How Do I Qualify for An FHA Loan in Kentucky based on score, income, work history and credit?

📍 Kentucky FHA Loan Guide — Updated 2026

How to Qualify for an FHA Loan
in Kentucky

Everything Kentucky first-time homebuyers need to know — credit scores, down payments, income, debt ratios, bankruptcy guidelines, loan limits, and more.

🏠 Low 3.5% Down Payment 📊 Flexible Credit Guidelines 💰 Down Payment Assistance Available ⚡ Same-Day Pre-Approval

Home › FHA Loans › How to Qualify for an FHA Loan in Kentucky

📋 Table of Contents

1. What Is an FHA Loan?
2. Credit Score Requirements
3. Down Payment Rules & Sources
4. Income & Debt Ratio Guidelines
5. Work History Requirements
6. AUS/DU vs. Manual Underwriting
7. Bankruptcy & Foreclosure Waiting Periods
8. FHA Mortgage Insurance (MIP)
9. Assets & Gift Funds
10. FHA Appraisal Requirements
11. 2025 Kentucky FHA Loan Limits
12. KHC Down Payment Assistance
13. Get Pre-Approved Today

If you're a first-time homebuyer in Kentucky — or you haven't owned a home in the past three years — an FHA loan is likely one of the best mortgage options available to you. Backed by the Federal Housing Administration, FHA loans are designed for buyers who may not have perfect credit or a large down payment saved up.

In this comprehensive guide, Joel Lobb, a Kentucky Mortgage Loan Officer with over 20 years of experience and 1,300+ families helped, breaks down every qualification requirement you need to know in 2025 — from credit scores to appraisal standards, mortgage insurance to loan limits.

🏡 Who This Guide Is For This guide is ideal for Kentucky residents who are first-time homebuyers, repeat buyers purchasing a primary residence, buyers with past credit challenges, and anyone exploring affordable homeownership options in Kentucky.

1. What Is an FHA Loan?

An FHA loan is a government-backed mortgage insured by the U.S. Department of Housing and Urban Development (HUD). Because the federal government insures the loan, approved lenders like Joel Lobb can offer more flexible qualification standards — including lower credit scores and smaller down payments — compared to conventional loans.

Key benefits of Kentucky FHA loans include:

• Down payments as low as 3.5% of the purchase price
• Credit scores accepted down to 580 (and as low as 500 with 10% down)
• Seller can pay up to 6% of closing costs
• Gift funds from family allowed for down payment
• Can be combined with KHC down payment assistance
• Available for 1–4 unit primary residences, condos, and manufactured homes (with restrictions)

FHA loans cannot be used for investment properties or vacation homes — the property must be your primary residence.

2. Credit Score Requirements for Kentucky FHA Loans

Your credit score is one of the most critical factors in your FHA loan approval. Here's how the tiers break down:

580+

Minimum for 3.5% Down

Standard FHA qualification

500–579

10% Down Required

Higher down payment needed

Under 500

Not Eligible

FHA loan not available

Most Kentucky lenders, including our office, prefer a middle score of 580–620 for standard FHA approval. Many lenders have an overlay requiring a 620 minimum, so your score matters. The FHA uses the middle score of all three credit bureaus (Equifax, Experian, TransUnion).

What Impacts Your FHA Credit Score Eligibility?

• Disputed accounts — FHA often requires disputed derogatory accounts to be resolved before closing, especially accounts with balances over $1,000.
• Collections and charge-offs — Medical collections may be excluded, but non-medical collections may need to be paid off depending on underwriting.
• Late payments — Recent late payments (within 12 months) are a red flag. A pattern of late payments on housing expenses can result in a denial.
• Thin credit file — FHA requires a minimum of two tradelines (credit accounts) for at least 12 months. Non-traditional credit may be considered with manual underwriting.

⏱️ Credit Score Timeline Tip If your score is currently below 580, don't give up. With targeted credit repair steps — paying down revolving balances below 30%, disputing errors, and avoiding new inquiries — many borrowers can improve their scores by 40–80 points within 3–6 months. Contact Joel today for a free credit analysis.

3. FHA Down Payment Rules in Kentucky

One of the most attractive features of an FHA loan is the low down payment requirement. Here's a complete breakdown of what you need to know:

Credit Score	Minimum Down Payment	Example: $200,000 Home
580 or higher	3.5%	$7,000
500–579	10%	$20,000
Under 500	Not eligible	—

Acceptable Sources for FHA Down Payment Funds

• Personal savings (checking, savings, or money market accounts)
• Gift funds from a family member (no repayment required — must be documented with a gift letter)
• KHC Down Payment Assistance (grant or forgivable second mortgage)
• Proceeds from the sale of personal property (documented with bill of sale)
• Retirement account withdrawals or loans (documented)
• Tax refunds (sourced and documented)

• No undocumented cash deposits — Any large deposit in your bank account (typically over $1,000 or one month's salary) must be fully explained and documented with a paper trail.
• No seller-funded down payments — Sellers can contribute up to 6% toward closing costs, but cannot contribute directly to your down payment.
• Borrowed funds from personal loans or credit cards are generally not allowed for down payment purposes.

🎉 Good News for Kentucky Buyers Through the Kentucky Housing Corporation (KHC), eligible first-time homebuyers may be able to receive down payment assistance that covers most or all of the 3.5% FHA down payment requirement. This can make homeownership possible with very little money out of pocket. See KHC details below →

4. Income & Debt Ratio Requirements

FHA lenders analyze two key debt ratios to determine how much home you can afford:

31%

Front-End Ratio

Max housing payment ÷ gross income

43%

Back-End Ratio

Max total debts ÷ gross income

55%

AUS Approval

With automated system approval & compensating factors

What Counts in Your Debt Ratio?

Front-End (Housing) Ratio includes your monthly principal & interest, property taxes, homeowner's insurance, and any HOA dues or FHA mortgage insurance premiums.

Back-End (Total Debt) Ratio includes all of the above PLUS monthly payments on credit cards, car loans, student loans, personal loans, child support, and any other recurring monthly debt obligations.

Debt Type	Counted in Back-End Ratio?
Car loans	Yes
Student loans (even in deferment)	Yes — 0.5% to 1% of balance/month or actual payment
Credit card minimum payments	Yes
Child support / alimony	Yes
Medical collections	Generally excluded from ratio
Utility bills, cell phone	No
Subscriptions / streaming	No

Student loans in deferment are still counted in your FHA debt ratio. If you have $50,000 in student loans, expect lenders to count a monthly payment of approximately $250–$500 even if you aren't currently making payments. This significantly impacts qualifying power.

What Counts as Qualifying Income?

• W-2 employment income — Base salary, overtime (2-year avg if consistent), bonuses (2-year avg)
• Self-employment income — Two years of federal tax returns required; net income after deductions is used
• Social Security / disability income — Counted at 100% (and may be grossed up 25% if non-taxable)
• Pension and retirement income — Award letter required
• Child support and alimony — Must have 3-year continuance
• Part-time income — Minimum 2-year history required
• Rental income — 75% of gross rent counted with Schedule E documentation

5. Work History Requirements

FHA guidelines require a 2-year employment history, but that doesn't necessarily mean you need to be at the same job for 2 years. Here's what different situations look like:

W2

Traditional W-2 Employee

2-year work history preferred. Job changes in the same field are acceptable. Gap under 6 months may be OK if you're back employed.

SE

Self-Employed

Must provide 2 years of federal tax returns (personal & business). Income is based on net earnings after deductions.

🎓

Recent Graduates

College transcripts can substitute for work history if employed in your field of study. Offer letter may count as income.

🪖

Military / Veterans

Military service counts as employment history. VA loans may also be available — contact us for comparison.

📝 Employment Gap Rules Gaps of 30 days or less generally require no explanation. Gaps of 1–6 months typically need a letter of explanation. Gaps over 6 months may require 6 months of employment with your current employer before qualifying. Seasonal work, temporary work, and contract roles must show a 2-year history with the same employer or in the same industry.

6. AUS/DU Approval vs. Manual Underwriting

When you apply for an FHA loan, your file is typically run through an Automated Underwriting System (AUS) — either Fannie Mae's Desktop Underwriter (DU) or FHA's TOTAL Mortgage Scorecard. The result determines how your loan is reviewed.

Factor	AUS/DU Approval (Approve/Eligible)	Manual Underwriting
Maximum Back-End DTI	Up to 50–56.99% with compensating factors	Typically capped at 50% (may go to 45–50% with strong factors)
Credit Score Minimum	580+	580+ (some lenders require 620+ manually)
Reserve Requirements	May not be required	1–3 months PITI reserves typically required
Rental History	Not always required	12-month verified rental history often required
Compensating Factors	Factored in by algorithm	Must be documented and submitted by underwriter

When Is Manual Underwriting Required?

• The AUS returns a "Refer" or "Caution" decision (not "Approve/Eligible")
• The borrower has no credit score (non-traditional credit profile)
• Borrower is in a Chapter 13 bankruptcy repayment plan
• FHA requires it due to certain risk factors in the file

FHA Compensating Factors That Help

• Verified and documented cash reserves of 3–6 months after closing
• Minimal increase in housing payment — new payment is less than 5% or $100 more than current rent
• Residual income above VA guidelines for the area (strong positive factor)
• No discretionary debt — living debt-free except for housing
• Additional income not reflected in qualifying ratios

7. Bankruptcy & Foreclosure Waiting Periods

Past financial hardship doesn't automatically disqualify you from an FHA loan. Here are the official FHA waiting periods:

2 Years

Chapter 7 Bankruptcy

From discharge date. Re-established credit required.

1 Year

Chapter 13 Bankruptcy

Into repayment plan. Court/trustee approval required. Manual underwriting.

3 Years

Foreclosure / Short Sale / Deed-in-Lieu

From completion/transfer date. Re-established credit required.

Event	FHA Waiting Period	Key Requirements
Chapter 7 Bankruptcy	2 years from discharge	Re-established credit, no new derogatory history
Chapter 13 Bankruptcy	1 year into plan	Trustee approval, manual underwriting, on-time plan payments
Foreclosure	3 years from sale date	Clean credit since event, hardship documentation may help
Short Sale	3 years from sale date	If mortgage payments were current at time of sale, may be waived
Deed-in-Lieu	3 years	Same as foreclosure

⚡ Exception for Extenuating Circumstances FHA may allow a reduced waiting period of 12 months for both Chapter 7 and foreclosure if the event was caused by documented extenuating circumstances beyond your control (job loss, serious illness, death of a wage earner) AND you have re-established good credit. This is evaluated case-by-case.

8. FHA Mortgage Insurance (MIP) — Upfront & Monthly

All FHA loans require mortgage insurance premiums (MIP), which is how the government insures the loan. There are two components:

1.75%

Upfront MIP (UFMIP)

Charged at closing. Can be rolled into the loan amount. Example: $200,000 loan → $3,500 upfront MIP added to balance.

0.45–0.85%

Annual MIP (Monthly)

Divided by 12 and added to monthly payment. Rate depends on loan term, LTV, and loan amount.

Annual MIP Rates by Loan Term & Down Payment (2025)

Loan Term	Down Payment / LTV	Annual MIP Rate
30-year	3.5% (LTV > 95%)	0.85%
30-year	5%+ (LTV ≤ 95%)	0.80%
15-year	3.5% (LTV > 90%)	0.70%
15-year	10%+ (LTV ≤ 90%)	0.45%

How Long Does FHA MIP Last?

• 30-year loans with less than 10% down: MIP lasts for the life of the loan (you'd need to refinance to a conventional loan to remove it).
• 30-year loans with 10% or more down: MIP is automatically canceled after 11 years.
• 15-year loans with 10%+ down: MIP is canceled after 11 years.

💡 MIP vs. PMI Strategy Once you've built equity and improved your credit score (typically to 620+), refinancing from an FHA loan to a conventional loan can eliminate mortgage insurance entirely — saving hundreds per month. Ask Joel about a refi review after 2 years of ownership.

9. Assets & Reserves

FHA does not have a minimum reserve requirement for 1-2 unit properties under an automated approval, but having reserves can strengthen your application and may be required for manual underwriting.

Asset Documentation Required

• Most recent 2 months of bank statements (all pages) for checking, savings, and investment accounts
• 401(k) and retirement account statements — 60% of vested balance may be counted (to account for early withdrawal penalties)
• Large deposits (over $1,000 or one month's paycheck) must be sourced and explained with documentation
• If using gift funds: gift letter stating funds are a gift (not a loan), plus bank statements showing the transfer
• Proceeds from sale of a vehicle or personal property must be documented with a bill of sale

⚠️ Cash Deposits Warning Undocumented cash deposits can kill an FHA loan. If you regularly deposit cash (tips, side income, etc.), speak with Joel early in the process so we can plan your documentation strategy. We've helped hundreds of Kentucky buyers navigate this exact issue.

10. FHA Appraisal Requirements in Kentucky

Unlike a conventional appraisal, an FHA appraisal must meet both valuation AND property condition standards established by HUD. The appraiser verifies both the market value and the safety, security, and soundness of the property.

Common FHA Property Condition Requirements

• Roof — Must have at least 2 years of useful remaining life. Active leaks or missing shingles will likely require repair before closing.
• Foundation — No evidence of structural defects, settlement, or water intrusion.
• Mechanical systems — Heating, electrical, and plumbing must be in working order.
• Peeling paint — In homes built before 1978, peeling or chipping paint is a flag due to lead paint concerns. Must be repaired or tested.
• Standing water / drainage — Evidence of flooding or poor drainage must be addressed.
• Windows and doors — Must open, close, and lock properly.
• Safety hazards — Open electrical panels, missing handrails on stairs, broken glass — all must be repaired.

🚨 Important: FHA Appraisals vs. Home Inspections The FHA appraisal is NOT a substitute for a home inspection. The appraisal only checks for obvious safety and habitability issues. Always hire a licensed Kentucky home inspector for a thorough evaluation of the property's condition. Joel strongly recommends this for all buyers.

FHA Repairs — Escrow Holdbacks

In some cases, FHA allows an escrow holdback (typically 1.5x the cost of the repair) so that minor repairs can be completed after closing rather than before. This is subject to lender and investor approval and is not guaranteed. For major repairs, a FHA 203(k) rehabilitation loan may be a better solution.

11. 2026 Kentucky FHA Loan Limits

FHA loan limits are set by county and property type. For 2026, most Kentucky counties fall under the national "floor" limit. High-cost counties have higher limits.

Most KY Counties

$541,287

1-Unit / Single Family

Most KY Counties

$693,050

2-Unit / Duplex

Most KY Counties

$837,700

3-Unit / Triplex

Most KY Counties

$1,041,125

4-Unit / Fourplex

For a complete county-by-county breakdown of Kentucky FHA loan limits, visit HUD's official loan limit lookup tool. The limits above apply to Jefferson County (Louisville), Fayette County (Lexington), and most Kentucky counties.

If the home you want to purchase exceeds the FHA loan limit for your county, you'll need to either increase your down payment to bring the loan amount within limits or explore a conventional loan. Call Joel to discuss your options.

12. KHC Down Payment Assistance for Kentucky Buyers

The Kentucky Housing Corporation (KHC) partners with approved lenders like Joel Lobb to provide down payment assistance to qualifying Kentucky homebuyers. This program can dramatically reduce — or even eliminate — your out-of-pocket costs at closing.

Regular DAP

Second mortgage loan for down payment and closing costs. Low 4.75% fixed rate. Minimum 12,500 assistance available.

Affordable DAP

For borrowers at or below 80% of Area Median Income. Even lower interest rate. Income limits apply by county.

KHC Income Limits & Eligibility

• Must be a first-time homebuyer (or not owned a primary residence in 3+ years) — OR purchasing in a targeted county
• Income limits apply — vary by household size and county
• Must complete an approved homebuyer education course (available online)
• Property must be in Kentucky and serve as your primary residence
• Must use a KHC-approved lender — Joel is an approved KHC lender
• Purchase price limits apply (vary by county, typically aligned with FHA limits)

13. How to Start Your FHA Loan Application

1

Contact Joel

Call, text, or email for a free consultation — no obligation.

2

Credit Review

We'll pull your credit and review your scores, debt ratios, and eligibility.

3

Pre-Approval

Same-day pre-approval letters available once your file is reviewed.

4

Find a Home

Shop with confidence knowing exactly what you're approved for.

5

Close & Move In

We guide you from application to closing keys in hand.

Documents You'll Need

• Last 2 years of W-2s (or 2 years of tax returns if self-employed)
• Last 30 days of pay stubs
• Last 2 months of bank statements (all pages)
• Government-issued photo ID
• Social Security number for credit pull
• If applicable: divorce decree, bankruptcy discharge papers, DD-214

📚 Related Kentucky Mortgage Resources

• USDA Rural Housing Loans in Kentucky — Zero Down Payment
• VA Home Loans in Kentucky — For Veterans & Active Military
• Kentucky First-Time Homebuyer Programs Overview
• FHA vs. Conventional Loans in Kentucky — Which Is Right for You?
• FHA 203(k) Rehab Loans in Kentucky
• Kentucky Mortgage Payment Calculator

📎 Official Government Resources

• HUD.gov — FHA Loan Information
• Kentucky Housing Corporation (KHC) — Official Site
• HUD FHA Loan Limits by County
• CFPB — Owning a Home Resources
• NMLS Consumer Access — Verify Lender License

JL

Joel Lobb — Kentucky Mortgage Loan Officer

NMLS #57916 | 20+ Years Experience | 1,300+ Families Helped

Joel specializes in FHA, VA, USDA, KHC, and Fannie Mae mortgage loans for Kentucky homebuyers and homeowners. He offers free mortgage consultations, same-day pre-approvals, and personalized guidance through every step of the homebuying process. Contact Joel at 502-905-3708 or kentuckyloan@gmail.com.

Ready to Get Pre-Approved for an FHA Loan in Kentucky?

Don't wait — get started today with a free consultation and same-day pre-approval. Joel Lobb has helped over 1,300 Kentucky families achieve homeownership. You could be next.

✅ Apply Online Now — Free & Secure 📞 Call/Text: 502-905-3708 ✉️ Email Joel Directly

Free application · No obligation · Same-day pre-approval available · Serving all of Kentucky

Joel Lobb | Kentucky Mortgage

Contact

• 📞 502-905-3708
• ✉️ kentuckyloan@gmail.com
• 🌐 mylouisvillekentuckymortgage.com

Licensing

• Joel Lobb — NMLS #57916
• Company NMLS #1738461
• Licensed in Kentucky Only
• NMLS Consumer Access

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⊞ Equal Housing Lender

Important Disclosures: This website is not affiliated with, endorsed by, or sponsored by the Federal Housing Administration (FHA), the U.S. Department of Veterans Affairs (VA), the U.S. Department of Agriculture (USDA), the Kentucky Housing Corporation (KHC), or any other government agency. This is an independent website operated by Joel Lobb, a licensed Kentucky Mortgage Loan Officer (NMLS #57916), for educational and informational purposes.

All loan programs are subject to credit approval, income verification, property appraisal, and underwriting guidelines. Interest rates and loan terms are subject to change without notice. Not all borrowers will qualify for all programs. This is not a commitment to lend. Loan limits, program guidelines, and qualification requirements are subject to change. Information provided is believed to be accurate as of the date of publication but may not reflect the most current guidelines. Always consult directly with a licensed mortgage professional for current information specific to your situation.

We are committed to the principles of the Fair Housing Act and the Equal Credit Opportunity Act. We do not discriminate on the basis of race, color, national origin, religion, sex, familial status, disability, age, or any other protected class. NMLS Consumer Access: www.nmlsconsumeraccess.org

© 2025 Joel Lobb | Kentucky Mortgage Loan Officer | All Rights Reserved. Content may not be reproduced without written permission.

Get a HUD Home for $100 Down

Kentucky HUD Homes for $100 Down 

If you can handle those qualifiers, here's the deal:

• You can only buy HUD homes. Go to the HUD Homes For Sale web page.

• You must use a HUD-registered real estate broker or agent.

• You must qualify for and use Federal Housing Administration (FHA) financing.

• You must plan to be an "owner-occupant," buying the property to live in and not as an investment.

• The home's purchase price must be no more than the appraised value of the property. If you bid a higher price you can pay the difference in cash, minus $100.

• The $100 down incentive must be on the executed contract. That means you have to specifically request the incentive. Your real estate agent should be aware of this provision.

• In some cases, HUD will also cover up to 6 percent of the closing costs.

• The $100 down payment program is eligible for the FHA 203(k) loans. The loans allow borrowers to use a portion of their purchase loan to repair and renovate run-down homes.

That's a good thing because HUD homes are sold in an "as-is" condition -- what you see is pretty much what you get. You could find a diamond in the rough or fool's gold. HUD homes often include a property condition report, but that is not a warranty.

The property report can resemble a home inspection report, but HUD home buyers are always encouraged to get a home inspection to determine just what "as is" is.

Watch video for more detailed info on getting approved for a HUD $100 Down FHA loan in Kentucky👇

 How It Works

 For HUD-owned homes only (found on HUDHomeStore.gov)
Owner-occupants only (no investors or vacation homes)
 Must use FHA financing through an approved lender
 May include up to 6% HUD-paid closing cost assistance
 Compatible with FHA 203(k) rehab loans for homes needing repairs

 Steps to Get Started

1️⃣ Get pre-approved with an FHA-approved lender
2️⃣ Work with a HUD-registered real estate agent
3️⃣ Browse listings at HUDHomeStore.com
4️⃣ Submit your bid with the $100 down incentive listed on your contract

Joel Lobb 

 Email - kentuckyloan@gmail.com 

 Call/Text - 502-905-3708

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

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Evo Mortgage
Company NMLS# 1738461
Personal NMLS# 57916

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

FHA $100 Down Payment Program Explained | Buy a Home in Kentucky

How to Buy a HUD Home in Kentucky for Just $100 Down: Complete 2025 Guide

Buying a home in Kentucky just became more affordable than ever. With the FHA $100 Down Payment Program, eligible buyers can purchase HUD-owned homes with only $100 down — a fraction of the standard 3.5% FHA down payment. This guide walks you through everything you need to know to make it happen in 2025.

What Are HUD Homes and Why Are They So Affordable?

HUD homes are properties previously financed through FHA loans that have gone through foreclosure. The U.S. Department of Housing and Urban Development (HUD) takes ownership of these homes and sells them to the public through registered agents and contractors.

These homes are often priced below market value to encourage homeownership and stabilize neighborhoods. Kentucky has a wide selection of HUD homes across the state — from Louisville and Lexington to Bowling Green and Elizabethtown.

Understanding the FHA $100 Down Payment Program

This special program allows Kentucky buyers to purchase eligible HUD-owned homes with just $100 down when using FHA financing. It’s designed to reduce barriers for homeownership and help families build equity faster.

• Minimum 580 credit score (500–579 may qualify with 10% down)
• Fixed-rate FHA financing available
• Must meet FHA manual underwriting guidelines

Who Qualifies for the Program?

To qualify for the $100 down payment incentive, buyers must:

• Be owner-occupants (must live in the home as their primary residence).
• Submit offers during the exclusive owner-occupant period (typically first 30 days of listing).
• Meet FHA credit, income, and debt-to-income ratio standards.
• Work with a HUD-registered real estate agent and FHA-approved lender.

The 5-Step Process to Buy a HUD Home in Kentucky

1. Search for Homes: Visit HUDHomeStore.com, select Kentucky, and filter for “$100 Down Eligible.”
2. Get Pre-Approved: Apply with an FHA-approved lender to receive your pre-approval letter.
3. Submit an Offer: Your HUD agent submits your bid online with your pre-approval attached.
4. HUD Review: HUD reviews bids and prioritizes owner-occupant buyers.
5. Close & Move In: Bring your $100 down payment, finalize closing, and get your keys.

Closing Costs and Seller Concessions

Typical closing costs range between 2%–5% of the home price. HUD may pay up to 3% of your closing costs. You can also roll some costs into your mortgage depending on FHA eligibility and lender approval.

Condition of HUD Homes

HUD homes are sold “as-is.” Always order a professional home inspection before closing. FHA appraisers will confirm the property meets minimum safety and structural requirements before loan approval.

Why This Program Works So Well in Kentucky

Kentucky’s moderate home prices, stable economy, and low property taxes make the FHA $100 Down Program ideal for first-time buyers and families wanting to stop renting and start building wealth. Many buyers pair it with Kentucky Housing Corporation (KHC) down payment assistance for added support.

Ready to Get Started?
Call/Text 502-905-3708 or visit MyLouisvilleKentuckyMortgage.com
Joel Lobb – Kentucky Mortgage Loan Officer, NMLS #57916 | EVO Mortgage NMLS #1738461

Frequently Asked Questions

Can I use the $100 down program if I’ve owned a home before?

Yes. The program is open to any qualifying buyer who intends to occupy the home as a primary residence.

Can I rent out the home after closing?

No. You must live in the home for at least one year before renting it out.

What if the home needs repairs?

HUD homes are sold as-is. You can finance repairs through an FHA 203(k) Renovation Loan.

Compliance Disclosure
EVO Mortgage – Company NMLS #1738461
Joel Lobb – Loan Officer NMLS #57916
Equal Housing Lender | Licensed in Kentucky Only
This is not a commitment to lend. Program terms subject to change based on HUD and FHA guidelines.

Kentucky FHA Loan and Repairs- Do you know that appraiser required repairs may be financed into an Kentucky FHA loan?

Do you know that appraiser required repairs may be financed into an KY FHA loan?

Costs of repairs can be added to the sales price before calculating the mortgage amount if:

• The repairs are required by the Appraiser to meet HUD’s MPR;
• The repairs are paid for by the Borrower; and
• The sales contract or addendum identifies the Borrower as the party responsible for payment and
completion of the repairs. Up to the maximum allowable amount. Seller can pay for additional repairs.
The maximum amount of repair costs that may be added to the sales price is the lesser of:

• The amount by which the value of the Property exceeds the sales price;
• The Appraiser’s estimate of repairs; or
• The amount of the contractor’s bid.

See FHA Handbook 4000.1. II.A.2.a https://www.allregs.com/tpl/Main.aspx

Example 1:

$105,000 Value
$100,000 Sales Price
$5,000 Appraiser Required Repairs
$105,000 Max Cost of Acquisition (Value)
X 96.50
$101,325 Base Loan Amount
+ $1,773.19 UFMIP
$103,098 Total Loan Amount
Borrower would pay up to $2,500 in contingency and funds are returned when repairs have been completed
and inspected. (See Escrow Limits below)

Example 2:

$105,000 Value
$100,000 Sales Price
$10,000 Appraiser Required Repairs
$105,000 Max Cost of Acquisition (Value)
X 96.50
$101,325 Base Loan Amount
+ $1,773.19 UFMIP
$103,098 Total Loan Amount

Borrower would pay the $5,000 in repairs that cannot be included into the loan amount. Borrower would also pay up to $5,000 (50% of 10,000 required repairs) in contingency and funds are returned when repairs have been completed and inspected .

The sales price of the property is $100,000 and the appraised value is $105,000. If the appraiser requires repairs in the amount of $10,000, $5,000 can be added to the sales price before calculating the mortgage amount. This is because the value came in at $105,000. The remaining $5,000 required repairs can be paid at closing by buyer or seller.

Escrow Holdbacks: Escrow holdbacks are used to facilitate loan closings for properties that are ready for occupancy but that require minimal completion or repair. The buyer or seller is required to establish a cash  escrow to ensure the completion of the required repairs. The proceeds of the cash escrow are held in an escrow account




Limits: Non HUD REO Transactions

• Existing Construction - Repair Items: Minimum amount to complete the escrow will be 150% (1.5
times) of the estimated cost to complete or cure per appraisal plus final inspection fee. Contingency
cannot be added in the costs of acquisition.

FHA HUD REO Purchases

• $10,000 for FHA HUD REO Purchases (not including 10% contingency) , total escrow amount must not exceed $11,000 including the 10% contingency




Documents Required: Minor Repair Items

• Purchase agreement must indicate who is responsible to provide the funds required for repair escrow. If funds are to be provided by the borrower(s), verification of sufficient funds from acceptable sources is required.
• The appraisal page 2 must indicate "subject to the following repairs or alterations on the basis of a
hypothetical condition that the repairs or alterations have been completed."
• The appraiser/appraisal must provide a list of items that are subject to repair and an estimated cost to cure. If the appraiser indicates the cost of such items cannot be estimated, a licensed/certified
contractor bid is required for estimate of repair costs.
Repairs and Improvements: Repairs and improvements, or any portion paid by the borrower that cannot be financed into the mortgage are part of the borrower's total cash requirements
Source of Funds: If escrow funds are being supplied by the buyer/borrower, source of funds must be verified and must meet eligible source of funds guidelines and requirements for the loan program. AUS must be run with the correct escrow holdback amount established and entered so that asset verification requirements are accurate

​

Joel Lobb
Senior  Loan Officer

(NMLS#57916)

American Mortgage Solutions, Inc.

10602 Timberwood Circle, Suite 3

Louisville, KY 40223

 phone: text or call (502) 905-3708

 Fax:     (502) 327-9119

kentuckyloan@gmail.com

http://www.mylouisvillekentuckymortgage.com/

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