRS Form 4506-T is required to be executed by the borrower
at the time of application and closing.
Appraisal Process for Correspondent Lender
Correspondent Lender will continue to order ALL appraisals.
Correspondent Lender participating in the Conventional
product will be required to upload the appraisal into FNMA
Uniform Collateral Data Portal (UCDP) system prior to
submission to underwriting. For Delegated Lenders, it must be
uploaded prior to approving the loan.
Correspondent Lender must provide a copy of the Submission
Summary Report (SSR) form showing a successful status with
a doc file ID along with the UAD compliance form and any
proprietary appraisal messages. Lenders shall submit any
additional documentation relating to these findings.
Appraisal Ordering Process for Third Party
Originator Lenders
Bluegrass Appraisal Management, Inc. must be used for all
FHA and Conventional appraisal requests for the Third Party
Originator (TPO) lenders. TPO lenders need to get set up with
Bluegrass Appraisal Management, Inc.,
www.bgappraisalmanagement.com
Appraisal Ordering Workflow for TPO Lenders
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Complete a case number request for FHA Loans and
e-mail to: [email protected] with a copy of the
purchase contract. KHC will e-mail the case number to
the TPO lender.
TPO lenders will order appraisal through Bluegrass
Appraisal Management’s Web site:
www.bgappraisalmanagement.com.
TPO lenders will pay for this service at time of the initial
request with a credit card. Due to MDIA regulations the
lender must pay for this and not the borrower.
TPO lenders can track the progress of the appraisal
online.
Once the appraisal is completed, an e-mail will be sent to
both the TPO lender and KHC giving access to the
appraisal.
KHC will underwrite the appraisal and upon completion will
notify TPO lender via e-mail. If the loan is a FHA loan, the
Conditional Commitment will be attached to the e-mail.
KHC will directly send a copy of the appraisal by mail or
electronically to the consumers within a week of
completion and review by the KHC underwriting
department.
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If a final inspection is required, the TPO lender will be
responsible for ordering this through Bluegrass Appraisal
Management, Inc.
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At closing, the TPO lender will collect the appraisal fee
and any final inspection fees from the borrower. The fee
for the appraisals will be $450 for FHA and $410 for
Conventional loans.
Originating lenders may collect the appraisal fee from the
borrower if in compliance with MDIA. Originating lenders will
be responsible for payment on all appraisal requests. FHA
Appraisals are good for 120 days.
Property Eligibility
Residence – one-unit, single-family dwelling, new or existing
property located in Kentucky
 Secondary Market Purchase Price Limit of $294,000
 KHC requires a full appraisal.
 Manufactured homes are eligible with FHA, VA & RHS
 May own other real estate at closing except with
Conventional first mortgages.
 Borrower must qualify with inclusion of the second home or
investment property monthly payment.
 The new loan with KHC must be the borrower’s primary
residence.
 Termite Report
Kentucky Housing Corporation will follow the insuring
agency guidelines.
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If termite report has been done, KHC requires a copy of
the report. If the report shows damage to foundation,
main beams, etc., and/or water in crawl space/basement,
this must be addressed. All infestation must be treated
and proof of treatment must be provided. Structural
damage inspections may be provided by a structural
engineer or FHA fee inspector.
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If the borrower has waived having a termite inspection, the
Kentucky Housing Corporation Termite Inspection Waiver
(Form 99) must be signed at closing.
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A termite soil treatment certificate (Form NPCA 99A and
99B) is required on all new construction properties
except on conventional loans.
Repairs
All repairs required as part of appraisal must be completed prior
to closing and inspected by appraiser or appropriate fee
inspector.
New Construction
 For FHA, VA, and RHS a one-year building warranty is
required. Also ten-year warranty with final inspection; or
three inspections; or building permit, certificate of
occupancy, and photos
Manufactured Housing
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Only new manufactured housing is permitted with RHS. New
and existing single and doublewide manufactured homes are
acceptable with FHA and VA.
Affidavit of Conversion to Real Estate is required. Must have a
valid title or certificate of origin to prepare affidavit. Copy of the
cancelled or surrendered title and ALTA 7 endorsement to title
policy is required.
Secondary Market Programs–KHC Program Guide—January 29, 2015
Page 7 of 14
Kentucky Housing Corporation – www.kyhousing.org – 502-564-7630, extension 291
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For New Construction –obtain Certificate of Origin (in
Underwriting package), then apply for title of loan, then do
Affidavit of Conversion.
 Minimum credit score policy of 640 is required.
 AUS requirement is waived.
Condominiums
Assumable
Condominium or planned unit developments must follow
Agency guidelines. For FHA, condominium must be listed on
HUD’s Web site as an approved condominium. For
Conventional, condominiums must meet FNMA guidelines.
Please review KHC’s condo listing on the Web. This list is to
determine if additional interior insurance coverage is required.
This does not warrant that the condo is approved by HUD or
Kentucky Housing. If condo is not listed, Kentucky Housing
requires proof of whether the interior coverage is included in
the master policy. If not, a separate interior policy equal to half
of loan amount is needed.
All Kentucky Housing Corporation FHA, VA, and RHS loans
are assumable provided buyer meets Agency Guidelines and
KHC requirements of the KHC Secondary Market Program.
Conventional loans are not assumable.
First Mortgage Term and Rate
FHA 203K Streamline Program
Purchase and Refinance
 Reservations for Secondary Market first mortgages, Regular
and Affordable DAP can be made from 10 a.m.-9 p.m.,
Monday –Friday, through KHC’s Loan Connection on the Web
site.
 New and existing property – 45-day lock.
 Must have property identified.
 Each buyer may have only one current reservation
 Purchases and refinances must close and fund within the 45
day lock.
 Any change to loan amount over a 10% tolerance may result
in a higher interest rate.
 A second reservation may not be issued unless initial
reservation has been expired or cancelled for 30 days or the
borrower has changed property.
 Locks that expire on the weekend or holiday will
automatically be extended to the following business
day.
 KHC will monitor loan fall out.
 Reservation Extension Policy:
 1-15 days for .25% fee
 16-30 days for .50% fee (total for 30-days
extension)
 Once the loan has reached the 30-day extension period the
lender will be required to relock the loan based on the higher
of the original interest rate or market rate for 45 days with no
additional fees.
 Property Change–If the borrower changes property, the
current interest rate is cancelled and a new reservation has to
be made at the market interest rate.
 For adjustments, the lender must call (800) 633-8896, ext.
291 or e-mail [email protected] to have a change
made.
The FHA 203K Streamline Program is the primary program for
the rehabilitation and repair of single-family housing. The
program provides up to $35,000 toward repair/rehabilitation of
the property.
 All standard FHA borrower and credit underwriting guidelines
apply.
 Combines funds needed to purchase or refinance along with
funds needed to repair or rehabilitate. A 10-20%
contingency is required on all FHA 203K Streamline loans.
With TPO Lenders, KHC requires a minimum of 10%
contingency. Correspondent Lender can charge 10-20%.
The 10-20% contingency has to be inclusive of the $35,000.
 FHA 203K Streamline Refinance Program is a rate-term, fullcredit qualifying first mortgage.
 TPO Lender has three months for a borrower to complete all
work. Correspondent Lender may follow agency guidelines
of six months for a borrower to complete all work.
 The Regular and Affordable DAP can be used with the FHA
203K Streamline Purchase Program.
 A Supplemental Origination Fee must be charged by all TPO
lenders. It is calculated as the greater of $350 or 1.5% of
repair cost. This fee must be reflected on the GFE. This fee
will be paid to KHC for the overseeing of the repair escrows.
 Follow FHA Agency Guidelines for eligible/ineligible repairs.
 Correspondent Lender will be responsible for overseeing the
repair escrow accounts. The Correspondent Lender may
charge a supplemental origination fee (the greater of $350 or
1.5% of rehabilitation cost).
 KHC has a Web page for the FHA 203K in Lender Services.
 Purchase and Refinance Term – Fixed for 30 year term.
 Rate – Subject to change on a daily basis. Review rate on
KHC’s Web site.
Reservation of Funds
Section 8 Voucher to Homeownership
Eligible Section 8 participants may use their Housing Choice
Voucher to assist them in purchasing a home. The term of
assistance is 15 years, unless elderly or disabled.
Housing Choice Voucher assistance can be used two different
ways. See the Section 8 Calculator on Kentucky Housing’s
Web site.
 Counted as Income (FHA, RHS, and VA)
 Added to the gross monthly income for determining ratios
(can gross up 15 percent).
 Counted as a PITI Reduction (FHA and RHS)
 A reduction of PITI (added to qualifying ratio based on
gross earnings only, no grossing up).
Automated Underwriting
 Prior to closing, Kentucky Housing Corporation or its
delegated underwriter must still approve all loans approved by
Automated Underwriting Systems (AUS).
 Kentucky Housing will accept limited documentation
required by DU/LP with a few exceptions.
 No LP allowed with Conventional No MI or With MI
Product
 Contact KHC if sponsorship is needed for DU access
 No stated income allowed.
 Must have full appraisal
 KHC requires AUS approval on all FHA, VA and
Conventional loans.
Secondary Market Programs–KHC Program Guide—January 29, 2015
Page 8 of 14
Kentucky Housing Corporation – www.kyhousing.org – 502-564-7630, extension 291
 KHC will accept GUS findings on RHS Loans as well as the
reduced documentation detailed within.
 All applicants’ income must be considered.
 For the Regular or Affordable DAP the second mortgage
amount must be shown as subordinate financing in DU/LP.
 KHC’s Regular and Affordable DAP must be disclosed on a
separate GFE, TIL and HUD-1 Settlement Statement.
Loan Review Process
Kentucky Housing Corporation will attempt to review the file
within 2-4 business days of receipt. KHC will notify the lender
of loan status by e-mail to the e-mail address identified by the
lender at the time reservation.
 The e-mail will identify borrower’s name and status of loan.
Approvals, rejections, and listings of pended items can be
printed from the Web site.
 All conditions of loan approval must be met prior to or at
closing. Proof that all conditions have been met must be
provided in closed loan package submitted to KHC.
Conventional FNMA Requirements for
Correspondent Lender
Correspondent Lender must comply with all FNMA
requirements for origination, processing, underwriting, prefunding review, closing, and post closing. Lenders must
comply with pre-funding requirements of a sample prior to
closing. Any significant findings must be reported to KHC
within 30 days. Lenders must ensure that all loans are not
considered High Priced Mortgage Loans. KHC will NOT
purchase a High Priced Mortgage Loan. Lenders will obtain
most recent year of tax transcripts on all borrowers and verify
employment on all borrowers within 10 days prior to the note
date. Lenders will also upload appraisal to the Uniform
Collateral Data Portal (UCDP) System.
Conventional FNMA Requirements for Third
Party Originator Lenders
TPO’s will be required to obtain most recent year of tax
transcripts prior to underwriting. Verification of employment on
all borrowers must be done within 10 days prior to the note
date. KHC will perform the 10% pre-funding sample and
uploading of appraisal into the FNMA Uniform Collateral Data
Portal (UCDP) System.
KHC’s Home Buyer Tax Credit (MCC)
 Mortgage Credit Certificates (MCCs) allow home buyers to
convert 25 percent of their mortgage interest deduction to a
“Life of Loan” tax credit. (Not to exceed $2,000 each year.)
Borrower is allowed to carry forward any unused credit for 3
years.
 The tax credit is available each year for the life of the original
loan (refinances are not eligible for an MCC).
 MCCs are assumable.
 Home buyers must meet MRB Guidelines, such as
income and purchase price, and must be a first-time
home buyer unless the home is in a targeted county.
 MCCs may be used with KHC’s Secondary Market Program,
 MCCs cannot be used with KHC’s MRB Program.
 MCCs may be used with other investor’s first mortgage loan
programs such as FHA, VA, RHS, Fannie Mae, or Freddie
Mac Programs (30 – year fixed rate mortgages only).
 Refinancing of construction loans, bridge loans, or other
temporary financing is eligible.
 The cost is $500 however, if the borrower obtains a KHC
Secondary Market loan, the cost is only $200!
 Delegated Lenders may charge a $225 MCC review fee.
 The $200 MCC underwriting fee (KHC Secondary Market) or
$500 MCC underwriting fee (other investor) will still be
charged and come to KHC.
 Borrowers claim the MCC with their annual tax return by using
Form 8396.
 The borrower may adjust their withholding (Form-W-4) to
reflect the anticipated credit -- increasing their take home pay.
 The anticipated credit may be used to help qualify the
borrower.
 FHA, VA, RHS, and Conventional allow the credit to
be used as additional income or as a reduction to
PITI in calculating ratios.
 KHC will allow the anticipated credit to be used for qualifying
as long as the lender has an AUS Approval.
 The borrower who obtains an MCC can still claim 75% of their
total year mortgage interest as a tax deduction.
 Both new and existing residence with max purchase price
of $265,000 eligible. Must be borrower’s primary
residence within 60 days of closing. Cannot own any
other real estate at closing.
 Eligible properties include single-family residences,
manufactured housing, and condominiums.
 Changes in the borrower’s Gross Annual Household Income,
marital status, ownership interest, purchase price or loan
amount prior to closing could affect program eligibility.
Changes that occur after closing do not affect program
eligibility. Such changes could affect recapture tax.
 The recapture tax applies to all MCC holders. The Recapture
Tax Reimbursement Program through KHC’s MRB Program
does NOT apply to the MCC Program. Generally, all of the
following events must occur to trigger the recapture tax:
 The residence is sold within the first nine years of the
closing date, AND
 The MCC holder realizes a net gain on the sale of
the residence, AND
 The MCC holder’s income has significantly increased
since the closing date and exceeds the limits
established by the IRS.
Secondary Market Programs–KHC Program Guide—January 29, 2015
Page 9 of 14
Kentucky Housing Corporation – www.kyhousing.org – 502-564-7630, extension 291
 Any lender can become an approved MCC lender by signing
up with KHC and paying a one-time fee of $750.
 Approved MCC lenders that are delegated can approve the
MCC without submitting the MCC package to KHC.
 When a borrower refinances and has an existing MCC:
Must complete an application to request a reissuance of a MCC.
KHC charges a $100 fee. Need a copy of the new Note and
HUD-1.
Home Buyer Tax Credit Benefits
 A home buyer with a 3.75 percent interest rate on a fixed, 30year mortgage of $125,000 would pay approximately $4,687
in interest payments for the first year without an MCC.
 With an MCC, 25% of that interest could be taken as a tax
credit against the home buyer’s federal income taxes.
*Borrowers are encouraged to consult an accountant for full details on
tax effects of this or any financial program.
**The interest rate and payment information includes the estimated
effects of the tax credit.
Secondary Market Programs–KHC Program Guide—January 29, 2015
Page 10 of 14
Second Mortgage Products
Down Payment Assistance Program (DAP) Guidelines
Only home buyers obtaining a Kentucky Housing Corporation first mortgage are eligible for DAP funds.
Interest Rate with DAP applicable.
DAP
Regular
Affordable
Secondary Market
Affordable Income
(Household Income)
New and Existing Properties
New and Existing Properties
Up to $6,000
Must go maximum allowed LTV on
first mortgage amount
Up to $4,500
Must go maximum allowed LTV on
first mortgage amount
5.50% amortized over 10 years
1% amortized over 10 years
Income Eligibility
Eligible Properties
Amount
Terms
Purchase Price
Limit
AUS
Ratios
Required Repairs
$294,000
Enter as Subordinate Financing
AUS Approval required
Borrower must qualify with additional monthly payment.
With AUS approval, can go up to 40/45 percent
Buyer or seller may use OWN funds to pay for repairs and pay off existing
debt
DAP GFE & TIL
Available in Loan Connection Services--$50 Document Preparation Fee to
closing agent and $25 (estimated) Recording Fee
When utilizing Regular or Affordable DAP with the Conventional Product, if unable to get a DU
Approve/Eligible at a 97% LTV with DAP, then you may lower first mortgage down to 95% LTV.
Secondary Market Programs–KHC Program Guide—January 29, 2015
Page 11 of 14
KENTUCKY HOUSING CORPORATION
2014 SECONDARY MARKET
GROSS ANNUAL INCOME LIMITATIONS
Effective April 1, 2014
Income Limit for the following counties
$94,500
Adair, Allen, Ballard, Barren, Bath, Bell, Boyd, Boyle, Breathitt, Breckinridge, Butler, Caldwell, Calloway, Carlisle,
Carroll, Carter, Casey, Clay, Clinton, Crittenden, Cumberland, Elliott, Estill, Fleming, Floyd, Fulton, Garrard,
Grant, Graves, Grayson, Green, Greenup, Harlan, Hart, Hickman, Hopkins, Jackson, Johnson, Knott, Knox,
Laurel, Lawrence, Lee, Leslie, Letcher, Lewis, Lincoln, Livingston, Logan, Lyon, Magoffin, Marion, Martin, Mason,
McCreary, Meade, Menifee, Metcalfe, Monroe, Montgomery, Morgan, Muhlenberg, Nicholas, Ohio, Owsley, Perry,
Pike, Powell, Pulaski, Robertson, Rockcastle, Rowan, Russell, Simpson, Taylor, Todd, Union, Washington,
Wayne, Whitley, Wolfe
Secondary Market Purchase Price Limit -- $294,000
County
Anderson
Boone
Bourbon
Bracken
Bullitt
Calloway
Campbell
Christian
Clark
Daviess
Edmonson
Fayette
Franklin
Gallatin
Hancock
Hardin
Harrison
Henderson
Henry
Jefferson
Jessamine
Income Limits
119,000
119,875
118,650
119,875
112,525
100,450
119,875
94,675
118,650
105,525
100,100
118,650
110,775
119,875
105,525
98,525
95,375
106,050
112,525
112,525
118,650
County
Income Limits
Kenton
Larue
Madison
Marshall
McCracken
Mclean
Mercer
Nelson
Oldham
Owen
Pendleton
Scott
Shelby
Spencer
Trigg
Trimble
Warren
Webster
Woodford
119,875
98,525
94,850
102,725
98,700
105,525
104,125
95,550
112,525
110,075
119,875
118,650
128,975
112,525
94,675
112,525
100,100
106,050
118,650
The income limitations listed above are imposed by state law.
Secondary Market Programs–KHC Program Guide—January 29, 2015
Page 12 of 14
2014 GROSS ANNUAL HOUSEHOLD
AFFORDABLE DAP INCOME LIMITS
Effective April 1, 2014 – March 31, 2015
Purchase Price Limit for AFFORDABLE DAP–$294,000
Counties
Person(s)
(1)
(2)
(3)
(4 or more)
Bath, Bell, Breathitt, Butler, Carlisle, Casey, Clay, Clinton, Cumberland, Elliott, Estill,
Floyd, Fulton, Grayson, Harlan, Hart, Jackson, Johnson, Knott, Knox, Lawrence, Lee,
Leslie, Letcher, Lewis, Lincoln, Magoffin, Martin, McCreary, Menifee, Metcalfe, Monroe,
Morgan, Nicholas, Owsley, Perry, Pike, Powell, Pulaski, Rockcastle, Russell, Wayne,
Whitley, and Wolfe
24,950
28,500
32,050
35,600
Bullitt, Henry, Jefferson, Oldham, Spencer, and Trimble
35,700
40,800
45,900
50,950
Bourbon, Clark, Fayette, Jessamine, Scott, and Woodford
37,450
42,800
48,150
53,500
Boone, Bracken, Campbell, Gallatin, Kenton, and Pendleton
38,400
43,850
49,350
54,800
(1)
(2)
(3)
(4 or more)
Other Counties
Person(s)
(1)
(2)
(3)
(4 or more)
25,800
26,250
29,450
30,000
33,150
33,750
36,800
37,500
Larue
31,550
36,050
40,550
45,050
Allen
Laurel
25,550
29,200
32,850
36,500
Anderson
38,100
43,550
49,000
54,400
Livingston
26,900
30,750
34,600
38,400
Ballard
29,050
33,200
37,350
41,500
Logan
27,100
30,950
34,800
38,650
Barren
28,500
32,550
36,600
40,650
Lyon
29,050
33,200
37,350
41,500
Boyd
28,600
32,650
36,750
40,800
Madison
31,050
35,500
39,950
44,350
Boyle
28,150
32,150
36,150
40,150
Marion
28,700
32,800
36,900
40,950
Breckinridge
26,600
30,400
34,200
38,000
Marshall
32,300
36,900
41,500
46,100
Caldwell
28,650
32,750
36,850
40,900
Mason
29,050
33,200
37,350
41,450
Calloway
32,150
36,750
41,350
45,900
McCracken
32,000
36,600
41,150
45,700
Carroll
28,400
32,450
36,500
40,550
McLean
32,050
36,600
41,200
45,750
Adair
Person(s)
Carter
25,900
29,600
33,300
39,950
Meade
28,600
32,650
36,750
40,800
Christian
30,350
34,650
39,000
43,300
Mercer
33,350
38,100
42,850
47,600
Crittenden
27,550
31,500
35,450
39,350
Montgomery
26,550
30,350
34,150
37,900
Daviess
32,050
36,600
41,200
45,750
Muhlenberg
25,500
29,150
32,800
36,400
Edmonson
32,050
36,600
41,200
45,750
Nelson
30,600
35,000
39,350
43,700
Fleming
28,700
32,800
36,900
40,950
Ohio
26,250
30,000
33,750
37,500
Franklin
35,500
40,550
45,600
50,650
Owen
34,200
39,050
43,950
48,800
Garrard
29,300
33,500
37,700
41,850
Robertson
27,750
31,700
35,650
39,600
Grant
30,450
34,800
39,150
43,450
Rowan
26,350
30,100
33,850
37,600
Graves
27,350
31,250
35,150
39,050
Shelby
41,300
47,200
53,100
58,950
Green
26,150
29,900
33,650
37,350
Simpson
29,900
34,200
38,450
42,700
Greenup
28,600
32,650
36,750
40,800
Taylor
26,600
30,400
34,200
38,000
Hancock
32,050
36,600
41,200
45,750
Todd
26,250
30,000
33,750
37,450
Hardin
31,550
36,050
40,550
45,050
Trigg
30,350
34,650
39,000
43,300
Harrison
30,550
34,900
39,250
43,600
Union
29,750
34,000
38,250
42,500
Henderson
33,950
38,800
43,650
48,500
Warren
32,050
36,600
41,200
45,750
Hickman
29,600
33,800
38,050
42,250
Washington
41,200
Webster
30,050
33,950
34,350
38,800
38,650
43,650
42,900
48,500
Hopkins
28,850
33,000
37,100
Secondary Market Programs–KHC Program Guide—January 29, 2015
Page 13 of 14
KENTUCKY HOUSING CORPORATION HOMEBUYER TAX CREDIT
2012 GROSS ANNUAL HOUSEHOLD INCOME LIMITS
Effective February 21, 2012
The income limitations listed below are imposed by federal law.
Failure to comply with them may create adverse consequences for Kentucky Housing Corporation and its bondholders.
Funding Source: MRB/Homebuyer Tax Credit (Purchase Price Limit – $265,000)
Person(s) per household
Anderson
Ballard
Barren
Boone
Bourbon
Boyd
Bracken
Bullitt
Caldwell
Calloway
Campbell
Christian
Clark
Daviess
Edmonson
Fayette
Franklin
Gallatin
Graves
Greenup
Hancock
Hardin
Harrison
Henderson
Henry
Hickman
Jefferson
Jessamine
(1 or 2)
(3 or more)
67,369
77,475
64,320
75,040
58,200
67,900
83,400
97,300
80,520
93,940
58,200
67,900
85,560
99,820
74,160
86,520
54,840
63,980
62,040
72,380
83,400
97,300
63,000
73,500
80,520
93,940
67,320
78,540
68,880
80,360
67,229
77,314
67,189
77,268
85,560
99,820
58,440
68,180
58,200
67,900
67,320
78,540
66,720
77,840
63,840
74,480
68,049
78,257
76,560
89,320
63,480
74,060
74,160
86,520
67,229
77,314
Person(s) per household
Kenton
Larue
Laurel
Livingston
Lyon
Madison
Marion
Marshall
McCracken
McLean
Meade
Mercer
Muhlenberg
Nelson
Oldham
Owen
Pendleton
Robertson
Scott
Shelby
Simpson
Spencer
Taylor
Trigg
Trimble
Union
Warren
Webster
Woodford
For all other counties not listed above:
63,600 (1 or 2 persons)
Secondary Market Programs–KHC Program Guide—January 29, 2015
(1 or 2)
(3 or more)
83,400
97,300
68,520
79,940
53,000
60,950
61,440
71,680
62,040
72,380
66,720
77,840
61,080
71,260
67,560
78,820
64,920
75,740
68,760
80,220
62,280
72,660
66,960
78,120
53,000
60,950
68,880
80,360
74,160
86,520
66,480
77,560
85,560
99,820
60,840
70,980
80,520
93,940
75,770
87,135
66,120
77,140
76,560
89,320
53,000
61,740
63,000
73,500
76,560
89,320
66,960
78,120
64,560
75,320
76,560
89,320
67,229
77,314
74,200 (3 or more persons)
Page 14 of 14