Can you use Foster Income for a Kentucky Mortgage Loan Approval?

 Foster Income for a Kentucky Mortgage 

Yes, if it can be documented that foster care income has been received for the last 2 years that income is likely to continue for at least 3 years from the date of the Note, then it can be used to qualify. 

Yes, we need to show 24 months receipt of this income, possible exception if only received for 12 months, and we would need something from the agency showing this will continue for 3 years.

Foster-Care Income for a Mortgage Loan Approval

What are the guidelines?

Income received from a state- or county-sponsored organization for providing temporary care for one or more children may be considered acceptable stable income if the following requirements are met.

✓	Verification of Foster-Care Income
	Verify the foster-care income with letters of verification from the organizations providing the income.
	Document that the borrower has a two-year history of providing foster-care services. If the borrower has not been receiving this type of income for two full years, the income may still be counted as stable income if the borrower has at least a 12-month history of providing foster-care services, and the income does not represent more than 30% of the total gross income that is used to qualify for the mortgage loan.

Comparison of Guidelines for Foster Care Income by Loan Type

Different loan programs have different rules for foster care income. Below is a comparison table summarizing how each major loan type treats this income, plus their documentation and gross-up allowances:

Loan Program	Use of Foster Care Income	Required History	Continuance Required	Documentation Needed	Gross-Up (Non-Taxable)
FHA (HUD)	Allowed if stable and ongoing. Counts in DTI.	2 years providing care. Less if strong case rarely.	Must be “reasonably likely to continue” (no fixed 3-year proof, just no evidence of stopping).	Letter from agency verifying 2-year history & payments.	Up to 15% increase (if tax-free).
Conventional (Fannie Mae)	Allowed if stable. Counts in DTI.	2 years history OR 12+ months if ≤30% of total income.	No need to document 3-year continuance explicitly.	Letters from paying organization verifying income.	Up to 25% increase (standard for non-taxable income).
Conventional (Freddie Mac)	Allowed if stable. Counts in DTI.	2 years consistent receipts (no short history exception mentioned).	Should likely continue 3+ years (no lender proof required unless doubts).	Agency letters; potentially proof of continued foster placement if available.	Up to 25% increase (standard for non-taxable income).
USDA (Rural)	Not allowed as qualifying income for loan repayment.	N/A – income not counted.	N/A – income not counted.	N/A – they exclude foster payments entirely.	N/A (income can’t be used, so gross-up doesn’t apply).
VA (Veterans)	Not counted toward DTI; used only to offset foster care expenses.	No specific requirement (generally needs consistent history if considered for offset).	N/A for DTI (but must show current foster placement to offset dependents).	Possibly agency letter if using to offset residual requirement.	Generally 25% if used for ratios (but main income listed as net).

Legend: DTI = Debt-to-Income ratio (used for loan qualifying ratios).

Understanding Foster Care Income in Mortgage Approval

What counts as foster care income? 

It’s generally the stipend paid by a state or county agency to you for providing care to a foster child or adult. This income is typically non-taxable (it won’t show up on your tax returns). Lenders can count it only if it’s stable and likely to continue, and they may even “gross it up” (increase it) since it’s tax-free.

Key considerations for using foster income:

• History of Income: Most programs want a track record (often 12–24 months) of you providing foster care and receiving payments.

• Documentation: You’ll need official verification, usually letters from the agency that pays you.

• Continuance: Lenders want to know the income is likely to keep coming. Some require proof it will continue for 3 more years, while others are satisfied if no evidence suggests it will stop.

• Portion of Total Income: If foster payments are a small part of your total income, some rules are more flexible. For example, Fannie Mae will allow just 12 months of history if foster income is ≤30% of your total income.

Foster care income, typically provided by state or county-sponsored organizations to caregivers, and AFC income for adult care, are forms of government assistance. Their eligibility for mortgage qualification depends on the loan type and underwriting guidelines of agencies like FHA, Fannie Mae, Freddie Mac, VA, and USDA. 

Given the variability in lender practices and agency policies, this analysis aims to clarify conditions for using such income, drawing from multiple sources including mortgage blogs, official guides, and expert articles, with a focus on Kentucky’s unique programs.

The guidelines for using foster care and AFC income vary across loan types. Below is a detailed breakdown, organized by agency and loan program, based on recent findings as of April 2025.

• FHA Loans

  • FHA loans allow foster care income with a 12-month history if received regularly and likely to continue, aligning with their flexibility for non-traditional income sources.
  • Non-taxable income can be grossed up by 25%, enhancing qualifying potential.
  • Documentation includes a letter from the organization, bank statements showing regular deposits, and verification of continuance for at least three years, as per FHA Loan Income Requirements.
  • Perfect for first-time buyers, especially in Kentucky, given FHA’s lenient DTI ratios up to 50% with strong credit.

• Conventional Loans (Fannie Mae)

  • Fannie Mae requires a 12-month history if foster care income is no more than 30% of total gross income, or 2 years otherwise, with confirmation it will continue for at least 3 years.
  • Non-taxable income may be grossed up by 25%, similar to FHA.
  • Documentation involves letters from the foster care agency, 1099s for 2 years if applicable, and bank statements, as outlined in Fannie Mae Other Sources of Income.
  • Stricter than FHA, but suitable for borrowers with stable income histories.

• Conventional Loans (Freddie Mac)

  • Freddie Mac requires a 2-year history of receiving foster care income, with evidence it will continue for at least 3 years, reflecting a more conservative approach.
  • Non-taxable income gross-up is typically 25%, consistent with industry standards.
  • Documentation includes 1099s for 2 years and a 24-month average for calculation, ensuring consistency, as per Freddie Mac Seller/Servicer Guide.

• VA Loans

  • VA loans accept foster care income if stable and verifiable, with a 12-month documentation period often sufficient via bank statements or agency contracts.
  • Non-taxable income can be grossed up, but there’s some debate on its universal acceptance, so lender consultation is advised.
  • Documentation includes standard income verification like letters and bank statements, as noted in VA Loan Employment Requirements.
  • Great for veterans or spouses, but clarity on foster care income usage varies, requiring lender verification.

• USDA Loans

  • USDA loans do not count foster care income for eligibility purposes (income limits), as it’s excluded from household income calculations, per USDA Income Eligibility Guidelines.
  • However, it may be considered for qualification (repayment ability) if stable and reliable, with 12-month proof and verification of continuance for 3 years.
  • Gross-up allowed for non-taxable income (typically 25%), but this is less common due to eligibility exclusions.
  • Documentation includes standard verification, but usage for qualification needs lender confirmation, given rural focus and income limits.

Documentation Requirements

Across loan types allowing foster care income, documentation is critical to verify stability and continuity. Common requirements include:

• A letter from the state or county organization providing the foster care income, confirming amount, payment schedule, and expected continuation.
• Copies of the borrower’s signed federal income tax returns, particularly 1099s for non-employment income, to establish history.
• Bank statements or deposit slips showing regular deposits of foster care payments, ensuring consistency.
• For FHA loans, additional verification may involve checking state agency guidelines and the age of individuals in care, reflecting the unique nature of foster care.

The table below summarizes the key guidelines for each loan type, highlighting the minimum history, continuance requirements, and documentation needed:

Loan Type	Agency	Minimum History	Continuance	Documentation	Additional Notes
VA, USDA	N/A	Not Allowed	N/A	N/A	Foster income cannot be considered for qualification.
Conventional	Freddie Mac	2 years	3 years likely	1099s for 2 years, 24-month average for calculation	Must be from state/county-sponsored organization.
Conventional, FHA	Fannie Mae	12 months (if ≤30% of total gross income) or 2 years	Likely to continue	Letter from organization, verification of 2 years receipt	If 12 months, income must not exceed 30% of total gross income for qualification.
FHA	N/A	24 months (averaged like commission) or 2 years	Likely to continue	Letter from organization, verification of receipt, state agency guidelines, age of children	Same as Fannie Mae for 12 months/2 years, must verify stability and continuance.

This table illustrates the variability in requirements, with Fannie Mae and FHA offering more flexibility for shorter histories under certain conditions, while Freddie Mac and VA/USDA impose stricter or exclusionary rules.

Learn more below about using Foster Care Income below at the following links:

• FHA Loan Income Requirements for 2023
• Fannie Mae Other Sources of Income
• Freddie Mac Seller/Servicer Guide
• VA Loan Employment Requirements and Income Verification
• USDA Income Eligibility Guidelines and Maximum
• KHC Down Payment Assistance Program
• Lexington First-Time Homebuyer Program
• LouisvilleKY.gov Down Payment Assistance Program

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Kentucky FHA Home Appraisal Checklist

 

Kentucky FHA appraisals can take home buyers by surprise. That’s why we've put together some good-to-know info about the process. Feel free to use this to help educate your clients. 

Your Kentucky  FHA Home Appraisal Checklist 

 

If you’re using an Kentucky FHA loan to buy a home (or selling to FHA borrowers), the property must pass an FHA appraisal, which determines the current market value and makes sure the house meets certain safety standards. Here is a list of items an FHA appraiser may look for:

 

General Health and Safety

• Foundation or structural defects
• Whether the utilities (water, sewage, heat, and electricity) all work
• Chipped or peeling paint in homes built before 1978
• Incomplete renovations
• Water damage
• If the property is accessible to vehicles, especially emergency vehicles
• Exposed wiring and uncovered junction boxes
• Whether the house is too close to outside hazards, such as a leaking oil tank or a waste dump
• Excessive noise, such as being close to an airport
• Missing handrails

Exterior

• Leaky or defective roof and holes in the siding
• Leaning or broken fencing 
• Doors that don’t properly open or close
• Condition of gutters, chimney, stairs, railings, and porches
• If swimming pools are up to code 

Every Room

• Whether each room has electricity
• Whether each room has a window or door to the exterior to be used as a fire escape

Kitchen

• Missing or broken appliances usually sold with a home, including stove and refrigerator
• Broken or leaking sink

Bathrooms

• Broken or leaking toilet, sink, or tub/shower
• No ventilation (either an exhaust fan or window)

Crawl space or basement

• Basement moisture
• Evidence of past or present standing water

Heating and Plumbing

• Inoperable HVAC
• Major plumbing issues and leaks

 

These are some common items an FHA appraiser looks for, but other issues that might make a house unsafe could keep it from passing. An FHA appraisal is not the same as an independent home inspection. It’s still a good idea to get a separate home inspection to make sure you’re making a wise investment! 

Updated FHA Info Letter Sent July 12, 2022 for Kentucky FHA Appraisal Reports

✨Applies to case numbers assigned on or after June 1, 2022

✨Updates the initial appraisal validity period from 120 days to 180 days from the effective date of the appraisal report;

🙌🏼Extends the appraisal update validity period from 240 days to one year from the effective date of the initial appraisal report; 

✨Allows the appraisal update to be ordered AFTER an appraisal expires; and

👊🏼Eliminates the optional 30-day extension.

✨This is big news for FHA ✨

The guideline change also puts FHA appraisal expirations on par with conventional loan expiration dates.🥊

  

List of Kentucky FHA Appraisers below:  

👇

see link

Kentucky FHA Mortgage Guidelines for a Kentucky First Time Home Buyer

Kentucky FHA Mortgage Information

Louisville Kentucky Mortgage Lender for FHA, VA, KHC, USDA and Rural Housing Kentucky Mortgages: Kentucky FHA Mortgage Information: 

 How to Qualify For a Kentucky FHA Mortgage Loan 1. Low Down Payment   –  FHA Mortgage Loans only require a 3.5% down payment. And what m...

FHA Mortgage Manual Underwriting Video Guidelines

Did you know over 50% of our Kentucky  FHA loans are manual underwrites?

 

Kentucky FHA will consider the borrower’s entire story, including extenuating circumstances and compensating factors, to justify loan approvals. If your borrower falls under any of these conditions, they may benefit from manual underwriting:

• Non-traditional credit / lack of credit
• True extenuating circumstances affecting credit or income history
• Lack of seasoning on a Chapter 13
• Disputed accounts over $1,000
• Frequent job changes in the last 12 months

If you think your borrower could benefit from  manual underwriting call us to learn more about manual underwriting or submit your scenario today.

Lowest Minimum Decision Credit Score 

Maximum Qualifying Ratios (%)

 Acceptable Compensating Factors

All manual underwritten loans require a VOR.

If the borrower does not pay rent a letter of explanation from borrower stating where living rent free.

31/43
• No compensating factors required.
• Energy Efficient Homes may have stretch ratios of 33/45.

37/47
One of the following:
• Verified & documented cash reserves equal to at least three total monthly mortgage payments.
• New total monthly mortgage payment is not more than $100 or 5% higher than previous total monthly housing payment, whichever is less; and there is a documented twelve-month housing payment history with no more than one thirty-day late payment.
• Residual Income per VA chart.

40/40
• Borrower has established credit lines in his/her own name (open for at least six months) but carries no discretionary debt (monthly total housing payment is only open installment account and borrower can document that revolving credit has been paid off in full monthly for at least the past six months).

40/50
Two of the following:
• Verified & documented cash reserves equal to at least three total monthly mortgage payments.
• New total monthly mortgage payment is not more than $100 or 5% higher than previous total monthly housing payment, whichever is less; and there is a documented twelve-month housing payment history with no more than one thirty-day late payment.
• Verified and documented significant additional income that is not considered effective income and likely to continue (part-time or seasonal income verified for more than 1 year but less than 2 years). The income if it were included in gross effective income is sufficient to reduce the qualifying ratios to not more than 37/47.
• Residual Income per VA chart.

Residual Income

Calculating Residual Income

Residual income is calculated in accordance with the following:
• Calculate the total gross monthly income of all occupying borrowers
• Deduct from the gross monthly income the following items:
➢ State income taxes
➢ Federal income taxes
➢ Municipal or other income taxes
➢ Retirement or Social Security
➢ Proposed total monthly fixed mortgage payment
➢ All recurring monthly debt obligations
➢ Estimated maintenance and utilities ($0.14 x sq. ft.)
➢ Job related expenses (e.g., child care)

• The difference between the gross monthly income and the deductions above is the residual income

Compensating Factors

Using Residual Income as a Compensating Factor
Count all members of the household of the occupying borrowers without regard to the nature of their relationship and without regard to whether they are joining on title or the note.
Exception: As stated in the VA Guidelines, the mortgagee may omit any individuals from “family size” who are fully supported from a source of verified income which is not included in the effective income in the loan analysis. These Individuals must voluntarily provide sufficient documentation to verify their income to qualify for this exemption.

From the table below, select the applicable loan amount and household size. If residual income equals or exceeds the corresponding amount on the table, it may be cited as a compensating factor.

Accept Risk Class required downgrade to Manual Underwriting

The Mortgagee must downgrade and manually underwrite any mortgage that received an accept or approve/eligible recommendation if:
• The mortgage file contains information or documentation that cannot be evaluated by TOTAL.
• Additional information, not considered in the AUS recommendation affects the overall insurability of the mortgage.
• The borrower has $1,000 or more collectively in Disputed Derogatory Credit Accounts.
• The date of the borrower’s bankruptcy discharge as reflected on bankruptcy documents is within two years from the date of the case number assignment.
• The case number assignment date is within three years of the date of the transfer of title through a Pre-Foreclosure Sale (Short Sale).
• The case number assignment date is within three years of the date of the transfer of title through a foreclosure sale.
• The case number assignment date is within three years of the date of the transfer of title through a Deed-in-Lieu (DIL) of foreclosure.
• The Mortgage Payment history, for any mortgage trade line reported on the credit report used to score the application, requires a downgrade as defined in Housing Obligations/Mortgage Payment History.
• The Borrower has undisclosed mortgage debt that requires a downgrade.
• Business income shows a greater than 20 percent decline over the analysis period.

https://www.hud.gov/sites/documents/fy16_sfhb_mod4_under.pdf

Qualifying for a Kentucky Mortgage Loan

Your lender needs to know everything about you for the application, but actually, all the lender needs to know about is employment, finances, and information about the home you’re buying (but you can be pre-approved before you choose a home). You will, however, need to provide quite a few details about these topics. The goal is to arrive at a monthly payment you can afford without creating financial hardships. Here's an idea of what lenders consider when they are qualifying you for a loan:

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 620 for an FHA loan and VA loan, 640 for a USDA, 640 for a KHC Loan with Down Payment Assistance, and 620 for an AU approval for Fannie Mae Loan.

It is very possible to get a mortgage loan with a lower credit score than 620 with a FHA loan or USDA loan. FHA will allow you to go down to a 500 credit score with 10% down payment and a 580 credit score or higher will allow for a 3.5% down payment. 

Lenders will create overlays so some lenders will create a higher credit score threshold than what FHA or USDA says on paper in their official guidelines. 

USDA loans and VA loans do not have a minimum credit score requirement, but most lenders will create overlays to filter out lower credit profile customers. The reason behind that is due to if the lender sends a lot of loans with lower credit scores to the government agency that insures the loan against default, they will get shut off from doing loans all together which would be detrimental to their business.

A lot of loan officers will work with you on your credit report to get your scores up with a rapid rescore, which is something we offer. 

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:

Income

Is the income sufficient to repay the loan? Ratio guidelines of 31 percent payment-to-income and 43 percent total debt-to-income are standard, but some programs allow for higher ratios. This is the typical manual underwrite for a score that does not fit the current Automated Underwriting Engines used for Fannie Mae (DO), FHA, VA, USDA and Rural Housing (GUS)
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?

Credit

 
Does the borrower have a good credit score-Typically 740 or higher will yield the best rates and lowest mortgage insurance for a conventional loan? 

FHA mortgage insurance and VA mortgage insurance is the same no matter what your credit score is.

 
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.

Collateral

Is the property worth what the borrower is paying for it? If not, the lender will not loan an amount in excess of the value. If the appraisal comes back less than the offer on the house, sometimes you can renegotiate the terms of the purchase contract with the seller and his/her real estate, agent.Some borrowers agree to purchase the home at the price they originally offer and pay the difference between the loan and the sales price. You need to have the disposable cash to do this, and you should assess whether the property is likely to hold its value. You also need to consider the type of loan for which you have qualified. 

If you need to move suddenly and have a large loan relative to the original value, and the property has not held its value, you could face a difficult cash shortfall when you go to pay off your loan.Is the property an acceptable type of property, and does it meet coding requirements and zoning restrictions? Is the property comparable to other properties in the area? Surveys are common and are used to get an accurate measurement of the land that goes with the property you are purchasing. The person who prepares the survey should be a licensed land surveyor. The survey shows the location of the land, dimensions of the land and any improvements.Encroachments are improvements to the property that illegally violate another's property or their right to use the property, such as building a fence that is actually on your neighbor's property instead of yours, or constructing a building that crosses from your property to another’s property without their permission. Evidence of encroachments can slow the final approval process.

The down payment

A downpayment 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.These programs may have less strict guidelines for loan approval, such as allowing a higher ratio of payment to income or debt to income. They also may accept alternative forms of credit history if you have not established credit through traditional means — credit cards and car loans. For example, a lender could look at the history of utility payments and rent payments to determine credit worthiness.

Joel Lobb (NMLS#57916)
Senior  Loan Officer

Text/call 502-905-3708

kentuckyloan@gmail.com

Kentucky Mortgage Rates and Home Loan Options

Kentucky Mortgage Rates and Home Loan Options

Kentucky is known for its native bluegrass pastures, thoroughbred horses, and bluegrass music. It's also estimated that one-third of all bourbon produced comes from the State of Kentucky. Its two largest metropolitan areas are the cities of Louisville and Lexington, the former being the home of the world's most famous horse race, the Kentucky Derby.



For those who don't fancy themselves bourbon fans or sport enthusiasts there are still many options for lively entertainment in Kentucky. And just as many options when it comes to settling down, owning a home, and finding a loan with a great mortgage rate.



The more you know, the better equipped you will be to understand the qualifying requirements from some of the lenders in Kentucky. Most require financial documentation, while others have a more relaxed underwriting process.



It helps to be educated when shopping for your new home loan, and the best place to find out more about current mortgage rates and loan options in Kentucky is right here at lendingtree.com.

Mortgage Interest Rates on Kentucky FHA Loans

The FHA insured loan program provides many borrowers with competitive mortgage interest rates and an excellent loan option with which to purchase a home. Those who don't have a bundle to spend on down payments can use an FHA insured loan through a local lending partner to obtain financing up to 96.5 percent of the purchase price of the home with loan amounts up to $417,000.



To achieve even lower mortgage rates, those who can manage a larger down payment can get a conventional loan through traditional Kentucky lenders. These loans offer the lowest possible interest rates to both existing and new homeowners.

Jumbo Loan Options in Kentucky

If you need a loan that is larger than the conforming loan limit, chances are you'll be getting a jumbo loan. These loans are offered through most local and statewide lenders and those with good credit and income levels large enough to qualify can obtain a jumbo loan at market mortgage rates or just slightly above. They frequently carry higher mortgage interest rates due to the increase risk associated with the larger loan amount.

Assistance with Down Payment, Closing Costs, and KY Mortgage Rates

Government agencies, like the Kentucky Housing Corporation, can provide education materials and counseling for those wishing to own a home in the state of Kentucky. These agencies also offer loan programs through its lender partners in which buyers can tap into one of the following:

Down payment assistance of $6,000 over 10 years at 1% or 5% depending on your income. 



• VA Loan - guaranteed by the Veterans Administration for qualified military veterans. Offers no down payment if the property appraises for the sale price or greater, has flexible underwriting is flexible, and no monthly mortgage insurance payments and no minimum credit score requirements. Lenders however will create overlays to require a 620 credit score for most VA mortgage loan approvals nowadays with Automated Underwriting through DO/DU



• Conventional loans – with as little as three percent down payment (lower than FHA requirements) yet still covered by and approved mortgage insurance company. This loan is for those with a credit score of 680 or better, offering quick turnaround time and no up-front mortgage insurance payments.

-







Joel Lobb (NMLS#57916)

Senior Loan Officer



Text/call 502-905-3708

kentuckyloan@gmail.com

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



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

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: