Kentucky first-time homebuyers with a focus on FHA, VA, USDA Home loans in Kentucky

Kentucky First-Time Homebuyer Loan Programs: FHA, VA, and USDA Explained

If you're a first-time homebuyer in Kentucky, navigating the mortgage landscape can feel overwhelming—but it doesn’t have to be. At Joel Lobb, Mortgage Loan Officer, we simplify the process by helping you understand your best loan options. 

Here’s a side-by-side breakdown of FHA, VA, and USDA home loans—each designed to help you become a homeowner without breaking the bank.

FHA Loan – Ideal for Buyers with Lower Credit Scores

Minimum Credit Score: 580+ (lower scores possible with a higher down payment)
Down Payment: 3.5% minimum
Debt-to-Income Ratio:

1. Front-End: Max 45%

2. Back-End: Max 56.99%
   Employment: Steady job history (2 years preferred)
   Past Credit Issues: Lenient with past bankruptcy or foreclosure
   Time to Close: ~30–45 days
   Appraisal Requirements: Must meet FHA’s Minimum Property Standards
   Income Documentation:

3. Recent pay stubs

4. W-2s (past 2 years)

5. Tax returns

6. Proof of any additional income

 VA Loan – Zero Down for Veterans and Active Duty Military

1. Minimum Credit Score: No official requirement (most lenders look for 620+)
2. Down Payment: None required
3. Debt-to-Income Ratio: 41% (can go higher with compensating factors' good residual income, high credit scores, lots of reserves and assets)Residual Income Requirements. Click here 
4. Employment: Stable income and employment for last two years
5. Past Credit Issues: More flexible on bankruptcies and foreclosures
6. Time to Close: ~45–60 days-
7. Appraisal Requirements: Property must meet VA Minimum Property Requirements (MPRs)
8. Income Documentation:

• Pay stubs

• W-2s

• Tax returns

• Documentation for bonuses, alimony, rental income (if applicable)

 USDA Loan – No Money Down for Rural Kentucky Buyers

1. Minimum Credit Score: 640 for GUS AUTOMATED APPROVAL (some exceptions possible on a manual underwrite with no score)
2. Down Payment: 0%
3. Debt-to-Income Ratio: 32%and 45% with 2 history (2 years preferred of work. Minimum of 12 months)
4. Past Credit Issues: Consideration given to past credit challenges, bankruptcy, or foreclosure
5. Time to Close: ~30–60 days-A little longer due to conditional commitment needed from USDA so a two step process to get final clear to close. 
6. Appraisal Requirements: Must pass USDA’s health and safety standards, typically must pass FHA HUD standards for appraisal requirements but does not have to be done by a FHA appraiser.
7. Income Documentation:

• Pay stubs

• W-2s

• Federal tax returns (last 2 years)

• Documentation for other income streams

 Appraisal requirements and income documentation

 

FHA Loan: Appraisal Requirements:

The property must meet FHA guidelines, including minimum property standards and safety requirements. An FHA-approved appraiser assesses the property's value and condition.

Income Documentation: 

Generally requires recent pay stubs, W-2 forms, tax returns for the past two years, and proof of additional income sources (if applicable).

VA Loan: Appraisal Requirements:

 VA loans require a VA appraisal conducted by a VA-assigned appraiser. The appraisal assesses the property's value and ensures it meets VA's Minimum Property Requirements (MPRs).

Income Documentation: 

Typically includes pay stubs, W-2 forms, tax returns for the past two years, and proof of any additional income (e.g., bonuses, alimony, rental income).

USDA Loan: Appraisal Requirements:

USDA loans require a USDA appraisal to determine the property's value and ensure it meets USDA's standards for safety and livability.

Income Documentation: 

Similar to FHA and VA loans, USDA loans require pay stubs, W-2 forms, tax returns for the past two years, and documentation of other income sources.

These appraisal requirements and income documentation are crucial parts of the loan application process. Lenders use this information to assess the property's value, ensure it meets safety standards, and verify the borrower's income stability and ability to repay the loan.

Joel Lobb  Mortgage Loan Officer

Text/call: 502-905-3708

email: kentuckyloan@gmail.com

http://www.mylouisvillekentuckymortgage.com/

NMLS 57916  | 

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).

Kentucky FHA Home Appraisal Checklist

 

Kentucky FHA appraisals can take home buyers by surprise. That’s why we've put together some good-to-know info about the process. Feel free to use this to help educate your clients. 

Your Kentucky  FHA Home Appraisal Checklist 

 

If you’re using an Kentucky FHA loan to buy a home (or selling to FHA borrowers), the property must pass an FHA appraisal, which determines the current market value and makes sure the house meets certain safety standards. Here is a list of items an FHA appraiser may look for:

 

General Health and Safety

• Foundation or structural defects
• Whether the utilities (water, sewage, heat, and electricity) all work
• Chipped or peeling paint in homes built before 1978
• Incomplete renovations
• Water damage
• If the property is accessible to vehicles, especially emergency vehicles
• Exposed wiring and uncovered junction boxes
• Whether the house is too close to outside hazards, such as a leaking oil tank or a waste dump
• Excessive noise, such as being close to an airport
• Missing handrails

Exterior

• Leaky or defective roof and holes in the siding
• Leaning or broken fencing 
• Doors that don’t properly open or close
• Condition of gutters, chimney, stairs, railings, and porches
• If swimming pools are up to code 

Every Room

• Whether each room has electricity
• Whether each room has a window or door to the exterior to be used as a fire escape

Kitchen

• Missing or broken appliances usually sold with a home, including stove and refrigerator
• Broken or leaking sink

Bathrooms

• Broken or leaking toilet, sink, or tub/shower
• No ventilation (either an exhaust fan or window)

Crawl space or basement

• Basement moisture
• Evidence of past or present standing water

Heating and Plumbing

• Inoperable HVAC
• Major plumbing issues and leaks

 

These are some common items an FHA appraiser looks for, but other issues that might make a house unsafe could keep it from passing. An FHA appraisal is not the same as an independent home inspection. It’s still a good idea to get a separate home inspection to make sure you’re making a wise investment! 

Updated FHA Info Letter Sent July 12, 2022 for Kentucky FHA Appraisal Reports

✨Applies to case numbers assigned on or after June 1, 2022

✨Updates the initial appraisal validity period from 120 days to 180 days from the effective date of the appraisal report;

🙌🏼Extends the appraisal update validity period from 240 days to one year from the effective date of the initial appraisal report; 

✨Allows the appraisal update to be ordered AFTER an appraisal expires; and

👊🏼Eliminates the optional 30-day extension.

✨This is big news for FHA ✨

The guideline change also puts FHA appraisal expirations on par with conventional loan expiration dates.🥊

  

List of Kentucky FHA Appraisers below:  

👇

see link

Kentucky FHA, VA, USDA Appraisal Requirements for Mortgage Loans

Joel Lobb (NMLS#57916)

Senior  Loan Officer

Text/call 502-905-3708

The reasons you will get turn down for a mortgage loan in Kentucky.

 There are several reasons why people in Kentucky might get turned down for a mortgage loan. These reasons can be broadly categorized into issues with the borrower or the property:

Borrower-related reasons:

• Credit score: Low credit scores (generally below 620) are a major factor in loan denials. Having a history of late payments, delinquencies, or collections can negatively impact your score.
• Debt-to-income ratio (DTI): This ratio compares your monthly debt payments to your gross income. A high DTI (generally above 50%) indicates you have a lot of debt compared to your income, making it harder to afford a mortgage payment.
• Employment history: Lenders prefer borrowers with stable employment and income. Recent job changes, gaps in employment, or insufficient income documentation can raise concerns.
• Down payment: A smaller down payment increases the loan amount and loan-to-value ratio (LTV), making the loan riskier for lenders. In Kentucky, FHA loans require a minimum 3.5% down payment, while conventional loans typically require 20%.
• Insufficient assets: While not always a disqualifier, having limited savings or assets can weaken your application by reducing your financial cushion.

Property-related reasons:

• Appraisal value: If the appraised value of the property is lower than the purchase price, it creates a high LTV, making the loan riskier for lenders.
• Property condition: Major repairs or structural issues with the property could require significant investment before closing, which lenders may not be comfortable with.
• Location: Properties in floodplains or other high-risk areas may be ineligible for certain loan types or require additional insurance.

Here are some resources that can help:

• Reasons loan denied in Kentucky https://www.mylouisvillekentuckymortgage.com/2010/10/get-approved-for-mortgage-or-home-loan.html

Joel Lobb  Mortgage Loan Officer

American Mortgage Solutions, Inc.
10602 Timberwood Circle
Louisville, KY 40223
Company NMLS ID #1364

Text/call: 502-905-3708
fax: 502-327-9119
email: kentuckyloan@gmail.com

http://www.mylouisvillekentuckymortgage.com/