How to Get Approved for a USDA Mortgage Loan in Kentucky

How to Get Approved for a USDA Mortgage Loan in Kentucky

If you are planning to buy a home in Kentucky and want a zero-down mortgage option, a USDA Rural Housing loan may be a strong fit. USDA loans are backed by the U.S. Department of Agriculture and are designed to help low-to-moderate income households purchase a primary residence in eligible rural areas of Kentucky.

Below is a practical breakdown of how USDA loan approval works in Kentucky, including credit score expectations, income limits, employment history, debt-to-income ratios, and bankruptcy or foreclosure guidelines.

  1. Credit score requirements for Kentucky USDA loans
    • USDA does not publish a hard minimum credit score, but in real-world lending a 640 or higher middle score is typically required for automated GUS approval.
    • Scores below 640 may still be eligible through manual underwriting with strong compensating factors such as stable income, reserves, or positive rental history.
    • While USDA technically allows scores down to 580, very few lenders will approve these files without strict underwriting review and higher risk pricing.
  2. USDA income eligibility in Kentucky
    • USDA counts total household income, not just the income of borrowers on the loan.
    • Household income must fall within USDA limits for the specific Kentucky county and household size.
    • Income limits change annually and must be verified using current USDA data.
  3. Employment and work history
    • Most borrowers need a two-year employment history in the same line of work.
    • Gaps may be acceptable if they are explainable and the borrower is currently employed in a stable position.
  4. Property location requirements
    • The home must be located in a USDA-eligible rural area of Kentucky.
    • Many properties outside Louisville, Lexington, and Northern Kentucky qualify, but eligibility must be verified by address.
    • USDA loans are available in most of Kentucky’s 120 counties, subject to map eligibility.
  5. Debt-to-income ratio guidelines
    • Standard USDA ratios are 29% for housing and 41% for total debt.
    • Higher ratios may be approved with an automated GUS approval or strong compensating factors.
  6. USDA income limits
    • Income limits vary by county and household size.
    • In many Kentucky rural counties, limits typically range from approximately $112,450 to $148,450 depending on family size.
    • These limits update yearly and must be verified at time of application.
  7. Eligible property types
    • USDA loans are for owner-occupied primary residences only.
    • Eligible properties include single-family homes, townhomes, and approved condominiums.
    • Investment properties and vacation homes are not allowed.
  8. Bankruptcy and foreclosure waiting periods
    • Chapter 7 bankruptcy: generally 3 years from discharge.
    • Chapter 13 bankruptcy: may be eligible after 12 months of on-time payments with court approval.
    • Foreclosure: generally 3 years from completion date.
  9. Closing timeline
    • Most Kentucky USDA loans close in approximately 30–45 days.
    • USDA loans require an additional USDA review step, which can add time if the file is not complete.
  10. Appraisal and inspections
    • A USDA appraisal is required to confirm value and property condition.
    • Termite inspections may be required depending on property type and location.
  11. GUS and manual underwriting
    • USDA uses the Guaranteed Underwriting System (GUS) to evaluate risk.
    • Files that do not receive an automated approval may still qualify through manual underwriting.

Steps to get a Kentucky USDA loan

  1. Confirm property eligibility using the USDA eligibility map.
  2. Verify household income limits for the county.
  3. Apply for pre-approval with a USDA-experienced lender.
  4. Shop for an eligible home and sign a purchase contract.
  5. Complete appraisal, underwriting, USDA approval, and closing.

USDA Guaranteed loans require a 1% upfront guarantee fee and a 0.35% annual fee, which is paid monthly. These fees are typically lower than FHA mortgage insurance and can be financed into the loan.

USDA loans offer 100% financing, a fixed 30-year rate, and competitive pricing for qualified Kentucky buyers who meet location and income requirements.

Posted by Joel Lobb, Mortgage Broker FHA, VA, KHC, USDA
Text or call: 502-905-3708
Email: kentuckyloan@gmail.com

Equal Opportunity Lender. NMLS #57916. Loan approval subject to underwriting guidelines and program requirements.

Do I Qualify for a Kentucky USDA Loan?

Before you start home shopping, confirm these four items: the home’s location, your household income, your credit profile, and your debt-to-income ratio. If those line up, USDA can be one of the strongest zero-down loan options in Kentucky.

Check My USDA Eligibility

Comparing loan options? You may also want to review:

Kentucky USDA Property Eligibility Map

USDA loans are only available for homes located in eligible rural areas. Use the official USDA address lookup tool below to confirm whether a specific Kentucky property qualifies.

If the map does not load inside the page, click here to open it in a new tab .

Kentucky USDA Loan FAQs

Do USDA loans require a down payment?

No. USDA Guaranteed loans allow 100% financing for eligible buyers purchasing a primary residence in an approved rural area.

What credit score is needed for a USDA loan in Kentucky?

Most lenders prefer a 640 or higher credit score for automated approval. Scores below that may still qualify through manual underwriting with compensating factors.

Are USDA loans only for first-time buyers?

No. USDA loans are available to both first-time and repeat homebuyers, as long as all eligibility requirements are met.

How long does it take to close a USDA loan?

Most Kentucky USDA loans close in approximately 30–45 days. Timing can vary due to the required USDA final approval step.

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