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.

Kentucky Mortgage Loan Approval Checklist | Documents Needed for FHA, VA & USDA Loans

🏡 How to Get Approved for a Kentucky Mortgage Loan (2025 Guide)

Author: Joel Lobb, Mortgage Loan Officer NMLS 57916 | EVO Mortgage NMLS 1738461
Serving: Louisville • Lexington • Bowling Green • Owensboro • Northern Kentucky
Equal Housing Lender

✅ Step-by-Step: Getting Approved for a Mortgage in Kentucky

Getting approved for a Kentucky mortgage loan starts with one thing — having your paperwork ready.
Lenders use four key factors to determine your approval:

1. Income & Employment Stability
2. Assets & Down Payment Verification
3. Credit History & Score
4. Appraisal / Collateral Review

This guide is designed for FHA, VA, USDA, KHC, and Conventional loans and helps Kentucky homebuyers and refinancers prepare efficiently.

📋 Documents Required for All Kentucky Mortgage Applicants

• W-2 forms for the past 2 years
• Recent pay stubs covering 30 days of income
• Bank statements for checking/savings accounts (all pages, last 60–90 days)
• Asset statements for 401(k), IRA, or investment accounts
• Driver’s license and Social Security card
• Two-year residence history (landlord or mortgage company contact info)
• Purchase contract (if under contract)
• Earnest-money check copy or proof of cleared funds
• Employment history covering 24 months, including any gaps
• Funds for credit report & appraisal fees
• Proof of funds used for down payment and closing costs

Pro Tip: Keep every page — even the blank ones. Kentucky lenders must review complete statements for compliance.

🧾 If You’re Self-Employed or a 1099 Contractor

• Personal federal tax returns (all pages and schedules) — last 2 years
• Business returns for any entity where you own ≥ 25%
• Year-to-date profit & loss statement and balance sheet
• 1099 forms if applicable

🎖️ FHA, VA & USDA Loan-Specific Requirements in Kentucky

FHA Loans

• Copy of driver’s license + Social Security card
• Minimum 580 credit score for 3.5% down (10% down below 580)
• 2-year job history + consistent income documentation

VA Loans

• Certificate of Eligibility (COE)
• DD-214 (discharge paperwork)
• Nearest living relative information (required by VA)
• No down payment + no monthly PMI if qualified

USDA Rural Housing Loans

• Property must be eligible by county (use USDA map)
• Household income limits apply — varies by county and household size
• Zero down payment available if approved under USDA guidelines

💡 Common Mistakes That Delay Kentucky Loan Approvals

• Missing bank pages or statements
• Large unverified deposits without documentation
• Credit disputes or recent late payments
• Job changes without updated VOE (Verification of Employment)
• Unfiled tax returns or IRS payment plans not verified

🧠 Work With a Local Kentucky Mortgage Expert

Most loan delays come from incomplete files. Working with a local lender who understands Kentucky underwriting standards — FHA, VA, USDA, and KHC — can save weeks.

📞 Call or Text Joel Lobb at 502-905-3708
📧 Email: Kentuckyloan@gmail.com
🌐 Visit: www.mylouisvillekentuckymortgage.com

📍 Local Kentucky Loan Programs

• KHC $12,500 Down Payment Assistance
• Zero-Down USDA Loans for eligible counties
• VA Loans for qualified veterans and surviving spouses
• FHA Loans for credit scores 580+
• Conventional Loans with as little as 3% down

🎥 Watch: How to Get Approved for a Kentucky Mortgage Loan

Watch this short 10-minute walkthrough where Joel Lobb breaks down how Kentucky homebuyers can get pre-approved faster, what lenders look for, and how to avoid common mistakes.

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🎬 Subscribe to Joel Lobb on YouTube for Kentucky mortgage tips, FHA/VA/USDA updates, and credit-improvement strategies.
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❓Frequently Asked Questions (FAQ)

What’s the minimum credit score to get approved for a Kentucky mortgage?

FHA = 580 (3.5% down); VA & USDA typically 620+; Conventional 620+; KHC may allow lower with compensating factors.

Can I get approved if I’m self-employed?

Yes, with two years of filed returns showing consistent income and proof of business stability.

How long does approval take?

Pre-approval within 24 hours once documents are received; full loan approval in about 30 days depending on property type and program.

What’s the fastest way to get approved?

Submit all documents at once, avoid new credit inquiries, and respond quickly to lender requests.

© 2025 Joel Lobb | EVO Mortgage
NMLS ID 57916 | NMLS Company ID 1738461
Equal Housing Lender | This is not a commitment to lend. All loans subject to credit approval and property eligibility.

General Requirements for Getting A Mortgage Loan Approval in Kentucky

Getting a mortgage in Kentucky involves meeting certain criteria set by lenders

General Requirements:

Credit Score: A minimum credit score of 620 is generally required, but higher scores (around 720+) can unlock better interest rates and loan options. Lower credit scores are allowed on FHA, VA, and USDA loans. USDA and VA have no minimum credit score requirement but most lenders will want a 580 credit score or higher and FHA will go down to a 500 credit score with 10% down. 

Debt-to-Income (DTI) Ratio: This compares your monthly debt payments to your gross monthly income. Aim for a DTI ratio below 40%, with some lenders allowing up to 50% depending on the loan type.

Down Payment: While 20% is traditional, Kentucky has programs allowing 3% down with assistance.

Employment and Income: Steady employment history and sufficient verifiable income are crucial.

Savings: Lenders prefer to see reserves covering several months of mortgage payments.

Additional factors:

Loan Type: Different loan types (FHA, VA, USDA) have specific eligibility requirements.

First-Time Homebuyer Status: Kentucky offers programs with relaxed criteria for first-time buyers.

Area Median Income (AMI): Income limits apply to some Kentucky assistance programs.

Tips for Qualifying:

Check your credit score and report for errors.

Pay down debt to lower your DTI ratio and improve your credit utilization to increase your score .

Save consistently for your down payment and closing costs. Get a gift lined up for down payment

Consider down payment assistance programs.

Get pre-approved for a mortgage to understand your budget and cash to close along with out of pocket expenses before closing. 

Resources:

Kentucky Housing Corporation: https://www.kyhousing.org/

My Louisville Kentucky Mortgage: https://www.mylouisvillekentuckymortgage.com/p/documents-needed-for-mortgage-loan.html

Kentucky First Time Home Buyer: https://kyfirsttimehomebuyer.wordpress.com/2024/01/20/kentucky-welcome-home-grant-5000-00/

5 Things to Know about buying a house and getting a Mortgage Loan approval in Kentucky for 2023

 

5 Things to Know about buying a house and getting a Mortgage Loan approval in Kentucky for 2023

1. Do Mortgage Rates Change Daily?

Just like the gas prices at the pump, mortgage rates can change daily or throughout the day. Typically mortgage rates are published at 10-11 am daily by most lenders and you can lock up through the close of business which is usually around 6-7 PM. Mortgage rates can change up or down throughout the day based on various financial, economics, and geopolitical news in the US Financial markets and World markets. Generally speaking, good economic news is bad for rates and vice versa, bad economic news is good for mortgage rates.

The good news is this: Once you find a home and get it under contract, you can lock your mortgage loan rate. Typically it takes about 30-45 days to close a mortgage loan in Kentucky, so the typical lock is for 30-60 days. If rates get better you may be able to negotiate a better rate with your lender, but they usually have to improve by at least 25 basis points (.25) to do that. Not all lenders offer this option. The longer you lock the loan, the greater the costs. It is usually free to lock in a loan for up to 90 days without having to pay a fee.

What a lot of lenders are experiencing now is that some loans don't close on time for various reasons. You can always extend the lock on the loan but it will costs you usually .125 basis points to do so. If you let the lock expire on the loan, then you have to take worse case pricing on that day when you go to relock. It is usually best to extend the lock on your loan.

2. What kind of Credit Score Do I need to qualify?

When applying for a mortgage loan, lenders will pull what they call a "tri-merge" credit report which will show three different fico scores from Trans union, Equifax, and Experian. The lenders will throw out the high and low score and take the "middle score" For example, if you had a 614, 610, and 629 score from the three main credit bureaus, your qualifying score would be 614. Most lenders will want at least two scores. So if you only have one score, you may not qualify. Lenders will have to pull their own credit report and scores so if you had it ran somewhere else or saw it on a website or credit card you may own, it will not matter to the lender, because they have to use their own credit report and scores.
Most lenders will pull your credit report for free nowadays so this should not be a big deal as long as your scores are high enough.
The Secondary Market of Mortgage loans offered by FHA, VA, USDA, Fannie Mae, and KHC all have their minimum fico score requirements and lenders will create overlays in addition to what the Government agencies will accept, so even if on paper FHA says they will go down to 580 or 500 in some cases on fico scores, very few lenders will go below the 620 threshold.
If you have low fico scores it may make sense to check around with different lenders to see what their minimum fico scores are for loans.
The lenders I currently deal with have the following fico cutoffs for credit scores:
FHA--580 minimum score
VA----580 minimum score
Fannie Mae--620 minimum score
USDA--620 minimum score
KHC with Down Payment Assistance --620 minimum score.

As you can see, 580-620 is the minimum score with most lenders for a FHA, VA, or Fannie Mae loan, is required for the no down payment programs offered by USDA for Kentucky for First Time Home Buyers wanting to go no money down.

3. What are the down payment requirements?

The most popular programs for Kentucky First Time Home Buyers usually involves one of the following housing programs outlined in bold below:
FHA:

FHA will allow a home buyer to purchase a house with as little as 3.5% down. If your credit scores are low, say 680 and below, a lot of times it makes sense to go FHA because everyone pays the same mortgage insurance premiums no matter what your score is, and the down payment can be gifted to you. Meaning you really don't have to have any skin into the game when it comes to down payment.

They even allow down payment assistance for down payment requirements of 3.5% through eligible parties like Kentucky Housing, Welcome Home Grants and Louisville KY and Covington Kentucky Down Payment Grants.

Lastly, FHA will allow for higher debt to income ratios with sometimes getting loan pre-approvals up to 55% of your total gross monthly income. So if you have a debt to income ratio of over 50%, Fannie Mae will not do the loan and USDA usually likes their debt to income ratios no more than 45%.


Think back to the last time you financed a purchase — be it a home, automobile, or what have you… You may remember having heard the term “debt-to-income ratio.” Today I want to spend some time going over exactly what this ratio is, and to also touch on how it can effect your personal finances.

4. What is your debt-to-income ratio?

Commonly referred to as your “DTI,” your debt-to-income ratio is a personal finance benchmark that relates your monthly debt payments to your monthly gross income.
As an example… Let’s say that your gross monthly salary is $5,000 and you are spending $2,800 of it toward monthly debt payments. In that case, your DTI would be an unhealthy 56%.
This version of your DTI is sometimes referred to as your “back-end” DTI. This is often broken down further to give a front-end debt-to-income ratio, which is a component of your back-end DTI.

How to calculate your front-end DTI for a Kentucky Mortgage Loan Approval

Your front-end DTI is calculated by dividing your monthly housing costs by your monthly gross income. Front-end DTI for renters is simply the amount paid in rent, whereas for homeowners it is the sum of mortgage principal, interest, property taxes, and home insurance (i.e., your PITI) divided by gross monthly income.


From above, if that $2,800 in debt payments is attributable to $1,500 in housing costs and $1,300 in non-housing costs, then your front-end DTI is $1,500/$5,000 = 30% (and your back-end ratio is still 56%, as calculated above).
Fannie Mae:
Fannie Mae requires just 3% down with their new Home Possible Program, but if you use their traditional mortgage loan, then 5% is the Fannie Mae Standard. Fannie Mae will go down 620 score, but if your scores are below 680, I would look seriously at the FHA loan program because Fannie Mae has steep increases to the interest rate and the mortgage insurance premiums if your scores are low.
A couple of good things about Fannie Mae is that you can buy a larger priced home and have a large loan amount due to FHA only allowing most Kentucky Home Buyers a maximum mortgage loan amount of $356,000 for a max FHA loan and $545,000 for Fannie Mae Conventional loans in Kentucky for 2020.
Lastly when it comes to mortgage insurance, FHA mortgage insurance premiums are for life of loan while Fannie Mae mortgage insurance premiums drop off when you develop 80% equity position in your house.
But as a tell most people, nobody has a loan for 30 years, and the average mortgage is either refinanced or home sold within the first 5-7 years.
VA Loans-

VA loans offer eligible Veterans and Active Duty Personnel to buy a home going no money down with no monthly mortgage insurance. This is probably the best no money down loan out there since the rates are traditionally very low on comparison to other government insured mortgages and no monthly mortgage insurance. The VA loan can be used anywhere in the state of Kentucky with the maximum VA loan limit being removed for 2021
USDA Loans-

USDA loans offer people buying a home in rural areas (typically towns of $20k or less) to buy a home going zero down. You cannot currently own another home and there is household income limits of $90,200 for a household family of four, and up to $119,300 for a household of five or more. You search USDA website for eligible areas and household income limits below at the yellow highlighted link :

KHC or Kentucky Housing-
Kentucky First Time Home Buyers typically use KHC for their down payment assistance. KHC currently offers $10,000 for down payment assistance and sometimes throughout the year they will offer low mortgage rates on their mortgage revenue bond program.

The down payment assistance usually never runs out because you have to pay it back in the form of a second mortgage. It helps a lot of home buyers that want to buy in urban areas that cannot utilizer the USDA program in rural areas. Most of the time the first mortgage is a FHA loan tied with the 2nd mortgage fore down payment assistance. All KHC programs require a 620 score and rates are locked for 45 days.

5. What if I have had a bankruptcy or foreclosure in the past?

FHA and VA are the easiest on previous bankruptcies. FHA and VA both require 2 years removed from the discharge date on a Chapter 7. If you are in the middle of a Chapter 13, FHA will allow for financing with a 12 month clean history payment to the Chapter 13 courts, and with trustee permission.

VA requires 2 years removed from a foreclosure (sheriff sale date of home) and FHA requires 3 years.

USDA requires 3 years removed from both a foreclosure and bankruptcy, but on the foreclosure they do not go off the sale date. This may save you a little time if you had a previous foreclosure.

Fannie Mae (Conventional Loan)

Fannie Mae is by far the strictest. They require 4-7 years out of a foreclosure or bankruptcy


If you have questions about qualifying as first time home buyer in Kentucky, please call, text, email or fill out free prequalification below for your next mortgage loan pre-approval.














Joel Lobb
Senior Loan Officer
(NMLS#57916)

Text or call phone: (502) 905-3708

email me at 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 views of my employer. Not all products or services mentioned on this site may fit all people

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The Dos & Don’ts of Applying for a Mortgage in Kentucky

DO maintain up-to-date records The mortgage application process is paperwork-heavy, and lenders could ask you to pull up records at a moment’s notice. To make things easier for yourself, make sure you have the following records readily available:

• Income: Underwriters typically verify income and tax documents through your employer, so hold onto new paystubs as you receive them.
• Assets: It’s best practice to save all incoming account statements in the order in which you receive them; keep all numbered pages of each statement.
• Gifts: If you’re receiving any gift money from relatives, they’ll need to sign a gift letter (which your loan officer will provide) and an account statement evidencing the source, which must be “seasoned” funds.
• Current Residence: If you’re currently renting, continue to pay your rent on time and save proof of payment. If you intend to sell your current residence, be prepared to show your HUD-1 Settlement Statement. If you plan on renting out your home, you may need to show sufficient equity, a lease, and receipts for the security deposit and first month’s rent.

DO keep your credit score in mint condition. Continue to make payments on time. The lender might pull your credit report again, and any negative change to your score could jeopardize your approval.

DO understand that things change. The requirements to receive approval for a home loan are always changing, and underwriters require more documentation now than they have in the past. Even if requests seem silly, intrusive or unnecessary, keep in mind that if they didn’t need it, they wouldn’t ask for it.

DON’T apply for new credit. Changes in credit can cause delays, change the terms of your financing or even prevent you from closing on a home. If you must open a new account (or even borrow against retirement funds), be sure to consult your loan officer first.

DON’T change jobs midway through the process. Probationary periods and career or status changes — such as from a salaried to a commission-based position, leave of absence or new bonus structure — can be subject to strict rules.

DON’T make undocumented deposits. Large (and sometimes even small) deposits must be sourced unless they’re identified. Make copies of all checks and deposit slips, keep your deposits separate and small, and avoid depositing cash.

DON’T wait to liquidate funds from stock or retirement accounts. If you need to sell investments, do it now and document the transaction. Don’t take the risk of the market working against you, leaving you short on funds for closing.

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Dos & Don’ts of Applying for a Mortgage in Kentucky