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
Kentucky Mortgage Loans with Past Credit Issues: FHA, VA, USDA, Conventional, and KHC Options
Kentucky mortgage loans after credit challenges: your options and next steps
If you’ve had late payments, collections, bankruptcy, or other setbacks, you’re not out of the game. Kentucky homebuyers routinely qualify using the right loan structure, realistic timelines, and clean documentation. Below is a practical breakdown of FHA, VA, USDA, Conventional, and KHC down payment assistance—plus smart internal and external resources.
Program overview
FHA loans in Kentucky
Potential approvals down to 500 with at least 10% down or 10% equity on a refinance.
580+ score typically enables 3.5% down payment.
Gift funds and DPA allowed; flexible underwriting for limited credit depth.
FHA is introducing new guidelines on loan to value ratios and the minimum credit score required for FHA borrowers in Kentucky. As detailed in a Mortgagee Letter from the Department of Housing and Urban Development (HUD), the following credit requirements will apply for FHA borrowers, effective October 4, 2010.
Kentucky FHA Borrowers with a credit score between 500 and 579 will be limited to a loan to value of 90%. A sub 580 FICO credit score borrower will henceforth need to make a 10% minimum down payment on a purchase transaction.
The new credit requirements are not expected to dramatically change the number of Kentucky FHA mortgage approvals.
minimum credit score requirement of 580 to 620 or higher for Kentucky FHA borrowers.
In limited cases, borrowers with scores between 580 and 639 could still obtain mortgage approval with compensating factors such as large down payment (more than 3.5% minimum), low debt to income ratios, and substantial reserves in the bank with a verifiable pay history of no late payments in the last 12 months of rent and on credit report. A late is considered 30 days late in the credit rating world.
Ultimately, there is no singular credit score that can guarantee you a mortgage approval. Each lender is free to set their own credit score requirements.
But many loan types are insured by government organizations. And lenders cannot accept borrowers with credit scores below the minimum these organizations set.
The four most popular home loan types are:
Conventional: Not backed by any government agency, but must meet the Fannie Mae and Freddie Mac underwriting guidelines
FHA: Loans backed by the Federal Housing Administration
VA: Loans backed by the US Department of Veterans Affairs (for military members)USDA: Loans backed by the US Department of Agriculture (for low- to moderate-income families who buy homes in rural areas)
The minimum credit score requirements for each of these loan types:
Conventional:
620 SCORE NEEDED. BUT TO GET APPROVED FOR A FANNIE MAE LOAN MOSTLY LIKE YOU WILL NEED A 720 SCORE OR HIGHER IF YOU HAVE LESS THAN 20% EQUITY POSITION OR LESS THAN 20% DOWN PAYMENT DUE TO PRIVATE MORTGAGE INSURANCE
FHA:
580 for a 3.5% down payment 500 for down payments of at least 10% **MOST FHA LENDERS WILL WANT A 580 to 620 CREDIT SCORE NOWADAYS
VA:
No minimum BUT MOST VA LENDERS WILL WANT A 580 to 620 CREDIT SCORE
USDA:
No minimum, but with a credit score of at least 620 to 640 you could qualify for streamlined credit analysis and chances of approval goes way down if score is below 640...
Which credit score is used to qualify for a Mortgage loan in Kentucky?
For example if you have a 598, 625, 604 on each of the main three reporting agencies, then your qualifying fico score would be 604.
If you’re planning to apply for a mortgage, be aware that the credit score you see on your application might differ slightly from the one you’re used to.
It might even be different than what comes up when you monitor your credit, or even when you apply for a car loan.
Banks use a slightly different credit score model when evaluating mortgage applicants. Below, we go over what you need to know about credit scores you’re looking to buy a home.
The scoring model used in mortgage applications
While the FICO® 8 model is the most widely used scoring model for general lending decisions, banks use the following FICO scores when you apply for a mortgage:
As you can see, each of the three main credit bureaus (Equifax, Experian and TransUnion) use a slightly different version of the industry-specific FICO Score. That’s because FICO tweaks and tailors its scoring model to best predict the creditworthiness for different industries and bureaus. You’re still evaluated on the same core factors (payment history, credit use, credit mix and age of your accounts), but the categories are weighed a little bit differently.
The FICO 8 model is known for being more critical of high balances on revolving credit lines. Since revolving credit is less of a factor when it comes to mortgages, the FICO 2, 4 and 5 models, which put less emphasis on credit utilization, have proven to be reliable when evaluating good candidates for a mortgage.
Mortgage lenders pull all three reports,from all three bureaus, but they only use one when making their final decision.
“A bank will use all three bureaus,”--- “It’s called a tri-merge.”
If all three of your scores are the same, then their choice is simple. But what if your scores are different?
If two of the three scores are the same, lenders use that one, regardless of whether it’s higher or lower than the other one.
And if you are applying for a mortgage with another person, such as your spouse or partner, each applicant’s FICO 2, 4 and 5 scores are pulled. The bank identifies the median score for both parties, then uses the lowest of the final two.
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).
If you’re a first-time homebuyer in Kentucky, chances are you’ve been checking your credit score on free apps like Credit Karma. It feels like a smart step toward homeownership. But here’s the reality: the score you see on your phone isn’t the score your mortgage lender will use.
This mismatch leaves many Kentucky homebuyers shocked — and sometimes discouraged — when they sit down for a mortgage pre-approval. The truth? It’s not your fault, and it’s more common than you think.
As a Kentucky mortgage loan officer with over 20 years of experience helping 1,300+ families buy homes, I see this confusion almost daily. Let’s break down why your Credit Karma score doesn’t match your mortgage FICO® score — and what that means for your path to homeownership.
1. What Your Credit Karma Score Really Means
Credit Karma is a helpful tool, but it’s not designed for mortgage approval. Here’s why:
Scoring Model: Credit Karma uses the VantageScore model.
Data Sources: It pulls from only two credit bureaus (Equifax & TransUnion) — not Experian.
Primary Purpose: Credit Karma’s purpose is consumer education, not lending decisions.
Mortgage Validity: Mortgage lenders do not use VantageScore for approval.
👉 Bottom line: Your Credit Karma score is best used to track trends in your credit health — not to measure mortgage readiness.
2. What Mortgage Lenders Actually Use: The FICO® Mortgage Scores
When applying for an FHA, VA, USDA, KHC, or Conventional loan in Kentucky, lenders are required to use older, more conservative FICO® models (2, 4, 5) — not the newer FICO 8 or VantageScore.
Here’s the breakdown:
Credit Bureau
Mortgage FICO Model Used
Experian
FICO® Score 2
Equifax
FICO® Score 5
TransUnion
FICO® Score 4
The “Middle Score Rule”
If you have three different scores, the middle one is used.
Example: 680 / 700 / 720 → 700 qualifies.
If two scores are the same, that repeated score is used.
Example: 690 / 690 / 710 → 690 qualifies.
These mortgage FICO scores are stricter and more sensitive to things like:
Collections
Recently opened accounts
Hard inquiries
This is why your mortgage score is often 10–50+ points lower than Credit Karma.
3. Credit Karma vs. Mortgage FICO: Side-by-Side Comparison
Factor
Credit Karma (VantageScore)
Mortgage FICO (2, 4, 5)
Used for Mortgages?
❌ No
✅ Yes
Data Pulled From
Equifax & TransUnion
All 3 Bureaus
Typical Score Difference
10–50+ points higher
Accurate for approval
Purpose
Consumer monitoring
Lending decisions
4. Kentucky Mortgage Credit Score Requirements
Here are the minimum mortgage FICO scores most lenders look for in Kentucky:
FHA Loans: 580 minimum
VA Loans: 620+
USDA Loans: 620+
Conventional Loans: 620 minimum, but 680+ improves approval chances and interest rates
💡 Pro Tip: If you want to see your true mortgage scores before talking to a lender, you can use myFICO.com, which provides access to the same models (FICO 2, 4, 5) we use.
5. Next Steps: Get Pre-Approved the Right Way in Kentucky
Don’t risk disappointment by relying on a consumer app score. The only way to know your true mortgage-ready credit score is to work with a licensed Kentucky mortgage lender who will pull your official FICO 2, 4, and 5 scores.
By getting pre-approved the right way, you’ll:
Avoid surprises when house hunting
Know exactly what price range you can afford
Get positioned for the best possible loan program
A Final Word from Joel Lobb, Kentucky Mortgage Loan Officer
“Your Credit Karma score won’t cut it—we need to pull the FICO 2, 4, 5 scores to get you approved and locked into the right loan. Let’s do this the right way.”
Why credit scores matter for mortgage underwriting
Mortgage lenders use FICO mortgage score models (FICO 2, 4, 5). Consumer scores (VantageScore, Credit Karma) are not used for final underwriting decisions.
Minimum credit scores by program
Conventional: Minimum 620 (automated); better pricing with higher scores. Learn more
The loan must be for a property used for your primary residence.
The property must be appraised by an FHA-approved appraiser.
The property must be safe, sound and secure, in compliance with minimum property standards as defined by the U.S. Department of Housing and Urban Development, or HUD.
You must have a valid Social Security number and be a legal resident of the U.S.
You must have a minimum credit score of 580 with a down payment of at least 3.5 percent, or a minimum credit score of 500 with a down payment of at least 10 percent.
You may not have delinquent federal debt or judgments, or debt associated with past FHA loans.
You must have steady employment history.
You must make a down payment of at least 3.5 percent of the purchase price. If the down payment was gifted by a family member, documentation is required.
You must have a DTI ratio that does not exceed limits.
Any judgments or collections on the credit report must be resolved or satisfactorily explained.
Any required waiting period has passed, as follows:
Event
Waiting period
Waiting period with extenuating circumstances (nonrecurring events beyond your control that result in sudden, significant, prolonged reduction in income or a catastrophic increase in financial obligations)
Chapter 7 or 11 bankruptcy
Four years
Two years
Chapter 13 bankruptcy
Two years from discharge, or four years from dismissal
Two years
Multiple bankruptcies
Five years if more than one filing in last seven years. Most recent bankruptcy must have been caused by extenuating circumstances.
Three years from most recent discharge or dismissal
Foreclosure
Seven years
Three years, with additional requirements after three years up to seven years: 90 percent maximum loan-to-value purchase, principal residence, limited cash-out refinance
Deed-in-lieu of foreclosure, preforeclosure sale (short-sale), or charge-off of mortgage account
Four years
Two years
Debt-to-Income Ratio Limits for Kentucky FHA Loans
Two DTI ratio figures are calculated when considering an Kentucky FHA mortgage. Thefront-end DTIratio is your total monthly housing expense, which includes the mortgage principal and interest, mortgage insurance, homeowners insurance, property taxes and applicable homeowners association fees, divided by your total monthly income. The back-end DTI ratio is your total monthly debt obligation, including housing, minimum credit card payments, auto loans, student loans and any other required monthly debt payment, divided by your total monthly income.
Standard FHA front- and back-end DTI limits are 31 percent and 43 percent, respectively. If you earn $3,500 per month, your front-end DTI cannot exceed $1,085 and the sum of all your monthly debt obligations cannot exceed $1,505. f Applications for Kentucky FHA borrowers with lower salaries and higher DTIs are manually underwritten. Manual underwriting means that your lender assigns a person to review your loan application and documents, versus running your information through an automated underwriting system. Manually underwritten FHA loans allow for front- and back-end DTI ratios of up to 40 percent and 50 percent, respectively. To qualify for these higher DTI limits, you will need to meet other requirements.
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