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, it’s easy to get lost in the mortgage details. My job is to simplify the landscape so you can make a confident, well-informed decision. Below is a clear, side-by-side breakdown of FHA, VA, and USDA home loans—three programs designed to help Kentucky buyers secure affordable financing.

Learn more about each program here: FHA, VA, and USDA home loans in Kentucky.

FHA Loan – Ideal for Buyers with Lower Credit Scores

• Minimum Credit Score: 580+ (lower scores possible with more down)
• Down Payment: 3.5% minimum
• Debt-to-Income Ratio: Up to 45% front-end, 56.99% back-end
• Employment: Preferably 2-year job history
• Past Credit Issues: More flexible after bankruptcy or foreclosure
• Time to Close: Approximately 30–45 days
• Appraisal: Must meet FHA Minimum Property Standards
• Income Documentation:
  • Recent pay stubs
  • W-2s (last 2 years)
  • Tax returns (as needed)
  • Documentation for other income

VA Loan – Zero Down for Veterans and Active-Duty Borrowers

• Minimum Credit Score: No official requirement (most lenders prefer 620+)
• Down Payment: None required
• Debt-to-Income Ratio: Typically 41%, but can go higher with compensating factors and strong residual income
• Residual Income Requirements: View VA residual income guidelines
• Employment: Stable 2-year history recommended
• Past Credit Issues: More lenient after bankruptcy or foreclosure
• Time to Close: Approximately 45–60 days
• Appraisal: Must meet VA Minimum Property Requirements (MPRs)
• Income Documentation:
  • Pay stubs
  • W-2s
  • Tax returns
  • Documentation for bonuses, alimony, rental income

USDA Loan – Zero Down for Rural Kentucky Homebuyers

• Minimum Credit Score: 640 for GUS automated approval (manual options possible)
• Down Payment: 0%
• Debt-to-Income Ratio: 32% front-end and 45% back-end with strong history
• Past Credit Issues: Flexibility for prior bankruptcy or foreclosure
• Time to Close: 30–60 days due to USDA conditional commitment
• Appraisal: Must meet USDA safety standards (similar to FHA, but not required to use an FHA appraiser)
• Income Documentation:
  • Pay stubs
  • W-2s
  • Tax returns (2 years)
  • Other income documentation

Appraisal Requirements and Income Documentation Overview

FHA Loan Appraisal

Requires an FHA-approved appraiser to verify the home meets FHA minimum property standards, focusing on safety, health, and structural soundness.

FHA Income Documentation

Typically includes recent pay stubs, W-2s, and tax returns. Additional income must be documented.

VA Loan Appraisal

A VA-assigned appraiser evaluates the home to ensure it meets VA Minimum Property Requirements (MPRs).

VA Income Documentation

Includes pay stubs, W-2s, tax returns, and verification of additional income such as rental income, alimony, or bonuses.

USDA Loan Appraisal

A USDA appraiser confirms the property meets rural housing health and safety standards.

USDA Income Documentation

Requires similar income verification as FHA and VA loans, including pay stubs, W-2s, tax returns, and proof of additional income.

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Internal Links for Kentucky Mortgage Buyers

• Kentucky FHA Mortgage Guide
• Kentucky USDA Zero Down Guide
• KHC Down Payment Assistance
• First-Time Homebuyer Mortgage Programs

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Contact Information

Joel Lobb, Mortgage Broker FHA, VA, KHC, USDA
Text/Call: 502-905-3708
Email: kentuckyloan@gmail.com
Website: www.mylouisvillekentuckymortgage.com

NMLS 57916 • EVO Mortgage NMLS 1738461 • Equal Housing Lender

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

Top 10 Reasons Mortgage Loans Are Denied in Kentucky (FHA, VA, USDA & Fannie Mae)

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/

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:  

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see link