2025 Kentucky Home Loan Comparison Guide — FHA, VA, USDA, and Conventional Loans Explained

If you are a first-time homebuyer in Kentucky, it's essential to have current information about loan programs. The same applies if you plan to refinance this year. The details in your mortgage quote can significantly impact your monthly payment. They can also affect your long-term costs. This is especially true since loan program fees and guidelines change annually.

We’ve updated our Kentucky Loan Comparison Chart for 2025. It reflects the latest program updates from FHA, VA, USDA, and Fannie Mae Conventional loans.

This quick visual guide helps Kentucky buyers easily compare down payment requirements, credit score guidelines, and monthly fees. This comparison makes it easier to choose the mortgage that fits your budget and goals.

 FHA Loan Updates (2025)

Old FHA MIP: 0.85%
New FHA MIP: 0.55%

Big news for 2025 — the FHA Mortgage Insurance Premium (MIP) has been reduced from 0.85% to 0.55%. That’s a major savings for buyers using low-down-payment FHA financing.

This change can lower your monthly mortgage payment and make homeownership even more affordable for first-time buyers with moderate credit.

1. ✅ Minimum Down Payment: 3.5%
2. ✅ Minimum Credit Score: 580+
3. ✅ Best For: Buyers with limited savings or lower credit scores

USDA Loan Updates (2025)

The USDA Rural Development Loan remains one of the best options. It offers 100% financing in eligible rural and suburban areas across Kentucky.

USDA Annual Fee: 0.35%
(based on the remaining principal balance, paid monthly)

1. ✅ Down Payment: 0%
2. ✅ Credit Score: Typically 620+
3. ✅ Income Limits Apply
4. ✅ Perfect For: Buyers looking to purchase outside city limits 

VA Loan Updates (2025)

Old VA Funding Fee: 0–3.6%
New VA Funding Fee Range: 0.5–3.3%

The VA Home Loan continues to be one of the most powerful benefits available to Kentucky veterans and active-duty service members. For 2025, the VA funding fee has been slightly reduced. The reduction depends on your service type, loan type, and down payment amount.

And remember — veterans with service-connected disabilities or surviving spouses are exempt from the VA funding fee entirely.

1. ✅ Down Payment: 0%
2. ✅ Credit Score: Flexible
3. ✅ Funding Fee: 0.5–3.3% (Exempt for Disabled Veterans)
4. ✅ Best For: Veterans, Active-Duty, and Eligible Reservists

Conventional Loan Updates (2025)

While Conventional loans still have flexible guidelines and competitive rates, buyers should note this. Private Mortgage Insurance (PMI) costs vary based on credit. They also vary based on down payment.

Updated PMI Range: 0.2%–2% annually

1. ✅ Down Payment: As low as 3%
2. ✅ Credit Score: 620+
3. ✅ Seller Concessions:

• 3% (less than 10% down)
• 6% (10–25% down)
• 9% (25%+ down)

This range gives you room to negotiate closing costs and minimize cash-to-close — a key advantage in today’s competitive market.

 Why This Update Matters for Kentucky Homebuyers

Each year, loan program fees change. Funding rates are also adjusted. Guidelines vary as well. The year 2025 brings meaningful updates that can directly affect your monthly affordability.

Whether you’re choosing between FHA, VA, USDA, or Conventional, understanding these differences helps you:

• Qualify with confidence
• Reduce monthly housing costs
• Maximize available down payment assistance
• Choose the most affordable loan program for your situation

If you’re exploring FHA, VA, USDA, or KHC loans in Kentucky, I can help you. You can compare your options side-by-side. It's just like the infographic above.

As a licensed Kentucky Mortgage Loan Officer (NMLS #57916), I have over 20 years of experience. I’ve helped more than 1,300 Kentucky families buy or refinance homes. I always use the best loan programs available.

Joel Lobb 

 Email - kentuckyloan@gmail.com 

 Call/Text - 502-905-3708

 www.mylouisvillekentuckymortgage.com
 911 Barret Ave., Louisville, KY 40204

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Evo Mortgage
Company NMLS# 1738461
Personal NMLS# 57916

Kentucky Mortgage Loan Expert For Kentucky FHA, VA, USDA, Fannie Mae and KHC Down payment Assistance Loans

2025 Kentucky VA Mortgage Guidelines

Things to know about getting a VA Mortgage Loan in Kentucky in 2025

Are you a veteran, active-duty service member, or surviving spouse looking to purchase a home in Kentucky?

 VA mortgage loans are one of the best financing options available for military personnel. With no down payment requirements, competitive interest rates, and flexible credit guidelines, these loans are designed to make homeownership more accessible.

Here’s everything you need to know about qualifying for a Kentucky VA mortgage loan in 2025:

1. No Loan Limits on VA Mortgages in Kentucky

One of the biggest advantages of a Kentucky VA loan is that there’s no limit on the loan amount you can borrow if you have full entitlement. However, keep in mind that the VA guarantees a portion of the loan, which may influence how much lenders are willing to lend without a down payment.

For high-cost areas in Kentucky, the loan amount may vary based on county-specific limits. Be sure to check with your lender or the VA's official website for updated limits in 2025.

2. VA Loans Are for Primary Residences Only

A Kentucky VA mortgage loan must be used to purchase or refinance your primary residence. Vacation homes, second homes, and investment properties are not eligible. However, VA eligible properties include:

Single-family homes
Multi-family homes (up to four units)
Condominiums approved by the VA
Manufactured or mobile homes on a permanent foundation that have only been moved once (from the factory or dealership to the land).

3. Surviving Spouses May Qualify

VA loans aren’t just for veterans and active-duty service members. Certain Kentucky VA surviving spouses may also be eligible. Here are some situations where eligibility applies:

The veteran was killed in action or died from a service-connected disability.
The spouse has not remarried (or remarried on or after age 57 and after December 16, 2003).
The spouse of a veteran who is missing in action or a prisoner of war.
The spouse of a totally disabled veteran whose death was not related to their disability.

4. Certificate of Eligibility (COE) Is Required

To qualify for a Kentucky VA mortgage loan, borrowers must obtain a Certificate of Eligibility (COE) from the VA. This document proves you meet the eligibility criteria for a VA loan. Here’s what you’ll need to get your COE:

Veterans: DD Form 214 (showing character of service and reason for separation).
Active-duty service members: A statement of service signed by your commander or personnel officer.
Surviving spouses: VA Form 26-1817 and the veteran’s DD Form 214, if available.
You can apply for your COE online, via mail, or through your lender.

5. Credit Score Requirements

While the VA itself does not set a minimum credit score, most lenders in Kentucky require a credit score of at least 620. Some lenders may approve scores as low as 500, but this often comes with stricter underwriting requirements and may delay the approval process.

To increase your chances of approval, it’s best to improve your credit score to 580 or higher. This will make the underwriting process smoother, especially if the automated underwriting system (AUS) is used.

6. VA Loans After Bankruptcy or Foreclosure

VA loans provide flexibility for borrowers who have faced financial difficulties. Here’s how you can qualify after a bankruptcy or foreclosure:

Chapter 7 Bankruptcy: Eligible 2 years after discharge.
Chapter 13 Bankruptcy: Eligible 1 year after filing, with on-time payments.
Foreclosure: Eligible 2 years after the foreclosure is finalized.
Short Sale:  Treated like a foreclosures and 2 years needed Some lenders may not require a waiting period.

7. Residual Income Requirement

VA loans are unique because they require borrowers to meet residual income requirements, ensuring you have enough money left over each month after paying your bills. This includes:

Mortgage payment (including taxes and insurance)
Credit card and loan payments
Utilities and other fixed expenses
Federal, state, and local taxes
The amount of residual income required depends on your family size and location. For example, in Kentucky (Southern region), a family of five needs to have $1,039 in residual income to qualify for a VA loan.

8. Key Benefits of Kentucky VA Loans

No Down Payment: You can finance 100% of the home’s purchase price.
No Private Mortgage Insurance (PMI): This can save you hundreds of dollars each month.
Competitive Interest Rates: VA loans typically have lower rates than conventional loans.
Flexible Credit Guidelines: More lenient than conventional and FHA loans.
No Loan Limits: Borrow as much as your lender approves based on your financial profile.

9. How to Apply for a Kentucky VA Mortgage Loan in 2025

Follow these steps to apply for your VA loan:

Check Your Eligibility: Obtain your COE through the VA or your lender.
Improve Your Credit: Aim for a credit score of 580 or higher. '
Find a VA-Approved Lender: Work with an experienced lender familiar with VA loans in Kentucky.
Get Pre-Approved: Provide your lender with income, asset, and debt information to secure pre-approval.
Choose Your Home: Select a property that meets VA guidelines (primary residence, approved property type, permanent foundation, etc.).
Close on Your Loan: Finalize your loan with your lender and move into your new home!

As a veteran myself (19K Tanker) and a mortgage professional, I’ve helped over 100 veterans secure VA loans in Kentucky. Whether you’re buying your first home, upgrading, or refinancing, I’m here to make the process seamless.

Have questions about qualifying for a Kentucky VA mortgage loan in 2025? Call, text, or email me today!