How to Get Approved for a Kentucky Mortgage Loan with Bad Credit.

Buying a home in Kentucky with bad credit can be done with the right mortgage loan officer to guide you through the process.

 There are various loan programs, including Kentucky FHA, VA, USDA, and conventional mortgages, have different criteria and offer opportunities for individuals with less-than-perfect credit to become homeowners. 

In this blog post, we'll explore the options available for Kentucky homebuyers with bad credit and provide tips on improving your credit scores to enhance your chances of loan approval to buy your first house in Kentucky

Understanding Your Credit Score or Fico Score 

Your credit score is a critical factor in determining your eligibility for a mortgage loan. It reflects your creditworthiness and helps lenders assess the risk of lending you money.

Credit scores range from 300 to 850, with higher scores indicating better credit health. Scores below 620 are generally considered "bad" credit, but don't be discouraged. There are still options available.

Loan Options for Kentucky Homebuyers with Bad Credit

Kentucky FHA Loans

Federal Housing Administration (FHA) loans are popular among Kentucky first-time homebuyers and those with bad credit. They offer more lenient credit requirements and lower down payment options.

• Credit Score Requirement: As low as 500 with a 10% down payment, or 580 with a 3.5% down payment.
• Benefits: Flexible credit requirements, low down payment, and competitive interest rates.
• Drawbacks: Mortgage insurance premiums (MIP) are required, which increase the overall cost of the loan. A lot of sellers view FHA buyers as weaker buyers vs Conventional loans and may hold that against you if you are making an offer with a FHA loan. 
• Bankruptcy: 2 years removed from Chapter 7 and 1 year in Chapter 13 pan with on time pay history and trustee approval is possible for FHA loans

Kentucky VA Loans

Veterans Affairs (VA) loans are available to veterans, active-duty service members, and eligible surviving spouses. These loans offer significant benefits, including no down payment and no private mortgage insurance (PMI).

• Credit Score Requirement: No official minimum, but most lenders prefer a score of at least 580 to 620.
• Benefits: No down payment, no PMI, competitive interest rates.
• Drawbacks: VA funding fee, which can be financed into the loan or waived for some eligible veterans. 
• Bankruptcy: 2 years removed from Chapter 7 and 1 year in Chapter 13 pan with on time pay history and trustee approval is possible for FHA loans

Kentucky USDA Loans

The United States Department of Agriculture (USDA) loans are designed for rural and suburban homebuyers with low to moderate incomes. These loans offer zero down payment options and low-interest rates.

• Credit Score Requirement: Generally, 640, but exceptions can be made for lower scores with compensating factors down to a 580 credit score. 
• Benefits: No down payment, low mortgage insurance, competitive interest rates.
• Drawbacks: Geographic and income restrictions apply and harder to qualify for vs FHA loans and VA loans when it comes to government backedmortgae loans. Much more restrictive on debt to income ratio and income limits for household see here 

Kentucky Conventional Mortgage Loans

Conventional loans are not backed by the government and typically require higher credit scores. However, there are programs available for those with lower scores.

• Credit Score Requirement: Generally, at least 620. Typically 720 or higher preferred--
• Benefits: Potentially lower overall costs compared to government-backed loans if you have a higher credit score and substantial down payment. No maximum purchase price or loan amount-Mortgage insurance not for life of loan and can recast your mortgage loan and remove mi unlike government backed loans via FHA, VA USDA ---Can be done anywhere and no income limits
• Drawbacks: Stricter credit requirements, higher down payments, and PMI required for down payments less than 20%. 

Joel Lobb
Mortgage Loan Officer

Individual NMLS ID #57916

Text/call:      502-905-3708

email:          kentuckyloan@gmail.com

https://www.mylouisvillekentuckymortgage.com/

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#57916 http://www.nmlsconsumeraccess.org/

What is the difference between Conventional, FHA and VA Mortgage loans in Kentucky

 

Conventional vs. FHA vs. VA loans in Kentucky

 I will outline below the credit score, loan limits, down payment and mortgage insurance requirements for FHA, VA and Conventional Mortgage Loans in Kentucky!

			Upfront funding fee of 1.4% to 3.6%

WHAT IS THE MINIMUM CREDIT SCORE FOR A KENTUCKY FHA MORTGAGE HOME LOAN APPROVAL?

Kentucky FHA Mortgage Credit Score Requirements

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.

To be eligible for maximum financing, borrowers will need a minimum credit score of 500 or higher.

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.


All Kentucky FHA borrowers with a credit score below 500 will not be eligible for FHA-insured mortgage financing in Kentucky.


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:

FICO® Score 2 (Experian)
FICO® Score 5 (Equifax)
FICO® Score 4 (TransUnion)

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.

Joel Lobb  Mortgage Loan Officer NMLS 57916

Text/call: 502-905-3708

email: kentuckyloan@gmail.com

http://www.mylouisvillekentuckymortgage.com/

NMLS 57916  | Company NMLS #173846

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).

 

Kentucky Mortgage Guidelines for Income, Employment, and credit scores

Kentucky Mortgage Loan Preapproval: What To Know

What affects your home loan preapproval

Your income, work history, credit score, money down and  saving are key factors that lenders will consider during the mortgage process.

Employment Status for Kentucky Mortgage Pre-Approval

Self-employed individual requires two-year tax returns'.

Only borrowers who have an ownership interest of 25% or more in a business and are not W-2 employees are considered “self-employed.” However, there is an exception if the borrower can show a two-year history in a similar line of work, which includes having documentation that proves an equal or higher income in the new role compared to the W2 position.

Debt-to-Income Ratio

The debt-to-income ratio is the percentage of your monthly gross income that goes toward paying debts. There are two types of DTI that lenders will consider during the mortgage process: front-end and back-end. The first consists only of your housing-related expenses, whereas the latter also includes all your minimum required monthly debts.

The lower your DTI, the better your chances of securing a home loan. 

For example, FHA loans secured by the government have more lenient requirements — you can have a DTI of up to 57% and still get approved for an FHA home loan. USDA loans used to buy homes in rural areas have a lower maximum DTI of 45%.

Loan-to-Value Ratio

The loan-to-value ratio (LTV) is a number lenders use to determine how risky a loan to a potential borrower might be. It measures the relationship between the loan amount and the market value of the property you want to buy, and it can also determine whether mortgage insurance will be required.

All mortgages have a maximum LTV to qualify. However, just like with DTI, the LTV varies depending on the loan. FHA loans, for example, have an LTV of 96.5% since they allow down payments of as little as 3.4%.

Going for an LTV of 80% or less is “ideal” because you get unique benefits as a buyer, but that requires a down payment of 20%. Ultimately, each buyer will need to figure out their own LTV based on how large a down payment they can afford.

Credit History and FICO Score for Kentucky Mortgages 

Your credit history is one of the most important factors when it comes to getting a mortgage.

Best Kentucky Mortgage Lender for First Time Home Buyers in Kentucky

You don’t need a perfect credit score to buy a house, but those with outstanding scores are usually rewarded with lower interest rates and a greater variety of payment options. Buyers with very poor credit have the option of finding a co-signer who has better credit than them to help secure the loan.

Why Getting Preapproved Is Such a Big Deal

Getting preapproved for a mortgage helps you shop for homes that you can afford and shows you are a serious buyer.

But a letter of preapproval is more than just a way to look good to sellers. It also helps you find the right mortgage lender and provides some flexibility in bargaining or negotiating for a better price range or specific costs, repairs, and improvements to a home.

Getting preapproved makes the entire closing process faster, too. It takes an average of 30 to 45 days to close on a house in Kentucky, and part of that period is due to the process of mortgage approval, title search, appraisal report, home inspections, verifying employment and bank account info along with taxes and w-2s and paystubs to validate the pre-approval.

What are standard continuity of employment requirements?

A borrower will need to verify a two-year cumulative employment history. Less than two year may be 

offset via school transcripts; if guaranteed hourly (40) or salaried in nature, the base income 

will be allowable. Variable earnings will require at minimum 12 months receipt on current position; 

OT, Bonus and commission are considered variable however, must reflect a cumulative two- year 

history of receipt.

What income can I use for a traveling nurse?

A minimum 12-month history of contract nursing work is required. Income documentation must

 include  copies of applicable contracts and WVOE’s for each position. The income will be averaged. 

Standard two- year employment history required.

Do we allow one score on a conventional transaction? No score?

Yes! If the borrower has three scores, the middle score is to be used; two scores, the lower score 

is to be used; one score, that score is to be used.  If no score, only allowable with AUS A/E and 

less than 50% of transactional income contributions. We do not average scores.

Can I use part time or secondary income for qualifying purposes?

Yes! Conventional~ secondary employment will require a two- year history of receipt to use in 

conjunction with the primary employment earnings. Multiple second jobs over this time frame are 

allowable however the borrower may not have a job gap > one month in length. Part time employment 

alone will be considered variable in nature and will require a minimum 12- month history; earnings 

will be averaged. FHA~ will require an uninterrupted two- year history for utilization.

When must a borrower start a new job in conjunction with future employment?

Conventional requires a start date within 90 days of the Note date. FHA requires a start date 

within 60 days of note date. VA max 60 days of note date. Non contingent contract required for each 

entity.

What type of income(s) are considered illegal?

Foreign shell banks; medical marijuana dispensaries; any business or activity related to 

recreational marijuana-use , growing, selling or supplying- even if permitted by state or local law.

 Policy is not limited to  owner of business.

Joel Lobb
Mortgage Loan Officer

Individual NMLS ID #57916

https://www.mylouisvillekentuckymortgage.com/

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. 

Here’s a side-by-side breakdown of FHA, VA, and USDA home loans—each designed to help you become a homeowner without breaking the bank.

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:

1. Front-End: Max 45%

2. 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:

3. Recent pay stubs

4. W-2s (past 2 years)

5. Tax returns

6. Proof of any additional income

 VA Loan – Zero Down for Veterans and Active Duty Military

1. Minimum Credit Score: No official requirement (most lenders look for 620+)
2. Down Payment: None required
3. 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 
4. Employment: Stable income and employment for last two years
5. Past Credit Issues: More flexible on bankruptcies and foreclosures
6. Time to Close: ~45–60 days-
7. Appraisal Requirements: Property must meet VA Minimum Property Requirements (MPRs)
8. 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

1. Minimum Credit Score: 640 for GUS AUTOMATED APPROVAL (some exceptions possible on a manual underwrite with no score)
2. Down Payment: 0%
3. Debt-to-Income Ratio: 32%and 45% with 2 history (2 years preferred of work. Minimum of 12 months)
4. Past Credit Issues: Consideration given to past credit challenges, bankruptcy, or foreclosure
5. 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. 
6. 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.
7. 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:

The property must meet FHA guidelines, including minimum property standards and safety requirements. An FHA-approved appraiser assesses the property's value and condition.

Income Documentation: 

Generally requires recent pay stubs, W-2 forms, tax returns for the past two years, and proof of additional income sources (if applicable).

VA Loan: Appraisal Requirements:

 VA loans require a VA appraisal conducted by a VA-assigned appraiser. The appraisal assesses the property's value and ensures it meets VA's Minimum Property Requirements (MPRs).

Income Documentation: 

Typically includes pay stubs, W-2 forms, tax returns for the past two years, and proof of any additional income (e.g., bonuses, alimony, rental income).

USDA Loan: Appraisal Requirements:

USDA loans require a USDA appraisal to determine the property's value and ensure it meets USDA's standards for safety and livability.

Income Documentation: 

Similar to FHA and VA loans, USDA loans require pay stubs, W-2 forms, tax returns for the past two years, and documentation of other income sources.

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 57916  | 

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).

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How to Buy a Home in Kentucky: 5 Popular Mortgage Options

Did you know that two-thirds of Americans are homeowners? If you’re among Kentucky’s renters looking to make the leap into homeownership, understanding your mortgage options is essential. Even if you have limited savings or a lower credit score, you may qualify for low or no down payment home loans backed by government programs.

🔹 1. FHA Mortgage

• Backed by the Federal Housing Administration (FHA)
• Only 3.5% down payment required with a 580+ credit score
• Allows gifts, grants, and down payment assistance
• Great option for first-time buyers and those with less-than-perfect credit

🔹 2. USDA Rural Housing Loan

• 100% financing with zero down payment required
• Eligible for homes in USDA-approved rural areas in Kentucky
• Lower mortgage insurance compared to FHA
• Income and location restrictions apply

🔹 3. Conventional (Fannie Mae/Freddie Mac) Loan

• As low as 3% down for first-time homebuyers
• Higher credit score requirement (typically 620+)
• Mortgage insurance can be removed at 20% equity
• Ideal for buyers with strong credit and stable income

🔹 4. VA Mortgage

• 0% down payment for eligible veterans, service members, and surviving spouses
• No monthly mortgage insurance
• Flexible guidelines on credit and income
• Low fixed rates and no loan limits in Kentucky

🔹 5. Portfolio Mortgage

• Non-government loan offered by select banks or lenders
• Custom underwriting guidelines
• Great for unique financial situations or self-employed borrowers
• Not subject to standard FHA/VA/USDA/Fannie Mae rules

Pro Tip from Joel Lobb: “Don’t assume one lender has the best deal. I shop across 10+ mortgage lenders to match you with the best loan based on your credit, income, and goals—even if you’ve been told no before.”

✅ Ready to Get Pre-Approved?

Let’s make homeownership in Kentucky a reality. Contact me today for a free mortgage pre-approval—no obligations, just straight answers.

• 📧 Email: kentuckyloan@gmail.com
• 📞 Call or Text: 502-905-3708
• 🌐 Website: www.mylouisvillekentuckymortgage.com

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👤 About Joel Lobb

Senior Loan Officer – Evo Mortgage | NMLS #57916
🏢 911 Barret Ave., Louisville, KY 40204
With 20+ years of experience helping over 1,300 Kentucky families buy or refinance their homes, I offer personal guidance with multiple loan options other lenders may not provide. You’re not just a number here—you’re a person, and we treat you like one throughout the entire process.

🏡 Unlock Your Dream Home in Kentucky Today!

Work with Joel Lobb — a trusted mortgage expert helping Kentucky families with FHA, VA, USDA, and first-time buyer loans.

• ✅ Zero Down Payment Programs
• ✅ Free Same-Day Pre-Approvals
• ✅ Expert Guidance Every Step

Enter your email to get started:

Joel Lobb: Your Trusted Mortgage Broker in Kentucky

Welcome, and Thank You for Visiting

I’m glad you’re here. My goal is to make this website a helpful and empowering resource as you explore your mortgage options. Whether you're buying your first home or your fifth, I want you to feel confident in choosing the right loan for your unique situation.

Serving All 120 Counties in Kentucky

With over 20 years of lending experience, I proudly serve all of Kentucky and offer a full range of mortgage loan programs:

• FHA Loans

• VA Loans

• USDA Rural Housing Loans

• Fannie Mae Conventional Loans

• KHC Down Payment Assistance Programs

I've helped more than 1,300 Kentucky families become homeowners. Whether you're just getting started or need a second opinion, I offer honest, no-pressure guidance—always free of charge.

What You Can Expect from Me

• I attend as many closings as possible to personally support you through the final step.

• I provide responsive, personalized service throughout the loan process.

• I ensure quick, accurate, and efficient loan processing from start to finish.

• I remain accessible every step of the way—your questions are always welcome.

Recognized for Excellence in Kentucky

I've been consistently recognized as a top mortgage loan officer in Kentucky for VA, FHA, USDA, and KHC programs. I take pride in being thorough, transparent, and attentive with every client I serve.

Please take a moment to read the reviews below to hear directly from families I’ve helped. If you have any questions or need expert guidance, I’m just a call or text away.

Why Choose Me?

Top-Rated Kentucky Loan Officer

Recognized year after year as one of Kentucky’s most trusted loan officers for VA, FHA, USDA, and KHC programs.

5-Star Client Reviews

“Joel made buying our first home feel easy. He was available day and night to answer questions and made us feel confident every step of the way.”

 — Sarah H., Lexington, KY

 

“We got denied elsewhere. Joel got it done. Can’t recommend him enough.”

 — Marcus D., Bowling Green, KY

 

 

check them out below at the link⬇️

⭐⭐⭐⭐⭐ Rated 5.0 on Google & Facebook with 200+ combined reviews

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

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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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