Kentucky First Time Home Buyer Loan Programs


Kentucky Mortgage Credit Score Requirements for a Mortgage Loan.

Different Kentucky mortgage programs like FHA, VA, USDA, and Fannie Mae Conventional loans have different credit requirements, and sometimes you can qualify with a credit score as low as 500 or in some cases no credit score. Lenders have credit overlays so keep that in mind. Even though USDA, FHA VA may say in the their guidelines they can do low scores and no scores, a lot of lenders will limit the credit score to 620 or higher. This is the current credit score that most Secondary Market lenders want. Scores go from 300 to 800 credit score range, and mortgage lenders use Fico Version 2, 4,5 respectively for Transunion, Equifax, and Trans union. with lenders taking the middle score. . 

As far as minimum credit requirements for Kentucky Mortgage Loan Approval.

Bankruptcy waiting period

  • Kentucky Conventional loan — You must wait four years from your discharge date after a chapter 7 or 11 bankruptcy, and two years after a chapter 13. The typical waiting period after a foreclosure is seven years, or three years if you have extenuating circumstances
  • Kentucky FHA loan — You must wait two years from your discharge date after a chapter 7, and one year after a chapter 13. There’s no waiting period after a chapter 11 bankruptcy. You must wait three years after a foreclosure
  • Kentucky VA loan — You must wait two years from your discharge date after a Chapter 7, and one year after a chapter 13. There’s no waiting period after a chapter 11. After a foreclosure, the waiting period is two years

Income and employment requirements to buy a house

For this reason, most lenders require 24 months of consecutive employment before approving a home loan application. This applies to self-employed mortgage borrowers, too, in which case you’ll provide your business and personal tax returns for the previous two years. Income statements must show consistent income over the previous 24 months, either remaining roughly the same or increasing.

There’s no minimum income to get a mortgage, but some loan programs have a max income limit.

Since a self-employed borrower’s income can fluctuate from year to year, mortgage lenders often average out their income over a two-year period, and then use this figure for qualifying purposes.

Be mindful, too, of possible income requirements for the type of loan you want. There’s typically no minimum income requirement, but some programs do have income limits. 

Buying a house also requires meeting down payment minimums.

With a conventional loan, you can expect to pay a minimum down payment between 3% and 5% of the purchase price. The minimum on an FHA loan, backed by the Federal Housing Administration, is 3.5%.

USDA and VA home loans do not have minimum down payment requirements. (Yes, that means you can buy a house with $0 down if you qualify.)

These days 20% down isn’t required. But some borrowers choose to put 20% down to avoid the monthly cost of private mortgage insurance (PMI).

That means if you’re making a low down payment of 3%, the total amount of money you need to save will be more like 5% to 8% of the sale price when upfront fees are added in.

If you’re having trouble saving money, you might qualify for a down payment assistance program. These programs provide funds in the form of grants or loans, which you can use to pay your down payment and/or closing costs. 

Kentucky Down Payment Assistance Programs
From first-time buyers to current homeowners, many state, county and local housing agencies offer affordable loan programs with Down Payment Assistance (DPA), subject to availability of funds and credit qualifying.


Down payment assistance can vary with single products or sometimes can be a combination of products such as Mortgage Credit Certificates (MCC), Grants, DPA’s along with closing cost assistance and low interest rates and fees that can help individuals and families become successful homeowners.


All borrowers must qualify for an underlying mortgage product according to the Housing Finance Agency authority (FHA, VA, USDA or Conventional). Housing loan programs are then layered on top to provide additional benefits. If eligible, the borrower can also add a down payment and closing cost assistance to their loan according to individual program guidelines.


What state are you in? I assume Kentucky? I will help you gather more information if this is something you want to look into. The general terms are below:
• Meet minimum credit score requirements 620• Meet income limits to $131,000 in major metro areas of Kentucky• Meet purchase price limits currently $336,000• Meet loan amount limits 

Welcome Home Grant $5,000

Eligibility Requirements

Homebuyer Eligibility

• Total household income must be at or below 80% of MRB income limits
• Homebuyers must contribute at least $500 of their own funds toward down payment and closing costs (60% of these
  funds may be received as a gift).
• Applicants do not have to be first-time homebuyers. However, all first-time homebuyers must complete a homebuyer
  counseling program.

Debt to Income Ratio Requirements

Your existing debts will have an impact on your qualified loan amount, and therefore your home buying budget.

High debts (like credit card debt, student loans, and other installment loans) can sometimes prevent qualifying for a mortgage. Low monthly debt, on the other hand, can help you afford a more expensive home.

Your mortgage lender will calculate your debt-to-income ratio (DTI) to determine your qualifying amount. DTI is the percent of your gross monthly income that goes toward minimum debt payments. 

Lenders look at the money left over after your regular debts are paid to see how much you can afford for a monthly mortgage payment.

An ideal DTI for different mortgage programs is as follows: 

  • 36-45% for a conventional loan with mortgage insurance. Higher with 20% downpayment to 50% debt to income ratio.
  • 55% for an FHA loan
  • 45% for a USDA loan
  • 41% for a VA loan

Some lenders allow higher ratios, though, if you have ‘compensating factors.’ These include an excellent credit score, a large down payment, or high cash reserves. 

Ideally, the mortgage payment on your new home shouldn’t exceed 31% to 43% of your gross monthly income.

Also note that your other homeownership costs — like homeowners insurance and property taxes — will be included in your debt-to-income ratio.

Kentucky Mortgage Pre-Approval Documents Needed

  • Tax returns, paystubs, and W-2s for the previous two years
  • Employment verification letter
  • Bank statements and information about other assets
  • Photo ID
  • Rental history
  • Year-to-Date Profit and Loss statement, if you’re self-employed

 hope this gives you some useful input to help guide your decision making. Give me a call if you have more specific questions! Thanks so much 😊

Joel Lobb (NMLS#57916)
Senior  Loan Officer
American Mortgage Solutions, Inc.10602 Timberwood Circle Suite 3Louisville, KY 40223Company ID #1364 | MB73346Text/call 502-905-3708
kentuckyloan@gmail.com

The view and opinions stated on this website belong solely to the authors, and are intended for informational purposes only. The posted information does not guarantee approval, nor does it comprise full underwriting guidelines. This does not represent being part of a government agency. The views expressed on this post are mine and do not necessarily reflect the view of my employer. Not all products or services mentioned on this site may fit all people. NMLS ID# 57916, (www.nmlsconsumeraccess.org). Mortgage loans only offered in Kentucky.All loans and lines are subject to credit approval, verification, and collateral evaluation and are originated by lender. Products and interest rates are subject to change without notice. Manufactured and mobile homes are not eligible as collateral.

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