I specialize in Kentucky First Time Homebuyers FHA, VA, USDA & Rural Housing, KHC and Fannie Mae mortgage loans. I have helped over 1300 Kentucky families buy their first home or refinance their current mortgage for a lower payment; Kentucky First time buyers we still how available down payment assistance with KHC. Free Mortgage applications/ same day approvals. Web site is not endorsed by the FHA, VA, USDA govt agency. Text/call 502-905-3708 kentuckyloan@gmail.com NMLS 57916 NMLS 1738461
Last Updated: September 2025 | By Joel Lobb, Kentucky Mortgage Expert | NMLS #57916
Think a 580 credit score means you can’t buy a home in Kentucky? You can. This guide shows how FHA, VA, and USDA approvals work for fair-credit borrowers.
Quick answer: A 580 credit score can be approved in Kentucky through FHA, VA, or USDA. We do these approvals across the state every month.
Understanding your 580 credit score in Kentucky
A 580 score is in the fair range. While conventional loans and KHC down payment assistance typically want 620+, FHA, VA, and USDA were built to help modest credit histories become homeowners.
Where 580 sits — and why government-backed loans still work.
FHA loans for 580 credit scores in Kentucky
Why FHA fits: 3.5% minimum down payment at 580, available statewide, gifts and seller credits allowed, flexible underwriting, assumable for resale value.
Credit score: 580 qualifies for 3.5% down
DTI target: 45.99 on front end and 56.99 on a AUS approval and on manual underwriting approvals can do go 40% to 50% with compensating factors % or lower when possible
Credit improvement strategies to get your score above 580
Pay down credit cards under 30% utilization
Dispute errors; remove active disputes before underwriting
Document rental history; add a secured card if file is thin
Avoid new credit until after closing
Quick wins that can move a 580 into better pricing or KHC eligibility with a 620 score
Real Kentucky success stories
Jennifer (Lexington): 583 score → FHA 3.5% down; seller-paid costs → closed on $175k home
David (Warren County): 589 score → USDA zero down in eligible area → ownership on a teacher’s salary
Maria (Louisville): 584 score veteran → VA zero down, no MI → competitive monthly payment
Frequently asked questions
Can I really get approved with a 580 credit score in Kentucky?
Yes. We close 580-score FHA/VA/USDA approvals every month. Government-backed programs are designed for fair-credit borrowers with stable income.
What is the minimum down payment at 580?
FHA: 3.5% down. VA: $0 down for eligible borrowers. USDA: $0 down in eligible rural areas.
How long does approval take?
Pre-approval: same day. Clear-to-close typically 18–30 days after contract; total 30–45 days.
Will my rate be higher at 580?
Usually modestly higher than prime-credit, but FHA/VA/USDA pricing is often competitive. You can refinance later as credit improves.
Should I wait to improve credit before applying?
If you’re ready to buy and income is stable, apply now. We can pair approval with a credit plan and revisit refinancing later.
Your next step: get pre-approved so you can shop with confidence.
Joel Lobb is a licensed Kentucky Mortgage Loan Officer (NMLS #57916) with 20+ years of experience. He specializes in government-backed mortgages for fair-credit borrowers and has helped more than 1,300 Kentucky families buy homes.
Educational only; not financial advice. Programs, rates, and requirements change. Not all borrowers qualify. Not endorsed by FHA, VA, USDA, or any government agency. Joel Lobb is licensed to originate mortgages in Kentucky only.
Kentucky Mortgage Credit Score Requirements for First-Time Homebuyers (2025 Guide)
Obtaining a mortgage pre-approval is one of the most important first steps for Kentucky first-time homebuyers. Your credit score is a key factor lenders use to determine which loan programs you qualify for, your interest rate, and your monthly payment.
Conventional loans are offered by private lenders and are usually a better fit for buyers with stronger credit profiles.
Minimum credit score: Typically 620
Minimum down payment: Often 3% for first-time homebuyers
Other factors: Tighter debt-to-income (DTI) and reserve requirements compared to government-backed loans
As credit scores rise above 680 and especially above 700, borrowers may see improved interest rates and lower mortgage insurance costs.
Kentucky FHA Loans
Kentucky FHA loans are insured by the Federal Housing Administration and are popular among first-time homebuyers because of their flexible credit and down payment requirements.
580+ credit score: Eligible for a 3.5% down payment
500–579 credit score: Requires a 10% down payment
More flexible on: Past credit issues and higher DTIs when supported by compensating factors
Example: A buyer with a 575 credit score may still qualify for FHA financing with a 10% down payment, making homeownership possible even with imperfect credit.
Kentucky VA Loans (For Eligible Veterans & Service Members)
Kentucky VA loans are designed for eligible active-duty military, veterans, and some surviving spouses. They are one of the strongest options for those who qualify.
Official VA guideline:No minimum credit score set by the VA itself
Lender overlays: Many Kentucky lenders use internal minimums, often around 600–620
Benefits:0% down payment, no monthly mortgage insurance, and competitive interest rates
Even when scores are under 620, approvals may still be possible with strong income, clean recent payment history, and adequate residual income.
Kentucky USDA Rural Housing Loans
USDA Rural Housing loans are designed for eligible rural areas and qualified borrowers who meet income limits.
Typical minimum credit score: Around 620 for most lenders
Down payment:0% down (no down payment required)
Location requirement: Property must be in a USDA-eligible rural area
Some lenders may consider scores below 620 with strong compensating factors, but automated underwriting approvals are more common with scores at or above 620.
Kentucky Housing Corporation (KHC) offers state-level assistance such as down payment and closing cost help, often paired with FHA, VA, USDA, or conventional first mortgage programs.
KHC FHA/VA/USDA minimum score: Typically around 620
KHC Conventional minimum score: Often around 660
Benefits: Down payment assistance, potentially lower upfront cash-to-close, and programs tailored to first-time homebuyers
KHC programs can be layered with federal loan options, making them a powerful tool for Kentucky buyers who need help with down payment or closing costs.
Comparative Credit Score Table for Kentucky Mortgage Programs
Loan Program
Minimum Credit Score
Key Notes
FHA
580+ (3.5% down)
500–579 requires 10% down payment
VA
No official VA minimum
Most lenders use internal overlays around 600–620
USDA
Typically around 620
0% down, property must be in an eligible rural area
Conventional
620
3% down for first-time buyers; stricter guidelines
KHC FHA/VA/USDA
620
Can include down payment assistance and closing cost help
KHC Conventional
660
Higher score required; competitive rate and MI options
What These Credit Scores Mean for Kentucky Buyers
1. FHA – Most Flexible for Lower Credit Scores
For buyers in the 500–620 range, FHA is often the most realistic starting point. FHA’s flexible guidelines on credit history, debt-to-income ratios, and past issues (like collections or late payments) make it a strong option for rebuilding or recovering credit.
2. VA – Best Value for Eligible Veterans and Service Members
VA loans offer some of the lowest total monthly payments due to no monthly mortgage insurance and competitive rates. Even though there is no official VA minimum credit score, most lenders prefer higher scores for smoother approvals. However, approvals with scores under 620 are still possible with the right profile.
3. USDA – Great for Rural Kentucky Buyers
USDA loans help buyers in designated rural areas purchase with no money down. Most lenders look for at least a 620 score to receive a favorable automated underwriting result. Manual underwrites can be done with lower scores, but the guidelines become tighter.
4. Conventional – Strong Scores Rewarded with Better Pricing
Conventional loans reward stronger scores with better pricing and cheaper mortgage insurance. At 620, many buyers will qualify, but at 680+ and especially 740+, mortgage insurance and rate options usually improve noticeably.
5. KHC – State Support for Kentucky First-Time Buyers
KHC programs combined with FHA, VA, USDA, or conventional loans can significantly reduce the cash needed to close. For many first-time buyers, KHC’s assistance is what makes the purchase possible, especially when savings are limited.
Next Steps for Kentucky First-Time Homebuyers
Even a modest credit score improvement of 20–40 points can sometimes result in:
Lower interest rates
Cheaper mortgage insurance
Stronger approval chances
Higher maximum qualifying purchase prices
If you are unsure which program fits you best, a tailored pre-approval review can compare FHA, VA, USDA, KHC, and conventional loan options side-by-side based on your income, credit, and goals.
I work with Kentucky first-time homebuyers every day and can help you understand where your credit stands today, what you qualify for now, and what small changes might help you qualify for better terms.
Contact Joel Lobb for a Kentucky Mortgage Pre-Approval
Joel Lobb
Mortgage Loan Officer – FHA, VA, USDA, KHC, Conventional NMLS #57916 | Company NMLS #1738461
Serving Kentucky first-time homebuyers with FHA, VA, USDA, and KHC mortgage options, plus conventional loan programs tailored to your credit score and budget.
2026 Kentucky VA Home Loan Guide: How to Qualify for a VA Mortgage in Kentucky
Updated for 2026. If you are a veteran, active-duty service member, or eligible surviving spouse looking to buy a home in Kentucky, the VA loan program is still one of the most powerful mortgage options available.
This guide walks you through exactly how Kentucky VA mortgage qualifying really works in 2026 – including credit scores, income, debt-to-income (DTI) ratios, residual income requirements, entitlement and loan limits, plus real-world examples of how lenders underwrite VA loans in Kentucky today.
As a local mortgage broker focused on Kentucky FHA, VA, USDA, KHC and Fannie Mae loans, my role is to translate the rules and overlays into a clear plan so you can see what it takes to qualify, where you stand today, and what needs to happen next to get you into a home.
Why VA Loans Are So Powerful for Kentucky Buyers in 2026
$0 down payment in most cases – no minimum down when entitlement and income qualify.
No monthly mortgage insurance (PMI) – a big monthly savings vs. FHA or low-down conventional.
Flexible credit – VA itself does not set a minimum credit score; lender overlays do.
Competitive interest rates compared to many other loan types.
Reusable benefit – you can use your VA eligibility more than once.
Assumable loans – in some cases, another qualified buyer can assume your VA loan later.
When structured correctly, a VA loan can put you into a Kentucky home with no money down, no PMI, and a fixed 30-year payment that is competitive with rent in many counties.
Step 1: VA Eligibility – Who Qualifies for a VA Loan?
Before we talk about credit scores and income, we have to make sure you meet the VA eligibility requirements and can obtain a Certificate of Eligibility (COE).
Typical VA Service Requirements (High-Level)
Active Duty: Generally 90 days of continuous active service during wartime or 181 days during peacetime.
National Guard / Reserves: Typically 6 years of service, or 90 days of active-duty service under certain call-ups.
Surviving Spouses: Certain un-remarried surviving spouses of veterans who died in service or from a service-connected disability may be eligible.
You do not have to memorize these rules. When we pull your COE, it will show:
Whether you’re eligible
Whether you have full entitlement or partial entitlement
Any notes about prior VA loans or disability benefits
Action step: If you’re not sure about your eligibility, I can help you pull your COE electronically as part of your pre-approval.
2026 Credit Score Guidelines for Kentucky VA Loans
This is one of the biggest areas of confusion, so let’s separate VA rules from lender overlays.
VA’s Rule vs. Lender Overlays
VA itself: The VA does not set a minimum credit score in its handbook.
Lenders in 2026: Most Kentucky lenders and investors expect at least a 620 middle score for standard VA approvals.
That means:
If your credit score is 620 or higher, we’re usually working inside normal AUS (automated underwriting system) approvals.
If your score is between 580–619, approvals are still possible, but you’re more likely to need:
Strong compensating factors and/or
A manual underwrite with tighter DTI and stronger residual income.
Below 580 is case-by-case and heavily dependent on recent credit behavior, late payments, collections, and how the rest of the file looks.
A borderline credit score does not automatically kill a VA loan – but it does change how tight we have to be on DTI, residual income, reserves, payment shock, and other risk factors.
Income, DTI & Residual Income – How VA Underwriting Really Works in 2026
VA loans look at both your Debt-to-Income (DTI) ratio and your residual income (the money left over after paying taxes, housing, and debts). In 2026, most Kentucky lenders are operating roughly like this:
Automated Underwriting (AUS) – More Flexibility
With a strong file and 620+ scores, DTI can go into the 55–65% range or even higher with AUS approval and solid compensating factors.
AUS considers:
Credit history (late payments, collections, public records)
Verified income stability
Verified rent history
Reserves (money left in the bank after closing)
Residual income compared to VA guidelines
Manual Underwriting – 41% DTI Guideline
If the file cannot get an AUS approval and has to be manually underwritten:
Back-end DTI guideline is 41% (total debts including new house payment ÷ gross income).
Underwriters are required to document compensating factors when DTI exceeds 41% and/or when residual income is just over the threshold.
If residual income exceeds VA’s guideline by 20% or more, it can support approval even with a higher DTI in some cases.
Key Compensating Factors Kentucky Underwriters Look For
Strong residual income compared to the required minimum
Verified on-time rent or mortgage history
Significant cash reserves after closing
Limited use of revolving credit; low balances vs. limits
Low payment shock (new payment not far above current rent)
Stable employment or long-term income in the same line of work
Residual Income Requirements for Kentucky VA Loans
Residual income is the amount of money you have left over each month after paying:
Taxes and withholdings
New VA mortgage (principal, interest, taxes, insurance, HOA if applicable)
All other monthly debts (car loans, credit cards, student loans, child support, etc.)
Kentucky is in the South Region for VA residual income. The VA publishes minimum residual income tables by region, family size, and loan amount. For most VA buyers in Kentucky with loan amounts over $80,000, the 2025 tables (which 2026 is expected to closely resemble) show minimums around:
Family of 1: around $441 per month
Family of 2: around $738 per month
Family of 3: around $889 per month
Family of 4: around $1,003 per month
Family of 5: around $1,039 per month
For families larger than 5, VA typically adds around $80 per additional household member. Always refer to the latest published VA tables for exact figures.
Helpful reference: You can review a current VA residual income chart for the South region (which includes Kentucky) here:
Example: Kentucky Family of Four – Residual Income
Let’s say:
Gross monthly income: $6,000
Estimated total taxes/withholding: $1,200
New VA house payment (PITI + HOA): $1,600
Other monthly debts: $600
Calculation:
$6,000 (gross income)
– $1,200 (taxes/withholding)
– $1,600 (new VA payment)
– $600 (other debts)
= $2,600 residual income
If the required residual income for a family of four in the South region is roughly $1,003 and you have $2,600 left over, you are significantly above the minimum – a strong positive for underwriting, especially if your DTI is on the high side.
Full vs. Partial VA Entitlement and Loan Limits in 2026
Full Entitlement – No VA Loan Limit
If your COE shows that you have full entitlement (often described as “This veteran’s basic entitlement is $36,000” with no reductions), then:
You do not have a formal VA loan limit.
You can often buy a home in Kentucky with zero down as long as:
The lender approves the loan based on credit, income and debts.
The VA appraisal supports the value.
In other words, with full entitlement, the true “limit” is what you can qualify for and what the property will appraise for – not an arbitrary VA cap.
Partial Entitlement – Tied to Conforming Loan Limits
If you still have a VA loan outstanding or lost some entitlement due to a prior foreclosure or short sale, you may have partial entitlement. In those cases, your maximum zero-down amount is tied to the FHFA conforming loan limit for the year.
For 2025, the baseline conforming loan limit for a 1-unit property is $806,500 in most U.S. counties.
Each year, FHFA may adjust these limits based on home prices. The VA then uses those numbers to calculate how much entitlement you have left for a no-down-payment purchase.
For 2026, you will want to look up the current conforming limit for your Kentucky county and then have your lender calculate how much zero-down purchasing power you have based on remaining entitlement.
Action step: If you’ve used a VA loan before, we’ll pull your COE, review any outstanding VA loans, and walk through an entitlement calculation so you know your maximum zero-down price range.
Property & Occupancy Rules for Kentucky VA Loans
VA loans are meant for owner-occupied primary residences. In Kentucky, that usually means:
1–4 unit properties (you must occupy one of the units as your primary residence).
Single-family homes in cities, suburbs, and rural areas.
VA-approved condos or townhomes.
Some manufactured homes (case-by-case, depending on foundation, age, and lender overlays).
You cannot use a VA loan to buy an investment property that you do not intend to occupy. However, you can buy a multi-unit property (like a duplex) and live in one unit while renting the other.
Step-by-Step: How to Get Approved for a Kentucky VA Mortgage in 2026
Initial call or online inquiry – We talk through your goals, service history, income, and main questions.
Pull COE and credit – We confirm your VA eligibility and pull a tri-merge credit report.
Income and asset review – You send recent paystubs, W-2s, tax returns (if needed), and bank statements.
AUS run (or manual pre-underwrite) – We run your file through VA’s automated system or line it up for manual underwriting.
Pre-approval letter – Once we have a strong approval, you and your Realtor know your price range.
Find a home and make an offer – Your pre-approval and VA benefit often strengthen your offer.
Appraisal, title, and final underwriting – We order the VA appraisal, clear conditions, and finalize your approval.
Closing – You sign final documents, get your keys, and move into your new Kentucky home.
When Does a Kentucky VA Loan Need a Manual Underwrite?
Not every file will get an AUS “Accept.” Some common reasons for a manual underwrite include:
Limited or “thin” credit history
Recent late payments, collections, or charge-offs
Prior bankruptcy, foreclosure, or short sale
Non-traditional credit (no credit scores, but documented rent and alternative accounts)
Borderline residual income or higher DTI
Manual underwrites in 2026 still get approved every day – but they require:
Stronger documentation
Clear compensating factors
Better residual income relative to the VA table
More conservative DTI (targeting the 41% back-end guideline)
If I see early in the process that your file is likely to be manual, we’ll plan the documentation and structure upfront so there are fewer surprises in underwriting.
How VA Loans Compare to FHA, USDA & Conventional in Kentucky
If you qualify for VA, it is almost always worth putting at the top of the list because you get no PMI and $0 down in many cases. That said, there are times when we still compare VA to other programs:
FHA Loans in Kentucky – Popular with first-time buyers who don’t have VA eligibility or have lower scores. FHA has a minimum 3.5% down payment and monthly mortgage insurance.
Learn more about Kentucky FHA mortgage loans
USDA Rural Housing Loans – Zero-down loans for eligible rural areas and income limits. Great for buyers in qualifying Kentucky counties who don’t have VA eligibility.
Explore Kentucky USDA rural housing loans
Conventional (Fannie Mae) Loans – Strong option for higher scores and buyers with larger down payments. Sometimes used when borrowing above certain VA thresholds or when a borrower wants a different structure.
Compare Kentucky FHA vs. Conventional loans
Kentucky Housing Corporation (KHC) Programs – State programs that can help with down payment and closing costs, often paired with FHA or Conventional and sometimes with VA where guidelines allow.
Kentucky first-time homebuyer and KHC programs
During your consultation, we’ll run side-by-side numbers so you can see whether VA, FHA, USDA, KHC, or Conventional gives you the best payment and the strongest approval path.
Real-World 2026 Kentucky VA Loan Scenarios
Scenario 1 – First-Time Buyer, 620 Score, Strong Income
First-time Kentucky homebuyer, veteran with full entitlement.
620–640 score, stable W-2 income, low other debts.
DTI at 45–50%, residual income comfortably above the South region table.
Result: Likely AUS approval, $0 down, no PMI, very straightforward VA loan.
Scenario 2 – Higher DTI, Strong Residual Income
Veteran buying move-up home; DTI around 60% after including new payment.
Family of 4 with strong income and significant residual income above the guideline.
Good payment history and several months of reserves left after closing.
Result: AUS may still approve despite high DTI because residual income, credit history and reserves offset the risk.
Scenario 3 – Manual Underwrite After a Credit Event
Veteran with a past bankruptcy or foreclosure that is now seasoned.
Scores in the high 500s/low 600s with recent on-time payments.
DTI tightened to stay around or under 41%, with residual income above the table.
Result: Manual underwrite with thorough documentation and clear compensating factors; still very possible to close if the rest of the file is strong.
FAQ: 2026 Kentucky VA Mortgage Qualifying
What credit score do I need for a Kentucky VA loan in 2026?
VA does not publish a minimum score, but most lenders in 2026 want to see around a 620 middle score. Below that, approvals are still possible but are more likely to need strong compensating factors and, in some cases, manual underwriting.
How high can my DTI be and still get approved?
On AUS approvals, we sometimes see DTI in the mid-50s to low-60s qualify when the rest of the file is strong. Manual underwrites are typically capped near the 41% back-end ratio, unless residual income and other factors justify an exception.
What is residual income and why does it matter?
Residual income is what’s left over after you pay taxes, the new VA mortgage, and all other monthly debts. VA has regional tables for minimum residual income. For Kentucky (South region), meeting or exceeding that number is a key part of getting approved – especially if your DTI is high.
Can I use my VA loan benefit more than once?
Yes. You can reuse your VA benefit multiple times as long as you restore or have remaining entitlement. We review your COE, any existing VA loans, and help you understand your remaining eligibility.
Can I buy a duplex or multi-unit with a VA loan in Kentucky?
Yes, VA allows 1–4 unit properties as long as you occupy one of the units as your primary residence. Rental income from the additional units may help qualify in some cases.
Can I roll closing costs into my VA loan?
In many cases, yes. You can use seller credits, lender credits, or in some cases a slightly higher rate to offset costs. We’ll structure your purchase to minimize cash to close while keeping your payment affordable.
Get a 2026 Kentucky VA Loan Game Plan
If you’re a veteran, active-duty service member, or eligible surviving spouse in Kentucky, you’ve earned this benefit. The next step is simply getting a clear, honest look at where you stand and what it will take to qualify.
Here’s what I’ll do for you:
Review your COE, credit, income, and debts.
Lay out your maximum price range, estimated payment, and closing cost options.
Show you whether VA, FHA, USDA, KHC, or Conventional gives you the best structure.
Build a step-by-step roadmap if you’re a few moves away from qualifying today.
Serving veterans and homebuyers in all 120 counties across Kentucky.
Legal & Compliance:
This article is for educational purposes only and does not constitute a commitment to lend or an offer of credit. All loan programs, terms, and guidelines are subject to change without notice. Final approval is based on underwriting review of your complete application, credit, income, assets, property, and applicable program guidelines. VA loans are offered through approved lenders; this website is not endorsed or sponsored by the U.S. Department of Veterans Affairs or any government agency.
Kentucky New Construction Loans with 3.5% Down Payment Assistance
By Joel Lobb, Mortgage Broker – FHA, VA, USDA, KHC, Fannie Mae
NMLS #57916 | Company NMLS #1738461
3.5% Down Payment Assistance for Completed New Construction Homes in Kentucky.
3.5% Down Payment Assistance for Completed Construction Homes
If you are building or buying a completed new construction home in Kentucky, coming up with the cash for
down payment and closing costs can slow everything down. This 3.5% down payment assistance (DPA) program
pairs a competitive 5/1 ARM first mortgage with a repayable 3.5% DPA second to help
buyers close with less money out of pocket.
The goal is simple: make Kentucky new construction loans more affordable for buyers
while giving builders a clean way to move inventory without cutting price. For buyers who want to compare this
to other Kentucky down payment assistance options through KHC,
this program can be part of a larger strategy, not a one-size-fits-all answer.
How This Kentucky New Construction DPA Program Works
The structure is straightforward. Buyers receive:
A 5/1 ARM first mortgage at a competitive rate.
A 3.5% down payment assistance second lien that is repayable.
The assistance can be used toward several upfront costs that usually keep buyers on the sidelines. When we look
at your file, we also compare this structure to
Kentucky USDA zero-down home loans
and KHC loan programs
so you can see which option actually delivers the best fit.
What the 3.5% Down Payment Assistance Can Be Used For
Down payment on a completed new construction home.
Prepaid items such as taxes and insurance.
Closing costs charged by the lender, title company, and other parties.
Temporary or permanent interest rate buydowns to lower the monthly payment.
Used correctly, this Kentucky down payment assistance program can reduce the buyer’s cash to close and
create a more comfortable payment from day one. If you are also researching your
credit score needed for a Kentucky mortgage,
it’s important to know that both the first mortgage and DPA second have minimum credit and underwriting guidelines.
Benefits for Kentucky Homebuyers
Buyers looking online for Kentucky new construction loans are usually focused on three
things: monthly payment, cash to close, and long-term flexibility. This 3.5% DPA option helps in all three areas.
Lower cash to close: Assistance can cover part of the down payment and closing costs.
Payment relief: Funds can be structured toward rate buydowns to help manage the payment in the early years.
Flexible structure: Buyers can combine this with other incentives, gifts, or seller credits where allowed.
Benefits for Builders and Developers in Louisville and Across Kentucky
For builders, this program is a clean Louisville builder financing solution that helps
buyers say “yes” without forcing deep price cuts or heavy concessions.
No price reduction required: Use financing instead of discounting the list price.
Move standing inventory: Turn qualified traffic into real contracts.
Helps more buyers qualify: By assisting with upfront costs, more buyers can make the numbers work.
Works with completed construction: Ideal for finished homes that are ready to close.
If you are a builder or listing agent with completed homes in Louisville, Lexington, Bowling Green, or other
Kentucky markets, this down payment assistance option can become part of your standard financing toolkit alongside
USDA, FHA, VA, and KHC down payment assistance.
Who Is a Good Fit for This Kentucky New Construction Program?
Buyers purchasing a completed new construction home in Kentucky.
Clients who have stable income but limited cash for down payment and closing costs.
First-time buyers and repeat buyers who want to preserve savings.
Builders with move-in ready homes who want a structured financing solution for their buyers.
Full underwriting guidelines will apply, including credit score, debt-to-income, income documentation, and
property eligibility. Not all borrowers or properties will qualify. If you’re unsure whether your current profile fits,
review the credit score and approval guide for Kentucky mortgages
and then reach out for a tailored scenario.
How the 5/1 ARM Works with the 3.5% DPA
The first mortgage is a 5/1 ARM, which means the interest rate is fixed for the first
five years and can adjust annually after that based on the terms of the note.
Years 1–5: Fixed introductory rate, often lower than a comparable 30-year fixed rate.
After year 5: Rate can adjust annually up or down within specified caps.
DPA second: The 3.5% assistance is structured as a second lien that is repayable based on program terms.
For many buyers, this structure can be a smart option if they plan to refinance in the future, move, or expect
income growth before the first adjustment period. We’ll compare this alongside fixed-rate products, USDA, KHC,
and other Kentucky down payment assistance programs
to make sure the ARM structure actually makes sense for your timeline.
Comparing This Program to Other Kentucky Down Payment Assistance Options
I have helped Kentucky homebuyers since 2001 with FHA, VA, USDA, KHC, and conventional mortgage programs.
My focus is on providing clear, honest guidance so you understand your options and choose the loan that fits
your budget and long-term plan.
Whether you are a first-time buyer, a move-up buyer, or a builder looking for reliable
Louisville builder financing support, I am available to walk you through every step. That includes reviewing
USDA Rural Housing loans,
KHC down payment assistance,
and other structures side-by-side with this new construction DPA option.
Every buyer and property are different. The best way to see if this Kentucky new construction DPA program is
right for you is to run a custom quote based on your credit, income, and the specific home you are building or buying.
Next Step: Call or text 502-905-3708, or use the contact form on my website to get started.
Important Disclosures
This is not a commitment to lend or an offer to extend credit. All loans are subject to credit approval,
underwriting guidelines, and program availability. Interest rates, program terms, and eligibility guidelines
may change without notice. Not all borrowers will qualify for all programs described. The 5/1 ARM and 3.5% down
payment assistance program described on this page is for completed new construction homes only and may not be
available in all areas of Kentucky.
Please contact Joel Lobb for the most current information and to receive a customized quote based on your
specific situation.
Kentucky FHA Loan Guidelines for Bankruptcy and Foreclosure
Chapter 7
Chapter 7 bankruptcy discharged more than 24 months prior to the application date may be allowed.
Chapter 7 bankruptcy discharged between 12 and 24 months prior to the application date requires satisfactorily established credit and documentation showing the circumstances which caused the bankruptcy were beyond the borrower's control (i.e. unemployment, medical bills not covered by insurance). In these instances, the file must be manually downgraded to a refer and manually underwritten. It falls upon the underwriter to make a final determination as to the overall quality of the file.
Chapter 7 bankruptcy discharged less than 12 months prior to the application date is not allowed.
Chapter 13
Loans where the borrower is currently in a Chapter 13 bankruptcy or had a Chapter 13 bankruptcy which was discharged within the previous 2 years require manual downgrade and must be underwritten manually. Note that manual underwrites require Underwriting Management approval.
A borrower who is currently in a Chapter 13 bankruptcy may be eligible for FHA financing provided all of the following conditions are met in addition to standard manual underwriting requirements:
Foreclosure / Short Sale
A foreclosure less than 3 years ago is not allowed.
In all instances, the “date of foreclosure” is considered the date of the foreclosure deed. The end date of the time frame is determined by the application date.
You can obtain a copy of your bankruptcy paperwork from the website below:
Frequently Asked Question on Kentucky Mortgages After Bankruptcy
📘 Chapter 13 Bankruptcy Mortgage Questions
⬇️ Click on arrows for answers to your mortgage questions
How long after a Chapter 13 bankruptcy can I get a mortgage?
You may be eligible after 12 on-time payments during your repayment plan (with court approval), or immediately after discharge with FHA, VA, or Non-QM options.
What types of mortgage loans are available during or after Chapter 13?
FHA, VA, USDA, Conventional (after 2 years discharge), and Non-QM Portfolio Loans.
What is your waiting period for an FHA loan after bankruptcy?
FHA typically allows for approval during Chapter 13 (after 12 payments with approval) or immediately after discharge.
What kind of interest rate should I expect?
Rates depend on credit recovery and loan type. Expect slightly higher-than-average rates during early post-bankruptcy stages, with the potential for competitive terms.
What are the most common obstacles after discharge?
Low credit scores, high DTI ratios, limited assets, incomplete documentation, or lack of court approval.
How long does it take to refinance after Chapter 13 discharge?
Typically 2–4 weeks if all documents are ready.
How long does it take to purchase after Chapter 13 discharge?
Often 30–45 days from pre-approval to closing.
Can I purchase a home while still in Chapter 13?
Yes, with 12 months of on-time payments and court/trustee approval.
Can I refinance my mortgage during Chapter 13?
Yes, under certain conditions and with approval from the bankruptcy court.
How long does it take to get approved during a Chapter 13 payment plan?
Typically 45–60 days including court approval, but may vary by case and jurisdiction.
Can I do a cash-out refinance after Chapter 13?
Yes, usually available 6–12 months post-discharge if equity and credit conditions are favorable.
Are there any mortgage offer loans for homeowners who own their home outright after bankruptcy?
Yes. Rate-and-term and cash-out refinances may be available depending on credit and income.
Are there low down payment loan options post-Chapter 13?
Yes. FHA (3.5% down), VA (0% down), USDA (0% down), and KHC programs are available.
What credit score is needed after Chapter 13?
FHA 580 with 3.5% down FHA and 500+ score with 10% down payment, VA: no minimuim score but 620 preferred USDA: no minumum score but 640 preferred, Conventional: 620+, Non-QM: 500–550+
What if I don’t qualify right now?
You’ll receive a custom action plan to build credit, savings, or income toward qualification.
How do student loans affect mortgage eligibility after bankruptcy?
Student loans count toward your DTI. Deferred loans typically calculated at 0.5%–1% of the balance.
Where can I find forms to file for Chapter 13 Bankruptcy?
Forms are available via the U.S. Bankruptcy Court website or through a licensed bankruptcy attorney.
How does divorce affect my Chapter 13 plan?
Divorce can affect repayment and income stability. Plan modifications may be needed through court.
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📙 Chapter 11 Bankruptcy Mortgage Questions
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What mortgage options are available after Chapter 11 bankruptcy?
Loan types vary based on personal vs. business bankruptcy. FHA, VA, and Non-QM may apply post-discharge.
What if I don’t qualify today?
You’ll receive a recovery plan tailored to reestablish eligibility.
When can I apply for a loan post-Chapter 11?
After your plan is confirmed or the bankruptcy is discharged—typically 12–24 months depending on the loan.
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📗 Chapter 7 Bankruptcy Mortgage Questions
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How long must I wait after Chapter 7 to get a mortgage?
FHA/VA: 2 years, USDA: 3 years, Conventional: 4 years, Non-QM: as little as 1 day post-discharge.
What loan options are available post-Chapter 7?
FHA, VA, USDA, Conventional, and Non-QM—all with different credit and timeline requirements.
Are there extra fees for Chapter 7 borrowers?
No hidden fees. Standard lender fees apply. Review your Loan Estimate for details.
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Do you offer loans for mobile homes on past Chapte7 or Chapter 13?
Yes—if the home is on a permanent foundation and meets agency/HUD guidelines.
Kentucky Mortgage Loans with Past Credit Issues: FHA, VA, USDA, Conventional, and KHC Options
Kentucky mortgage loans after credit challenges: your options and next steps
If you’ve had late payments, collections, bankruptcy, or other setbacks, you’re not out of the game. Kentucky homebuyers routinely qualify using the right loan structure, realistic timelines, and clean documentation. Below is a practical breakdown of FHA, VA, USDA, Conventional, and KHC down payment assistance—plus smart internal and external resources.
Program overview
FHA loans in Kentucky
Potential approvals down to 500 with at least 10% down or 10% equity on a refinance.
580+ score typically enables 3.5% down payment.
Gift funds and DPA allowed; flexible underwriting for limited credit depth.
