FHA loans in Kentucky After A Bankruptcy

Kentucky FHA Loan Guidelines for Bankruptcy and Foreclosure

Chapter 7

Chapter 7 bankruptcy discharged more than 24 months prior to the application date may be allowed.

Chapter 7 bankruptcy discharged between 12 and 24 months prior to the application date requires satisfactorily established credit and documentation showing the circumstances which caused the bankruptcy were beyond the borrower's control (i.e. unemployment, medical bills not covered by insurance). In these instances, the file must be manually downgraded to a refer and manually underwritten. It falls upon the underwriter to make a final determination as to the overall quality of the file.

Chapter 7 bankruptcy discharged less than 12 months prior to the application date is not allowed.

Chapter 13

Loans where the borrower is currently in a Chapter 13 bankruptcy or had a Chapter 13 bankruptcy which was discharged within the previous 2 years require manual downgrade and must be underwritten manually. Note that manual underwrites require Underwriting Management approval.


A borrower who is currently in a Chapter 13 bankruptcy may be eligible for FHA financing provided all of the following conditions are met in addition to standard manual underwriting requirements:

Foreclosure / Short Sale

A foreclosure less than 3 years ago is not allowed.

In all instances, the “date of foreclosure” is considered the date of the foreclosure deed. The end date of the time frame is determined by the application date.

You can obtain a copy of your bankruptcy paperwork from the website below:


Bankruptcy Courts 👉    http://www.pacer.psc.uscourts.gov/

Frequently Asked Question on Kentucky Mortgages After Bankruptcy

📘 Chapter 13 Bankruptcy Mortgage Questions

⬇️ Click on arrows for answers to your mortgage questions

How long after a Chapter 13 bankruptcy can I get a mortgage?

You may be eligible after 12 on-time payments during your repayment plan (with court approval), or immediately after discharge with FHA, VA, or Non-QM options.

What types of mortgage loans are available during or after Chapter 13?

FHA, VA, USDA, Conventional (after 2 years discharge), and Non-QM Portfolio Loans.

What is your waiting period for an FHA loan after bankruptcy?

FHA typically allows for approval during Chapter 13 (after 12 payments with approval) or immediately after discharge.

What kind of interest rate should I expect?

Rates depend on credit recovery and loan type. Expect slightly higher-than-average rates during early post-bankruptcy stages, with the potential for competitive terms.

What are the most common obstacles after discharge?

Low credit scores, high DTI ratios, limited assets, incomplete documentation, or lack of court approval.

How long does it take to refinance after Chapter 13 discharge?

Typically 2–4 weeks if all documents are ready.

How long does it take to purchase after Chapter 13 discharge?

Often 30–45 days from pre-approval to closing.

Can I purchase a home while still in Chapter 13?

Yes, with 12 months of on-time payments and court/trustee approval.

Can I refinance my mortgage during Chapter 13?

Yes, under certain conditions and with approval from the bankruptcy court.

How long does it take to get approved during a Chapter 13 payment plan?

Typically 45–60 days including court approval, but may vary by case and jurisdiction.

Can I do a cash-out refinance after Chapter 13?

Yes, usually available 6–12 months post-discharge if equity and credit conditions are favorable.

Are there any mortgage offer loans for homeowners who own their home outright after bankruptcy?

Yes. Rate-and-term and cash-out refinances may be available depending on credit and income.

Are there low down payment loan options post-Chapter 13?

Yes. FHA (3.5% down), VA (0% down), USDA (0% down), and KHC programs are available.

What credit score is needed after Chapter 13?

FHA 580 with 3.5% down FHA and 500+ score with 10% down payment, VA: no minimuim score but 620 preferred USDA: no minumum score but 640 preferred, Conventional: 620+, Non-QM: 500–550+

What if I don’t qualify right now?

You’ll receive a custom action plan to build credit, savings, or income toward qualification.

How do student loans affect mortgage eligibility after bankruptcy?

Student loans count toward your DTI. Deferred loans typically calculated at 0.5%–1% of the balance.

Where can I find forms to file for Chapter 13 Bankruptcy?

Forms are available via the U.S. Bankruptcy Court website or through a licensed bankruptcy attorney.

How does divorce affect my Chapter 13 plan?

Divorce can affect repayment and income stability. Plan modifications may be needed through court.

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📙 Chapter 11 Bankruptcy Mortgage Questions

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What mortgage options are available after Chapter 11 bankruptcy?

Loan types vary based on personal vs. business bankruptcy. FHA, VA, and Non-QM may apply post-discharge.

What if I don’t qualify today?

You’ll receive a recovery plan tailored to reestablish eligibility.

When can I apply for a loan post-Chapter 11?

After your plan is confirmed or the bankruptcy is discharged—typically 12–24 months depending on the loan.

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📗 Chapter 7 Bankruptcy Mortgage Questions

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How long must I wait after Chapter 7 to get a mortgage?

FHA/VA: 2 years, USDA: 3 years, Conventional: 4 years, Non-QM: as little as 1 day post-discharge.

What loan options are available post-Chapter 7?

FHA, VA, USDA, Conventional, and Non-QM—all with different credit and timeline requirements.

Are there extra fees for Chapter 7 borrowers?

No hidden fees. Standard lender fees apply. Review your Loan Estimate for details.

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Do you offer loans for mobile homes on past Chapte7 or Chapter 13?

Yes—if the home is on a permanent foundation and meets agency/HUD guidelines.

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Can You Buy A House After Bankruptcy in Kentucky?

Can You Buy a House After Bankruptcy in Kentucky? (Updated 2026 Guide)

Yes — you can buy a home after a bankruptcy in Kentucky. The key is understanding the timelines for each loan program, rebuilding your credit, and showing stable financial behavior after your discharge or dismissal.

Below is the 2026 Kentucky-specific guide to FHA, VA, USDA, and Conventional loans after Chapter 7 or Chapter 13 bankruptcy.

How Soon Can You Buy a Home After Bankruptcy?

Your waiting period depends on:

• The type of bankruptcy (Chapter 7 or Chapter 13)
• The loan program (FHA, VA, USDA, Conventional)
• Whether the bankruptcy is discharged or dismissed
• Your new credit history and debt management

Most Kentucky homebuyers qualify again between 1–4 years after bankruptcy.

2025 Waiting Periods After Chapter 7 Bankruptcy

Loan Type	Waiting Period After Chapter 7 Discharge
FHA	2 years from the discharge date
VA	2 years from the discharge date
USDA Rural Housing	3 years from the discharge date
Conventional (Fannie Mae/Freddie Mac)	4 years from the discharge date

Tip: If your Chapter 7 bankruptcy included a home foreclosure, that may extend your waiting period depending on the loan program. Let me review your full history so I can tell you exactly where you stand.

2026 Waiting Periods After Chapter 13 Bankruptcy

Loan Type	Waiting Period After Chapter 13
FHA	1 year of on-time plan payments with Trustee approval — OR 2 years after discharge
VA	1 year of plan payments with Trustee approval — OR 2 years after discharge
USDA	1 year of on-time payments with Trustee approval — OR 3 years after discharge
Conventional	2 years after discharge — OR 4 years after dismissal

Good news: Many Kentucky buyers in Chapter 13 qualify while still in repayment with a simple letter from their Trustee.

Kentucky FHA Loans After Bankruptcy

An FHA loan is often the fastest path back to homeownership after bankruptcy for Kentucky first-time buyers. FHA is flexible with credit scores, previous hardship, and higher debt-to-income ratios.

• Minimum credit score usually 580+
• Low 3.5% down payment
• Gift funds allowed
• KHC Down Payment Assistance can be used with FHA

FHA is often the best option for buyers rebuilding credit after Chapter 7 or Chapter 13.

Kentucky VA Loans After Bankruptcy

VA loans are extremely forgiving for eligible military borrowers. In 2026, the VA still allows homeownership again as early as:

• 2 years after Chapter 7 discharge
• 1 year into a Chapter 13 with Trustee approval

VA loans also require no down payment and no monthly mortgage insurance — making them a major win for recovering credit profiles.

Kentucky USDA Rural Housing Loans After Bankruptcy

USDA is stricter about credit history, but still very doable after bankruptcy:

• 3-year wait after Chapter 7
• 1 year into Chapter 13 with Trustee approval

USDA is a 0% down program designed for rural Kentucky counties. Income limits and property-eligibility maps apply.

→ Click here to check if a Kentucky property is USDA-eligible

How to Rebuild Credit After Bankruptcy (Quick Wins)

• Use a secured credit card and keep balances below 10–20%
• Pay every bill on time
• Avoid new personal loans or auto loans
• Dispute inaccurate items on your credit report
• Keep your credit usage low — this matters more than you think

Your goal is to show 12–24 months of clean, stable credit behavior.

Kentucky First-Time Homebuyer Options After Bankruptcy

You can still use:

• KHC Down Payment Assistance
• FHA Loans
• VA Loans
• USDA Rural Housing Loans

If you’re not sure which program is best, I can review your entire profile — credit, income, job history, debts — and map out your fastest path to getting approved.

Get a Free Kentucky Mortgage Assessment

If you’ve had a bankruptcy and want to buy again in Kentucky, reach out and I’ll build a personalized roadmap for you.

Call/Text: 502-905-3708
Email: kentuckyloan@gmail.com
Website: www.mylouisvillekentuckymortgage.com

I’ve helped more than 1,300 Kentucky families purchase or refinance — including hundreds rebuilding after bankruptcy.

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Joel Lobb, Mortgage Broker FHA, VA, KHC, USDA
NMLS #57916 | Company NMLS #1738461
Equal Housing Lender | This is not a commitment to lend. All approvals subject to credit, income, property, and underwriting guidelines.

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

Kentucky Mortgage Credit Score Requirements for FHA, VA, USDA, Conventional & 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

Why Kentucky Mortgage Loans Are Denied

When applying for a Kentucky mortgage loan, several factors play a crucial role in the approval and denial process. 

Understanding why Kentucky mortgage loans may not get approved due to credit score, bankruptcy, income ratio, work history, and foreclosure is essential for prospective homebuyers. 

Credit Score of 620 or below:

A credit score reflects an individual's creditworthiness. Lenders use this score to assess the risk of lending money. A lower credit score, typically below 620, can raise concerns for lenders. It may indicate past financial challenges, missed payments, or high levels of debt. To improve mortgage approval chances, borrowers should aim for a higher credit score by paying bills on time, reducing debt, and fixing any errors on their credit report.

Bankruptcy less than 2 years or foreclosure less than 3 years:


Bankruptcy can significantly impact mortgage approval. Depending on the type of bankruptcy (Chapter 7 or Chapter 13) and how long ago it occurred, lenders may view it as a red flag. 

Bankruptcies stay on credit reports for 10 years, affecting credit scores and indicating financial instability. Lenders may require a waiting period after bankruptcy before considering a mortgage application.

 
Chapter 7

If you have filed a Chapter 7  Bankruptcy, the mortgage waiting periods begin after the discharge date:

Fannie Mae (conventional) loan – 4 years from discharge date
FHA loan – 2 years from discharge date
VA loan – 2 years from discharge date
USDA loan – 3 years from discharge date

Chapter 13 Bankruptcy

On the other hand, if you have filed a Chapter 13 Bankruptcy, the mortgage waiting periods are shorter:

Fannie Mae (conventional) loan – 2 years from discharge date, and also 4 years from the dismissal date.
FHA loan – 1 year from the payout period. However, you also need court permission, and proof of satisfactory bankruptcy payment and performance.
VA loan – 1 year from the payout period. Also, court permission, and proof of satisfactory bankruptcy payment and performance.
USDA loan – 1 year of the payout must elapse and payment performance must be satisfactory. In addition, you need court permission to borrow again.

After Short Sale/Deed-in-Lieu of Foreclosure

The mortgage waiting periods after a short sale begin after the completion date:Fannie Mae (conventional) loan – 4 years
FHA loan – 3 years
VA loan – 2 years
USDA loan – 3 years



Debt to Income Ratio over 50% 

Lenders assess income ratios to determine if borrowers can afford mortgage payments. The debt-to-income ratio (DTI) compares monthly debt payments to gross monthly income. A high DTI suggests financial strain and may lead to loan denial. Lenders typically prefer a DTI below 50% for conventional loans. Increasing income or reducing debt can help improve this ratio and enhance loan approval chances.


Work History less than 2 years with job gaps: 

2 year Stable employment and consistent income are vital for mortgage approval. Lenders evaluate work history to ensure borrowers have a reliable source of income to repay the loan. Job changes, gaps in employment, or irregular income can raise concerns. Ideally, borrowers should demonstrate a steady work history with consistent or increasing income over time.











Joel Lobb Mortgage Loan Officer

Text/call: 502-905-3708

email: kentuckyloan@gmail.com


http://www.mylouisvillekentuckymortgage.com/








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.
NMLS ID# 57916, (www.nmlsconsumeraccess.org).

Bankruptcy Mortgage Loans in Kentucky | FHA, VA, USDA & Conventional Guidelines for Chapter 7 & 13

Bankruptcy Mortgage Loans in Kentucky | FHA, VA, USDA & Conventional Guidelines for Chapter 7 & 13

Looking for a mortgage loan in Kentucky after bankruptcy? Whether you’ve filed Chapter 7 or Chapter 13, you may still qualify for FHA, VA, USDA, or Conventional (Fannie Mae) loans.

In this video, Joel Lobb, Kentucky Mortgage Expert with EVO Mortgage, breaks down the waiting periods, loan program requirements, and real options available to Kentucky homebuyers — even after bankruptcy.

✅ FHA – 2 years after Chapter 7, 1 year into Chapter 13

✅ VA – 2 years after Chapter 7, 1 year into Chapter 13

✅ USDA – 3 years after Chapter 7, 1 year into Chapter 13

✅ Conventional – 4+ years depending on discharge or dismissal

🏡 Serving all of Kentucky including Louisville, Lexington, Owensboro, Bowling Green, and rural counties.

📞 Call/Text: (502) 905-3708

📧 Email: kentuckyloan@gmail.com

🔗 Learn more: MyLouisvilleKentuckyMortgage.com

Equal Housing Lender | NMLS 57916 | EVO Mortgage NMLS 1738461

Kentucky No Money Down Home Loans

Buy a Home in Kentucky With No Money Down — Even With Bad Credit, subject to credit qualfying criteria

Struggling with credit? Don’t have a down payment saved up?
You’re not out of options. You’re just one good loan officer away from a plan.

At Kentucky Home Loans by Joel Lobb, we specialize in helping homebuyers just like you get approved using government-backed loan programs that require little to no money down—even with less-than-perfect credit.

You Might Qualify for These No-Money-Down Options:

USDA Loans

• $0 down payment required
• Flexible credit guidelines (scores as low as 580)
• Great for rural areas and small towns across Kentucky

VA Loans (for veterans, active duty & eligible spouses)

• 100% financing — no down payment
• No monthly mortgage insurance
• Approvals with credit scores as low as 500–580

FHA Loans + KHC Assistance

• Only 3.5% down, with help available from Kentucky Housing Corporation
• Credit scores as low as 580 (even lower with 10% down)
• Forgiving on past credit issues, bankruptcies, or foreclosures

Kentucky Housing Corporation (KHC)

• Up to $10,000 in down payment help
• Pair with FHA, VA, USDA, or Conventional loans
• Available to first-time and repeat buyers

We Make It Simple:

1. Free mortgage application
2. Same-day credit review and pre-approval
3. No hidden fees or pressure
4. One-on-one help every step of the way

Let’s Find Out What You Qualify For

I’m Joel Lobb, a local loan officer with 20+ years of experience helping Kentucky families become homeowners. If you've been told “no” before, don’t give up. There may still be a path forward—and I’ll help you find it.

Call or Text: (502) 905-3708
Email: kentuckyloan@gmail.com
NMLS #57916 – Kentucky #1 Lender for Kentucky First Time Homebuyers for government backed loans by FHA, VA, USDA and KHC.

Ready to Get Started?

APPLY NOW – FREE CREDIT CHECK & SAME-DAY ANSWER

Ready to Get Started? If you’re ready to purchase a home in Kentucky, partnering with an experienced loan officer will make the process seamless. Whether you're a first-time homebuyer or upgrading, programs like FHA, VA, USDA, and KHC down payment assistance are designed to help you achieve your dream of homeownership. For personalized guidance and support, contact: 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 Evo Mortgage Company NMLS# 1738461 Personal NMLS# 57916 For assistance with Kentucky mortgage loans, reach out via email, call, or text Joel Lobb directly.

2025 Kentucky Homebuyers Guide: Getting Approved for a Mortgage Loan in Kentucky

If you’re a Kentucky homebuyer, this blog post will guide will help you. It will help you navigate the mortgage approval process in 2025.

If you're looking to purchase your next home, this guide is for you too. Whether you're considering FHA, VA, USDA, or KHC loans with down payment assistance, we’ll cover everything you need to know.

This includes credit score requirements and debt-to-income ratios. We will also discuss appraisals, inspections, bankruptcy, and foreclosure guidelines.

Zero Down Payment Options for Kentucky Homebuyers in 2025

Kentucky offers several programs that allow eligible home-buyers to buy a home with little to no down payment:

Kentucky Housing Corporation (KHC) Loans

FHA Loans with down payment assistance

VA Loans for veterans and active-duty personnel

USDA Rural Housing Loans

Special grants, like the $25,000 Kentucky Welcome Home Grant

Each program has its own qualifying criteria. Let’s dive into the specifics.

Kentucky FHA loan with Down Payment Assistance

Kentucky FHA loan

KHC offers affordable loans paired with down payment assistance (DPA) to help Kentucky homebuyers.

Credit Score: Minimum 620 for government loans and 660 for conventional loans

Down Payment: 3.5% (may be offset by DPA programs)

Income Limits: Varies by county and household size click yellow link>---See income limits and purchase price limits here <

Debt-to-Income Ratio (DTI): 50% for housing costs; 50% for all debts

Work History: Minimum two years of stable employment

KHC Down Payment Assistance (DPA) Options:

Up to $10,000, repayable over 10 years at 3.75% interest. It can be used for down payment and closing costs and prepaids (property taxes, home insurance and odd days interest)

FHA Loans in Kentucky

Kentucky FHA loans are government-backed mortgages requiring low down payments, making them ideal for Kentucky first-time homebuyers with lower credit scores, scores under 620 and higher debt to income ratios over 45% on the backend.

Credit Score:

580+ with 3.5% down payment

500-579 with 10% down payment

Debt-to-Income Ratio: Generally up to 45.99% on front end ratio or housing ratio and up to 56.99% on the back-end ratio, meaning new house payment plus monthly payments on the credit report.

Work History: Two years of consistent income. Does not have to be the same job. If off work more than 6 months in the past 2 years, may require you to be on current job for 6 months, 

Bankruptcy/Foreclosure Requirements:

Two years after bankruptcy Chapter 7 and 1 year removed from A Chapter 13 with a perfect pay history can do a FHA loan while in Chapter 13 with 12 months paid on time and trustee approval form courts

Three years after foreclosure

Kentucky FHA Loan Limits for 2025 

The Federal Housing Administration (FHA) loan program is a popular choice for homebuyers due to its lower credit score requirements and modest down payment needs. Here are the updated FHA loan limits for Kentucky in 2025:

One-Unit Properties: $472,030

Two-Unit Properties: $604,400

Three-Unit Properties: $730,525

Four-Unit Properties: $907,800

Kentucky VA Loans for Active Duty and Veterans

Kentucky VA loans are a top choice for veterans and active-duty military members. They require no down payment. They also require no mortgage insurance monthly but does have upfront mortgage insurance. see link here for guidelines > 

Certified of Eligibility 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.

Credit Score: No official minimum, but most lenders require 580-620. The higher your score and lower your debt to income ratio and the higher your residual income your changes of approval is greater

Income: Must demonstrate stable and sufficient income.

Work History: Two years of consistent employment. If getting out of the military and using your VA COE to buy a house the job must line up with your MOS. Military Occupational Specialty

Bankruptcy/Foreclosure Requirements:

Two years after bankruptcy or foreclosure

Debt-to-Income Ratio: No set maximum, can go much higher on the debt to income ratio on VA loans due to they have a residual income requirements. I have see a backend ratio get an approval as high as 75% but they had a great credit score (740 or higher),  high residual income and a lot of assets in the bank as far as checking, savings, 401k or retirement. 

VA loans also include a residual income requirement to ensure borrowers can afford living expenses after the mortgage payment, monthly payments on the credit report, child care expenses, maintenance, and utilities for the house. See the residual income chart below. This is very important for VA loan approval. If you are over this amount, you will not qualify, even with a great credit score, low debt ratio, and a lot of reserves in the bank.

Example: Residual Income for a VA Loan Approval in Kentucky

Example: Residual Income for a VA Loan Approval in Kentucky
Family Size: 5
Loan Amount: Over $80,000
Required Residual Income: $1,158 (for 4 family members) + $80 (for the 5th member) = $1,238
Actual Residual Income: $1,500
Outcome: The borrower qualifies for the VA loan, as their residual income of $1,500 exceeds the required $1,238.

Outcome: The borrower qualifies for the VA loan, as their residual income of $1,500 exceeds the required $1,238.

Residual income is a critical requirement for VA loan approvals, ensuring borrowers have enough to cover living expenses, including housing utilities, child care, and maintenance costs. If residual income falls below the threshold, loan approval may not be possible, regardless of credit score or debt-to-income ratio.

 The higher your score and lower your debt to income ratio and the higher your residual income your changes of approval is greater

USDA Rural Housing Loans in Kentucky

The USDA Rural Housing Loan Program is perfect for Kentucky homebuyers looking to purchase in eligible rural areas. It offers 100% financing with low mortgage insurance premiums.

Credit Score:

640 for automated approval

Manual underwriting is available for borrowers with credit scores below 640. If they decide to manually underwrite a loan, they will ask for more information about the borrower's credit history from the past year.

All loans are ran through GUS Automated Underwriting Engine, and your pre-approval is based off this

Property Restrictions:

Eligible Properties:
Must be located in a designated rural area.
Includes single-family primary residences, modular homes, and detached or attached planned unit developments (PUDs).
Thermal standards must meet or exceed the International Energy Conservation Code (IECC).

Ineligible Properties:
Cooperatives.
Income-producing properties.
Manufactured or mobile homes.
Non-rural designated properties.
Non-owner-occupied homes.

How to Determine Eligibility

You need to confirm if a property is located in a designated rural area. Visit the USDA Property Eligibility Map by clicking this link 

👇
Kentucky USDA Rural Housing Map for 2025 for Eligible Property Locations

Income Limits: Varies by county and household size

$112,450 for 1-4 person households

$148,450 for 5+ person households

To check income limits for your county, use the

➡️ USDA Income Eligibility Tool.

Work History: Two years of stable income required.

Debt-to-Income Ratio:

Front-end: 31%

Back-end: 45%

Key Advantage: USDA loans don’t need a down payment, and the upfront mortgage insurance can be rolled into the loan.

Kentucky Down Payment Assistance and Grants

$25,000 Kentucky Welcome Home Grant for 2025

This grant provides significant assistance for down payments and closing costs.

Eligibility:

Must complete a homebuyer counseling program.

Contribute at least $500 toward closing costs.

Grant Repayment: Prorated repayment required if the home is sold within five years.

Eligible Loans: Can be used with FHA, USDA, VA, and conventional loans.

5% Kentucky Homebuyer Grant

Offers up to 5% of the buying price for down payment or closing costs.

Fully forgivable or repayable options available.

$25,000 Kentucky Welcome Home Grant for 2025

How the 2025 Kentucky Welcome Grant Works

Offered through local banks and credit unions partnered with the Federal Home Loan Bank of Cincinnati.

The program becomes available annually on March 1st.

Funds are distributed on a first-come, first-serve basis and are typically depleted within 15 days due to high demand.

Application and Closing Timeline

The program requires an application for approval tied to a specific property.

Due to the nature of the grant, the closing process may take longer, so planning ahead is crucial.

Why Choose the Kentucky Welcome Home Grant?

This grant offers an unparalleled opportunity to reduce the financial burden of homebuying. With the Kentucky Welcome Home Grant of  $25,000 available for qualified applicants, it can significantly lower the amount you need upfront for your new home.

Other Mortgage Loan Requirements in Kentucky

Credit Score Requirements

Conventional Loans: Minimum 620 (higher scores preferred for better terms).

FHA Loans: 580+ (or 500-579 with 10% down).

VA Loans: 580-620 (varies by lender).

USDA Loans: 620-640 for most lenders.

KHC Down Payment Assistance. 620 for FHA, VA, USDA and 660 for Conventional Scores

Debt-to-Income Ratio

Conventional Loans: 45% max with mortgage insurance 50% max without mortgage insurance

FHA Loans: 40%-56% max

VA Loans: Flexible, no max debt to income but must meet residual income requirements

USDA Loans: 31% front-end; 45% back-end, much tighter dti restriction's when compared to FHA, VA, USDA and KHC ...

Work History and Income Verification

Lenders require at least two years of stable employment. Self-employed borrowers must provide two years of tax returns.

Appraisals and Inspections

Appraisals ensure the home’s value matches the purchase price.

Home appraisals are required by a lender. Home inspections aren’t.
You must set up an inspection yourself while the lender will order an appraisal for you.
An appraisal may impact your ability to get the loan amount you need. An inspection won’t.
Appraisers typically only spot things visible to the naked eye, whereas inspectors use special devices and training to spot deeper issues.

Home buyers are allowed and encouraged to walk through the home with the inspector during the inspection.

An inspector will explain and educate during the interactive process. An appraiser won’t tell you their findings until they complete their report.

A home inspection only examines the condition of the home when making the assessment. A home appraisal considers the condition of the home, comparable home prices, lot size, home features, area crime rates and school zones.

Typically, an appraiser will go through the appraisal process alone.
The inspector and appraiser have a different set of skills, are trained and certified in different processes and have different areas of expertise.

Bankruptcy and Foreclosure Requirements

FHA: Two years after bankruptcy; three years after foreclosure.

VA: Two years after bankruptcy or foreclosure.

USDA: Three years after bankruptcy or foreclosure.

Conventional: Four years after bankruptcy; seven years after foreclosure.

Time to Close

Most loans in Kentucky take 30-45 days to close, depending on the lender and loan program.

Here’s a blog post based on the text and flow chart steps provided in the image, tailored for Kentucky homebuyers:

Step-by-Step Guide to Getting Approved for a Mortgage Loan in Kentucky

Buying a home in Kentucky can feel overwhelming, especially for first-time homebuyers. Understanding the mortgage process, the timeline involved, and what is needed to close your loan will make the journey smoother and less stressful. Here’s a step-by-step guide to walk you through the process.

Step 1: Pre-Purchase Consultation

The first step is scheduling a pre-purchase consultation with a mortgage professional. During this meeting:

Discuss your financial goals and homeownership plans.

Review your credit score, income, and overall qualifications for a mortgage loan.

Understand the loan options available, including FHA, VA, USDA, and conventional loans.

Tip: Be prepared to ask questions and clarify your expectations during this phase.

Step 2: Pre-Qualification

Once your consultation is complete, gather the necessary documents (such as pay stubs, tax returns, and bank statements) to verify your financial situation. After reviewing these, your lender will issue a pre-qualification letter, which shows sellers that you are a serious buyer with financing in place.

Step 3: Find a Home and Negotiate the Contract

With your pre-qualification letter in hand, you can now:

Start searching for your dream home.

Work with a realtor to make an offer and negotiate the purchase contract.

Note: Ensure that the home you choose aligns with your loan requirements, such as USDA property eligibility for rural housing loans.

Step 4: Review Loan Terms and Sign Initial Disclosures

After your contract is accepted:

Your lender will provide initial disclosures outlining the loan terms, estimated costs, and required steps.

Carefully review the loan documents and sign them to proceed with the loan application.

Step 5: Order Inspection, Appraisal, and Title

At this stage, the following steps are initiated:

Home Inspection: Ensures the property is in good condition and identifies potential issues.

Appraisal: Confirms the home’s value matches the purchase price.

Title Work: Verifies there are no legal issues with property ownership.

Tip: Coordinate closely with your realtor and lender to ensure these steps are completed in a timely manner.

Step 6: Submit Loan Package to Underwriting

Once all initial documents are gathered, your lender will submit the complete loan package to underwriting. The underwriter reviews:

Credit score

Debt-to-income ratio

Employment history

Property appraisal

Title work

Expect the underwriter to request updated documents or clarification on certain details.

Step 7: Clear Underwriting Conditions

After the underwriter reviews your loan file, they may issue conditional approval. This means you need to provide additional documentation, such as:

Updated bank statements

Proof of funds for closing

Explanations for any credit inquiries

Once all conditions are met, the underwriter will issue final approval.

Step 8: Closing Disclosure and Waiting Period

Before closing, you’ll receive a Closing Disclosure (CD), which outlines the final terms and costs of your mortgage. By law, you must review this document during a 3-day waiting period before the closing.

Step 9: Closing Day

Congratulations, it’s time to finalize your loan! On closing day:

Sign the final loan documents.

Pay any remaining closing costs (if applicable).

Receive the keys to your new home.

What to Expect Throughout the Process

Timeline: The mortgage process typically takes 30-45 days from pre-qualification to closing, though this can vary depending on the loan type and how quickly documents are provided.

Communication: Stay in close contact with your lender, realtor, and title company to avoid delays.

Updated Documents: Be prepared to provide updated pay stubs, bank statements, or other documentation throughout the process.

Tips for a Smooth Closing

Stay Organized: Keep all required documents in one place for easy access.

Respond Quickly: Promptly address any requests from your lender or underwriter.

Ask Questions: Don’t hesitate to clarify terms or processes you don’t understand.

Be Financially Stable: Avoid making major purchases or changes to your financial situation during the process.

Ready to Get Started?

If you’re ready to purchase a home in Kentucky, partnering with an experienced loan officer will make the process seamless. Whether you're a first-time homebuyer or upgrading, programs like FHA, VA, USDA, and KHC down payment assistance are designed to help you achieve your dream of homeownership.

For personalized guidance and support, contact:

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

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