I specialize in Kentucky First Time Homebuyers FHA, VA, USDA & Rural Housing, KHC and Fannie Mae mortgage loans. I have helped over 1300 Kentucky families buy their first home or refinance their current mortgage for a lower payment; Kentucky First time buyers we still how available down payment assistance with KHC. Free Mortgage applications/ same day approvals. Web site is not endorsed by the FHA, VA, USDA govt agency. Text/call 502-905-3708 kentuckyloan@gmail.com NMLS 57916 NMLS 1738461
Pages
- 4 Things Required for a KY Mortgage Loan Approval
- Credit Scores Required For A Kentucky Mortgage Loan Approval in 2025
- Kentucky First-time Home Buyer Programs
- Kentucky FHA Mortgage Information
- Kentucky VA Mortgage Loan Information
- USDA Rural Housing Kentucky Loan Information
- Down Payment Assistance Kentucky 2025 Kentucky Housing Corporation KHC
- Zero Down Kentucky Mortgages
- First-time Home-buyers in Kentucky
- Documents Needed Mortgage Approval in Kentucky
- Free Credit Score For Mortgage Loan Approval
- Do's & Dont's before closing:
- Closing Costs Kentucky Mortgage
- Lock Kentucky Mortgage Loan Rate
- Home Inspections Kentucky Mortgage Loan
- Legal / Privacy Policy / Accessibility Statements
- Testimonials
- Mortgage Calculator
- About Me and this website
KENTUCKY VA MORTGAGE LENDER APPROVAL REQUIREMENTS

How to Get a VA Loan with Bad Credit in Kentucky
How to Get a VA Loan with Bad Credit in Kentucky (2025 Guide)
If you're a veteran in Kentucky struggling with a low credit score, you're not alone—and you still have options. The VA home loan program is one of the most flexible mortgage solutions available, even for borrowers with past credit challenges, bankruptcy, or foreclosure. Here's how Kentucky veterans can qualify for a VA loan—even with bad credit.
Key Benefits of a VA Loan for Kentucky Veterans with Bad Credit
- No Minimum Credit Score Required by the VA: Most Kentucky VA lenders require 580–620, but some accept scores as low as 500.
- Faster Recovery After Bankruptcy or Foreclosure: Apply just 2 years after bankruptcy or foreclosure (or 1 year with extenuating circumstances).
- No Down Payment Required: VA loans offer 100% financing.
- No PMI: No monthly private mortgage insurance required.
Common Credit Issues & VA Loan Impact in Kentucky
Credit Issue | VA Loan Impact |
---|---|
Credit score under 580 | May require manual underwriting |
Medical collections | Usually not a problem |
Credit card collections | Older than 12 months may be acceptable |
Child support arrears | Must be resolved |
Student loan collections | Must be brought current |
Recent rent/mortgage lates | Usually disqualifying |
IRS collections | Must be in a payment plan |
Manual Underwriting: Your Best Friend in Kentucky
Manual underwriting allows VA-approved lenders to consider your full financial picture even with credit score issues.
- 12 months of on-time rent or mortgage payments
- Stable employment & income
- Acceptable DTI and residual income
- Documentation for past issues
Compensating Factors That Help Approval
- Substantial savings or liquid assets
- Long-term employment history
- VA disability or retirement income
- Low increase in housing expense
Waiting Periods After Bankruptcy & Foreclosure
Event | Standard | With Extenuating Circumstances |
---|---|---|
Chapter 7 Bankruptcy | 2 years | 1 year |
Chapter 13 Bankruptcy | 12 payments | Court approval |
Foreclosure | 2 years | 1 year |
What Is Considered Bad Credit for VA Loans?
- 500–579: Poor – May qualify with strong compensating factors
- 580–619: Fair – May qualify with manual underwriting
- 620+: Preferred range for automated approval
Tips to Improve VA Loan Approval Chances
- Pay all bills on time for at least 12 months
- Reduce your debts and credit usage
- Don’t apply for new credit before applying for a mortgage
- Gather documentation for past credit issues
- Work with a Kentucky VA loan specialist or broker
No Credit Score? No Problem
Alternative credit like rent, utilities, car insurance, and phone bill payment histories can be used in underwriting.
Why Use a Mortgage Broker for a VA Loan in Kentucky?
- Access to multiple VA-friendly lenders
- Experience with manual underwriting and credit-challenged files
- Better odds of approval tailored to your profile
Final Thoughts
Even with bad credit, veterans in Kentucky can still qualify for a VA home loan. With no minimum credit score required by the VA, manual underwriting flexibility, and experienced local lenders, your path to homeownership is still within reach.
Contact a VA Loan Expert in Kentucky
Joel Lobb – Senior Loan Officer
Phone: (502) 905-3708
Email: kentuckyloan@gmail.com
NMLS ID: 57916
Website: www.kentuckymortgageblog.com
Equal Housing Lender

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.
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:
-
Front-End: Max 45%
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:-
Recent pay stubs
-
W-2s (past 2 years)
-
Tax returns
-
Proof of any additional income
VA Loan – Zero Down for Veterans and Active Duty Military
- Minimum Credit Score: No official requirement (most lenders look for 620+)
- Down Payment: None required
- 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
- Employment: Stable income and employment for last two years
- Past Credit Issues: More flexible on bankruptcies and foreclosures
- Time to Close: ~45–60 days-
- Appraisal Requirements: Property must meet VA Minimum Property Requirements (MPRs)
- 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
- Minimum Credit Score: 640 for GUS AUTOMATED APPROVAL (some exceptions possible on a manual underwrite with no score)
- Down Payment: 0%
- Debt-to-Income Ratio: 32%and 45% with 2 history (2 years preferred of work. Minimum of 12 months)
- Past Credit Issues: Consideration given to past credit challenges, bankruptcy, or foreclosure
- 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.
- 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.
- 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:
Income Documentation:
VA Loan: Appraisal Requirements:
Income Documentation:
USDA Loan: Appraisal Requirements:
Income Documentation:
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 ID# 57916, (www.nmlsconsumeraccess.org).

KENTUCKY VA MORTGAGE LOAN INFORMATION
COMMON KENTUCKY VA LOAN MYTHS FOR KENTUCKY VETERANS AND ACTIVE DUTY BORROWERS
- VA loans are difficult to qualify for.
- All VA loans require a down payment.
- VA loans require private mortgage insurance (PMI).
- You can't refinance a VA loan.
- You can only have one VA loan.
- You can use a VA loan once.
- VA loans are not assumable.
- You can't buy land with a VA loan.
- You can't build a house with a VA loan.
- VA loans only apply to the home purchase itself.
Is it hard to qualify for a VA loan?
Myth #1: Kentucky VA loans are difficult to qualify for.
Fact: VA loans have fewer credit restrictions compared to conventional loans. These reduced restrictions, like a higher debt-to-income (DTI) ratio and more leniency regarding credit scores, mean it can be easier to qualify. VA has no minimum credit score but lenders will have overlays with most being 620 and some going down to 580, with a few going all the way down to 500 but it is very difficult to get approved at this level --- though each individual case and lender will vary.
Do VA loans require a down payment?
Myth #2: All Kentucky VA loans require a down payment.
Fact: While conventional loans generally require down payment options that can reach up to 20%, no such thing is required with a VA home loan at or under the local conforming limit. Down payments are still an option, of course, but they are not a requirement.
The VA allows you to purchase jumbo loans, but the down payment depends on your entitlement:
- Full entitlement - 100% LTV (loan-to-value) maximum
- Partial entitlement - Maximum loan must be calculated using 25% guarantee of 1 unit county loan limit. Max LTV is lesser of max allowed or LTV required to meet 25% guaranty
Do VA loans have PMI?
Myth #3: VA loans require private mortgage insurance (PMI).
Fact: Private mortgage insurance is not required for VA loans. PMI typically adds 0.2%-0.9% of expenses to your monthly mortgage payments when you put less than 20% down. That’s a big additional expense you don’t have to worry about when you get a VA loan. Remember, VA loans do come with a funding fee.
Can you refinance a VA loan?
Myth #4: You can’t refinance a Kentucky VA loan.
Fact: Thanks to VA streamline and cash-out loan programs, VA loans are actually easier to refinance than conventional mortgages. The streamline version lowers the mortgage rate of an already existing VA loan, usually for less than the current principal and interest. This means it doesn't require a credit check or appraisal. The cash-out option involves a credit check and appraisal, since the home’s value represents the maximum loan amount and the new loan will be larger than the existing loan.
How many VA loans can you have?
Myth #5: You can only have one Kentucky VA loan.
Fact: There is no limit to the number of VA loans you can have. While it is possible to have multiple VA loans at once, this depends on VA loan entitlement. VA loan entitlement refers to the amount that the VA will pay your lender if you default on your loan. There is a limit on your VA entitlement. It can be split across multiple loans but the limit remains the same. For full entitlement, the VA covers:
- Up to $36,000 for loans < $144,000
- Up to 25% for loans > $144,000
If, however, you’ve used a portion of your entitlement in one loan that you’re still actively paying off (or defaulted on), the amount of entitlement you have on any new loan is reduced. This means that you may need to put money down yourself instead of having the usual benefit of a zero down payment for VA loans. To learn about VA loan limits and entitlement, visit us here.
How many times can you use a VA loan?
Myth #6: You can only use a Kentucky VA loan once.
Fact: There is no limit on the number of times you can use the VA loan benefit. You can use the benefit an unlimited number of times throughout your life, as long as you still qualify. To qualify, you need to meet certain requirements, which you’ll already be aware of if you’ve taken out a VA loan in the past. For those who haven’t taken out a VA loan prior, you can learn how to qualify here.
Are VA loans assumable?
Myth #7: Kentucky VA loans are not assumable.
Fact: Federally insured and guaranteed loans are usually assumable. This includes VA loans. What does it mean if a loan is assumable? An assumable mortgage is when the lender allows you, the buyer, to take over the current mortgage that the seller has. This can save a lot of money if the interest rates are lower on the existing mortgage than they would be to take out a new mortgage. Assumable mortgages allow buyers, who otherwise wouldn’t qualify for a VA loan, to take over a VA mortgage. This means that you would get most, if not all, of the benefits that come with VA loan eligibility. In order to assume a VA mortgage, you will need to meet certain requirements, such as:
- acceptable credit history and credit score
- debt-to-income ratio to meet guidelines
- No Bankruptcies or foreclosures in last 2 years ( Chapter 7) --Chapter 13 is possible within one year in the plan.
- acceptable work history for last two years
- residual income requirements
- property passing VA standards
You will also be required to pay the VA funding fee that comes with VA loans. This equates to 0.5% of the total loan amount. This may be waived if you’re an eligible military borrower who qualifies for an exemption. Other fees may be required as well.
For sellers, if a non-military borrower assumes your mortgage, your VA entitlement won’t be restored until the loan is paid in full. You will want to request that the lender releases you from liability on the loan to avoid dips in your credit reports if the buyer defaults or makes a late payment.
Can you buy land with a VA loan?
Myth #8: You can’t buy land with a Kentucky VA loan.
Fact: The VA doesn’t authorize buyers to singularly purchase land with a VA loan. However, you can purchase land and build a home on it. This is partially because VA loans are granted with a required occupancy period — you must use the property as your primary residence for at least one year. If there is already a home on the land, this is acceptable. Another acceptable scenario is if you plan to immediately build a home on the land after purchase. This may require a purchase/construction loan.
You can also purchase land with a conventional loan or certain other types of loans. Then you can build a home on the land using a VA construction loan. Upon completion, military borrowers can refinance VA construction loans into permanent VA loans. Builders must be VA-approved.
Finally, you can purchase land and build a property using a non-VA purchase/construction loan. Then you can refinance the loan upon completion of the build into a permanent VA loan (as long as the property meets the VA’s requirements).
Can you use a VA loan to build a house?
Myth #9: You can’t build a house with a Kentucky VA loan.
Fact: VA construction loans do exist, as mentioned above, and under the right circumstances, they can be refinanced into permanent VA loans. Ask your lender about VA purchase/construction loan options.
Can you use a VA loan for home improvement?
Myth #10: Kentucky VA loans only apply to the home purchase itself.
Fact: The VA allows for increases to purchase loans for the purpose of making renovations. The VA’s Energy Efficiency Mortgage program, for instance, lets borrowers add up to $6,000 to their home loan amount to install solar heating, insulation and storm windows, among other features.
In conclusion
Applicant subject to credit and underwriting approval. Not all applicants will be approved for financing. Receipt of application does not represent an approval for financing or interest rate guarantee does not guarantee the quality, accuracy, completeness or timelines of the information in this publication. While efforts are made to verify the information provided, the information should not be assumed to be error free.


Joel Lobb
Mortgage Loan Officer - Expert on Kentucky Mortgage Loans
Website: www.mylouisvillekentuckymortgage.com
Address: 911 Barret Ave., Louisville, KY 40204
Evo Mortgage
Company NMLS# 1738461
Personal NMLS# 57916
For assistance with Kentucky mortgage loans, reach out via email, call, or text Joel Lobb directly.

How the NAR Settlement Is Changing Kentucky Homebuyers Options for Mortgage Loan Approval
On March 15th, 2024, the National Association of Realtors (NAR) agreed to pay $418 million in damages to settle some of their real estate commission lawsuits. The settlement prohibits NAR from requiring a seller's agent to engage in cooperative compensation with a buyer's agent.
The key details are:
- Date: March 15th, 2024
- Payment: NAR agreed to pay $418 million in damages
- Settlement terms: NAR prohibited from requiring seller's agent to cooperate with buyer's agent on commissions
This settlement is significant because the new terms will likely have ripple effects that both consumers and industry stakeholders will experience:
Consumers:
- Potentially lower real estate commission fees as a result of increased competition between agents
- More flexibility and control for sellers in how they compensate buyer's agents
- Possibility of buyers having to pay their agent's fees directly rather than them being bundled into the home price
Industry Stakeholders:
- Real estate brokerages and agents may need to adjust their business models and commission structures
- Reduced influence of NAR in setting industry standards and practices around commissions
- Potential for new business models and pricing approaches to emerge in the real estate market
Overall, this settlement represents a shift in the power dynamics of the real estate industry that could lead to more competition and consumer-friendly changes in the way real estate transactions are conducted. Let me know if you have any other questions!
Real Estate Commissions and Loan Types in Kentucky
The National Association of Realtors (NAR) recently reached a settlement that impacted real estate commissions for different mortgage loan types in Kentucky and across the United States. Here's a breakdown of how commissions can vary:
Conventional Loans
- For conventional mortgage loans, the typical real estate commission is 3-6% of the home's sale price.
- This commission is usually split evenly between the buyer's agent and the seller's agent.
- Buyer may pay their Agent's reasonable commissions or have the seller or agent constructio to the commission of the buyer agents' commission. Typical fees paid by the seller are not subject to the IPC limits. (interested party contribution)
FHA Loans
- For FHA (Federal Housing Administration) loans, the real estate commission is typically slightly lower, around 3-6% of the sale price.
- This lower commission is due to the additional requirements and paperwork involved with FHA loans.
FHA Loans-FHA allows buyer to pay commissions of their agents, or negotiate the seller's or agent contribution to commission to the buyer's agent. – If the State and Local law or custom permits this, and if the commissions and fees are reasonable in amount, the existing policy would not treat it as an IPC. (interested party contribution)
VA Loans
- For VA (Veterans Affairs) loans, the real estate commission is usually the lowest, around 3-6% of the sale price.
- VA loans have strict guidelines, and the lower commission helps offset some of the additional costs associated with these loans.
- VA Loans-Buyer may pay their agent's commission or negotiate the seller or agents contribution to commission to the buyer's agent. (interested party contribution) IPC is not mentioned. A temporary variance is permitted for the Veteran buyer to pay Buyer Broker Fees.
USDA Loans
- USDA (United States Department of Agriculture) loans, which are designed for low-income homebuyers in rural areas, also typically have a real estate commission of 3-6%.
- The lower commission helps make these loans more affordable for the homebuyers.
- USDA loans-Buyer may pay their agents commission or negotiate the seller's or agent's contribute to the commission of the buyer's agent. Real Estate Commission Fees are excluded from the 6% cap for IPC concessions
Interested Party Contributions: On April 15, Fannie Mae and Freddie Mac announced that they will not count buyer’s agent commissions as part of their allowable interested party contributions (IPCs). This is not an update to their selling guides, but a clarification on how seller-paid real estate agent fees are treated. Fannie/Freddie guidelines allow sellers to contribute 2-9% of the property value toward the borrower’s closing costs. In their announcement, Fannie and Freddie stated that “fees or costs customarily paid by the property seller according to local convention are not subject to these financing concessions limits.”
The new terms outlined in this settlement will have ripple effects that both consumers and industry stakeholders will likely experience.
The consumer impact:
Consumers may feel more pressured to finance the broker’s commission into their loan. This could negatively impact underserved, low-to moderate-income, and first-time borrowers who may not have the necessary means to fund a buyer’s commission out of pocket.
Higher mortgage costs:
Financing the buyer-broker commission into the loan poses challenges to the Section 32 points & fees test, which could lead to an increase in higher-cost mortgages and non-qualified mortgage (QM) loans.
On March 15th, 2024, the National Association of Realtors (NAR) agreed to pay $418 million in damages to settle some of their real estate commission lawsuits. The settlement prohibits NAR from requiring a seller's agent to engage in cooperative compensation with a buyer's agent.
The key details are:
- Date: March 15th, 2024
- Payment: NAR agreed to pay $418 million in damages
- Settlement terms: NAR prohibited from requiring seller's agent to cooperate with buyer's agent on commissions
This settlement is significant because the new terms will likely have ripple effects that both consumers and industry stakeholders will experience:
Consumers:
- Potentially lower real estate commission fees as a result of increased competition between agents
- More flexibility and control for sellers in how they compensate buyer's agents
- Possibility of buyers having to pay their agent's fees directly rather than them being bundled into the home price
Industry Stakeholders:
- Real estate brokerages and agents may need to adjust their business models and commission structures
- Reduced influence of NAR in setting industry standards and practices around commissions
- Potential for new business models and pricing approaches to emerge in the real estate market
Overall, this settlement represents a shift in the power dynamics of the real estate industry that could lead to more competition and consumer-friendly changes in the way real estate transactions are conducted. Let me know if you have any other questions!
Joel Lobb Mortgage Loan Officer NMLS 57916
EVO Mortgage911 Barret Ave, Louisville, KY 40204
Company NMLS ID # 173846
Text/call: 502-905-3708
email: kentuckyloan@gmail.com
http://www.
NMLS ID# 57916, (www.nmlsconsumeraccess.org).

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 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.

