Kentucky FHA Loan Program

FHA Loan Requirements in Kentucky

Navigating the process of securing an FHA loan in Kentucky can be made simpler with the right information.

Down Payment

Minimum 3.5% Down Payment of purchase price on a 580 credit score or higher

Minimum 10% Down payment on credit scores 500-579

Credit Score

• Borrowers must have a minimum credit score of 500-579 for maximum LTV of 90 percent with a minimum down payment of 10 percent. Most lenders will not go below 580 to 620 score, and very few lenders will go to 580 score. It's best to work on getting your scores up before you apply or work with a loan officer to improve them.

Debt-to-Income Ratio

Front-end: 45% max, Back-end: 50-56.99% max

Work History

2 years consistent employment preferred

Top 3 Benefits of Kentucky FHA Loans

Low Down Payment

Only 3.5% down payment required, which can be gifted from a relative, own funds, 401k, savings and checking account, no cash allowed. Secured asset can be used to borrow off for the donw payment. ie.. car, house, securities, 

Flexible Credit

Credit scores as low as 500 with at least 10% down payment or equity position.

Seller-Paid Closing Costs

Sellers can pay up to 6% of the purchase price in closing costs.

FHA Loan Eligibility

Income Requirements

Your debt-to-income ratio must be within the limits of the FHA and your lender. There are both front-end and back-end DTI ratios to be considered. The front-end is capped at 45% and the back-end ratio is limited to 50-56.99% in most cases.

Credit Background

Your credit history will be reviewed, with most weighted over the last 2-3 years. Bankruptcies, foreclosures, collections, and pay history will be reviewed over the last two years.

Down Payment

You must be able to make a down payment and cover closing costs if the seller will not pay for it or it cannot be covered by lender credit. You must have your own down payment. The seller and lender cannot supply you with the down payment requirements for an FHA loan.

Maximum FHA Loan Amounts

County Limits

Maximum loan amount varies by county in Kentucky. All 120 counties have the same approval amount. And there are no income limits on FHA loans, just have to meet debt to income ratio requirement's.

Highest Limit

The highest maximum FHA loan in Kentucky is $524,225- see limits for Kentucky for 2025 below

https://www.hud.gov/program_offices/housing/sfh/lender/origination/mortgage_limits

Financing Percentage

Maximum financing is 96.5% of appraised value or selling price, whichever is lower.

Down Payment and Closing Costs

Minimum Investment

Buyers must invest at least 3.5% of the sales price for down payment and closing costs. if score is below 580, will need to 10% down payment. Minimum score is 500 for a FHA loan.

Acceptable Sources

Down payment can come from gifts, government agencies, or other approved sources.

Eligible Property Types

Single-Family Homes

Traditional detached houses qualify for FHA loans.

Condos

Approved condominium units are eligible if on HUD approved list. See list below

https://entp.hud.gov/idapp/html/condlook.cfm

Multi-Unit Properties

1-4 family residences where the borrower occupies one unit.

Types of FHA Refinance Loans

Rate/Term Refinance

For borrowers with conventional mortgages wanting to switch to an FHA loan.

Cash-Out Refinance

Access home equity for homeowners whose property value has increased.

Streamline Refinance

Minimum Credit Score

General Requirement

A minimum credit score of 500 is required for FHA loans in Kentucky with some lenders requiring a 620. If below 580 and higher than 500, then you will need a 10% down payment.

Lower Score Option

Borrowers with credit scores between 500 and 579 may still qualify with a larger down payment of 10%.

Credit History

The FHA considers your payment history, credit utilization, and other factors when assessing your creditworthiness.

Down Payment Amounts

Standard Down Payment

The standard down payment for FHA loans in Kentucky is 3.5% of the purchase price.

Lower Credit Score

If your credit score falls between 500 and 579, you'll need a 10% down payment.

Gift Funds

Down payment funds can be gifted from family members or other eligible sources.

Debt-to-Income Ratio Limits

Understanding Debt-to-Income Ratio

The debt-to-income (DTI) ratio measures the percentage of your monthly income that goes towards debt payments.

• Mortgage payment
• Credit card payments
• Student loans
• Auto loans

FHA Loan DTI Limit

FHA loans in Kentucky generally have a maximum DTI limit of 50%, which means that your debt payments cannot exceed 50% of your monthly income.

Employment and Income Requirements

Stable Employment

FHA lenders typically require a minimum of two years of consistent employment history.

Verifiable Income

You'll need to provide documentation, such as pay stubs or tax returns, to verify your income.

Self-Employment

If you are self-employed, you may need to provide additional financial documentation, such as tax returns and bank statements.

Property Eligibility Criteria

Property Type	Eligibility
Single-family homes	Eligible
Condominiums	Eligible with certain restrictions
Townhouses	Eligible
Multi-family units	Not eligible for FHA financing

Mortgage Insurance Premiums

Annual Premium

You'll pay an annual mortgage insurance premium (MIP) on your FHA loan.

Upfront Premium

An upfront MIP is also required at closing, typically 1.75% of the loan amount.

MIP Duration

The MIP can be paid for the life of the loan or for a set period of time depending on your down payment and loan term.

Applying for an FHA Loan in Kentucky

Credit Check

Your credit history is crucial for FHA loan approval.

Property Appraisal

An appraisal is conducted to determine the fair market value of the property.

Income Verification

You'll need to provide documentation to verify your income.

Loan Underwriting

The lender will review your application and make a decision on your loan.

1 -  Email - kentuckyloan@gmail.com 

2.   Call/Text - 502-905-3708

Joel Lobb
Mortgage Loan Officer - Expert on Kentucky Mortgage Loans

 Website: www.mylouisvillekentuckymortgage.com
 Address: 911 Barret Ave., Louisville, KY 40204

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Evo Mortgage
Company NMLS# 1738461
Personal NMLS# 57916

For assistance with Kentucky mortgage loans, reach out via email, call, or text Joel Lobb directly.