Louisville Kentucky First Time Home Buyer Programs

If you are a potential Louisville Kentucky First Time home buyer first time home buyer in Louisville Kentucky, we welcome you! It is our utmost desire to assist you in reaching the goal of buying your first home. 

We've gathered the most helpful, beneficial resources together on this page to make things as easy as possible for you.


We have access to all the Louisville Kentucky First Time home Buyers programs including, FHA, VA, KHC, and USDA, Rural Housing Zero Down home loans--

What is available for first time home buyer financial programs in Kentucky?

The first place to start in that search is the Kentucky Housing Corporation. They provide generous assistance to first time home buyers in the form of grants to help with the down payment as well as closing costs.

The Kentucky Housing Corporation has a down payment assistance program for eligible homebuyers who meet specific moderate-income limits to help with down payment and/or closing costs. Check and see what is available and if you qualify....


There are other Louisville, Kentucky first time homeownership programs available through the Kentucky Housing Corporation. 

Your household income and expenses

Lenders look at your income in ways other than the total amount; how you earn it is also important. For example, income from bonuses, commissions and overtime can vary from year to year. If these sources make up a large percentage of your income, your lender will want to know how reliable they are.

Your lender will also consider the relationship between your income and expenses. Generally, your fixed housing expenses (mortgage payment, insurance, and property taxes, but not repairs or maintenance) should not be more than 28 percent of your gross monthly income, although this is not an absolute rule. Your lender will also consider other long-term debts, such as car loans or college loans. It is a good idea to bring the following when you meet with your lender:

Income

Employment, salary and bonuses, and any other source of income for the past two years (bring your most recent pay stub, previous year’s W-2 forms, and tax returns if possible)
The most recent account statement showing the amount of any dividend and interest income you received during the past two years 

Official documentation to support the amount of any other regular income you may receive (alimony, child support, etc.) Job stability is a factor that a mortgage lender will look for, and two years at your current job helps, but this also is not an absolute requirement. If you change jobs but stay in the same line of work, you should not have a problem — especially if the job change is an advancement or increase in income.

Credit score

Your credit score also helps to predict how likely you are to repay the mortgage debt. Credit scores will determine if you qualify for the loan, what your rate is, and mortgage insurance payments each month. Typical fico scores wanted for an automated approval run around 580 for an FHA loan and VA loan, 620 for a USDA, 620 for a KHC Loan with Down Payment Assistance, and 620 for an AU approval for Fannie Mae Loan.

Personal assets

Current balances and recent statements for any bank accounts, including checking and savings
Most recent account statement showing current market value of any investments you may have, such as stocks, bonds or certificates of deposit
Documentation showing interest in retirement funds
Face amount and cash value of life insurance policies
Value of significant pieces of personal property, including automobiles
Debt Information
The balances and account numbers of your current loans and debts, including car loans, credit card balances and any other loans you may have 

Underwriting

The lender does the best possible job of ensuring that a borrower qualifies for a loan. The final decision, however, rests with the lender's underwriter, who measures the total risk that the specific investor, who backs up the loan, is taking. Each investor (or investment company) has its own underwriting guidelines (often using statistical models), so while the underwriters evaluate many of the same factors as the lenders, they may look more closely at some areas than others, depending on the guidelines.

 For example, while the lender may have pre-approved you before you chose a home, by the time you get to underwriting, you will have chosen the property you want to buy, and the underwriter will review the property details closely. 

However, most of the information used is the same as that used by the lender, but it may be evaluated differently. The underwriter will evaluate the borrower's ability to pay (income), willingness to pay (credit history), and the collateral (property). As underwriters analyze each of these risks (although this is not a complete list), here are some possible guidelines they may use:

Is the income stable from month to month and year to year? 

Has the borrower been on his/her current job and in the same industry for a sufficient amount of time? 

A minimum of two years is the standard guideline, but exceptions can be made.

Can the income be verified? 

2 years taxes, last 30 days of paystubs 

Does the borrower have late payments, collections, or a bankruptcy? 

If so, is there an explanation that can be provided for the late payments/collections/bankruptcy? 

FHA, VA requires 2 years removed from bankruptcy and USDA requires 3 years removed from bankruptcy. 

 
Fannie Mae requires 4-7 years after a bankruptcy. 

 
Does the borrower have excessive monthly debts to repay? Typical Debt to income ratios for a no money down loan are limited to 45% of your total gross monthly income for a USDA or KHC loan.
Is the borrower maxed out on credit cards? 

Pay down your credit card balances to less than 25% of your credit limits before you apply for a mortgage loan.

The down payment

A down payment is a percentage of your home's value. The type of mortgage you choose determines the down payment you will need. It can range from zero to 20 percent, or more if you wish.

A number of loans are available that do not require high down payments, particularly for first-time home buyers. 

FHA loans, for example, may require less than 5 percent down, and veterans or those on active duty in the military can obtain loans with no down payment at all. 

USDA loans are offered to rural home buyers with a no down payment option just like VA loans.

In addition to down payment assistance offered through Kentucky Housing where you don't have to put a down payment down with income caps for both KHC and USDA loans.

Joel Lobb  Mortgage Loan Officer NMLS 57916

EVO Mortgage
 911 Barret Ave, Louisville, KY 40204
Company NMLS ID # 173846

Text/call: 502-905-3708

email: kentuckyloan@gmail.com

http://www.mylouisvillekentuckymortgage.com/

NMLS 57916  | Company NMLS #173846

This is not a commitment to lend or extend credit. Restrictions may apply. Information and/or data is subject to change without notice. All loans are subject to credit approval. THIS PRODUCT OR SERVICE HAS NOT BEEN APPROVED OR ENDORSED BY ANY GOVERNMENTAL AGENCY, AND THIS OFFER IS NOT BEING MADE BY AN AGENCY OF THE GOVERNMENT. This email was sent as part of my effort to maintain our relationship and keep you well informed of market conditions. It could be interpreted as a commercial message. If you would like to stop receiving these emails, you may click here to unsubscribe at any time:

What is the minimum Credit Score Needed to Buy a House and get a Kentucky Mortgage Loan?

Kentucky Home Buyers: What Credit Score Do You Need?

Buying a home in Kentucky? Your credit score plays a crucial role in determining which mortgage loans you qualify for and how much you’ll pay in interest rates. Understanding the minimum credit score requirements for FHA, VA, USDA, and Conventional loans can help you prepare for homeownership and secure the best loan options.

While there's no single, simple answer, this guide will break down the minimum credit score requirements for various Kentucky mortgage options, empowering you to understand where you stand and how to achieve your homeownership goals. We'll cut through the confusion and give you the straight facts!

Why Your Credit Score Matters: More Than Just a Number

Think of your credit score as your financial reputation. Lenders use it to assess the risk of lending you money. A higher score signals lower risk, translating to better interest rates, more favorable loan terms, and potentially lower down payment requirements.

Here's the credit score impact on interest rates and your wallet (in general terms):

• 760-850: The Gold Standard! Expect the lowest interest rates and the most attractive loan options.
• 700-759: Excellent! You'll still qualify for very competitive rates and favorable terms.
• 640-699: Good. You'll likely be approved, but interest rates will be slightly higher.
• 620-639: Acceptable. This range is often the minimum for conventional loans, but be prepared for less favorable rates.

As the guide shows, aiming for a 740+ score can lead to best rates and closing costs on mortgage loans, especially Conventional Mortgage Loans,.

Kentucky Mortgage Options: Credit Score Requirements Deconstructed. 

Let's explore the minimum credit score requirements for different Kentucky mortgage types:

Conventional Loan

• At least 3%-5% down• Closing costs will vary on which rate you choose and the lender. Typically, the higher the rate, the lesser closing costs due to the lender giving you a lender credit back at closing for over par pricing. Also, called a no-closing costs option. You have to weigh the pros and cons to see if it makes sense to forgo the lower rate and lower monthly payment for the higher rate and less closing costs.

Fico scores needed start at 620, but most conventional lenders will want a higher score to qualify for the 3-5% minimum down payment requirements Most buyers using this loan have high credit scores (over 720) and at least 5% down.

The rates are a little higher compared to FHA, VA, or USDA loan but the mortgage insurance is not for life of loan and can be rolled off when you reach 80% equity position in home. Conventional loans require 4-7 years removed from Bankruptcy and foreclosure.
Kentucky USDA Rural Housing Program

If you meet income eligibility requirements and are looking to settle in a rural area, you might qualify for the KY USDA Rural Housing program. The program guarantees qualifying loans, reducing lenders’ risk and encouraging them to offer buyers 100% loans. That means Kentucky home buyers don’t have to put any money down, and even the “upfront fee” (a closing cost for this type of loan) can be rolled into the financing.

 
Fico scores usually wanted for this program center around 620 range, with most lenders wanting a 640 score so they can obtain an automated approval through GUS. GUS stands for the Guaranteed Underwriting system, and it will dictate your max loan pre-approval based on your income, credit scores, debt to income ratio and assets.

 
They also allow for a manual underwrite, which states that the max house payment ratios are set at 29% and 41% respectively of your income.

They loan requires no down payment, and the current mortgage insurance is 1% upfront, called a funding fee, and .35% annually for the monthly mi payment. Since they recently reduced their mi requirements, USDA is one of the best options out there for home buyers looking to buy in a rural area

A rural area typically will be any area outside the major cities of Louisville, Lexington, Paducah, Bowling Green, Richmond, Frankfort, and parts of Northern Kentucky. There is a map link below to see the qualifying areas.

There is also a max household income limits with most cutoff starting at 109,500 for a family of four, and up to $136,000 for a family of five or more.

The income limits change every spring, so make sure and check to see what updated income limits are.
USDA requires 3 years removed from bankruptcy and foreclosure
There is no max USDA loan limit.

 

Kentucky FHA Loan

FHA loans are good for home buyers with lower credit scores and no much down, or with down payment assistance grants. FHA will allow for grants, gifts, for their 3.5% minimum investment and will go down to a 580-credit score.

 
The current mortgage insurance requirements are kind of steep when compared to USDA, VA, but the rates are usually good so it can counteract the high mi premiums. As I tell borrowers, you will not have the loan for 30 years, so don’t worry too much about the mi premiums.

 
The mi premiums are for life of loan like USDA.

 
FHA requires 2 years removed from bankruptcy and 3 years removed from foreclosure. 

 

Kentucky VA Loan

VA loans are for veterans and active-duty military personnel. The loan requires no down payment and no monthly mi premiums, saving you on the monthly payment. It does have an funding fee like USDA, but it is higher starting at 2% for first time use, and 3% for second time use. The funding fee is financed into the loan, so it is not something you have to pay upfront out of pocket.

 
VA loans can be made anywhere, unlike the USDA restrictions, and there is no income household limit and no max loan limits in Kentucky

 
Most VA lenders I work with will want a 580-credit score, even though VA says in their guidelines there is no minimum score, good luck finding a lender
VA requires 2 years removed from bankruptcy or foreclosure
Clear Caviars needed to for a VA loan.

 

Kentucky Down Payment Assistance

This type of loan is administered by KHC in the state of Kentucky. They typically have $10,000 down payment assistance year around, that is in the form of a second mortgage that you pay back over 10 years. Current terms are $10,000 over 10 years at 3.75% 

Sometimes they will come to market with other down payment assistance and lower market rates to benefit lower income households with not a lot of money for down payment.

KHC offers FHA, VA, USDA, and Conventional loans with their minimum credit scores being set at 620 for all programs. The conventional loan requirements at KHC requires 660 credit score.
The max debt to income ratios is set at 50% and 50% respectively.

 FHA Loans – Best for First-Time Homebuyers with Low Credit

500-579 Credit Score – Requires 10% down payment
580+ Credit Score – Requires 3.5% down payment
Flexible credit guidelines & lower down payments
Easier approval for first-time buyers & those with past credit issues

VA Loans – Best for Veterans and Active Military

No official minimum credit score
 Most lenders require 580-620+
0% down payment – No mortgage insurance required
Best for veterans, active-duty military & eligible spouses

USDA Loans – Best for Rural & Suburban Homebuyers

Minimum 620 to 640+ Credit Score (for automatic approval through GUS )
 Some lenders may approve below 640 with manual underwriting with a minimum score of 581 and above
0% down payment required
Best for low-to-moderate-income homebuyers in rural areas Income limits and property locations restrictions 

Conventional Loans – Best for Borrowers with Good Credit

Minimum 620+ Credit Score-Truthfully, if scores are 620 and less than 20% down payment look at going to the government loan programs like FHA, USDA and VA 
Higher scores (760+) qualify for better interest rates
Down payment: 3%-5% or more
Best for buyers with strong credit & stable income

Kentucky Housing Corporation (KHC) Loans – First-Time Buyer Assistance

Minimum 620+ Credit Score, Income limits and max dti is 50% usually used for the down payment and closing costs on a FHA, VA, USDA or Conventional loan with the $10k DAP assistance
Offers down payment assistance for eligible buyers
Best for first-time homebuyers needing financial help 

Non-QM Loans – Alternative Financing for Unique Situations

Minimum 500-620 Credit Score (Varies by lender)
 Includes Bank Statement Loans, DSCR Loans, Asset-Based Loans
Best for self-employed borrowers, real estate investors & those with non-traditional income sources

Why Choose Non-QM? These non-traditional loans are great for borrowers who don’t qualify for conventional or government-backed loans due to income verification challenges.

How Credit Scores Affect Mortgage Interest Rates

Your credit score doesn’t just determine loan eligibility—it also affects the interest rate you receive.

Here’s how credit scores impact mortgage rates (examples based on typical loan rates):

Credit Score	Estimated Interest Rate	Kentucky Mortgage Loan Options Available
760-850	Best Rate (Lowest Cost)	Kentucky Conventional, FHA, VA, USDA
700-759	Good Rate	Kentucky Conventional, FHA, VA, USDA
640-699	Higher Rate	Kentucky FHA, VA, USDA, Some Conventional
620-639	Even Higher Rate	Kentucky FHA, VA, USDA, Some Conventional
Below 620	Limited Options, Highest Rates	FHA, VA, USDA and  (with higher down payment), Non-QM

1 -  Email - kentuckyloan@gmail.com 

2.   Call/Text - 502-905-3708

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.

Kentucky Local Home Loan Lender Services

 First-Time Home Buyers Welcome
 FHA, Rural Housing (USDA), VA, and Kentucky Housing Corporation (KHC) Loans
 Conventional Loan Options Available
 Fast Local Decision-Making
 Experienced Guidance Through the Home Buying Process

KENTUCKY USDA RURAL HOUSING APPROVAL GUIDE FOR A MORTGAGE

What is the Current Mortgage Insurance Requirements for a Louisville Kentucky FHA Loan?

On a KY FHA loan , you typically have to pay both an upfront and an annual mortgage insurance premium (MIP):

Upfront MIP on A Kentucky FHA Loan

Kentucky FHA loans now collect  upfront MIP cost 1.75% of the home loan. For instance, if you borrow $100,000, you must pay $1,750 ($100,000 x 1.75%). It can be paid in full upfront, or added to your mortgage balance. This MIP applies no matter your loan amount or term.  Most FHA buyers in Kentucky choose to finance the MIP into the loan. If you decide to pay the upfront MI out of your own funds, then you must pay all the mi premium, not just a part of it.  The FHA upfront mi fee is not refundable now. This is a change whereas you use to be able to get e refund if the loan was refinanced or paid off in the first 5 years.


Annual MIP on a Kentucky FHA loan

The  annual MIP or monthly mortgage insurance is divided by 12 and added to your monthly mortgage payment. The current maximum of 1.35% of the loan amount. How much and how long you have to pay the annual MIP depends on the originating date of your loan, the amount, and your loan-to-value ratio. For example, if you borrow $100,000 on a 30 year FHA loan, the monthly mortgage insurance would be
$112.00  ($100,00 x 1.35=$1350/12=$112.00 monthly mi)

The monthly mi payable to FHA is now for life of loan. This is a big change to keep in mind because FHA use to drop the monthly mi once you reached to 78% ltv of the original balance.


For Kentucky FHA loans with less than 15 year terms the monthly mortgage insurance (Annual MIP) much cheaper.

FHA is changing the duration for the collection of MIP:

o For all mortgages with an original principal LTV of 90% or less, regardless of loan term, the annual MIP will be assessed for 11 years.
o For all mortgages with an original principal LTV greater than 90%, regardless of loan term, the annual MIP will be assessed for the entire life of the loan.
Loans of 15 year terms or less with LTV 78% or less will pay an MIP amount of 45 bps.
FHA

KHC's Down payment Assistance Program (DAP)

Down Payment Assistance Programs in Kentucky

Kentucky Down payment assistance loans are available up to $10,000 for Mortgage

For Kentucky First Time Home Buyers to current Kentucky homeowners, many state, county and local housing agencies offer affordable loan programs with Down Payment Assistance (DPA), subject to availability of funds and credit qualifying. 

Kentucky Down Payment Assistance programs  can vary with single products or sometimes can be a combination of products such as Mortgage Credit Certificates (MCC), Grants, DPA’s along with closing cost assistance and low interest rates and fees that can help individuals and families become successful homeowners.

All Kentucky home borrowers must qualify for an underlying mortgage product according to the Housing Finance Agency authority (FHA, VA, USDA or Conventional). 

Housing loan programs are then layered on top to provide additional benefits. If eligible, the borrower can also add a down payment and closing cost assistance to their loan according to individual program guidelines

Kentucky Housing Regular Down Payment Assistance of $10,000

• Purchase price up to $510,939​ with Secondary Market​ or Mortgage Revenue Bond (MRB) income limits.
• Assistance in the form of a loan up to $10,000 in $100 increments.
• Repayable over a 10-year term at 3.75 percent.
• Available to all KHC first-mortgage loan recipients.

​​More About Down Payment and Closing Costs

• No liquid asset review and no limit on borrower reserves.
• Specific credit underwriting standards may apply to down payment programs.​

Kentucky Housing Mortgage Revenue Bonds (MRB)

• Informational Flyer
  
• First-time homebuyers statewide in non-targeted areas​
  
• First-time and repeat homebuyers statewide in targeted areas
  
• 30-year fixed interest rate
  
• Principal residence ONLY
  
• Purchase Price Limit: $510,939
  
• Borrower must meet KHC's MRB Income Limits
  

FHA

• Insured by the Federal Housing Administration
• 3.5 percent down payment
• KHC DAP applicable
• Upfront and monthly mortgage insurance
• Minimum credit score of 620

VA

• Guaranteed by the Veterans Administration for qualified military veterans
• No down payment if the property appraises for the sales price or greater
• KHC DAP applicable
• Minimum credit score of 620
• No monthly mortgage insurance payments
  

RH​​S

• Guaranteed by Rural Housing Services (RHS)
• Home must be located in a rural area as defined by RHS
• No down payment if the property appraises for the sales price or greater
• KHC DAP applicable
• Upfront and monthly mortgage insurance
• Minimum credit score of 620
  

​​​​

​​​​​Secondary Market Funding Source

• First-time and repeat homebuyers statewide
  
• 30-year fixed interest rate
  
• Principal residence ONLY
  
• Purchase Price Limit:  $510,939​
  
• Borrower must meet KHC's Secondary Market Income Limits
  

Conventional Preferred ​Program

• Minimum credit score of 660
• 3 percent down payment
• Monthly mortgage insurance (charter coverage)
• KHC DAP applicable
• No minimum borrower contribution
• No reserves required
• 80 percent AMI in​​come         
  

Conventional Preferred Plus 80

• Minimum credit score of 660
• 3 percent down payment
• Monthly mortgage insurance (standard coverage)
• KHC DAP applicable
• No minimum borrower contribution
• No reserves required
• Secondary Market​ Income limits apply
  

Freddie HFA ​Advantage

• Press release about new program
  
• Informational flier
  
• Minimum credit score of 660
• 3 percent down payment
• Monthly mortgage insurance (charter coverage ≤ 80% AMI​, standard coverage > 80% AMI)
• KHC DAP applicable
• No minimum borrower contribution
• No reserves required
• Secondary Market​ Income limits apply
  

FHA

• Insured by the Federal Housing Administration
• 3.5 percent down payment
• KHC DAP applicable
• Upfront and monthly mortgage insurance
• Minimum credit score of 620

Refinance Options (Available only through Secondary Market)         

• Credit qualifying Streamline Refinance and Rate/Term Refinance
• Insured by the Federal Housing Administration
• Cash back to borrower not to exceed $500
• Upfront and monthly mortgage insurance
• Minimum credit score of 620         

VA

• Guaranteed by the Veterans Administration for qualified military veterans
• No down payment if the property appraises for the sales price or greater
• KHC DAP applicable
• Minimum credit score of 620
• No monthly mortgage insurance payments
  

​ Refinance Options (Available only through Secondary Market)         

• VA IRRRL
  
• ​620 minimum credit score
  
• No appraisal required
  
• 30-year term
  
• VA existing loan
  

R​H​​S

• Guaranteed by Rural Housing Services (RHS)
• Home must be located in a rural area as defined by RHS
• No down payment if the property appraises for the sales price or greater
• KHC DAP applicable
• Upfront and monthly mortgage insurance
• Minimum credit score of 620
  

Refinance Options (Available only through Secondary Market)         

• RHS Streamlined-Assist Refinance Program
  
• 620 minimum credit score
  
• No appraisal required
  
• Must have made timely mortgage payments for the last 12 months
  
• 30-year term
  
• RHS existing 502 guaranteed loan​

1 -  Email - kentuckyloan@gmail.com 

2.   Call/Text - 502-905-3708

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.

Kentucky Local Home Loan Lender Services

 First-Time Home Buyers Welcome
 FHA, Rural Housing (USDA), VA, and Kentucky Housing Corporation (KHC) Loans
 Conventional Loan Options Available
 Fast Local Decision-Making
 Experienced Guidance Through the Home Buying Process

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