Kentucky Housing Corporation (KHC)


Kentucky First-Time Home Buyer Programs 



There are basically 4 mortgage programs for first time home buyers in Kentucky to consider:
Kentucky First-Time Home Buyer Programs 

Rest assured, most Kentucky first-time homebuyers are confused and lack confidence when it comes to buying their first home in Kentucky.

There are basically 4 mortgage programs for first time home buyers in Kentucky to consider:


1. FHA:
Kentucky FHA loans are a popular choice in Jefferson County Kentucky first time home buyers because they allow the least down payment of 3.5%, vs Fannie Mae which now requires a 5% investment on primary residences.


The current credit score requirements center around the 580 score for most FHA loans in Kentucky, with no bankruptcies in the last 2 years and no foreclosures in the last 3 years.


Even though FHA insure a mortgage loan down to a 580 credit score or lower sometimes, it is very difficult to find a lender that will approve the loan with scores below 620. Keep that in mind.


The house payment will need to be around 30% of your gross monthly income. For example if you gross around $3000 a month, then the maximum mortgage payment you would qualify would be $1000 a month. If the loan comes back as an accept, the debt to income ratio can be substantially higher than the 31% rule.


All FHA loans are pre-approved through an AUS, an automated underwriting system upfront that will dictate your loan approval. The software underwriting engine looks at your credit, income, assets and figures your loan approval and will recommend an accept, refer/eligible, or refer/ineligible, or out of scope.

Most FHA investors will want a Accept on your underwriting findings to do a loan. It it comes back referred, then there are additional conditions or overlays that could stop your loan from being approved.



2. VA:

Kentucky VA loans require no down payment but you must have a VA certificate of Eligibility issued by the Veterans Administration to purchase a home using your VA loan entitlement.


The current credit score that most Kentucky VA lenders want is 620. There can be no bankruptcies or foreclosures in the last two years with good re-established credit.


The maximum debt to income ratio is 41% with a residual income of around $1000 a month after you pay all your bills. For example, if you make $4000 gross monthly, then the maximum house payment along with your other household bills would be set at $3000 a month so as you have the $1000 residual income requirement met. There are some variances on the residual income to whereas it is based on the number of people living in the household and which state you live in.



3. USDA/Rural Housing:

USDA or Rural Housing loans are not available in the more highly populated counties in Kentucky . The counties of Jefferson and Fayette Counties are not eligible for USDA loans.

USDA loans require no down payment and are subject to income and property eligibility requirements by County..

Check Kentucky USDA Income Limits Here”—–>>>>


Check Kentucky USDA Property Eligibility Limits Here—>>>>


All Kentucky Rural Housing Loans are ran through GUS, Guarantee Underwriting System, an online to determine your loan approval

The Automated Underwriting engine will come back with an Accept, Refer, or Ineligible.

Most USDA mortgage investor want an Accept on the initial underwriting approval to do the loan.

640 is the score that most USDA lenders want, but USDA will go down to a 580 credit score in their guidelines but it is very difficult to get approved.

If you have a score below 640 and trying to go USDA, work on getting your credit scores up first.



4. Kentucky Housing Corp or KHC
KHC is used for mostly applicants in urban areas of Kentucky that don’t have access to USDA or other government agencies to buy a home with no down payment.


Down Payment Assistance for Ky First Time Home Buyer, 100% Financing


Down Payment: There are still housing programs that exist for Kentucky home buyers whereas you can purchase a home with no down payment. You will need a 620 mid credit score to purchase a home using the KHC loan programs for their no down payment credit requirements.

How the Down Payment Assistance Program (DAP) Works

A minimum of 3.5% down payment is required with this loan. Down payment assistance loans are available from $4500-$6,000, and are paid back over a period of ten years. They are typically offered to buyers with limited cash reserves and carry an interest rate of 1 to 5.5%. 


These loans can make a critical difference to buyers for whom the down payment is an obstacle. Buyers whose 3.5% down payment is less than the $6000 limit may choose to use the remainder of a down payment loan to pay closing costs, further reducing the amount needed to bring to closing.







Home Buyer Eligibility
•  KHC can help both first time and repeat home buyers statewide.
•  Must be a U.S. citizen or legal status to be in U.S.
•  Applicant’s income ONLY through Secondary Market.
•  Property must be the borrower’s principal residence.
•  Any Borrower that meets both the income and purchase price limit can have access to 
Down Payment Assistance.






Kentucky Housing Credit Standards
•   620 minimum credit score required for FHA, VA, & RHS.
•   660 minimum credit score required for Conventional.
•   Debt ratios: 40/50%
•   Collections in most cases do not need to be paid-off in full.
•   Bankruptcies and foreclosures must be discharged two to seven years.
•   Non-taxable income can be grossed-up.






Property Eligibility
•  Both new and existing property.
•  Both new & existing Manufactured Housing.
•  With RHS only new construction Manufactured housing is allowed.
•  Purchase price limit of $346,644 for Secondary Market or $311,997 for Tax Credit.
•  Full appraisal required on all KHC loans.
•  With Existing Property, VA is the only loan product that requires a termite inspection.
•  A termite soil treatment certificate is required on ALL new construction properties 
except on conventional loans.
















Joel Lobb (NMLS#57916)
Senior Loan Officer

text or call 502-905-3708 cell

kentuckyloan@gmail.com


This web site is not the FHA, VA, USDA, HUD or any other government organization responsible for managing, insuring, regulating or issuing residential mortgage loans.


All approvals and rates are not guaranteed, and are only issued based on standard mortgage qualifying guidelines


Remember, we are even available this weekend for pre-qualifications or questions. Call our cell phone or email us. If you miss us, leave a message and we WILL call you back

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There are basically 4 mortgage programs for first time home buyers in Kentucky to consider:

What’s a debt-to-income ratio, and why you need a low one to buy a home


This article is too good not to be shared so it’s copied from The Washington Post.

When it comes to qualifying for a loan to buy a home or to refinance your mortgage, there are plenty of numbers to consider, such as your credit score and the appraised home value. Perhaps one of the most important numbers is your debt-to-income (DTI) ratio, which compares the minimum payments on all debt you must make each month with your gross monthly income.

“The DTI ratio is one of the most important considerations lenders take into account when evaluating the risk associated with a borrower taking on another payment,” says Paul Buege, president and chief operating officer of Inlanta Mortgage in Pewaukee, Wis. “The lower the DTI ratio a borrower has, the more confident the lender is about getting paid on time in the future based on the loan terms.”

It’s not just the lender who benefits from knowing your DTI, says Buege.

“Calculating your DTI ratio can help you determine how comfortable you are with your current debt and whether you have enough income to take on a mortgage payment,” he says.

Your DTI tells a lender what percentage of your income is being consumed by debts, says Joseph Mayhew, chief credit officer of Evolve Mortgage Services in Frisco, Tex.

“Lenders like to see low DTI ratios because it means a borrower has excess income to cover unforeseen emergencies and to save for a rainy day,” says Mayhew. “As DTI ratios go higher, lenders become less willing to lend. In the eyes of a mortgage lender, a high DTI can signify poor credit management, living beyond your means and difficulty saving money for the future.”

How to calculate your DTI

A simple DTI calculation is to divide your total monthly obligations by your total monthly income to generate a percentage, says Mayhew. For example, if your total monthly debts are $1,000 and your total monthly income is $4,000, your DTI would be 25 percent.

However, not every monthly bill is included in your DTI.

“Lenders typically look at installment loan obligations, such as auto and student loans, as well as any revolving debt payments such as credit cards or a home equity line of credit,” says Buege. “Alimony and child support payments are also included. When calculating DTI ratios, lenders don’t include utilities, cable and phone bills or health insurance premiums. Medical bills are generally not included. Everyday items like food and gas are also not included when calculating DTI ratios.

Your mortgage payments, including principal, interest, taxes and insurance, are contained in the DTI calculation, but auto insurance and life insurance payments, 401(k) contributions, income tax deductions and college or private school tuition payments are not, says Mayhew.

What’s a good DTI?

While an ideal DTI would be 25 percent or less, says Buege, the lower the DTI the better. Various loan programs have different DTI ratio requirements.

“For consumers with a good credit history, stable income and a down payment of 5 percent or more, most lenders will easily lend up to 45 percent DTI,” says Mayhew. “Those with smaller down payments or problems in their credit history may find themselves limited to a DTI around 38 percent.”

If your DTI is between 45 and 50 percent, many lenders will still approve a loan, says Mayhew, but they will require a perfect credit history, a larger down payment of 20 percent or more and plenty of cash in the bank for an emergency. Applicants with a higher level of debt will usually need to reduce their debt and/or increase their income.