Joel Lobb, Mortgage Broker FHA, VA, KHC, USDA Reviews

★★★★★

“Joel was incredibly helpful throughout the whole process of buying a home. This was my first time, and he made everything clear and stress-free from start to finish.”

— Mike , Kentucky First-Time Homebuyer

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Kentucky Credit Score Requirements for Mortgage Approval – FHA, VA, USDA, Fannie Mae & KHC

Thinking about buying or refinancing a home in Kentucky and wondering what credit score you need? Your credit score is one of the key factors lenders look at when deciding whether to approve your mortgage and what interest rate to offer.

As a Kentucky mortgage loan officer who has helped over 1,300 families across the state, I work every day with first-time homebuyers, repeat buyers and homeowners looking to refinance using programs like FHA, VA, USDA Rural Housing, Conventional (Fannie Mae) and Kentucky Housing Corporation (KHC) down payment assistance.

This guide breaks down typical credit score benchmarks for Kentucky mortgage approvals and explains what you can do if your scores are not quite where you want them yet.

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Why Your Credit Score Matters for a Kentucky Mortgage

When you apply for a mortgage in Kentucky, the lender pulls your credit from the three major bureaus and uses your middle score (or the lower middle score if there is more than one borrower).

Your credit score helps the lender evaluate:

• How likely you are to pay on time
• Your history of managing credit cards, auto loans and other accounts
• How much total debt you are carrying compared to your limits
• Past issues like collections, charge-offs, bankruptcies or foreclosures

Important: There is no single “magic number” that approves or denies every Kentucky mortgage. Each program has its own guidelines, and many lenders add their own internal rules, called “overlays.” Your income, debt-to-income ratio (DTI), job stability and property type all matter too.

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Typical Credit Score Minimums by Loan Type in Kentucky

Below are common credit score benchmarks used by many lenders for Kentucky borrowers. These are general guidelines and can change based on lender, market conditions and your overall profile.

Loan Type	Typical Minimum Credit Score	Notes for Kentucky Borrowers
FHA (Federal Housing Administration)	580+ for 3.5% down 500–579 possible with 10% down (lender approval required)	Very popular with first-time homebuyers and buyers with limited down payment or past credit issues.
VA (Department of Veterans Affairs)	No official VA minimum; many lenders look for 580–620+	For eligible Veterans, Active Duty, Reservists and some surviving spouses. No monthly PMI and flexible guidelines.
USDA (Rural Housing)	Often 620–640+ for automated approval	$0 down for eligible rural areas in Kentucky. Lower scores may require more documentation and manual underwriting.
Conventional (Fannie Mae/Freddie Mac)	Generally 620+ minimum	Stronger scores (680–740+) can mean better interest rates and easier approval, especially with lower down payments.
Kentucky Housing Corporation (KHC)	Varies by program; many options start around 620+	Often paired with FHA, VA, USDA or Conventional loans for down payment and closing cost assistance for Kentucky homebuyers.

Note: These are typical ranges only. Final approval depends on full underwriting and your complete financial profile.

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How Your “Qualifying” Mortgage Credit Score Is Calculated

When you apply, your lender orders a tri-merge mortgage credit report from:

• Experian
• Equifax
• TransUnion

For most Kentucky mortgages, the lender uses the middle score of the three bureaus as the “qualifying” score. If there are two borrowers, the lender usually uses the lower of the two middle scores.

Example:

• Borrower A: 598, 625, 604 → Qualifying score = 604
• Borrower B: 640, 659, 652 → Qualifying score = 652

If both apply together, the lender may qualify the file off the lower middle score, in this example 604.

Also keep in mind: mortgage lenders often use older FICO models (not the same as many “free” credit score apps), so your lender’s scores can look different from what you see on a credit monitoring website.

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FHA Credit Score Requirements in Kentucky

FHA loans are a go-to option for many Kentucky first-time home buyers because they allow for lower down payments and more flexible credit guidelines than many conventional loans.

• 580+ credit score: You may qualify for the minimum 3.5% down payment, subject to full underwriting.
• 500–579 credit score: FHA will technically allow financing with at least 10% down, but many lenders set higher internal minimums. Expect a case-by-case review and stricter conditions.
• Below 500: Usually not eligible for FHA financing. Work on credit repair first, then re-apply.

FHA also looks closely at your recent 12–24 month payment history, especially for any mortgage or rent, auto loans and major revolving accounts.

For more in-depth FHA information, you can also review my Louisville FHA guide here:
Louisville Kentucky First-Time Home Buyer FHA & KHC Programs

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VA Credit Score Guidelines for Kentucky Veterans

The VA itself does not publish a strict minimum credit score. Instead, lenders set their own tolerances based on risk, experience and market conditions.

In practice for Kentucky VA home loans:

• Many lenders look for 580–620+ as a baseline.
• Stronger income, solid recent payment history and low DTI can help offset borderline scores.
• Past credit events (bankruptcy, foreclosure, short sale) may require seasoning time and compensating factors.

VA loans can be extremely powerful tools for eligible buyers: no down payment in most cases, no monthly PMI, and flexible guidelines when structured properly.

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USDA Rural Housing Credit Score Expectations in Kentucky

USDA Rural Development (Rural Housing) loans offer true $0 down financing in many areas of Kentucky. Because there is no down payment, lenders pay close attention to credit history and income stability.

Typical USDA score expectations:

• 640+: Often qualifies for automated underwriting approval (GUS Accept), assuming the rest of the file is strong.
• 620–639: May still be possible, but more documentation or a manual underwrite could be required.
• Below 620: Case-by-case basis. Expect more scrutiny and a need for strong compensating factors like low DTI and reserves.

If you want to check whether a property might be USDA-eligible, you can start with my Kentucky USDA map and eligibility tools here:
Check if a Kentucky Property Is in a USDA Eligible Area

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Conventional (Fannie Mae/Freddie Mac) Credit Score Benchmarks

Conventional loans backed by Fannie Mae or Freddie Mac usually require a stronger credit profile than FHA, VA or USDA.

• 620+: Common minimum score for many lenders.
• 660–679: Often required for certain products, lower down payments or riskier profiles.
• 680–740+: Typically qualifies for more favorable pricing, especially with smaller down payments.

If you are trying to refinance out of FHA into a Conventional loan to remove mortgage insurance, or you want to pair a Conventional loan with KHC down payment assistance, your credit score can make a noticeable difference in interest rate and closing cost options.

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How KHC (Kentucky Housing Corporation) Looks at Credit

Kentucky Housing Corporation (KHC) does not lend money directly to consumers, but it partners with approved lenders (like us) to provide down payment assistance and special programs.

In general:

• Many KHC programs start around 620+ credit scores, depending on the specific product and loan type (FHA, VA, USDA, Conventional).
• KHC overlays may be stricter than the underlying FHA/VA/USDA/Conventional guidelines in some areas.
• Higher scores help with pricing, underwriting approval and access to more assistance options.

If you are a first-time homebuyer in Kentucky and need help with down payment or closing costs, we can review which KHC options fit your credit profile and income.

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Refinancing vs. Purchasing: Does the Credit Score Requirement Change?

For most programs, the credit score ranges are similar whether you are purchasing or refinancing. However, the purpose of the refinance can matter:

• Rate-and-term refinance: Often similar credit score and DTI guidelines as a purchase.
• Cash-out refinance: Usually requires higher scores and more equity, especially for Conventional and VA cash-out.
• Streamline refinances (FHA, VA IRRRL, etc.): May have more flexible credit documentation but still require a review of payment history and risk.

If you already own a home in Kentucky and want to lower your payment, shorten your term, or remove mortgage insurance, we can run side-by-side refinance scenarios based on your current scores.

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5 Practical Ways to Improve Your Credit Before Applying

If your credit score is close to the cutoff, even a small improvement can open up better loan options and interest rates. Here are five practical steps:

1. Pull and review your credit reports. Check Experian, Equifax and TransUnion for errors, duplicates or old derogatory items that should have fallen off.
2. Lower your credit card balances. Try to keep utilization under 30% of your limits on each revolving account – lower is better.
3. Avoid new loans or major purchases. Hold off on buying vehicles, furniture or opening new credit cards right before applying for a mortgage.
4. Make every payment on time. A single 30-day late payment can drop scores and trigger underwriting issues.
5. Talk to a Kentucky loan officer early. A customized credit review can show you which actions will give you the biggest boost toward mortgage approval.

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Next Steps: Talk Through Your Kentucky Mortgage Credit Plan

Every borrower’s story is different. Two people can have the same credit score but very different credit histories and approval paths.

If you are:

• A first-time homebuyer in Kentucky
• Looking to refinance your current home loan
• A Veteran or active-duty service member considering a VA loan
• Buying in a rural area and exploring USDA Rural Housing
• Interested in KHC down payment assistance

…I can help you review your credit, run loan scenarios and design a practical plan to get you approved.

Call or text: 502-905-3708
Email: kentuckyloan@gmail.com

Serving homebuyers and homeowners across all 120 counties in Kentucky.

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Frequently Asked Questions About Kentucky Mortgage Credit Scores

What is the minimum credit score for an FHA loan in Kentucky?

Many lenders in Kentucky look for a 580+ credit score to qualify for the 3.5% minimum down payment on an FHA loan. Scores between 500 and 579 may be considered with at least 10% down, but approval is more difficult and not all lenders will allow it.

Can I get a Kentucky mortgage with a credit score below 580?

It can be possible, but options are limited. Some FHA and VA lenders may consider scores in the 500–579 range with stronger down payment, low debt-to-income ratio and clean recent payment history. In many cases, it is more effective to spend a few months improving your credit and then apply.

What credit score do I need for a VA loan in Kentucky?

The VA does not publish a hard minimum score, but many Kentucky lenders prefer 580–620+. Stronger scores can mean better terms, especially if you have prior credit challenges.

What credit score is required for a USDA Rural Housing loan in Kentucky?

USDA loans often work best with scores of 640 or higher for automated approval. Lower scores may still be considered, but expect more documentation, a manual underwrite and tighter qualification standards.

How can I improve my score quickly before applying for a Kentucky mortgage?

Common fast-impact steps include paying down credit card balances, bringing any past-due accounts current, avoiding new inquiries and disputing any obvious errors on your report. A targeted review with a Kentucky loan officer can help you focus on the items that will move your score the most.

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Disclaimer: This information is for educational purposes only and does not constitute a commitment to lend. Program guidelines, credit score requirements and underwriting standards are subject to change without notice. All loans are subject to credit approval, income verification, acceptable collateral and program availability.

NMLS #57916  |  Company NMLS #1738461  |  Equal Housing Lender

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 FHA Loan Requirements
• Kentucky VA Home Loans
• Kentucky Housing Corporation (KHC) Programs

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.

Frequently Asked Questions for A Kentucky Mortgage Loan Approval

Kentucky Mortgage Loan Approval

Frequently Asked Questions

Joel Lobb, Mortgage Broker FHA, VA, KHC, USDA

Individual NMLS ID 57916 | Company NMLS ID 1738461

Equal Housing Lender

Phone: 502-905-3708 | Email: kentuckyloan@gmail.com | Website: www.mylouisvillekentuckymortgage.com

Welcome to Your Mortgage Journey

This guide is designed to give Kentucky homebuyers a clear, realistic understanding of how mortgage approval works and what to expect. Whether you are purchasing your first home, using a VA benefit, buying in a USDA-eligible rural area, or refinancing an existing loan, the goal is simple: remove uncertainty and set expectations early.

Available loan programs include FHA, VA, USDA and Rural Housing, Kentucky Housing Corporation down payment assistance, and Fannie Mae conventional financing.

Getting Started: Documents You Will Need

Every borrower profile is different. Some files move quickly with minimal documentation, while others require additional clarification. Requests for extra items are normal and part of responsible underwriting.

Property Information

• Fully executed purchase contract with all riders and addenda
• Proof of earnest money deposit
• Contact information for your real estate agent, builder (if applicable), insurance agent, and closing attorney or title company

Income Documentation

• Most recent 30 days of pay stubs showing year-to-date income
• W-2 forms for the most recent two years
• Two-year employment history with employer names and addresses
• Written explanation for any employment gaps within the last two years
• Copy of permanent resident card or visa, if applicable

Self-employed, commission, bonus, or rental income

• Complete personal tax returns for the last two years, including all schedules
• Year-to-date profit and loss statement
• K-1s for partnerships or S-corporations (two years)
• Business tax returns (1065 or 1120) when ownership is 25 percent or greater

Alimony or child support used for qualification

• Divorce decree or court order stating terms
• Proof of receipt covering the most recent 12 months

Social Security, disability, or VA income

• Current award letter or benefit statement

Assets, Funds, and Down Payment

• Settlement statement from sale of an existing home, if applicable
• Two months of bank statements for checking, savings, or money market accounts
• Most recent statements for stocks, bonds, or retirement accounts being used
• Gift letter for any gifted funds (form provided upon request)

Debts and Obligations

• Statements for all current debts showing balances and monthly payments
• Mortgage or rent history for the past two years
• Court orders for alimony or child support obligations, if applicable

Credit and Loan Approval

How credit is evaluated

Lenders use credit scoring models to evaluate repayment risk. Your credit profile includes payment history, outstanding balances, length of credit history, types of accounts, and recent activity. Most mortgage lenders rely on FICO scoring models, which range from 350 to 850.

Accuracy matters. Reviewing your credit report before applying helps prevent delays caused by errors or outdated information. You are entitled to one free credit report every 12 months from each bureau.

Equifax: 800-685-1111

Experian: 888-397-3742

TransUnion: 800-916-8800

Free reports: AnnualCreditReport.com

Improving your credit profile

• Payment history: late payments and collections have the greatest negative impact
• Credit utilization: high balances relative to limits reduce scores
• Length of credit history: longer histories generally help
• New credit inquiries: multiple recent inquiries can lower scores
• Credit mix: responsible use of different account types is favorable

Practical steps include paying all obligations on time, reducing balances, avoiding new debt during the loan process, and allowing time for improvements to reflect.

The Mortgage Process Explained

Appraisal

An appraisal is an independent estimate of a property’s market value performed by a state-licensed professional. It helps ensure the loan amount aligns with the home’s value.

Private Mortgage Insurance (PMI)

Conventional loans with less than 20 percent down typically require PMI. This insurance protects the lender, not the borrower. Several Kentucky loan programs offer alternatives that can reduce or eliminate PMI requirements.

Interest rate lock

Mortgage rates change daily. Locking your rate secures pricing for a defined period, usually 30 to 60 days, helping protect you from market increases while your loan is processed.

Discount points

One point equals one percent of the loan amount. Paying points upfront reduces the interest rate and monthly payment. This strategy generally makes sense when you plan to remain in the home for several years.

APR explained

APR reflects the total cost of financing, including fees. It can help compare options, but a full cost breakdown is the best way to evaluate long-term value.

Refinancing Considerations

Refinancing is commonly beneficial when interest rates drop by two percent or more. In some cases, smaller reductions still make sense depending on loan balance, monthly cash flow, and long-term plans. A personalized analysis is the only reliable way to determine whether refinancing aligns with your objectives.

Closing and Funding

Closing is the final step where loan documents are signed and ownership transfers. This typically occurs at a title company or attorney’s office. Keys are released once the loan funds and the transaction records.

For borrowers unable to attend in person, mobile or remote notary options can be arranged.

Why Work With a Kentucky-Based Mortgage Expert

• Deep knowledge of Kentucky-specific loan programs and underwriting expectations
• Clear communication and upfront guidance to reduce surprises
• Access to FHA, VA, USDA, KHC, and conventional financing
• Same-day pre-approvals for qualified buyers
• Down payment assistance guidance tailored to Kentucky buyers

Contact

Phone or Text: 502-905-3708

Email: kentuckyloan@gmail.com

Website: www.mylouisvillekentuckymortgage.com

Individual NMLS ID 57916 | Company NMLS ID 1738461

Kentucky mortgage loans only | Equal Housing Lender | www.nmlsconsumeraccess.org

This website is an independent educational resource and is not affiliated with or endorsed by FHA, VA, USDA, or any government agency.

4 Things Every Borrower Needs to Know to Get Approved for a Mortgage Loan In Kentucky

Thank you for visiting. I hope you find this website both informative and empowering as you explore your Kentucky mortgage options. My goal is to help you feel confident in selecting the right home loan for your unique situation.

I proudly serve all 120 counties in Kentucky, offering a full range of mortgage loan programs, including:

• FHA Loans

• VA Loans

• USDA Rural Housing Loans

• Fannie Mae Conventional Loans

• KHC Down Payment Assistance Programs

With over 20 years of lending experience, I’ve had the privilege of helping more than 1,300 Kentucky families achieve their homeownership goals. Whether you're a first-time homebuyer or seeking a second opinion, I’m here to offer honest, no-pressure advice—always free of charge.

I am dedicated to:

• Attending as many closings as possible

• Providing responsive, personalized service

• Ensuring quick, efficient, and accurate loan processing

• Making myself accessible every step of the way

I've been consistently recognized as a top mortgage loan officer in Kentucky for VA, FHA, USDA, and KHC programs. I take pride in being thorough, transparent, and attentive with each and every client.

Please take a moment to read my reviews below. If you have questions or need guidance, feel free to call or text me directly.

Chasity Wray

I would 100% recommend Joel & Dawn! They helped make a goal for my family a reality. From start to finish they helped me every step of the way. I will forever be thankful for them. Day or night, any worry or thought I had I never had to wait for a response, they really kept me sane during the stresses of being a first time buyer. I found Joel on YouTube when I was doing research before I decided to start the process of buying, turned out he was actually right here in Kentucky and so it was meant for me to go with them! Thank you both for everything, The Wray Family! 

Cee Bell

10 reviews

Absolutely Amazing!! I emailed Joel after I had just got a denial from a bank and just thought i would try to get some advice on what my next steps would be to get a house. I honestly didn't expect to even get a reply because my credit is not great. That was about a week and a half ago. I just signed a contract on a house last night. ONLY because of Joel Lobb. He even worked with us throughout the weekend, which shocked me. Best decision I have ever made. THANK YOU SO MUCH FOR WORKING WITH US THROUGHOUT THE ENTIRE PROCESS

2 reviews


We were afraid we wouldn’t get approved for a loan because we didn’t have the best credit scores. But with Joel’s help he got us approved for a FHA. We closed on our home about 2 weeks ago! Joel was quick at responding to any of our questions and concerns. He was polite and professional when it came to our needs. We couldn’t have done this without Joel! THANKS AGAIN

Beth Ratliff

5  reviews • 

Absolutely the best experience buying my home. Everyone else turned me away. I done a google search for lenders and found Joel, and he gave me a chance. I faced a lot of personal road blocks during this process but he stuck it out with me. I was guided on what needed to be done and trusted his guidance wholeheartedly. We finally made it to the end and I worked with a lady named Dawn. She as well seen road blocks I encountered but stuck it out with me also. I emailed them with more questions than I should have, and they probably wished I didn’t send so many haha but they never failed to respond. If anyone can take owning a home from a dream to a reality, it’s Joel and his team!

Oggie Hall

5 reviews •

Mr. Joel Lobb was an important part of why we had a successful and very pleasant experience in purchasing our new home, he was very professional and knowledgeable in the process . He explained what we was to expect and was there for us as new home buyers in our corner every day and night I would recommend him to anyone and everyone he is a must have in your home buying journey.

Brandon Crook
3 reviews 

Thank god for this man. He is amazing. He Helped me from start to finish. When I first started looking for a house I knew nothing about the process or what it took to purchase a home. He broke everything down from start to finish. Helped me to get get my credit in order. Very professional and knowledgeable gentleman. If you are a first time home buyer or this is your 10th home. This is the man you need to see ASAP! I greatly appreciate everything he has done for my family. We love our new home! I can’t thank him enough! 10 stars!!!

The 4 things below underwriters review for a Mortgage Loan Approval 
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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 re established credit.

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

4. Appraisal

Generally, there’s nothing you can do to affect this. Bottom line here is…..”is the value of the house at least the value of what you’re paying for it?” If not, then not good things start to happen. Generally you’ll find less issues with values on purchase transactions, because, in theory, the realtor has done an accurate job of valuing the house prior to taking the listing. The big issue comes in refinancing. In purchase transactions, the value is determined as the


Lower of the value or the contract price!!!


That means that if you buy a $1,000,000 home for $100,000, the value is established at $100,000. Conversely, if you buy a $200,000 home and the value comes in at $180,000 during the appraisal, then the value is established at $180,000. Big issues….Talk to your loan officer.



For each one of these boxes, there are over 1,000 things that can effect if a borrower has reached the threshold to complete that box. Soo…..talk to a great loan officer. There are so many loan officers that don’t know what they’re doing. But, conversely, there’s a lot of great ones as well. Your loan is so important! Get a great lender so that you know, for sure, that the loan you want, can be closed on!

5 Most Popular Kentucky Home Loan Programs below:⬇️

Conventional Loan

• At least 3%-5% down

• Closing costs will vary on which rate you choose and the lender. Typically the higher the rate, the lesser closing costs due to the lender giving you a lender credit back at closing for over par pricing. Also, called a no-closing costs option. You have to weigh the pros and cons to see if it makes sense to forgo the lower rate and lower monthly payment for the higher rate and less closing costs.

Fico scores needed start at 620, but most conventional lenders will want a higher score to qualify for the 3-5% minimum down payment requirements Most buyers using this loan have high credit scores (over 720) and at least 5% down.

The rates are a little higher compared to FHA, VA, or USDA loan but the mortgage insurance is not for life of loan and can be rolled off when you reach 80% equity position in home.

Conventional loans require 4-7 years removed from Bankruptcy and foreclosure.

KENTUCKY FANNIE MAE LOAN LIMITS IN 2026 FOR CONVENTIONAL MORTGAGE LOANS href="https://www.fhfa.gov/data/conforming-loan-limit-cll-values">Kentucky 2026 Conforming Loan Limits

Area Type	2026 1-Unit Loan Limit	Notes
Most U.S. Areas (Baseline)	$832,750	Increased from $806,500 in 2025
High-Cost Areas (Ceiling)	$1,249,125	150% of baseline conforming limit
Alaska, Hawaii, Guam, U.S. Virgin Islands	$1,249,125 – $1,873,675	Higher statutory limits apply in these areas

Source: Federal Housing Finance Agency (FHFA). Loan limits shown apply to 1-unit properties for 2026.

These new limits allow Kentucky homebuyers to finance larger homes while still qualifying for conforming loans, avoiding the stricter requirements and higher rates of jumbo loans.

The FHFA determines the conforming loan limit each year, basing it on the average U.S. home value over the past four quarters.

Kentucky USDA Rural Housing Program

If you meet income eligibility requirements and are looking to settle in a rural area, you might qualify for the KY USDA Rural Housing program. The program guarantees qualifying loans, reducing lenders’ risk and encouraging them to offer buyers 100% loans. That means Kentucky home buyers don’t have to put any money down, and even the “upfront fee” (a closing cost for this type of loan) can be rolled into the financing.

Fico scores ****.usually wanted for this program center around 620 range, with most lenders wanting a 640 score so they can obtain an automated approval through GUS. GUS stands for the Guaranteed Underwriting system, and it will dictate your max loan pre-approval based on your income, credit scores, debt to income ratio and assets.

They also allow for a manual underwrite, which states that the max house payment ratios are set at 29% and 41% respectively of your income.

They loan requires no down payment, and the current mortgage insurance is 1% upfront, called a funding fee, and .35% annually for the monthly mi payment. Since they recently reduced their mi requirements, USDA is one of the best options out there for home buyers looking to buy in an rural area.

A rural area typically will be any area outside the major cities of Louisville, Lexington, Paducah, Bowling Green, Richmond, Frankfort, and parts of Northern Kentucky .

There is a map link below to see the qualifying areas.

Income Limits for: Most Locations

New Kentucky USDA Rural Housing  Income limits for most counties in 2024 (*) in Kentucky are $112,450 for a household family of four and household families of five or more  can make up to $148,450 with the new changes for 

2025 Kentucky USDA Income limits, 

2025 Kentucky USDA Rural Housing Income Limits by County Type

🏠 Standard Kentucky Counties

USDA Rural Housing Loan Limits 2025:

$119,850

1–4 Person Household Income Limit

$158,250

5–8 Person Household Income Limit

🏙️ Northern Kentucky Metro Counties

Higher USDA Income Limits 2025:

$128,600

1–4 Person Household Income Limit

$169,800

5–8 Person Household Income Limit

Kentucky USDA Rural Housing 2026 Higher Income Limits Apply To: Boone County, Campbell County, Gallatin County, and Kenton County (Cincinnati MSA counties qualify for increased USDA rural development loan limits)

USDA requires 3 years removed from bankruptcy and foreclosure.

There is no max USDA loan limit.

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Kentucky FHA Loan

FHA loans are good for home buyers with lower credit scores and no much down, or with down payment assistance grants. FHA will allow for grants, gifts, for their 3.5% minimum investment and will go down to a 580 credit score.

The current mortgage insurance requirements are kind of steep when compared to USDA, VA , but the rates are usually good so it can counteracts the high mi premiums.

As I tell borrowers, you will not have the loan for 30 years, so don’t worry too much about the mi premiums.

The mi premiums are for life of loan like USDA.

FHA requires 2 years removed from bankruptcy and 3 years removed from foreclosure.

The new Kentucky FHA Mortgage Loan Limits for for FHA case numbers assigned on or after January 1, 2026:

Kentucky 2026 FHA Loan Limits 
• Floor (Low-Cost Areas):
  • 1-Unit: $541,287
  • 2-Units: $693,050 / $693,063
  • 3-Units: $837,700 / $837,720
  • 4-Units: $1,041,138 / $1,041,125 

Kentucky VA Loan

VA loans are for veterans and active duty military personnel. The loan requires no down payment and no monthly mi premiums, saving you on the monthly payment. It does have an funding fee like USDA, but it is higher starting at 2.3% for first time use, and 3.6% for second time use. The funding fee is financed into the loan, so it is not something you have to pay upfront out of pocket.

VA loans can be made anywhere, unlike the USDA restrictions, and there is no income household limit.

Most VA lenders I work with will want a 580 credit score even though on paper, VA says they don't have a minimum credit score.

VA requires 2 years removed from bankruptcy or foreclosure.

VA Loan Limits for 2025 in Kentucky

As announced previously by VA in Circular 26-19-30 (which provides interim guidance on implementing "The Blue Water Navy Vietnam Veterans Act of 2019") the conforming loan limit cap on guarantees was removed for Veterans with full entitlement. For Veterans who have previously used entitlement and the entitlement has not been restored, the maximum amount of guaranty entitlement available to the Veteran (for a loan above $144,000) is 25 percent of the conforming loan limit reduced by the amount of entitlement previously used (not restored) by the Veteran. 

As a reminder, Veterans are able to use their VA Home Loan Guaranty benefit regardless of loan amount, but in order to purchase homes with loan amounts above the conforming loan limits, Veterans with partial entitlement may be required to make a down payment on amounts in excess of the conforming loan limit. Regardless of full or partial entitlement, the VA guaranty plus any required down payment must total 25% of the loan amount.

Kentucky Down Payment Assistance

 KHC Loan (Kentucky Housing Loan with Down Payment Assistance)

 

The first no money-down home  loan program offered by Kentucky Housing and other lenders in the state of Kentucky currently offers up to $10,000 in down payment assistance (DAP) 

     

• Informational Flyer
  
• First-time homebuyers statewide in non-targeted areas​​
  
• First-time and repeat homebuyers statewide in targeted areas
  
• 30-year fixed interest rate
  
• Principal residence ONLY
  
• Purchase Price Limit: $544,232
  
• Borrower must meet KHC's MRB Income Limits
  

​​​​

​​​​​Secondary Market Funding Source

• First-time and repeat homebuyers statewide
  
• 30-year fixed interest rate
  
• Principal residence ONLY
  
• Purchase Price Limit:  $544,232​
  
• Borrower must meet KHC's Se​​condary Market Income Limits

  

    Need to be 2 years removed from a Chapter 7 Bankruptcy and 3 years removed from a foreclosure.

 

Kentucky First Time Home Buyer Common Questions and Answers below:👇

∘ 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 620 to 640 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 to 640 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 620 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 Grants are all available to Kentucky First Time Home buyers if you qualify for them. Ask your loan officer about these programs

∘ 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

∘ 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, USDA, 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 120 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 you know! The max house payment you would qualify would be the $890, because it is the lowest payment of the two ratios.

10 mortgage facts will give you an advantage when shopping for a home loan in KY!👇

1. Mortgage Rates Change

Just like the stock market, mortgage rates change throughout the day. Mortgage rates you see today may not be available tomorrow. If you are in the market for a mortgage loan, be sure to check the current rates being offered by lenders. If you have already done your research and have found your dream home consider locking in your rate as soon as possible.



2. Different Lenders Charge Different Fees


Don’t expect every lender to charge the same fees for a mortgage loan. Every lender structures their fees differently, which is why it is important to shop with at least 3 lenders to compare. Next time you apply for a mortgage loan pay attention to the rates, points being charged and closing costs.



3. Lenders Can Sell Your Loan to Another Bank


Many borrowers have experience getting a mortgage loan with a certain lender only to find out that the loan has been sold to another bank. This occurs because lenders need to free up their liabilities in order to make room to give out more loans. This does not affect your mortgage whatsoever, but it’s important to pay close attention to your mortgage statement and any correspondence you receive in the mail to make sure you do not make payments to the wrong bank.



4. Your Middle Credit Score Matters



When you apply for a mortgage loan, the lender will pull your credit scores from three credit bureaus (Transunion, Equifax and Experian) to help them determined if you are credit worthy. Your middle score of the three is what lenders will use for loan qualification. However, the underwriter will review all three scores as part of the loan underwriting process. If you pull your own credit score through a website online, the credit scores displayed to you may be different than what lenders use because they use different reporting systems.



5. You Can Refinance Your Home Loan Anytime



You can refinance your mortgage anytime, but it doesn’t necessarily mean you should. Think about why you want to refinance. Is because you want to lower your monthly payments, to change the type of loan you are in or to take cash out from your equity? Whatever the reason is, make sure that it makes financial sense.


6. You Can Get a Mortgage Loan After a Foreclosure


Many homeowners have experienced a foreclosure after the recent mortgage crisis. There is good news for these borrowers because they can get a mortgage loan after foreclosure. There are waiting periods involved, for example, to apply for an FHA loan you must wait three years after foreclosure to apply. If you want to get a conventional loan the waiting period is seven years from foreclosure. For those seeking a VA loan, the waiting period is two-years.


There are exceptions to the waiting periods, but you have to show the lender that your foreclosure was caused by an event outside your control, such as losing your job or being seriously ill.


8. Good Credit Allows you to Get Better Mortgage Rates



Good credit scores mean a better rate in any type of loan, especially a mortgage loan. Your credit heavily impacts the type mortgage loan you will qualify for. To maintain a good credit report, make sure you monitored it closely. One of the advantages to good credit is that more banks will want to compete for your business, therefore giving you leverage to negotiate the closing costs.



9. Know Your Annual Percentage Rate (APR)


Knowing your APR will allow you see the true cost of your loan. While the interest rate shows the annual cost of your loan, the APR includes other fees such as origination points, admin fees, loan processing fees, underwriting fees, documentation fees, private mortgage insurance and escrow fees.


There may be more or less fees included in the ARP from what we mentioned. To be sure what fees are included in the APR, ask your lender to give you a breakdown of the closing costs included.


10. You Can Always Reduce Closing Costs


One way to reduce closing costs is to have the sellers contribute towards the closing costs when purchasing your home. This can be negotiated between the buyer and the sellers in the purchase contract. The amount the seller can contribute will depend on the type of loan. Another way to save on closing costs is to have the lender give you a credit to cover out of pocket loan costs.

I specialize in assisting Kentucky First-Time Homebuyers with mortgage loans, including FHA, VA, USDA & Rural Housing, KHC (Kentucky Housing Corporation), and Fannie Mae programs. With over 20 years of experience in the mortgage industry, I’ve helped more than 1,300 Kentucky families achieve their dream of homeownership or refinance their current mortgages to secure lower payments.

Whether you’re a first-time buyer or looking to refinance, I am here to guide you through every step of the process with personalized attention, expert advice, and the best loan options available to fit your unique needs.

Down Payment Assistance:
For Kentucky first-time homebuyers, we still have down payment assistance available through KHC programs. These funds can make a huge difference in reducing upfront costs and making homeownership more accessible.

Why Work With Me?

Local Expertise: I know the ins and outs of Kentucky’s housing market and loan programs.

Fast Approvals: I offer free mortgage applications with same-day approvals to keep the process moving quickly.

Customized Loan Solutions: Whether you’re buying a home or refinancing, I’ll find the right loan program to fit your needs.

Personalized Service: I treat every client like family, ensuring you’re supported and informed throughout the process.

About My Website
Visit my website for a wealth of resources tailored to Kentucky homebuyers. You’ll find:

Step-by-step guides for first-time homebuyers.

Information on loan programs like FHA, VA, USDA, and KHC.

Tools to help you calculate potential payments and affordability.

Blog posts with tips and updates on the Kentucky housing market.

A secure portal to start your loan application and upload documents.

Please Note: My website is not endorsed by the FHA, VA, USDA, or any government agency. It is an independent platform created to educate and assist homebuyers with expert advice and accessible tools.

 Email - kentuckyloan@gmail.com 

2.   Call/Text - 502-905-3708

Joel Lobb
Mortgage Loan Officer - Expert on Kentucky Mortgage Loans

Licensing Info: Kentucky Mortgage Loan Only

NMLS Personal ID: 57916

Company NMLS ID: 1738461
www.nmlsconsumeracces.org
Equal Housing Lender

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NMLS 57916  | Company NMLS #173846

The view and opinions stated on this website belong solely to the authors, and are intended for informational purposes only. The posted information does not guarantee approval, nor does it comprise full underwriting guidelines. This does not represent being part of a government agency. The views expressed on this post are mine and do not necessarily reflect the view of my employer. Not all products or services mentioned on this site may fit all people.
(www.nmlsconsumeraccess.org).

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