How to Get Approved for a Mortgage Loan in Kentucky (2026 Guide)

 

Kentucky Down payment assistance loans are available up to $20,000 for Mortgage with Welcome Home Grant 2024

 

Information for Kentucky Homebuyers

Welcome Home Program Grant Program for Kentucky Home buyers in 2024

The Federal Home Loan Bank of Cincinnati (FHLB Cincinnati) offers grants of up to $25,000 for honorably discharged veterans, surviving spouses of military personnel, and active duty military homebuyers and up to $20,000 for all other homebuyers to assist with down payment and closing costs for income eligible homebuyers through the Welcome Home Program (WHP). Homebuyers must apply and qualify for a mortgage loan with one of our Member financial institutions to utilize the grant.

Who are Eligible Homebuyers?

A homebuyer would be eligible for the Welcome Home grant if all of the following guidelines are met:

 The total income for all occupants who will reside in the home is at or below 80 percent of the Mortgage Revenue Bond (MRB) limit for the county and state where the property is located;
 A fully executed (signed by buyer and seller) purchase contract on an eligible property is in hand;
 The homebuyer has at least $500 of their own funds to contribute towards down payment and/or closing costs; and,
 If a first-time homebuyer (typically anyone who has not owned a home in the last three years), a satisfactory homebuyer counseling course is completed prior to the loan closing. Note: Applicants do not have to be first-time homebuyers.

What is an Eligible Property?

A property would be eligible if all of the following guidelines are met:

 The property will be the homebuyer’s primary residence;
 The property is a single family, townhome, condominium, duplex, multi-unit (up to four family units) or a qualified manufactured home. (Manufactured homes may be eligible if they are taxed as real estate and affixed to a permanent foundation); and,
 The property is subject to a legally enforceable five-year retention mechanism, included in the Deed or as a Declaration of Restrictive Covenants to the Deed, requiring the FHLB Cincinnati be given notice of any refinancing, sale, foreclosure, deed in-lieu of foreclosure, or change in ownership during the five year retention period.

How Do I Apply?

For more program information, homebuyers should contact a FHLB Cincinnati Member financial institution.

 

A list of Members is available at👉 List of Kentucky Mortgage Lenders for the Welcome Grant Home Program for $20,000 for 2024 KY Homebuyers

 

 

2024 Welcome Home Grant Program for Kentucky Home Buyers $20,000[/caption]

 

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Kentucky First Time Home Buyer Common Questions and Answers:

 

∘ 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 580 to 620 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 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 580 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  and Welcome Grants are all available to Kentucky First Time Home buyers if you qualify for them.

 

Kentucky has many programs and grants for first-time home buyers with no money down home loans and down payment assistance programs for 2024

,see list below and let me know if you have any questions at 502-905-3708- call or text

or email me at kentuckyloan@gmail.com

 

LIST BELOW👇

 

• HUD Community Development Block Grants (CDBG) — Kentucky contacts: HUD provides grant money to communities and those funds may be used to assist home buyers
  • Ashland
  • Bowling Green
  • Elizabethtown
  • Hopkinsville
  • Lexington
  • Louisville
  • Owensboro
• HUD HOME Program — Kentucky contacts: HUD provides grant money to communities designated as participating jurisdictions for assisting home buyers, rental assistance, and other housing initiatives
• Community Ventures Corporation Kentucky Home Financing
• The Kentucky Housing Corporation offers:
  • Homeownership Programs
  • Counseling Resources
• Habitat for Humanity: Through volunteer labor and donations of money and materials, Habitat builds and rehabilitates simple, decent houses with the help of the homeowner (partner) families
• Federal Home Loan Bank of Cincinnati: Serves Kentucky residents by offering various home buying assistance programs, including Welcome Home grants. For more information, you may call 1 (888) 345-2246
• Kentucky Area Development Districts (ADDs): Contact your local ADD to find out more about local home buying assistance programs
• Kentucky Association for Community Action: Helps to fund housing programs for low-income residents
• Federal Appalachian Housing Enterprise (FAHE): Provides housing assistance in rural, low-income, Appalachian communities
• Housing Partnership, Inc.: Provides affordable housing services for residents of Jefferson County
• Secondary financing/down payment assistance programs are listed by state
• USDA Rural Development: Home buying loan programs that reduce the cost of homeownership for low and moderate-income families

@mortgage.ky #firsrtimehomebuyer #badcredit #creditscore #usdaloan #zerodownhomeloan #zerodownhomeloan #zerodownhomeloan #kentuckyrealestate #mortgagebroker #mortgage #homelender #valoans #badcredit #firsrtimehomebuyer #mortgagetips #homelender #grants #downpaymentassistance #welcomehomegrant #20kgrant ♬ Positive Vibes - Soundbeaver

 

Ask your loan officer about these program

 

∘ 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, and the general trend is that they have been going up since the Presidential election in November 2016.

∘ 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, USDAS, 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 60 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 your know! The max house payment you would qualify would be the $890, because it is the lowest payment of the two ratios.

 

 

If you want a personalized answer for your unique situation call, text, or email me or visit my website below:

Text/call: 502-905-3708

Joel Lobb
Mortgage Loan Officer
Individual NMLS ID #57916

American Mortgage Solutions, Inc.
10602 Timberwood Circle 
Louisville, KY 40223
Company NMLS ID #1364