Showing posts with label first time home buyer loan. Show all posts
Showing posts with label first time home buyer loan. Show all posts

Kentucky First-Time Home-Buyer Programs

Kentucky First-Time Home Buyer Programs 2026 | FHA, USDA, VA, KHC DPA Guide
Updated for 2026

Kentucky First-Time Home Buyer Programs 2026: Complete Guide to Buying a Home in Kentucky

Buying your first home in Kentucky in 2026 is achievable when the loan is structured correctly. Kentucky offers multiple pathways to homeownership, including zero-down options, flexible credit programs, and down payment assistance through Kentucky Housing Corporation (KHC).

Current benchmark: KHC’s maximum purchase price remains $544,232 (effective June 23, 2025), expanding eligibility across higher-priced Kentucky markets.

Kentucky First-Time Home Buyer Programs Available in 2026

Most Kentucky first-time buyers qualify for at least one of these options:

KHC DPA up to $12,500 USDA 0% down FHA 3.5% down VA 0% down Conventional 3-5% down

In many cases, programs can be layered together to reduce out-of-pocket costs at closing.

Kentucky Home Buyer Program Comparison (2026)

Program Minimum Credit Score Down Payment Limits Best For
FHA Loan 580 with 3.5% down
500–579 with 10% down		 3.5% minimum FHA county loan limits apply Lower credit scores, flexible underwriting
USDA Rural Development No offical minimum credit score, but 640 preferred for automated approval
Lower scores possible with manual underwriting		 0% down Household income capped at 115% of area median income Rural/suburban buyers seeking zero down
VA Loan No official minimum (most lenders prefer 620+) 0% down No loan limit with full entitlement Veterans, active duty, eligible spouses
KHC Down Payment Assistance Typically 620–660 depending on loan type 0% with assistance County income limits + $544,232 max purchase price First-time buyers needing down payment help
Conventional 97 / 95 620 minimum; 720+ strongly preferred 3% minimum Conforming loan limits apply Strong credit borrowers wanting cancellable PMI

FHA Loans for First-Time Buyers in Kentucky

FHA loans are commonly used for first-time buyers because they are insured by the Federal Housing Administration and allow more flexible underwriting.

Key FHA advantages

  • 3.5% down with a 580 credit score
  • 10% down allowed with scores as low as 500
  • Gift funds permitted for down payment and closing costs
  • Seller concessions allowed up to 6%
  • Assumable loan feature

FHA mortgage insurance

FHA loans require an upfront mortgage insurance premium of 1.75% and annual mortgage insurance. Annual FHA mortgage insurance is standardized and does not vary by credit score. This is the trade-off for easier qualification.

USDA Rural Development Loans in Kentucky

USDA loans provide 100% financing (no down payment) and can be a strong fit in many Kentucky suburbs and rural areas.

USDA loan benefits

  • Zero down payment
  • Competitive interest rates
  • Lower monthly mortgage insurance than FHA
  • No prepayment penalty

USDA eligibility requirements

  • Property must be located in a USDA-eligible area
  • Household income must be under 115% of area median income
  • Primary residence only
  • Automated approval commonly requires 640+ credit
  • Manual underwriting can be possible with tighter debt ratios and compensating factors

Rural does not mean farmland. Many areas outside Louisville, Lexington, Bowling Green, and other metros still qualify.

VA Loans for Kentucky Veterans and Military Buyers

VA loans are one of the strongest mortgage benefits available for eligible buyers.

VA loan advantages

  • Zero down payment
  • No monthly mortgage insurance
  • Competitive interest rates
  • Assumable loans
  • Reusable entitlement

VA funding fee

VA loans include a one-time funding fee unless exempt. Veterans with service-connected disabilities are exempt from the funding fee.

Kentucky Housing Corporation Down Payment Assistance

KHC provides the primary down payment assistance programs used by first-time buyers statewide.

KHC program highlights

  • Up to $12,500 in down payment assistance
  • Often structured as a forgivable second mortgage
  • Can be combined with FHA, USDA, VA, or conventional loans
  • $544,232 maximum purchase price (effective June 23, 2025)

Important: Income limits are county-specific and generally include total household income, not just the borrowers on the loan.

How to Qualify as a First-Time Home Buyer in Kentucky (2026)

First-time buyer definition

Most programs define a first-time buyer as someone who has not owned a home in the last three years. Some exceptions may apply.

General qualification guidelines

  • Credit score typically 620+ depending on program
  • Stable two-year employment history
  • Debt-to-income ratio commonly capped around 45–50%
  • Income within county limits (when applicable)
  • Owner-occupied primary residence

Documentation checklist

  • Last 30 days of pay stubs or fixed income statements
  • Two years of W-2s and tax returns
  • Two months of bank statements
  • Government ID and Social Security card

Step-by-Step Kentucky Home Buying Process

Step 1: Review credit and budget

Confirm your credit profile and your comfort level for a monthly payment that includes principal, interest, taxes, and insurance.

Step 2: Get pre-qualified

Get a clear, accurate pre-qualification so you know your price range and which programs fit.

Step 3: Choose the right program

Select FHA, USDA, VA, Conventional, and/or KHC assistance based on eligibility and long-term cost.

Step 4: Work with a Realtor

Use a Kentucky buyer’s agent who understands first-time buyer rules and seller concessions.

Step 5: Submit full application

Provide documentation early to reduce conditions and avoid closing delays.

Step 6: Close and receive keys

Sign, fund, record, and you are a homeowner.

Kentucky Home Buying Timeline

  • Pre-qualification: same day
  • Home search: 2–8 weeks
  • Loan processing: 30–45 days
  • USDA loans: often 35–45 days
  • KHC assistance: allow extra processing time

Frequently Asked Questions

What credit score do I need to buy a house in Kentucky?

FHA allows 580 for 3.5% down and 500 with 10% down. USDA commonly requires 640+ for automated approval. VA has no official minimum, but many lenders prefer 620+. Conventional usually requires 620+, with stronger approvals typically at 700+.

Can I get down payment assistance in Kentucky?

Yes. KHC offers down payment assistance up to $12,500 for qualified first-time buyers, subject to county income limits and program rules.

Can I combine multiple programs?

Yes. KHC down payment assistance can often be paired with FHA, USDA, VA, or conventional financing when structured correctly. Seller concessions may also reduce cash needed at closing.

Ready to Buy Your First Home in Kentucky?

Start with a free pre-qualification and get a clear plan for FHA, USDA, VA, KHC assistance, or a conventional option. No pressure. Accurate numbers.

Call/Text: (502) 905-3708 Email: kentuckyloan@gmail.com

*Estimates and examples are for educational purposes only and may not reflect current market pricing. Not a commitment to lend. Programs, rates, and guidelines are subject to change. Equal Housing Lender.
EVO Mortgage NMLS #1738461 • Joel Lobb NMLS #57916

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How to Qualify for a Kentucky FHA, VA, USDA and Conventional Home Loan




How to qualify for a mortgage

The type of mortgage you’re applying for determines the minimum requirements you’ll have to meet for your down payment, credit score, and debt-to-income ratio.

Find out what type of loan you might qualify for or what aspects of your finances you’ll need to improve to get a better shot at qualifying for a mortgage.

Loan TypeMin. Down PaymentMin. Credit ScoreMax DTIProperty Type
Conventional3%62045%Primary, secondary, investment
VA0%nonenonePrimary
FHA3.5%50050%Primary
USDA0%none41%Primary

Keep in mind: The minimum down payment, minimum credit score, and maximum DTI shown in the table apply to mortgages used to purchase a primary residence. While you can use a conventional loan or a jumbo loan to purchase a home for another purpose, you might need a larger down payment, a higher credit score, more cash reserves, or all three.

Credit score needed to buy a house

Mortgage lending is risky, and lenders want a way to quantify that risk. They use your three-digit credit score to gauge the risk of loaning you money since your credit score helps predict your likelihood of paying back a loan on time. Lenders also consider other data, such as your income, employment, debts and assets to decide whether to offer you a loan.

Different lenders and loan types have different borrower requirements, loan terms and minimum credit scores. Here are the requirements for some of the most common types of mortgages.

Conventional loan

Minimum credit score: 620

A conventional loan is a mortgage that isn’t backed by a federal agency. Most mortgage lenders offer conventional loans, and many lenders sell these loans to Fannie Mae or Freddie Mac — two government-sponsored enterprises. Conventional loans can have either fixed or adjustable rates, and terms ranging from 10 to 30 years.

You can get a conventional loan with a down payment as low as 3% of the home’s purchase price, so this type of loan makes sense if you don’t have enough for a traditional down payment. However, if your down payment is less than 20%, you’re required to pay for private mortgage insurance (PMI), which is an insurance policy designed to protect the lender if you stop making payments. You can ask your servicer to cancel PMI once the principal balance of your mortgage falls below 80% of the original value of your home.

FHA loan

Minimum credit score (10% down): 500

Minimum credit score (3.5% down): 580

FHA loans are backed by the Federal Housing Administration (FHA), a part of the U.S. Department of Housing and Urban Development (HUD). The FHA incentivizes lenders to make mortgage loans available to borrowers who might not otherwise qualify by guaranteeing the federal government will repay the mortgage if the borrower stops making payments. This makes an FHA loan a good option if you have a lower credit score.

FHA loans come in 15- or 30-year terms with fixed interest rates. Unlike conventional mortgages, which only require PMI for borrowers with less than 20% down, all FHA borrowers must pay an up-front mortgage insurance premium (MIP) and an annual MIP, as long as the loan is outstanding.

VA loan

Minimum credit score: N/A

VA loans are mortgages backed by the U.S. Department of Veterans Affairs (VA). The VA guarantees loans made by VA-approved lenders to qualifying veterans or service members of the U.S. armed forces, or their spouses. This type of loan is a great option for veterans and their spouses, especially if they don’t have the best credit and don’t have enough for a down payment.

VA loans are fixed-rate mortgages with 10-, 15-, 20- or 30-year terms.

Most VA loans don’t require a down payment or monthly mortgage insurance premiums. However, they do require a one-time VA funding fee, that ranges from 1.4% to 3.6% of the loan amount.

USDA loan

Minimum credit score: N/A

The U.S. Department of Agriculture guarantees loans for borrowers interested in buying homes in certain rural areas. USDA loans don’t require a minimum down payment, but you have to meet the USDA’s income eligibility limits, which vary by location.

All USDA mortgages have fixed interest rates and 30-year repayment terms.

USDA-approved lenders must pay an up-front guarantee fee of up to 3.5% of the purchase price to the USDA. That fee can be passed on to borrowers and financed into the home loan. If the home you want to buy is within an eligible rural area (defined by the USDA) and you meet the other requirements, this could be a great loan option for you.

What else do mortgage lenders consider?

Your credit score isn’t the only factor lenders consider when reviewing your loan application. Here are some of the other factors lenders use when deciding whether to give you a mortgage.

  • Debt-to-income ratio — Your debt-to-income (DTI) ratio is the amount of debt payments you make each month (including your mortgage payments) relative to your gross monthly income. For example, if your mortgage payments, car loan and credit card payments add up to $1,800 per month and you have a $6,000 monthly income, your debt-to-income ratio would be $1,800/$6,000, or 30%. Most conventional mortgages require a DTI ratio no greater than 36%. However, you may be approved with a DTI up to 45% if you meet other requirements.
  • Employment history — When you apply for a mortgage, lenders will ask for proof of employment — typically two years’ worth of W-2s and tax returns, as well as your two most recent pay stubs. Lenders prefer to work with people who have stable employment and consistent income.
  • Down payment — Putting money down to buy a home gives you immediate equity in the home and helps to ensure the lender recoups their loss if you stop making payments and they need to foreclose on the home. Most loans — other than VA and USDA loans — require a down payment of at least 3%, although a higher down payment could help you qualify for a lower interest rate or make up for other less-than-ideal aspects of your mortgage application.
  • The home’s value and condition — Lenders want to ensure the home collateralizing the loan is in good condition and worth what you’re paying for it. Typically, they’ll require an appraisal to determine the home’s value and may also require a home inspection to ensure there aren’t any unknown issues with the property.

How is your credit score calculated?

Most talk of credit scores makes it sound as if you have only one score. In fact, you have several credit scores, and they may be used by different lenders and for different purposes.

The three national credit bureaus — Experian, Equifax and TransUnion — collect information from banks, credit unions, lenders and public records to formulate your credit score. The most common and well-known scoring model is the FICO Score, which is based on the following five factors:

  • Payment history (35%) — A history of late payments will drag your score down, as will negative information from bankruptcies, foreclosures, repossessions or accounts referred to collections.
  • How much you owe (30%) — Your credit utilization ratio is the amount of revolving credit you’re using compared to your total available credit. For example, if you have one credit card with a $2,000 balance and a $4,000 credit limit, your credit utilization ratio is 50%. Credit scoring models view using a larger percentage of your available credit as risky behavior, so high balances and maxed-out credit cards will negatively impact your score.
  • Length of credit history (15%) — This factor considers the age of your oldest account, newest account and the average age of all your credit accounts. In general, the longer you’ve been using credit responsibly, the higher your score will be.
  • Types of accounts (10%) — Credit scoring models favor people who use a mix of credit cards, installment loans, mortgages and other types of credit.
  • Recent credit history (10%) — Lenders view applying for and opening several new credit accounts within a short period as a sign of financial trouble and it’ll negatively impact your score.

Ready to shop around for a mortgage?







Joel Lobb
Mortgage Loan Officer
Individual NMLS ID #57916


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



Text/call: 502-905-3708

email: kentuckyloan@gmail.com

https://kentuckyloan.blogspot.com/

How to qualify for a mortgage The type of mortgage you’re applying for determines the minimum requirements you’ll have to meet for your down payment, credit score, and debt-to-income ratio. Find out what type of loan you might qualify for or what aspects of your finances you’ll need to improve to get a better shot at qualifying for a mortgage. Loan Type Min. Down Payment Min. Credit Score Max DTI Property Type Conventional 3% 620 45% Primary, secondary, investment VA 0% none none Primary FHA 3.5% 500 50% Primary USDA 0% none 41% Primary Keep in mind: The minimum down payment, minimum credit score, and maximum DTI shown in the table apply to mortgages used to purchase a primary residence. While you can use a conventional loan or a jumbo loan to purchase a home for another purpose, you might need a larger down payment, a higher credit score, more cash reserves, or all three. Credit score needed to buy a house Mortgage lending is risky, and lenders want a way to quantify that risk. They use your three-digit credit score to gauge the risk of loaning you money since your credit score helps predict your likelihood of paying back a loan on time. Lenders also consider other data, such as your income, employment, debts and assets to decide whether to offer you a loan. Different lenders and loan types have different borrower requirements, loan terms and minimum credit scores. Here are the requirements for some of the most common types of mortgages. Conventional loan Minimum credit score: 620 A conventional loan is a mortgage that isn’t backed by a federal agency. Most mortgage lenders offer conventional loans, and many lenders sell these loans to Fannie Mae or Freddie Mac — two government-sponsored enterprises. Conventional loans can have either fixed or adjustable rates, and terms ranging from 10 to 30 years. You can get a conventional loan with a down payment as low as 3% of the home’s purchase price, so this type of loan makes sense if you don’t have enough for a traditional down payment. However, if your down payment is less than 20%, you’re required to pay for private mortgage insurance (PMI), which is an insurance policy designed to protect the lender if you stop making payments. You can ask your servicer to cancel PMI once the principal balance of your mortgage falls below 80% of the original value of your home. FHA loan Minimum credit score (10% down): 500 Minimum credit score (3.5% down): 580 FHA loans are backed by the Federal Housing Administration (FHA), a part of the U.S. Department of Housing and Urban Development (HUD). The FHA incentivizes lenders to make mortgage loans available to borrowers who might not otherwise qualify by guaranteeing the federal government will repay the mortgage if the borrower stops making payments. This makes an FHA loan a good option if you have a lower credit score. FHA loans come in 15- or 30-year terms with fixed interest rates. Unlike conventional mortgages, which only require PMI for borrowers with less than 20% down, all FHA borrowers must pay an up-front mortgage insurance premium (MIP) and an annual MIP, as long as the loan is outstanding. VA loan Minimum credit score: N/A VA loans are mortgages backed by the U.S. Department of Veterans Affairs (VA). The VA guarantees loans made by VA-approved lenders to qualifying veterans or service members of the U.S. armed forces, or their spouses. This type of loan is a great option for veterans and their spouses, especially if they don’t have the best credit and don’t have enough for a down payment. VA loans are fixed-rate mortgages with 10-, 15-, 20- or 30-year terms. Most VA loans don’t require a down payment or monthly mortgage insurance premiums. However, they do require a one-time VA funding fee, that ranges from 1.4% to 3.6% of the loan amount. USDA loan Minimum credit score: N/A The U.S. Department of Agriculture guarantees loans for borrowers interested in buying homes in certain rural areas. USDA loans don’t require a minimum down payment, but you have to meet the USDA’s income eligibility limits, which vary by location. All USDA mortgages have fixed interest rates and 30-year repayment terms. USDA-approved lenders must pay an up-front guarantee fee of up to 3.5% of the purchase price to the USDA. That fee can be passed on to borrowers and financed into the home loan. If the home you want to buy is within an eligible rural area (defined by the USDA) and you meet the other requirements, this could be a great loan option for you. What else do mortgage lenders consider? Your credit score isn’t the only factor lenders consider when reviewing your loan application. Here are some of the other factors lenders use when deciding whether to give you a mortgage. Debt-to-income ratio — Your debt-to-income (DTI) ratio is the amount of debt payments you make each month (including your mortgage payments) relative to your gross monthly income. For example, if your mortgage payments, car loan and credit card payments add up to $1,800 per month and you have a $6,000 monthly income, your debt-to-income ratio would be $1,800/$6,000, or 30%. Most conventional mortgages require a DTI ratio no greater than 36%. However, you may be approved with a DTI up to 45% if you meet other requirements. Employment history — When you apply for a mortgage, lenders will ask for proof of employment — typically two years’ worth of W-2s and tax returns, as well as your two most recent pay stubs. Lenders prefer to work with people who have stable employment and consistent income. Down payment — Putting money down to buy a home gives you immediate equity in the home and helps to ensure the lender recoups their loss if you stop making payments and they need to foreclose on the home. Most loans — other than VA and USDA loans — require a down payment of at least 3%, although a higher down payment could help you qualify for a lower interest rate or make up for other less-than-ideal aspects of your mortgage application. The home’s value and condition — Lenders want to ensure the home collateralizing the loan is in good condition and worth what you’re paying for it. Typically, they’ll require an appraisal to determine the home’s value and may also require a home inspection to ensure there aren’t any unknown issues with the property. How is your credit score calculated? Most talk of credit scores makes it sound as if you have only one score. In fact, you have several credit scores, and they may be used by different lenders and for different purposes. The three national credit bureaus — Experian, Equifax and TransUnion — collect information from banks, credit unions, lenders and public records to formulate your credit score. The most common and well-known scoring model is the FICO Score, which is based on the following five factors: Payment history (35%) — A history of late payments will drag your score down, as will negative information from bankruptcies, foreclosures, repossessions or accounts referred to collections. How much you owe (30%) — Your credit utilization ratio is the amount of revolving credit you’re using compared to your total available credit. For example, if you have one credit card with a $2,000 balance and a $4,000 credit limit, your credit utilization ratio is 50%. Credit scoring models view using a larger percentage of your available credit as risky behavior, so high balances and maxed-out credit cards will negatively impact your score. Length of credit history (15%) — This factor considers the age of your oldest account, newest account and the average age of all your credit accounts. In general, the longer you’ve been using credit responsibly, the higher your score will be. Types of accounts (10%) — Credit scoring models favor people who use a mix of credit cards, installment loans, mortgages and other types of credit. Recent credit history (10%) — Lenders view applying for and opening several new credit accounts within a short period as a sign of financial trouble and it’ll negatively impact your score. Ready to shop around for a mortgage? Joel Lobb Mortgage Loan Officer Individual NMLS ID #57916 American Mortgage Solutions, Inc. 10602 Timberwood Circle Louisville, KY 40223 Company NMLS ID #1364 Text/call: 502-905-3708 email: kentuckyloan@gmail.com https://kentuckyloan.blogspot.com/ Email This BlogThis! Share to Twitter Share to Facebook Share to Pinterest Labels: credit, Credit Score, Debt to Income Ratio, FHA Guidelines, FHA Kentucky Home Loans, Fico Score, Kentucky VA Loans, USDA loans Joel Lobb, Mortgage Broker FHA, VA, KHC, USDA I have helped over 1300 Kentucky families buy or refinance their home over the last 20 years. Realizing that this is one of the biggest, most important financial transactions a family makes during their lifetime, I always feel honored and respected when I am chosen to originate their personal home loan. You can count on me to deliver on what I say, and I will always give you honest, up-front personal attention you deserve during the loan process. I have several advantages over the large banks in town. First, I can search and negotiate for your loan options through several different mortgage companies across the country to get you the best deal locally. Where most banks will offer offer you their one set of loan products. I have access to over 10 different mortgage companies to broker your loan through to get you the best pricing and loan products that may not fit into the bank's program due to credit, income, or other underwriting issues. You will not get lost in the shuffle like most borrowers do at the mega banks; you're just not a number at our company, you are a person and we will treat you like one throughout the entire process.

 
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