Showing posts with label 2023 Loan Limits for Kentucky VA and Kentucky FHA Loans. Show all posts
Showing posts with label 2023 Loan Limits for Kentucky VA and Kentucky FHA Loans. Show all posts

Kentucky Mortgage Loan Approval Requirements for 2023


They're 3 basic items that a borrower needs to show a lender in order to get approved for a mortgage in Kentucky for 2023.

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 reestablished credit.

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

Joel Lobb
Mortgage Loan Officer

Individual NMLS ID #57916

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

Text/call: 502-905-3708


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Kentucky VA Mortgage Lender Qualifying Criteria

 Information about Kentucky VA Loan Mortgage

Most Kentucky VA loans come with the added benefits of zero down payments, lower interest rates and no requirements for mortgage insurance. 

The VA sets these Kentucky mortgage conditions and guarantees a portion of the loan amount which is in lieu of a down payment from the Veteran. Financing for the property purchase is still provided by a lender in Kentucky that does VA loans

Kentucky VA Borrowers will still need to be approved by a qualified lender under Kentucky VA loan conditions in order to secure this type of mortgage.

Kentucky specific requirements for A VA Mortgage loans.

While these loans generally follow the same processing steps nationwide, the VA does set specific requirements for some areas. Standards around energy efficiency, insect inspections and environmental hazards can all vary from state to state and borrowers are obligated to meet these standards for an approved loan.

Frequently asked questions for Kentucky VA Mortgage Loans:

What do I need to apply for a Kentucky VA Loan?

The Veteran or Active Duty soldier must get a Certificate of Eligibility to prove they can participate in the VA home loan program . This does not guarantee loan approval, but does allow the borrower to participate in the VA home loan program in Kentucky. See link below on how to obtain your COE from VA

How is the interest determined on a Kentucky VA Mortgage Loan:

Mortgage rates change daily so whenever you go to apply for your VA loan, you can lock in your rate for a certain time period. This time period usually starts at 15 days and goes up to 90 day or some up to 180 days, but keep in mind, the longer you take out your loan lock, the higher the rate and costs of the VA loan. 

Your credit score, loan amount, property state and lender you choose will set the mortgage rate for you. It pays to shop around for the best rate. 

Mortgage terms are usually set on 30 year and 15 year terms. The shorter the term, the lower the rate on your loan. 

Is there mortgage insurance on Kentucky VA Mortgage Loans:

They're no monthly mortgage insurance premiums for VA Mortgage loans. However, there is upfront mortgage insurance, in the form of an upfront funding fee that gets added on top of the base loan. See below Funding Fee Schedule 

Review the VA funding fee rate charts on this page to determine the amount you’ll have to pay. Down payment and VA funding fee amounts are expressed as a percentage of total loan amount.

For example: Let’s say you’re using a VA-backed loan for the first time, and you’re buying a $200,000 home and paying a down payment of $10,000 (5% of the $200,000 loan). You’ll pay a VA funding fee of $2,850, or 1.5% of the $190,000 loan amount. The funding fee applies only to the loan amount, not the purchase price of the home.

VA-backed purchase and construction loans

Rates for Veterans, active-duty service members, and National Guard and Reserve members

If your down payment is…Your VA funding fee will be…
First useLess than 5%2.15%
5% or more1.5%
10% or more1.25%
After first useLess than 5%3.3%
5% or more1.5%
10% or more1.25%

Note: If you used a VA-backed or VA direct home loan to purchase only a manufactured home in the past, you’ll still pay the first-time funding fee.

VA-backed cash-out refinancing loans

Rates for Veterans, active-duty service members, and National Guard and Reserve members

First useAfter first use

Note: The VA funding fee rates for refinancing loans don’t change based on your down payment amount. If you used a VA-backed or VA direct home loan to purchase only a manufactured home in the past, you’ll still pay the first-time funding fee.

Native American Direct Loan (NADL)

Type of useVA funding fee

Note: The VA funding fee rate for this loan doesn’t change based on your down payment amount or whether you’ve used the VA home loan program in the past.

Other VA home loan types

Loan typeVA funding fee
Interest Rate Reduction Refinancing Loans (IRRRLs)0.5%
Manufactured home loans (not permanently affixed)1%
Loan assumptions0.5%
Vendee loan, for purchasing VA-acquired property2.25%

Note: The VA funding fee rates for these loans don’t change based on your down payment amount or whether you’ve used the VA home loan program in the past.

Can I avoid a Kentucky Mortgage VA funding fee?

Yes. However, in order to avoid paying a Kentucky VA funding fee, your service history will have to match up with one of these requirements:

You already receive VA disability income.

You're eligible for disability income but receive active-duty or retirement pay.

You have a memorandum that states you're eligible for disability pay, dated before your loan closing.

You're an active duty Purple Heart recipient.

You're the surviving spouse of a veteran who died as a result of their military service.

Who pays for Closing Costs on a Kentucky Mortgage Loan:

Who pays for which closing costs?

The seller must pay these closing costs (sometimes called seller’s concessions):

  • Commission for real estate professionals
  • Brokerage fee
  • Buyer broker fee
  • Termite report (unless you’re using a refinancing loan)

You (the buyer) or the seller can negotiate who will pay other closing costs such as these:

  • VA funding fee
  • Loan origination fee
  • Loan discount points or funds for temporary “buydowns”
  • Credit report and payment of any credit balances or judgments
  • VA appraisal fee
  • Hazard insurance and real estate taxes
  • State and local taxes
  • Title insurance
  • Recording fee

Note: We require that a seller can’t pay more than 4% of the total home loan in seller’s concessions. But this rule covers only some closing costs, including the VA funding fee. The rule doesn’t cover loan discount points.

    Does Kentucky offer VA loans to surviving spouses?
  • Yes. You'll need to meet a few additional requirements:

    You have not remarried.

    Your spouse was killed in service or from a service-related disability.

    Your spouse was missing in action or a prisoner of war for at least 90 days.

    Your spouse was rated disabled and was eligible for disability compensation at the time of death.

  • What are the types of VA loans that I can get in Kentucky?

  • Purchase loan
    Native American Direct Loan (NADL) program
    Interest Rate Reduction Refinance Loan (IRRRL)
    Cash-out refinance loan

  • What kind of credit score do I need for a VA Mortgage Loan Approval in Kentucky?
  • VA on paper has no minimum credit score requirement, however most Private VA lenders will require a minimum  credit score of 620 or higher  with some going down to 580 on an exception basis. We can do loans down to a 580 credit score just fyi 
     What is the most you can borrow on a VA home loan in Kentucky?

This will come down to your debt to income ratio. Typically VA mortgage loans have two ratios.
A front-end ratio and an back-end ratio. The front end ratio is the house payment, and the back-end ratio is the new house payment plus the monthly payments listed on your credit report.
They then divide these two ratios by your gross monthly income to get your max dti requirement for a VA Loan.

see link below on how to figure out your debt to income ratio:

Joel Lobb
Mortgage Loan Officer
Individual NMLS ID #57916

American Mortgage Solutions, Inc.

Text/call:      502-905-3708
fax:            502-327-9119


2023 Loan Limits for Kentucky VA and Kentucky FHA Loans


New 2023 Loan Limits for Kentucky VA and Kentucky FHA Loans

Kentucky VA loan limits received a massive increase for 2023. The standard Kentucky VA loan limit in 2023 is $726,200 for most U.S. counties, increasing from $647,200 in 2022.

Kentucky VA loan limits also increased for high-cost counties to $1,089,300 for a single-family home.


Kentucky VA loan limits do not represent a cap or max loan amount. Veterans with their full entitlement can get as much as a lender is willing to give them without needing a down payment. However, Veterans with one or more active VA loans or who have defaulted on a previous VA loan will encounter the limits, which will in part determine their zero-down buying power.


For Kentucky FHA loan limits, please click here to consult this page on the website as Loan Limits for FHA loans vary by county in Kentucky each 120 counties.