Showing posts with label credit score and bankruptcy. Show all posts
Showing posts with label credit score and bankruptcy. Show all posts

How to Get Approved for a Kentucky Mortgage While in A Chapter 13 Bankruptcy:

Can you get a mortgage loan while in a Chapter 13 Bankruptcy?

Here is a brief summary:

You must have 12 payments paid into the Chapter 13 before you can apply for a mortgage loan.

The payments must be made on time for last 12 months or after 12 months if you have been in longer, so no late payments to the Chapter 13 while in it.

You have to ask permission from the courts to seek a mortgage loan. They usually grant this. I have never not seen them grant it.

You have to qualify with the new house payment along with Chapter 13 payments and other debts listed on credit report. Debt to income ratios usually center around 31 and 43% respectively, meaning the new house payment should not be more than 31% of your gross monthly income and your total house payment and debts listed on credit report along with Chapter 13 payment should not be more than 43% of your total gross monthly income.

Credit scores: Most FHA lenders I work with will want a 620-middle score. You have three fico scores from Experian, Equifax, and Transunion, and they throw out the high and low score and take middle score. For example, if you had a 598, 679, and 590 scores respectively for all three bureaus listed above, your qualifying score would be 598.

There are some FHA investors that I am set up with that will go down to 580, but I have seen in my past experiences 620 will get you a better deal and far greater chance of closing on your loan with FHA.

Down payment:
For FHA loans, you will need to have at least 3.5% down payment saved up. It is extremely hard to find a no money down loan program to get you approved for a mortgage while you are in a Chapter 13 plan.

FHA, VA and USDA are really the only two options that I know of that offer financing for a borrower with a current Chapter 13 Bankruptcy plan, so keep that in mind.

Conventional loan program offered by Fannie Mae will not allow a mortgage loan for someone in a Chapter 13 Bankruptcy plan.

On USDA loans, it is possible to get 100% Financing after you have paid into the plan for 12 months with a good pay history. The credit scores needed for a USDA loan approval really need to be above 640 in my past experience in getting them approved. 

A lot of USDA lenders will say they will do down to 620, but it is very difficult getting them approved. Best to get your scores up to increase your changes in qualifying for a USDA loan. There is not much that difference in getting your scores up to that range if you are at a 620 score now.

With USDA loans, they have income and property eligibility requirements that FHA does not have, so below is a rough run down of FHA vs USDA loan for you:

Typically, USDA-eligible properties are located in rural areas. It is a mistake, however, to think that you have to live far out in the country to qualify for a USDA loan. USDA-eligible properties are often located near urban areas.

A property’s eligibility is determined by its location with respect to USDA’s map of eligible locations. The USDA program also places limits on your household income based on median earnings in an area. If you exceed that limit, you can’t obtain a USDA loan.

The FHA, by contrast, does not place limits on household earnings. The FHA, however, does establish a maximum limit on the amount of money that can be borrowed through the program.

So, if you were in a hurry to buy, after you have been in your Chapter 13 plan for 12 months, I can look at getting you approved to buy a home if you wish:

How to Get Approved for a Kentucky Mortgage While in A Chapter 13 Bankruptcy Kentucky Chapter 13 Mortgage Lender for FHA, VA, USDA Bankruptcy

So, if you were in a hurry to buy, after you have been in your Chapter 13 plan for 12 months, I can look at getting you approved to buy a home if you wish:

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


Text or call phone: (502) 905-3708

email me at

Can You Buy A House After Bankruptcy in Kentucky?

Mortgage Loan Options After Bankruptcy in Kentucky

In some cases, you have exhausted your emergency fund, and have decided there is no option other than to file for bankruptcy to pay off your debt. You may decide to work with a bankruptcy attorney. Plus, you should know all real estate agents and mortgage lenders who have experience working with people with bankruptcy on their credit score.

When you declare bankruptcy, you may find it hard to improve your credit score and financial condition. Even worse, you may think you will never be able to buy a house again, but the reality is different.

Who wants bankruptcy? Of course, no one wants to fall into this drastic situation. But people dealing with financial troubles may think it is the only way to get out of debts and start from the beginning.

However, bankruptcy may minimize financial stress and allow you to focus on making positive financial decisions for your future. So are you ready to move forward and make your dream of owning a home come true? So, adopt the following strategies to achieve the goal.

How Long after a Bankruptcy Can I Qualify for a Kentucky Mortgage?

You can buy a house approximately one or two years after filing for bankruptcy, only if you restore your credit and avoid new debt. Filing a Chapter 7 or Chapter 13 bankruptcy will impact your credit report and put a negative score on your credit. But it does not mean that you cannot buy your own house.

Chapter 7 Bankruptcy

The standard type of bankruptcy is Chapter 7, in which the court wipes down your qualifying debts. In this case, your credit score is affected. If you file Chapter 7 bankruptcy, you have to wait for about four years after the court dismisses your bankruptcy to make you eligible for a conventional loan.

However, government-backed mortgage loans are more complex. You have to wait for about three years after your bankruptcies' dismissal to qualify for a USDA loan. At the same time, you have to wait for about two years in order to qualify for a VA or FHA loan.

Chapter 13 Bankruptcy

Chapter 13 bankruptcy involves the restructuring of your debts. That means you have to make scheduled payments to your creditors. It does not have a substantial effect on your credit score. Moreover, you can keep your assets as well. While regulations for chapter 13 are less severe than Chapter 7, these loans also have a waiting period.

Conventional loans after chapter 13 bankruptcy usually require a waiting period depending on the court’s choice to handle your bankruptcy. Generally, the waiting period is about four years from the date you file bankruptcy and two years from your dismissal date.

While chapter 7 bankruptcy standards are relaxed for government-backed loans, USDA loans have a 1-year waiting period after filing for Chapter 13 bankruptcy. FHA and VA loans need a court to dismiss or discharge approval of your loan before your apply. However, the waiting period remains the same in both cases, whether dismissal or discharge.

How Long after a Kentucky Bankruptcy Can I Qualify for a Mortgage Loan in Kentucky?

There are bankruptcy lenders who can help with your mortgage application even just one day out of chapter 7 or chapter 13 bankruptcy. You will likely need a larger down payment and show that you are taking financial steps to improve your credit.

Below, we will take you through some mortgage after bankruptcy options and then connect you with some of the best bankruptcy lenders. We understand that you area dealing with a lot and having a bankruptcy is not easy. Let us help guide you through this process.

Type of LoanChapter 7Chapter 13
Conventional4 years2 years
FHA2 years1 year
VA2 years1 year
USDA3 years1 year

* Mortgage after bankruptcy waiting period chart

Kentucky Mortgage after Bankruptcy Waiting Period

Every type of loan has different waiting period requirements. Here are some of the basics:

Depending upon your scenario, we can find a mortgage for you just ONE DAY after your bankruptcy has been discharged. The rules for applying for a mortgage is the same regardless as to whether you filed a chapter 7 bankruptcy or chapter 13 bankruptcy.

Kentucky Mortgage Waiting Period After Bankruptcy Discharge

Can You Buy A House After Bankruptcy
Kentucky Mortgage After a Bankruptcy in 2024 – Chapter 7 or 13

Joel Lobb  Mortgage Loan Officer

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

Text/call: 502-905-3708


NMLS 57916  | Company NMLS #1364/MB73346135166/MBR1574

How to Get Approved for a Kentucky Mortgage Loan with Bad Credit and Improve Your Credit Scores

Buying a home in Kentucky with bad credit can be done with the right mortgage loan officer to guide you through the process. I  can help you do that.  There are various loan programs, including Kentucky FHA, VA, USDA, and conventional mortgages, have different criteria and offer opportunities for individuals with less-than-perfect credit to become homeowners. 

In this blog post, we'll explore the options available for Kentucky homebuyers with bad credit and provide tips on improving your credit scores to enhance your chances of loan approval to buy your first house in Kentucky

Understanding Your Credit Score or Fico Score 

Your credit score is a critical factor in determining your eligibility for a mortgage loan. It reflects your creditworthiness and helps lenders assess the risk of lending you money.  Credit scores range from 300 to 850, with higher scores indicating better credit health. Scores below 620 are generally considered "bad" credit, but don't be discouraged.There are still options available.

Loan Options for Kentucky Homebuyers with Bad Credit

Kentucky FHA Loans

Federal Housing Administration (FHA) loans are popular among Kentucky first-time homebuyers and those with bad credit. They offer more lenient credit requirements and lower down payment options.

  • Credit Score Requirement: As low as 500 with a 10% down payment, or 580 with a 3.5% down payment.
  • Benefits: Flexible credit requirements, low down payment, and competitive interest rates.
  • Drawbacks: Mortgage insurance premiums (MIP) are required, which increase the overall cost of the loan. A lot of sellers view FHA buyers as weaker buyers vs Conventional loans and may hold that against you if you are making an offer with a FHA loan. 
  • Bankruptcy: 2 years removed from Chapter 7 and 1 year in Chapter 13 pan with on time pay history and trustee approval is possible for FHA loans

Kentucky VA Loans

Veterans Affairs (VA) loans are available to veterans, active-duty service members, and eligible surviving spouses. These loans offer significant benefits, including no down payment and no private mortgage insurance (PMI).

  • Credit Score Requirement: No official minimum, but most lenders prefer a score of at least 580 to 620.
  • Benefits: No down payment, no PMI, competitive interest rates.
  • Drawbacks: VA funding fee, which can be financed into the loan or waived for some eligible veterans. 
  • Bankruptcy: 2 years removed from Chapter 7 and 1 year in Chapter 13 pan with on time pay history and trustee approval is possible for FHA loans

Kentucky USDA Loans

The United States Department of Agriculture (USDA) loans are designed for rural and suburban homebuyers with low to moderate incomes. These loans offer zero down payment options and low-interest rates.

  • Credit Score Requirement: Generally, 640, but exceptions can be made for lower scores with compensating factors down to a 580 credit score. 
  • Benefits: No down payment, low mortgage insurance, competitive interest rates.
  • Drawbacks: Geographic and income restrictions apply and harder to qualify for vs FHA loans and VA loans when it comes to government backedmortgae loans. Much more restrictive on debt to income ratio and income limits for household see here 

Kentucky Conventional Mortgage Loans

Conventional loans are not backed by the government and typically require higher credit scores. However, there are programs available for those with lower scores.

  • Credit Score Requirement: Generally, at least 620. Typically 720 or higher preferred--
  • Benefits: Potentially lower overall costs compared to government-backed loans if you have a higher credit score and substantial down payment. No maximum purchase price or loan amount-Mortgage insurance not for life of loan and can recast your mortgage loan and remove mi unlike government backed loans via FHA, VA USDA ---Can be done anywhere and no income limits
  • Drawbacks: Stricter credit requirements, higher down payments, and PMI required for down payments less than 20%. 

Improving Your Credit Scores for Kentucky Mortgage Loan Approval with Bad Credit

Improving your credit score can significantly enhance your chances of getting approved for a Kentucky mortgage loan. Kentucky mortgage loan. Here are some steps you can take to boost your credit:

  1. Check Your Credit Report: Obtain a free copy of your credit report from each of the three major credit bureaus (Equifax, Experian, and TransUnion) at

  2. Pay Your Bills on Time: Payment history accounts for 35% of your credit score. Make sure to pay all your bills on time, including credit cards, loans, and utilities.

  3. Reduce Your Debt: Lower your credit card balances and pay down debt. Aim to keep your credit utilization ratio (the amount of credit you're using compared to your credit limit) below 30%.

  4. Avoid New Credit Inquiries: Each time you apply for credit, a hard inquiry is recorded on your credit report, which can lower your score. Limit new credit applications while you're working to improve your score.

  5. Maintain a Healthy Mix of Credit: Having a mix of credit accounts, such as credit cards, auto loans, and mortgages, can positively impact your score.

  6. Keep Older Accounts Open: The length of your credit history also affects your score. Keep older accounts open and use them occasionally to maintain a longer credit history

  7. Pay Every Single Bill on Time, or Early, Every Month Credit Cards: Lower Balances Are Always Better


Getting approved for a mortgage loan in Kentucky with bad credit is challenging but achievable. FHA, VA, USDA, and conventional loans each offer unique benefits and have different requirements.

For personalized guidance and assistance, consider reaching out to a reputable mortgage broker like Joel Lobb Mortgage Loan Officer with great reviews and mortgage expert in FHA, VA, USDA and Fannie Mae Home loans in Kentucky

With 20+ years of experience helping Kentucky families buy their first house or refinance , Joel can provide expert mortgage  advice and help you navigate the loan approval process for a Kentucky Home loan. 

If you have questions or need assistance, contact Joel Lobb at

Joel Lobb
Mortgage Loan Officer
Individual NMLS ID #57916

American Mortgage Solutions, Inc.

Text/call:      502-905-3708
fax:            502-327-9119

NMLS Consumer Access

Accessibility Statement

If you are an individual with disabilities who needs accommodation, or you are having difficulty using our website to apply for a loan, please contact us at 502-905-3708.

Disclaimer: No statement on this site is a commitment to make a loan. Loans are subject to borrower qualifications, including income, property evaluation, sufficient equity in the home to meet Loan-to-Value requirements, and final credit approval. Approvals are subject to underwriting guidelines, interest rates, and program guidelines and are subject to change without notice based on applicant's eligibility and market conditions. Refinancing an existing loan may result in total finance charges being higher over the life of a loan. Reduction in payments may reflect a longer loan term. Terms of any loan may be subject to payment of points and fees by the applicant Equal Opportunity Lender. NMLS#57916

How to get a Kentucky mortgage loan with bad credit through FHA, VA, USDA, or the Kentucky Housing Corporation (KHC)

 To get a Kentucky mortgage loan with bad credit through FHA, VA, USDA, or the Kentucky Housing Corporation (KHC), you'll need to take specific steps tailored to each program:

  1. Kentucky FHA Loan with Bad Credit:

    • Credit Score Requirement: FHA loans typically accept lower credit scores than conventional loans. While the minimum credit score can vary, aiming for at least a 580 score can increase your chances.
    • Down Payment: With a credit score below 580, a 10% down payment may be required. If your score is 580 or above, you can qualify with a 3.5% down payment.
    • Work on Your Credit: Prioritize improving your credit score by paying bills on time, reducing debt, and disputing any errors on your credit report.
  2. Kentucky VA Loan with Bad Credit:

    • Credit Score Requirement: VA loans are known for being flexible with credit requirements. While there's no set minimum score, lenders often look for scores around 620 or higher.
    • VA Loan Guaranty: The VA doesn't directly issue loans but guarantees a portion of the loan, making lenders more willing to approve applicants with lower credit scores.
    • Proof of Financial Stability: Highlight stable income and employment history to strengthen your application.

  3. Kentucky USDA Loan with Bad Credit:

    • Credit Score Requirement: USDA loans typically require a minimum credit score of 640. However, some lenders may consider scores as low as 580 with compensating factors.
    • Income Limits: Ensure your income falls within USDA's income limits for the area where you're buying.
    • Compensating Factors: Emphasize factors like a steady job, low debt-to-income ratio, and a history of making timely payments to offset a lower credit score.
  4. Kentucky Housing Corporation (KHC) Loan with Bad Credit:

    • Credit Score Requirement: KHC loans may have varying credit score requirements depending on the specific program. Aim for a score of at least 620 for better chances of approval.
    • Down Payment Assistance: KHC offers down payment assistance programs that can help lower-income and first-time homebuyers. Check eligibility and requirements for these programs.
    • Prequalification: Consider getting prequalified to understand your options and improve your negotiating position.

How to get a Kentucky mortgage loan with bad credit through FHA, VA, USDA, or the Kentucky Housing Corporation (KHC)

Hope your day is full of sunshine😊

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

NMLS 57916  | Company NMLS #1364/MB73346135166/MBR1574

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, (

For all these loans, working with a knowledgeable mortgage broker like Joel Lobb can be beneficial. They can guide you through the specific requirements, help you understand your options, and assist in improving your chances of approval despite bad credit.

Kentucky Mortgage Loan Programs

FHA Pricing Improvements
  • Any FICO (down to 550)
Conventional Pricing Improvements
  • Any FICO ( down to 580)
Non-Traditional Credit/ No Score Options
  • Available on FHA, VA and USDA

FreddieMac ChoiceRenovation

  • Down to 580 Fico
  • EasyPath
FHA 203K
  • Limited and standard
  • Down to 620 FICO
  • Purchase and Refinance options


  • Down to 550 FICO on FHA and VA
  • Down to 580 FICO on USDA and Conventional
  • FHA, VA & USDA
  • FHA and VA down to 550 FICO
  • VA cash-out up to 100 LTV
  • Manual Underwrite options
  • Manufactured housing options
  • Single and multi-wide options
  • Available for FHA, VA, USDA and conventional
  • Options for manufactured homes built after June 15th 1976
  • 97% of the USA is eligible
  • 100% LTV available
  • USDA Streamline NO FICO allowed
  • Escrow holdbacks allowed
  • DACA and EAD allowed
  • FICOs down to 580
Temporary Buydowns
  • Currently available on FHA, VA and Conventional loans