2025 Kentucky FHA Loan Requirements & Limits

2025 Kentucky FHA Loan Requirements: Credit, Down Payment, DTI & Loan Limits

2025 Kentucky FHA Loan Requirements & Loan Limits

Updated for 2025! FHA loan limits are higher across Kentucky. The new single-family limit is $524,225—an increase of $25,968 from last year. That means you can buy more home with just 3.5% down!

FHA Loan Requirements in Kentucky – 2025 Snapshot

  • Minimum Credit Score: 580+ (3.5% down); 500–579 (10% down)
  • Minimum Down Payment: 3.5% (with 580+ score)
  • Debt-to-Income (DTI) Ratio: Typically up to 57% (with strong credit)
  • Bankruptcy Wait Period: 2 years from Chapter 7 discharge, 1 year for Chapter 13 (with on-time payments)
  • Foreclosure Wait Period: 3 years
  • Loan Limits: $524,225 (1-unit); $671,200 (2-unit); $811,275 (3-unit); $1,008,300 (4-unit)
  • Property Type: Must be your primary residence
  • Loan Insurance: Upfront (UFMIP) + monthly MIP required

Kentucky FHA Loan Requirements for income, credit, income and loan limits

2025 Kentucky FHA Loan Requirements Infographic: Credit, Down Payment, DTI, Bankruptcy, Foreclosure, Loan Limits

2025 FHA Loan Limits by County in Kentucky

County 1-Unit 2-Unit 3-Unit 4-Unit
Adair$524,225$671,200$811,275$1,008,300
Allen$524,225$671,200$811,275$1,008,300
Boone$603,750$772,900$934,800$1,161,050
Campbell$603,750$772,900$934,800$1,161,050
Gallatin$603,750$772,900$934,800$1,161,050
Kenton$603,750$772,900$934,800$1,161,050
Woodford$524,225$671,200$811,275$1,008,300

See FHA limits for all counties on HUD.gov |

What does this mean for you?
You can now purchase a home in Kentucky with as little as 3.5% down—even up to $524,225 for a single-family property! Multi-unit buyers benefit from higher limits, too.

Kentucky FHA Loan FAQs

Most lenders require a 580 score for 3.5% down. Some allow 500–579 with 10% down.
The minimum down payment is 3.5% if your credit score is 580 or higher with scores between 500 and 579 FHA loans in Kentucky require a down payment of 10%. This does not mean you're automatically apporved if yo uhave these scores.
You typically must wait 2 years after Chapter 7 bankruptcy, 1 year after Chapter 13 (with on-time payments), and 3 years after foreclosure or short sale. Must have clear Cavirs too.
Most counties: $524,225 (single-family). Cincinnati metro counties: $603,750 (Boone, Campbell, Gallatin, Kenton).
FHA generally allows DTI up to 45–57%, depending on credit and other factors. There are two debt ratios, front end and backend with the max front end ratio being 45% and the max backend ratio of 56.99% for an automated approval through Desktop Underwriting or Loan Prospector, typcially called aus
What does this mean for you?
You can now purchase a home in Kentucky with as little as 3.5% down—even up to $524,225 for a single-family property! Multi-unit buyers benefit from higher limits, too.

Kentucky FHA Loan FAQs

Most lenders require a 580 score for 3.5% down. Some allow 500–579 with 10% down.
The minimum down payment is 3.5% if your credit score is 580 or higher.
CAIVRS stands for Credit Alert Interactive Voice Response System. It’s a federal database lenders use to check if you have any unpaid federal debts or defaulted government loans. A clear CAIVRS is required for FHA approval.
Generally, you need a two-year work history in the same field or line of work. Recent grads or job changes are often acceptable if you can document stability and likelihood of continued employment.
Yes, FHA loans are available for manufactured and double-wide homes if the home is permanently affixed to owned land and meets HUD standards. Mobile homes in parks (leased land) are not eligible.
Yes, Kentucky offers down payment assistance programs that can cover your 3.5% down and closing costs, allowing some buyers to purchase with little to no out-of-pocket funds. Program and eligibility rules apply.
FHA loans require upfront (UFMIP) and monthly mortgage insurance premiums (MIP), regardless of down payment. Unlike conventional PMI, FHA mortgage insurance stays for the life of the loan if you put less than 10% down.
Yes, you can get another FHA loan as long as you no longer have the previous FHA loan on a primary residence. Exceptions exist if relocating for work or proven need.
Generally, you can only have one FHA loan at a time. Rare exceptions exist for relocations, job changes, or family size increases, but you must document the need and get lender approval.
Collections are reviewed case by case. Medical collections are usually ignored. Non-medical collections over $2,000 may need to be paid or included in your debt ratio. Always disclose all debts for a transparent pre-approval.
A past car repossession does not automatically disqualify you. Lenders will want to see re-established credit and an explanation for the repo. If it’s recent or unsatisfied, you may need to resolve the balance or wait a year or more.
FHA requires that 0.5% of the outstanding student loan balance (if no payment is reported) be counted in your DTI ratio, even if payments are deferred. Document your actual payment for the most accurate approval outcome.
Most lenders want at least one credit score, but FHA technically allows for “no score” loans using manual underwriting, with strict compensating factors like low debt, strong job history, and rent verification.
Yes, but only a small number of lenders offer this. You’ll need to show alternative credit (rent, utilities, insurance, etc.), and manual underwriting guidelines apply. Expect stricter review and possibly higher down payment requirements.
Typical closing times are 30–45 days in Kentucky, but can be faster if your documents are ready and there are no appraisal or title delays. Down payment assistance can add a few days to the process.

Ready to Buy with 3.5% Down?

Start your FHA pre-approval today or ask a question—no obligation, fast response.

Contact Joel Lobb, Kentucky FHA Expert
Call/Text: (502) 905-3708
About Your Kentucky FHA Expert
Joel Lobb, Senior Loan Officer – EVO Mortgage
NMLS #57916 | Company NMLS #1738461
Call/Text: (502) 905-3708 | kentuckyloan@gmail.com
Based in Louisville. Over 1,300 Kentucky families served since 2002.
Equal Housing Lender. www.nmlsconsumeraccess.org

Ready to Buy with 3.5% Down?

Start your FHA pre-approval today or ask a question—no obligation, fast response.

Contact Joel Lobb, Kentucky FHA Expert
Call/Text: (502) 905-3708
About Your Kentucky FHA Expert
Joel Lobb, Mortgage Broker FHA, VA, KHC, USDA NMLS ID. 57916
Company NMLS #1738461
Call/Text: (502) 905-3708 | kentuckyloan@gmail.com
Based in Louisville. Over 1,300 Kentucky families served since 2002.
Equal Housing Lender. www.nmlsconsumeraccess.org




















2025 Kentucky FHA Loan Requirements & Limits


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Kentucky USDA Rural Housing Mortgage Lender: 2025 Kentucky Rural Housing Income limits

Kentucky USDA Rural Housing Mortgage Lender: 2025 Kentucky Rural Housing Income limits: 2025 Kentucky USDA Income Limits by County | EVO Mortgage 2025 USDA Income Limits for Every Kentucky ...

Kentucky First-Time Home-Buyer Programs

Kentucky First-Time Home Buyer Programs 2025 | Complete Guide & Down Payment Assistance

Kentucky First-Time Home Buyer Programs 2025: Your Complete Guide to Homeownership

New for 2025: Kentucky Housing Corporation (KHC) has increased their purchase price limit to $544,232 effective June 23, 2025, opening doors for more first-time home buyers across Kentucky. Whether you're looking in Louisville, Lexington, or rural Kentucky communities, we'll help you find the right program with down payment assistance up to $10,000.

Kentucky First-Time Home Buyer Programs: What's Available in 2025?

Kentucky offers some of the most comprehensive first-time home buyer assistance programs in the nation. From zero-down payment options to substantial down payment assistance, first-time buyers in Kentucky have multiple pathways to homeownership. Here's what makes Kentucky special for new home buyers:

  • Kentucky Housing Corporation (KHC) provides up to $10,000 in down payment assistance
  • USDA Rural Development loans offer 0% down for eligible areas in Kentucky
  • FHA loans require as little as 3.5% down with credit scores as low as 580 or 10% down with a 500 credit score
  • VA loans provide 0% down for eligible veterans and active military
  • Conventional loans with as little as 3% down for qualified borrowers

The best part? Many of these programs can be combined to maximize your buying power and minimize out-of-pocket costs.

Kentucky Home Buyer Programs: Side-by-Side Comparison

Program Minimum Credit Score Down Payment Income/Price Limits Best For
FHA Loan 580 (3.5% down)
500-579 (10% down)
3.5% minimum Up to $524,225 in high-cost KY counties Lower credit scores, flexible qualification
USDA Rural Development 640+ (preferred) but no minimum score 0% down payment 115% of area median income; rural/$119,850 to $158,250 typically based on household size family Rural buyers, zero down payment
VA Loan No minimum (lender overlay 620 or higher preferred) 0% down payment No income limits; must meet VA eligibility for residual income limits Veterans, active military, eligible spouses
KHC Down Payment Assistance 620-660 (varies by loan type) 0% with assistance Income limits vary by county; $544,232 max price First-time buyers needing down payment help
Conventional 95-97% LTV 620+ but 720 or higher is usually needed with at least 5% down with mi gets approved 3% minimum max debt to income ratio of 45% and 50% on front end and back end ratios $806,500 Kentucky limit Good credit, ability to cancel PMI

FHA Loans for First-Time Buyers in Kentucky

FHA loans are the most popular choice for Kentucky first-time home buyers, and for good reason. The Federal Housing Administration backs these loans, making them less risky for lenders and more accessible for borrowers.

Kentucky FHA Loan Benefits:

  • Low down payment: Just 3.5% with a 580+ credit score
  • Flexible credit requirements: Scores as low as 500 accepted (with 10% down)
  • Gift funds allowed: Down payment can come from family gifts
  • Seller concessions: Sellers can contribute up to 6% toward closing costs
  • Assumable loans: Future buyers can take over your FHA loan

2025 FHA Loan Limits in Kentucky:

Most Kentucky counties have an FHA loan limit of $524,225

FHA Mortgage Insurance in Kentucky:

FHA loans require both upfront mortgage insurance (1.75% of loan amount) and annual mortgage insurance. For 2025, annual rates range from 0.15% to 0.75% depending on loan-to-value ratio and loan term and loan amount Everyone pays the same with FHA.

USDA Rural Development Loans in Kentucky

Kentucky's rural and suburban communities are perfect for USDA loans, which offer 100% financing (no down payment) for eligible properties and borrowers.

USDA Loan Advantages:

  • Zero down payment required
  • Competitive interest rates
  • No prepayment penalties
  • Flexible credit guidelines
  • Lower mortgage insurance than FHA loans

USDA Eligibility in Kentucky:

Contrary to popular belief, "rural" doesn't mean farmland. Many suburban areas around Louisville, Lexington, and other Kentucky cities qualify for USDA financing. Key requirements include:

  • Property must be in a USDA-eligible area see link below (we can check any address)
  • Household income cannot exceed 115% of area median income see link below
  • Must be primary residence, not investment or second homes
  • Credit score of 640+ for automated approval, but can do a manual underwrite with scores below 640 with a maxiumum debt to income ratio of 29% and 41% respeivrtly on front end and back end ratios

Popular USDA-Eligible Areas in Kentucky:

Many communities around major cities qualify, including parts of Oldham, Shelby, Spencer, Bullitt, and other counties near Louisville, plus numerous areas around Lexington, Bowling Green, and other Kentucky metros.

VA Loans for Kentucky Veterans and Military

Kentucky's strong military presence means many first-time buyers can take advantage of VA loan benefits, which are among the best available.

VA Loan Benefits:

  • No down payment required
  • No private mortgage insurance
  • Competitive interest rates
  • No prepayment penalties
  • Assumable loans
  • Reusable benefit

VA Loan Eligibility:

Veterans, active-duty service members, National Guard, Reserves, and eligible surviving spouses may qualify. You'll need a Certificate of Eligibility (COE) from the VA.

VA Funding Fee:

While VA loans don't require montlhy mortgage insurance, there is a upfront funding fee, varies click here for more info Veterans with service-connected disabilities are exempt from this fee.

Kentucky Housing Corporation (KHC) Down Payment Assistance

The Kentucky Housing Corporation offers the most significant down payment assistance in the state, helping qualified first-time buyers overcome the biggest barrier to homeownership.

KHC Program Highlights:

  • Up to $10,000 in down payment assistance
  • Forgivable loans in many cases
  • Can be combined with FHA, VA, USDA, or conventional loans
  • Below-market interest rates
  • $544,232 maximum purchase price (effective June 23, 2025)

KHC Income Limits by County (2025):

Income limits vary by county and household size. For example:

  • Jefferson County (Louisville): Up to $99,700 for 1-2 person household
  • Fayette County (Lexington): Up to $92,400 for 1-2 person household
  • Most other counties: $73,500-$89,100 for 1-2 person household

How KHC Down Payment Assistance Works:

KHC provides a second mortgage for down payment and closing cost assistance. In many cases, this loan is forgiven after 5-10 years of occupancy, making it essentially a grant.

How to Qualify for Kentucky First-Time Home Buyer Programs

First-Time Buyer Definition:

Most programs define "first-time buyer" as someone who hasn't owned a home in the past 3 years. Some exceptions apply for single parents, divorced individuals, and displaced homemakers.

General Qualification Requirements:

  • Credit Score: Minimum varies by program 620 for government loans and 660 for conventinonal loans
  • Income: Must be within program limits for your area
  • Employment: Stable 2-year work history
  • Debt-to-Income: Typically 50% or lower
  • Assets: Enough for down payment and closing costs (unless using assistance)
  • Primary residence: Must be your main home

Required Documentation:

  • Recent pay stubs or monthly statements if on fixed income (30 days)
  • Tax returns and w-2's(2 years)
  • Bank statements (2 months)
  • Credit report
  • Employment verification for last two years
  • ID and Social Security card

Kentucky First-Time Home Buyer Process: Step-by-Step Guide

Step 1: Check Your Credit and Finances

Pull your free credit report from annualcreditreport.com and review your finances. Calculate how much you can afford for a monthly payment including principal, interest, taxes, and insurance.

Step 2: Get Pre-Qualified

Contact a Kentucky-licensed loan officer for a free pre-qualification. This will help you understand your buying power and which programs you qualify for.

Step 3: Choose Your Home Loan Program

Based on your location, credit, and financial situation, select the best program or combination of programs for your needs.

Step 4: Find a Kentucky Realtor

Work with a buyer's agent who understands first-time buyer programs and can help you find homes within your budget and program requirements.

Step 5: Apply for Your Mortgage

Submit your complete application with all required documentation. Your loan officer will guide you through underwriting and closing.

Step 6: Close on Your New Home

Attend your closing, sign the paperwork, and get your keys! Welcome to homeownership in Kentucky!

Kentucky Home Buying Timeline: What to Expect

Understanding the timeline helps you plan your home purchase:

  • Pre-qualification: Same day to 24 hours
  • House hunting: 2-8 weeks (varies by market and preferences)
  • Loan processing: 30-45 days from application to closing
  • USDA loans: May take 35-45 days due to rural development review
  • KHC loans: Allow extra time for down payment assistance processing

Frequently Asked Questions About Kentucky First-Time Home Buyer Programs

What credit score do I need to buy a house in Kentucky?

Credit score requirements vary by program: FHA loans accept scores as low as 580 (or 500 with 10% down), USDA prefers 640+ but can go lower on a manual undewrite, VA loans have no official minimum but lenders typically want 620+, and conventional loans usually require 620+ but usually need 700 or highere. KHC programs follow the underlying loan type requirements.

Can I get down payment assistance in Kentucky?

Yes! Kentucky Housing Corporation provides up to $10,000 in down payment assistance for qualified first-time buyers. Many of these loans are forgivable after 5-10 years. Additionally, FHA, VA, and USDA loans allow seller contributions toward closing costs.

What areas of Kentucky qualify for USDA loans?

Much of Kentucky outside major metro centers qualifies for USDA financing. This includes many suburban areas around Louisville, Lexington, and other cities. We can check any specific address for USDA eligibility at no cost.

How much can I borrow with Kentucky first-time buyer programs?

Loan limits vary by program and location. FHA limits go up to $524,225 in high-cost Kentucky areas, USDA has no set limit but income restrictions apply, VA loans have no limit with full entitlement, and KHC programs have a $544,232 maximum purchase price as of June 2025. House payment should not be more than 45 to 50% of your gross income, lower on bad credit files and no money down programs in Kentucky

Can I combine multiple Kentucky home buyer programs?

Yes! Many programs can be combined. For example, you can use KHC down payment assistance with an FHA loan, or combine seller concessions with various loan programs to minimize your out-of-pocket costs.

How long does it take to close on a home in Kentucky?

Average closing times are 30 days for FHA and conventional loans, 25-30 days for VA loans, and 35-45 days for USDA loans. KHC programs may add a few extra days for down payment assistance processing.

Kentucky Home Loan Payment Calculator

Estimate Your Monthly Payment

*Estimates only. Actual payments may vary. Not a commitment to lend. Equal Housing Lender.
EVO Mortgage NMLS #1738461 • Joel Lobb NMLS #57916

Ready to Start Your Kentucky Home Buying Journey?

Get your free pre-qualification in 24 hours and discover which Kentucky first-time buyer programs you qualify for. No hard credit check required.

Joel Lobb - Senior Loan Officer
EVO Mortgage • NMLS #1738461 • Personal NMLS #57916
Equal Housing Lender • Licensed in Kentucky

Kentucky First-Time Home Buyer Programs by Region

Louisville Metro Area First-Time Buyers

4 Things Every Borrower Needs to Know to Get Approved for a Mortgage Loan In Kentucky

Thank you for visiting. I hope you find this website both informative and empowering as you explore your Kentucky mortgage options. My goal is to help you feel confident in selecting the right home loan for your unique situation.

I proudly serve all 120 counties in Kentucky, offering a full range of mortgage loan programs, including:

  • FHA Loans

  • VA Loans

  • USDA Rural Housing Loans

  • Fannie Mae Conventional Loans

  • KHC Down Payment Assistance Programs

With over 20 years of lending experience, I’ve had the privilege of helping more than 1,300 Kentucky families achieve their homeownership goals. Whether you're a first-time homebuyer or seeking a second opinion, I’m here to offer honest, no-pressure advice—always free of charge.

I am dedicated to:

  • Attending as many closings as possible

  • Providing responsive, personalized service

  • Ensuring quick, efficient, and accurate loan processing

  • Making myself accessible every step of the way

I've been consistently recognized as a top mortgage loan officer in Kentucky for VA, FHA, USDA, and KHC programs. I take pride in being thorough, transparent, and attentive with each and every client.

Please take a moment to read my reviews below. If you have questions or need guidance, feel free to call or text me directly.




Top-Rated Mortgage Company in Louisville, Kentucky

I would 100% recommend Joel & Dawn! They helped make a goal for my family a reality. From start to finish they helped me every step of the way. I will forever be thankful for them. Day or night, any worry or thought I had I never had to wait for a response, they really kept me sane during the stresses of being a first time buyer. I found Joel on YouTube when I was doing research before I decided to start the process of buying, turned out he was actually right here in Kentucky and so it was meant for me to go with them! Thank you both for everything, The Wray Family! πŸ 






Cee Bell



Absolutely Amazing!! I emailed Joel after I had just got a denial from a bank and just thought i would try to get some advice on what my next steps would be to get a house. I honestly didn't expect to even get a reply because my credit is not great. That was about a week and a half ago. I just signed a contract on a house last night. ONLY because of Joel Lobb. He even worked with us throughout the weekend, which shocked me. Best decision I have ever made. THANK YOU SO MUCH FOR WORKING WITH US THROUGHOUT THE ENTIRE PROCESS






2 reviews


We were afraid we wouldn’t get approved for a loan because we didn’t have the best credit scores. But with Joel’s help he got us approved for a FHA. We closed on our home about 2 weeks ago! Joel was quick at responding to any of our questions and concerns. He was polite and professional when it came to our needs. We couldn’t have done this without Joel! THANKS AGAIN
5  reviews • 








Absolutely the best experience buying my home. Everyone else turned me away. I done a google search for lenders and found Joel, and he gave me a chance. I faced a lot of personal road blocks during this process but he stuck it out with me. I was guided on what needed to be done and trusted his guidance wholeheartedly. We finally made it to the end and I worked with a lady named Dawn. She as well seen road blocks I encountered but stuck it out with me also. I emailed them with more questions than I should have, and they probably wished I didn’t send so many haha but they never failed to respond. If anyone can take owning a home from a dream to a reality, it’s Joel and his team!




Mr. Joel Lobb was an important part of why we had a successful and very pleasant experience in purchasing our new home, he was very professional and knowledgeable in the process . He explained what we was to expect and was there for us as new home buyers in our corner every day and night I would recommend him to anyone and everyone he is a must have in your home buying journey.












Brandon Crook
3 reviews 
Thank god for this man. He is amazing. He Helped me from start to finish. When I first started looking for a house I knew nothing about the process or what it took to purchase a home. He broke everything down from start to finish. Helped me to get get my credit in order. Very professional and knowledgeable gentleman. If you are a first time home buyer or this is your 10th home. This is the man you need to see ASAP! I greatly appreciate everything he has done for my family. We love our new home! I can’t thank him enough! 10 stars!!!



The 4 things below underwrites review for a Mortgage Loan Approval 
⬇️

1. Income


You need income. You need to be able to afford the home. But what is acceptable income? Let’s just say that there are two ratios mortgage underwriters look at to qualify you for mortgage payment:

First Ratio – The first ratio, top ratio or housing ratio. Basically, that means out of all the gross monthly income you make, that no more that X percent of it can go to your housing payment. The housing payment consists of Principle, Interest, Taxes and Insurance. 


Whether you escrow or not every one of these items are factored into your ratio. There are a lot of exceptions to how high you can go, but let’s just say that if your ratio is 33% or less, generally, across the board, you’re safe.

Second Ratio- The second ratio, bottom ratio or debt ratio includes the housing payment, but also adds all of the monthly debts that the borrower has. So, it includes housing payment as well as every other debt that a borrower may have. 


This would include, Auto loans, credit cards, student loans, personal loans, child support, alimony…. basically any consistent outgoing debt that you’re paying on. Again, if you’re paying less than 45% of your gross monthly income to all of the debts, plus your proposed housing payment, then……generally, you’re safe. You can go a lot higher in this area, but there are a lot of caveats when increasing your back ratio.


What qualifies as income? 




Basically, it’s income that has at least a proven, two-year history of being received and pretty high assurances that the income is likely to continue for at least three years. What’s not acceptable? Unverifiable cash income, short term income and income that’s not likely to continue like unemployment income, student loan aid, VA education benefits, or short-term disability are not allowed for a mortgage loan.

2. Assets


What the mortgage underwriter is looking for here is how much can you put down and secondly, how much will you have in reserves after the loan is made to help offset any financial emergencies in the future.

Do you have enough assets to put the money forth to qualify for the down payment that the particular program asks for? 

The only 100% financing or no money down loans still available in Kentucky for home buyers are available through USDA, VA, and KHC or Kentucky Housing Loans. Most other home buyers that don't qualify for the no money down home loans mentioned above, will turn to the FHA program. 

FHA loans currently requires a 3.5% down payment and Fannie Mae, or Conventional loans require a 3% to 5% down payment. The more you put down, the better your rate and terms usually and your chances of qualifying.

Kentucky Home buyers that have access to putting down at least 5% or more, will usually turn to Fannie Mae or Freddie Mac mortgage programs so they can get better pricing when it comes to mortgage insurance.

These assets need to be validated through bank accounts, 401k or retirements account and sometimes gifts from relatives or employer. Can you borrow the down payment? Sometimes.


 Generally, if you’re borrowing a secured loan against a secured asset you can use that. But rarely can cash be used as an asset. 

FHA will allow for gifts from relatives for down payments with little as 3.5% down but Fannie Mae will require a 20% down payment when a gift is being used for the down payment on the home.

The down payment scenarios listed above are for Kentucky Primary Residences only. There are stricter down payment requirements for investment homes made in Kentucky.

3. Credit


580 to 620 is the bottom score (again with few exceptions) that lenders will permit. Below a 620, then you have to look at doing a FHA loan or VA loan if you are a veteran. Even at 620, people consider you a higher risk that other folks and are going to penalize you or your borrower with a more expensive loan. 720 is when you really start to get in the “as a lender we love you” credit score. 760 is even better.


 Watch your credit scores carefully. You have three credit scores, and the lender will take your middle score. For example, let's say you have a 590 on Transunion, 679 on Experian, and a 618 on Equifax. Then your middle qualifying credit score will be 618 credits score.

If you absolutely cannot get your credit scores up to 620, then FHA will be a good option for you. FHA states that if your fico credit score is 580 or above, they will allow for a 3.5% down payment, and if below 580, you will need 10% down payment.

There are a lot of mortgage lenders that will not go below 580 to 620 range, so keep that in mind when you are shopping for a mortgage lender, because they create credit overlays.

Kentucky FHA Mortgage Loans currently requires 3 years removal from a foreclosure or short sale and 2 years on a bankruptcy with good reestablished credit.

Kentucky Fannie Mae Mortgage Loans currently requires 4 years removal from a bankruptcy, and 7 years on a foreclosure.

Kentucky VA Mortgage Loans currently requires 2 years removal from a bankruptcy or foreclosure with good, reestablished credit.

Kentucky USDA loans require 3 years removal from bankruptcy and foreclosure with good re established credit.











Which credit score is used to qualify for a Mortgage loan in Kentucky?





Credit score required for a Kentucky Mortgage Loan Approval




4. Appraisal



Generally, there’s nothing you can do to affect this. Bottom line here is…..”is the value of the house at least the value of what you’re paying for it?” If not, then not good things start to happen. Generally you’ll find less issues with values on purchase transactions, because, in theory, the realtor has done an accurate job of valuing the house prior to taking the listing. The big issue comes in refinancing. In purchase transactions, the value is determined as the


Lower of the value or the contract price!!!


That means that if you buy a $1,000,000 home for $100,000, the value is established at $100,000. Conversely, if you buy a $200,000 home and the value comes in at $180,000 during the appraisal, then the value is established at $180,000. Big issues….Talk to your loan officer.



For each one of these boxes, there are over 1,000 things that can effect if a borrower has reached the threshold to complete that box. Soo…..talk to a great loan officer. There are so many loan officers that don’t know what they’re doing. But, conversely, there’s a lot of great ones as well. Your loan is so important! Get a great lender so that you know, for sure, that the loan you want, can be closed on!



5 Most Popular Kentucky Home Loan Programs below:⬇️


Conventional Loan

• At least 3%-5% down

• Closing costs will vary on which rate you choose and the lender. Typically the higher the rate, the lesser closing costs due to the lender giving you a lender credit back at closing for over par pricing. Also, called a no-closing costs option. You have to weigh the pros and cons to see if it makes sense to forgo the lower rate and lower monthly payment for the higher rate and less closing costs.

Fico scores needed start at 620, but most conventional lenders will want a higher score to qualify for the 3-5% minimum down payment requirements Most buyers using this loan have high credit scores (over 720) and at least 5% down.

The rates are a little higher compared to FHA, VA, or USDA loan but the mortgage insurance is not for life of loan and can be rolled off when you reach 80% equity position in home.

Conventional loans require 4-7 years removed from Bankruptcy and foreclosure.

KENTUCKY FANNIE MAE LOAN LIMITS IN 2025 FOR CONVENTIONAL MORTGAGE LOANS

KENTUCKY FANNIE MAE LOAN LIMITS IN 2025 FOR CONVENTIONAL MORTGAGE LOANS


The FHFA determines the conforming loan limit each year, basing it on the average U.S. home value over the past four quarters.



Kentucky USDA Rural Housing Program



If you meet income eligibility requirements and are looking to settle in a rural area, you might qualify for the KY USDA Rural Housing program. The program guarantees qualifying loans, reducing lenders’ risk and encouraging them to offer buyers 100% loans. That means Kentucky home buyers don’t have to put any money down, and even the “upfront fee” (a closing cost for this type of loan) can be rolled into the financing.

Fico scores ****.usually wanted for this program center around 620 range, with most lenders wanting a 640 score so they can obtain an automated approval through GUS. GUS stands for the Guaranteed Underwriting system, and it will dictate your max loan pre-approval based on your income, credit scores, debt to income ratio and assets.

They also allow for a manual underwrite, which states that the max house payment ratios are set at 29% and 41% respectively of your income.

They loan requires no down payment, and the current mortgage insurance is 1% upfront, called a funding fee, and .35% annually for the monthly mi payment. Since they recently reduced their mi requirements, USDA is one of the best options out there for home buyers looking to buy in an rural area.

A rural area typically will be any area outside the major cities of Louisville, Lexington, Paducah, Bowling Green, Richmond, Frankfort, and parts of Northern Kentucky .

There is a map link below to see the qualifying areas.

Income Limits for: Most Locations

New Kentucky USDA Rural Housing  Income limits for most counties in 2024 (*) in Kentucky are $112,450 for a household family of four and household families of five or more  can make up to $148,450 with the new changes for 
2025 Kentucky USDA Income limits, the Jefferson County Louisville, KY Metro area (**) saw an increase of $112,450 for a family of four and up to $148,450 for a family of five or more. The metro area surrounding counties of Jefferson County includes Oldham, Bullitt, Spencer are included in these higher income limits for USDA loans.
Remember,  the entire  Jefferson County and Fayette County  Kentucky counties are not eligible for USDA loans. Along with parts of the following counties Daviess (Owensboro), Mccracken (Paducah), Madison County, (Richmond), Clark County (Winchester), Warren (Bowling Green), Hardin (Fort Knox and Radcliff), Bullitt(Hillview, Maryville, Zoneton, Fairdale, Brooks), Franklin, (Frankfort), Henderson (Henderson City Limits), Christian County (Hopkinsville, Fort Campbell), Boyd County (Ashland city limits) and the most Northern Parts of Boone, Kenton, Campbell Counties of Northern Kentucky (Covington, Florence, Richwood, Hebron, Ludlow, Fort Thomas, Bellevue, Ryle, Beechwood, ) 

The Northern Kentucky Counties (***) of Boon, Kenton, Campbell, Bracken, Gallatin, and Pendleton are $120,300 for a household of four or less and up to $159,150 for a family of five or more.
USDA Eligible Areas in Northern Kentucky
Burlington
Hebron
Independence
Walton
Alexandria
Highland Heights
Cold Springs
Grant County
Owen County
Pendleton County
USDA Income Limits
Boone, Kenton & Campbell Counties (N. KY)

$120,300 (family size 1-4)
$159,150 (family size 5 or more)
Grant, Owen & Pendleton Counties (N. KY)

$112,450 (family size 1-4)
$148,450  (family size 5 or more)

USDA requires 3 years removed from bankruptcy and foreclosure.

There is no max USDA loan limit.

KY USDA Rural Housing program.
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Kentucky FHA Loan



FHA loans are good for home buyers with lower credit scores and no much down, or with down payment assistance grants. FHA will allow for grants, gifts, for their 3.5% minimum investment and will go down to a 580 credit score.

The current mortgage insurance requirements are kind of steep when compared to USDA, VA , but the rates are usually good so it can counteracts the high mi premiums.

As I tell borrowers, you will not have the loan for 30 years, so don’t worry too much about the mi premiums.

The mi premiums are for life of loan like USDA.

FHA requires 2 years removed from bankruptcy and 3 years removed from foreclosure.


The new Kentucky FHA Mortgage Loan Limits for for FHA case numbers assigned on or after January 1, 2025:


Property Size
Low-Cost Area “Floor”
High-Cost Area “Ceiling”
Alaska, Hawaii, Guam,
and U.S. Virgin Islands “Ceiling”1
One Unit
$524,225
$1,209,750
$1,814,625
Two Units
$671,200
$1,548,975
$2,323,450
Three Units
$811,275
$1,872,225
$2,808,325
Four Units
$1,008,300
$2,326,875
$3,490,300



Kentucky VA Loan



VA loans are for veterans and active duty military personnel. The loan requires no down payment and no monthly mi premiums, saving you on the monthly payment. It does have an funding fee like USDA, but it is higher starting at 2.3% for first time use, and 3.6% for second time use. The funding fee is financed into the loan, so it is not something you have to pay upfront out of pocket.

VA loans can be made anywhere, unlike the USDA restrictions, and there is no income household limit.


Most VA lenders I work with will want a 580 credit score even though on paper, VA says they don't have a minimum credit score.

VA requires 2 years removed from bankruptcy or foreclosure.

VA Loan Limits for 2024 in Kentucky


As announced previously by VA in Circular 26-19-30 (which provides interim guidance on implementing "The Blue Water Navy Vietnam Veterans Act of 2019") the conforming loan limit cap on guarantees was removed for Veterans with full entitlement. For Veterans who have previously used entitlement and the entitlement has not been restored, the maximum amount of guaranty entitlement available to the Veteran (for a loan above $144,000) is 25 percent of the conforming loan limit reduced by the amount of entitlement previously used (not restored) by the Veteran. 

As a reminder, Veterans are able to use their VA Home Loan Guaranty benefit regardless of loan amount, but in order to purchase homes with loan amounts above the conforming loan limits, Veterans with partial entitlement may be required to make a down payment on amounts in excess of the conforming loan limit. Regardless of full or partial entitlement, the VA guaranty plus any required down payment must total 25% of the loan amount.






Kentucky Down Payment Assistance


 KHC Loan (Kentucky Housing Loan with Down Payment Assistance)

 

The first no money-down home  loan program offered by Kentucky Housing and other lenders in the state of Kentucky currently offers up to $10,000 in down payment assistance (DAP) 

   The maximum income limits are $168,700 for  Kentucky households with a max loan of 510,939. It requires a          620 minimum credit score and can be done  anywhere in Kentucky.

    Need to be 2 years removed from a Chapter 7 Bankruptcy and 3 years removed from a foreclosure.

 






Kentucky First Time Home Buyer Common Questions and Answers below:πŸ‘‡





∘ What kind of credit score do I need to qualify for different first time home buyer loans in Kentucky?



Answer. Most lenders will wants a middle credit score of 620 to 640 for KY First Time Home Buyers looking to go no money down. The two most used no money down home loans in Kentucky being USDA Rural Housing and KHC with their down payment assistance will want a 620 to 640 middle score on their programs.


If you have access to 3.5% down payment, you can go FHA and secure a 30 year fixed rate mortgage with some lenders with a 580 credit score. Even though FHA on paper says they will go down to 500 credit score with at least 10% down payment, you will find it hard to get the loan approved because lenders will create overlays to protect their interest and maintain a good standing with FHA and HUD.


Another popular no money down loan is VA. Most VA lenders will want a 620 middle credit score but like FHA, VA on paper says they will go down to a 500 score, but good luck finding a lender for that scenario.


A lot of times if your scores are in the high 500’s or low 600’s range, we can do a rapid rescore and get your scores improved within 30 days.


∘ Does it costs anything to get pre-approved for a mortgage loan?


Answer: Most lenders will not charge you a fee to get pre-approved, but some lenders may want you to pay for the credit report fee upfront. Typically costs for a tri-merge credit report for a single borrower runs about $50 or less. Maybe higher if more borrowers are included on the loan application.



∘ How long does it take to get approved for a mortgage loan in Kentucky?



Answer: Typically if you have all your income and asset documents together and submit to the lender, they typically can get you a pre-approval through the Automated Underwriting Systems within 24 hours. They will review credit, income and assets and run it through the different AUS (Automated Underwriting Systems) for the template for your loan pre-approval. Fannie Mae uses DU, or Desktop Underwriting, FHA and VA also use DU, and USDA uses a automated system called GUS. GUS stands for the Guaranteed Underwriting System.


If you get an Automated Approval, loan officers will use this for your pre-approval. If you have a bad credit history, high debt to income ratios, or lack of down payment, the AUS will sometimes refer the loan to a manual underwrite, which could result in a longer turn time for your loan pre-approval answer


∘ Are there any special programs in Kentucky that help with down payment or no money down loans for KY First Time Home Buyers?


Answer: There are some programs available to KY First Time Home Buyers that offer zero down financing: KHC, USDA, VA, Fannie Mae Home Possible and HomePath, HUD $100 down and City Grants are all available to Kentucky First Time Home buyers if you qualify for them. Ask your loan officer about these programs


∘ When can I lock in my interest rate to protect it from going up when I buy my first home?


Answer: You typically can lock in your mortgage rate and protect it from going up once you have a home picked-out and under contract. You can usually lock in your mortgage rate for free for 90 days, and if you need more time, you can extend the lock in rate for a fee to the lender in case the home buying process is taking a longer time. The longer the term you lock the rate in the future, the higher the costs because the lender is taking a risk on rates in the future.


Interest rates are kind of like gas prices, they change daily


∘ How much money do I need to pay to close the loan?


Answer: Depending on which loan program you choose, the outlay to close the loan can vary. Typically you will need to budget for the following to buy a home: Good faith deposit, usually less than $500 which holds the home for you while you close the loan. You get this back at closing; Appraisal fee is required to be paid to lender before closing. 



Typical costs run around $500-$650 for an appraisal fee; home inspection fees. Even though the lender’s programs don’t require a home inspection, a lot of buyers do get one done. The costs for a home inspection runs around $300-$400. 

Lastly, termite report. They are very cheap, usually $50 or less, and VA requires one on their loan programs. FHA, KHC, USDA, Fannie Mae does not require a termite report, but most borrowers get one done.


There are also lender costs for title insurance, title exam, closing fee, and underwriting fees that will be incurred at closing too. You can negotiated the seller to pay for these fees in the contract, or sometimes the lender can pay for this with a lender credit. The lender has to issue a breakdown of the fees you will incur on your loan pre-approval.


How long is my pre-approval good for on a Kentucky Mortgage Loan?



Answer: Most lenders will honor your loan pre-approval for 120 days. After that, they will have to re-run your credit report and ask for updated pay stubs, bank statements, to make sure your credit quality and income and assets has not changed from the initial loan pre-approval.


How much money do I have to make to qualify for a mortgage loan in Kentucky?



Answer: The general rule for most FHA, VA, KHC, USDA and Fannie Mae loans is that we run your loan application through the Automated Underwriting systems, and it will tell us your max loan qualifying ratios.


There are two ratios that matter when you qualify for a mortgage loan. The front-end ratio, is the new house payment divided by your gross monthly income. The back-end ratio, is the new house payment added to your current monthly bills on the credit report, to include child support obligations and 401k loans.

Car insurance, cell phone bills, utilities bills does not factor into your qualifying rations.

If the loan gets a refer on the initial desktop underwriting findings, then most programs will default to a front end ratio of 31% and a back-end ratio of 43% for most government agency loans that get a refer. You then take the lowest payment to qualify based on the front-end and back-end ratio.

So for example, let’s say you make $3000 a month and you have $400 in monthly bills you pay on the credit report. What would be your maximum qualifying house payment for a new loan?

Take the $3000 x .43%= $1290 maximum back-end ratio house payment. So take the $1290-$400= $890 max house payment you qualify for on the back-end ratio.

Then take the $3000 x .31%=$930 maximum qualifying house payment on front-end ratio.

So now you know! The max house payment you would qualify would be the $890, because it is the lowest payment of the two ratios.






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10 mortgage facts will give you an advantage when shopping for a home loan in KY!πŸ‘‡




1. Mortgage Rates Change



Just like the stock market, mortgage rates change throughout the day. Mortgage rates you see today may not be available tomorrow. If you are in the market for a mortgage loan, be sure to check the current rates being offered by lenders. If you have already done your research and have found your dream home consider locking in your rate as soon as possible.



2. Different Lenders Charge Different Fees


Don’t expect every lender to charge the same fees for a mortgage loan. Every lender structures their fees differently, which is why it is important to shop with at least 3 lenders to compare. Next time you apply for a mortgage loan pay attention to the rates, points being charged and closing costs.



3. Lenders Can Sell Your Loan to Another Bank


Many borrowers have experience getting a mortgage loan with a certain lender only to find out that the loan has been sold to another bank. This occurs because lenders need to free up their liabilities in order to make room to give out more loans. This does not affect your mortgage whatsoever, but it’s important to pay close attention to your mortgage statement and any correspondence you receive in the mail to make sure you do not make payments to the wrong bank.



4. Your Middle Credit Score Matters




When you apply for a mortgage loan, the lender will pull your credit scores from three credit bureaus (Transunion, Equifax and Experian) to help them determined if you are credit worthy. Your middle score of the three is what lenders will use for loan qualification. However, the underwriter will review all three scores as part of the loan underwriting process. If you pull your own credit score through a website online, the credit scores displayed to you may be different than what lenders use because they use different reporting systems.



5. You Can Refinance Your Home Loan Anytime



You can refinance your mortgage anytime, but it doesn’t necessarily mean you should. Think about why you want to refinance. Is because you want to lower your monthly payments, to change the type of loan you are in or to take cash out from your equity? Whatever the reason is, make sure that it makes financial sense.


6. You Can Get a Mortgage Loan After a Foreclosure


Many homeowners have experienced a foreclosure after the recent mortgage crisis. There is good news for these borrowers because they can get a mortgage loan after foreclosure. There are waiting periods involved, for example, to apply for an FHA loan you must wait three years after foreclosure to apply. If you want to get a conventional loan the waiting period is seven years from foreclosure. For those seeking a VA loan, the waiting period is two-years.


There are exceptions to the waiting periods, but you have to show the lender that your foreclosure was caused by an event outside your control, such as losing your job or being seriously ill.


8. Good Credit Allows you to Get Better Mortgage Rates



Good credit scores mean a better rate in any type of loan, especially a mortgage loan. Your credit heavily impacts the type mortgage loan you will qualify for. To maintain a good credit report, make sure you monitored it closely. One of the advantages to good credit is that more banks will want to compete for your business, therefore giving you leverage to negotiate the closing costs.



9. Know Your Annual Percentage Rate (APR)


Knowing your APR will allow you see the true cost of your loan. While the interest rate shows the annual cost of your loan, the APR includes other fees such as origination points, admin fees, loan processing fees, underwriting fees, documentation fees, private mortgage insurance and escrow fees.


There may be more or less fees included in the ARP from what we mentioned. To be sure what fees are included in the APR, ask your lender to give you a breakdown of the closing costs included.


10. You Can Always Reduce Closing Costs


One way to reduce closing costs is to have the sellers contribute towards the closing costs when purchasing your home. This can be negotiated between the buyer and the sellers in the purchase contract. The amount the seller can contribute will depend on the type of loan. Another way to save on closing costs is to have the lender give you a credit to cover out of pocket loan costs.



I specialize in assisting Kentucky First-Time Homebuyers with mortgage loans, including FHA, VA, USDA & Rural Housing, KHC (Kentucky Housing Corporation), and Fannie Mae programs. With over 20 years of experience in the mortgage industry, I’ve helped more than 1,300 Kentucky families achieve their dream of homeownership or refinance their current mortgages to secure lower payments.
Whether you’re a first-time buyer or looking to refinance, I am here to guide you through every step of the process with personalized attention, expert advice, and the best loan options available to fit your unique needs.
Down Payment Assistance:
For Kentucky first-time homebuyers, we still have down payment assistance available through KHC programs. These funds can make a huge difference in reducing upfront costs and making homeownership more accessible.
Why Work With Me?
  • Local Expertise: I know the ins and outs of Kentucky’s housing market and loan programs.
  • Fast Approvals: I offer free mortgage applications with same-day approvals to keep the process moving quickly.
  • Customized Loan Solutions: Whether you’re buying a home or refinancing, I’ll find the right loan program to fit your needs.
  • Personalized Service: I treat every client like family, ensuring you’re supported and informed throughout the process.
About My Website
Visit my website for a wealth of resources tailored to Kentucky homebuyers. You’ll find:
  • Step-by-step guides for first-time homebuyers.
  • Information on loan programs like FHA, VA, USDA, and KHC.
  • Tools to help you calculate potential payments and affordability.
  • Blog posts with tips and updates on the Kentucky housing market.
  • A secure portal to start your loan application and upload documents.
Please Note: My website is not endorsed by the FHA, VA, USDA, or any government agency. It is an independent platform created to educate and assist homebuyers with expert advice and accessible tools.
2.  πŸ“ž Call/Text - 502-905-3708

Joel Lobb
Mortgage Loan Officer - Expert on Kentucky Mortgage Loans

Licensing Info: Kentucky Mortgage Loan Only
  • NMLS Personal ID: 57916



Click on link to start your mortgage loan approval





 



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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 approvalnor 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.
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