10 Mortgage Facts Every Kentucky Homebuyer Needs to Know!

 Mortgage Facts That Give You an Advantage When Shopping for a Home Loan in Kentucky

If you’re buying a home in Kentucky, understanding how mortgages work can give you a real edge. Whether you’re a first-time buyer or a repeat homeowner, these 10 insider facts can save you money, stress, and time during the mortgage process.👇

 

10 Mortgage Facts Every Kentucky Homebuyer Should Know for | FHA, VA, USDA & Conventional Loans

Looking to buy a home in Kentucky? 

Here are 10 insider mortgage facts that give you an edge when applying for FHA, VA, USDA, or Conventional home loans in 2025.

If you’re buying a home in Kentucky, understanding how mortgages work can give you a real edge. Whether you’re a first-time buyer or a repeat homeowner, these 10 insider facts can save you money, stress, and time during the mortgage process.👇

1. Mortgage Rates Change — Sometimes Daily

Mortgage rates move up and down throughout the day, just like the stock market. The rate you see in the morning might not be available in the afternoon.
👉 Pro Tip: If you’ve found your dream home and your loan officer quotes you a solid rate, consider locking it in immediately before market shifts erase your savings.

2. Every Lender Charges Different Fees

Not all lenders price their loans the same. Rates, origination fees, discount points, and closing costs can vary widely.
👉 Best Practice: Get at least three loan estimates to compare side-by-side. Don’t just shop rate — compare total cost.

3. Your Loan Might Be Sold — And That’s Normal

It’s common for lenders to sell your loan to another bank or servicer. This helps lenders free up capital to issue more loans.
👉 What to Watch: Always read your mail and verify who’s collecting your payment. The terms of your loan don’t change when it’s sold.

4. Your Middle Credit Score Is What Counts

Lenders pull three credit scores — one each from Experian, Equifax, and TransUnion. Your middle score determines your qualification and rate.
👉 Important: Free credit scores from apps or websites use different models and may not match what mortgage lenders see.

5. You Can Refinance Anytime — But That Doesn’t Mean You Should

You can refinance whenever you like, but it only makes sense if it benefits your long-term financial goals.
👉 Ask Yourself: Are you lowering your payment, shortening your term, or pulling cash out for home improvements? If the math works, refinance. If not, wait.

6. You Can Buy a Home Again After a Foreclosure

A past foreclosure doesn’t disqualify you forever. Each loan type has its own waiting period:

• FHA: 3 years

• VA: 2 years

• Conventional: 7 years
  👉 Exception: You may qualify sooner if you can document an uncontrollable hardship (job loss, major illness, etc.).

7. Good Credit = Better Mortgage Rates

High credit scores don’t just open more doors — they get you better pricing.
👉 Action Step: Keep your balances below 30% of your limits, pay on time, and avoid new credit inquiries before applying. The stronger your credit, the more leverage you have to negotiate closing costs.

8. Know Your APR (Annual Percentage Rate)

Your interest rate and your APR are not the same.

• Interest Rate: Cost of borrowing the money

• APR: The true cost, including lender fees, points, and mortgage insurance
  👉 Smart Move: Always ask for a breakdown of what’s included in the APR so you know where your money is going.

9. You Can Reduce Your Closing Costs

Closing costs can be negotiated.
👉 Options:

• Ask the seller for a credit

Ready to Get Started?

Joel Lobb | Kentucky Mortgage Loan Officer

Helping Kentucky Families Since 2002

FHA | VA | USDA | KHC | Conventional

 502-905-3708

 

 kentuckyloan@gmail.com

 

 www.mylouisvillekentuckymortgage.com

 

 911 Barret Ave., Louisville, KY 40204

Get Pre-Approved Today

Joel Lobb - Mortgage Loan Officer
NMLS Personal ID: 57916 | Company NMLS ID: 1738461
Kentucky Mortgage Loans Only | Equal Housing Lender

Important Disclaimers:
This website and content are not endorsed by the FHA, VA, USDA, or any government agency. All information is for educational purposes only and does not constitute financial advice.

Loan approval is subject to credit approval and program guidelines. Not all loan programs are available in all states for all loan amounts. Interest rates and program terms are subject to change without notice. Mortgage, home equity and credit products are offered by lenders who are licensed by the states in which they operate. Other restrictions and limitations apply.

Visit www.nmlsconsumeraccess.org to verify licensing and credentials.

 Equal Housing Opportunity

Ready to Get Started?

🏠 10 Mortgage Facts

Every Kentucky Homebuyer Needs to Know

1

📈Rates Change Daily

Mortgage rates move like the stock market. The rate you see this morning could disappear by afternoon. Lock it in when it looks solid!

2

💰Every Lender Charges Different Fees

Compare at least 3 loan estimates. Look beyond the rate—check origination fees, underwriting fees, and lender credits. That's where the real differences hide.

3

📬Your Lender Can Sell Your Loan

Totally normal—it helps lenders free up funds. Your loan terms don't change, but always read your mail to ensure you're sending payments to the right place.

4

📊Middle Credit Score Matters Most

Lenders pull from Experian, Equifax, and TransUnion—and use your middle score to qualify you. Free app scores? Usually not the same as mortgage scores.

5

🔄Refinancing: Run the Numbers

You can refinance anytime, but should you? It makes sense if you'll break even in 2-3 years, eliminate PMI, shorten your term, or pull equity for something important.

6

🏡You Can Buy Again After Foreclosure

FHA: 3 years | VA: 2 years | Conventional: 7 years. If life threw you a curveball, time and recovery open new doors. Don't give up on homeownership.

7

⭐Good Credit = Better Rates

Keep balances low, pay on time, avoid new credit before applying. Even a 20-point credit score bump can save you thousands over your loan's life.

8

🔍Know Your APR

Interest rate = what you pay to borrow. APR = the true cost including fees, points, and insurance. Always ask what's included so you're comparing apples to apples.

9

💵Reduce Your Closing Costs

In Kentucky, sellers are often open to credits. You can also use lender credits or roll costs into loans with VA or USDA. There's always room to negotiate!

10

✅Pre-Approval Gives You Power

In Kentucky's competitive market, sellers take you seriously when you're pre-approved. It shows you're ready to close—and can be the difference between winning or losing a home.

Same-Day Approvals Available!

Ready to Get Started?

Joel Lobb | Kentucky Mortgage Loan Officer

Helping Kentucky Families Since 2002

FHA | VA | USDA | KHC | Conventional

📞 502-905-3708

📧 kentuckyloan@gmail.com

Get Pre-Approved Today

NMLS Personal ID: 57916 | Company NMLS ID: 1738461
Kentucky Mortgage Loans Only | Equal Housing Lender

Kentucky USDA Rural Housing — Income Limits by County

2025 Kentucky USDA Rural Housing Income Limits

Check your county’s USDA income limits and property eligibility map

Search for Your County: Or Select from the List: -- Choose a Kentucky County --

1-4 Person Household:

5-8 Person Household:

Use the map below to check if a property address is located in a USDA-eligible area for 2025.

© 2025

enter address below: 👇👇👇👇

Joel Lobb (NMLS#57916)
Senior  Loan Officer

Text/call 502-905-3708

kentuckyloan@gmail.com

2025 Kentucky Home Loan Comparison Guide — FHA, VA, USDA, and Conventional Loans Explained

If you are a first-time homebuyer in Kentucky, it's essential to have current information about loan programs. The same applies if you plan to refinance this year. The details in your mortgage quote can significantly impact your monthly payment. They can also affect your long-term costs. This is especially true since loan program fees and guidelines change annually.

We’ve updated our Kentucky Loan Comparison Chart for 2025. It reflects the latest program updates from FHA, VA, USDA, and Fannie Mae Conventional loans.

This quick visual guide helps Kentucky buyers easily compare down payment requirements, credit score guidelines, and monthly fees. This comparison makes it easier to choose the mortgage that fits your budget and goals.

 FHA Loan Updates (2025)

Old FHA MIP: 0.85%
New FHA MIP: 0.55%

Big news for 2025 — the FHA Mortgage Insurance Premium (MIP) has been reduced from 0.85% to 0.55%. That’s a major savings for buyers using low-down-payment FHA financing.

This change can lower your monthly mortgage payment and make homeownership even more affordable for first-time buyers with moderate credit.

1. ✅ Minimum Down Payment: 3.5%
2. ✅ Minimum Credit Score: 580+
3. ✅ Best For: Buyers with limited savings or lower credit scores

USDA Loan Updates (2025)

The USDA Rural Development Loan remains one of the best options. It offers 100% financing in eligible rural and suburban areas across Kentucky.

USDA Annual Fee: 0.35%
(based on the remaining principal balance, paid monthly)

1. ✅ Down Payment: 0%
2. ✅ Credit Score: Typically 620+
3. ✅ Income Limits Apply
4. ✅ Perfect For: Buyers looking to purchase outside city limits 

VA Loan Updates (2025)

Old VA Funding Fee: 0–3.6%
New VA Funding Fee Range: 0.5–3.3%

The VA Home Loan continues to be one of the most powerful benefits available to Kentucky veterans and active-duty service members. For 2025, the VA funding fee has been slightly reduced. The reduction depends on your service type, loan type, and down payment amount.

And remember — veterans with service-connected disabilities or surviving spouses are exempt from the VA funding fee entirely.

1. ✅ Down Payment: 0%
2. ✅ Credit Score: Flexible
3. ✅ Funding Fee: 0.5–3.3% (Exempt for Disabled Veterans)
4. ✅ Best For: Veterans, Active-Duty, and Eligible Reservists

Conventional Loan Updates (2025)

While Conventional loans still have flexible guidelines and competitive rates, buyers should note this. Private Mortgage Insurance (PMI) costs vary based on credit. They also vary based on down payment.

Updated PMI Range: 0.2%–2% annually

1. ✅ Down Payment: As low as 3%
2. ✅ Credit Score: 620+
3. ✅ Seller Concessions:

• 3% (less than 10% down)
• 6% (10–25% down)
• 9% (25%+ down)

This range gives you room to negotiate closing costs and minimize cash-to-close — a key advantage in today’s competitive market.

 Why This Update Matters for Kentucky Homebuyers

Each year, loan program fees change. Funding rates are also adjusted. Guidelines vary as well. The year 2025 brings meaningful updates that can directly affect your monthly affordability.

Whether you’re choosing between FHA, VA, USDA, or Conventional, understanding these differences helps you:

• Qualify with confidence
• Reduce monthly housing costs
• Maximize available down payment assistance
• Choose the most affordable loan program for your situation

If you’re exploring FHA, VA, USDA, or KHC loans in Kentucky, I can help you. You can compare your options side-by-side. It's just like the infographic above.

As a licensed Kentucky Mortgage Loan Officer (NMLS #57916), I have over 20 years of experience. I’ve helped more than 1,300 Kentucky families buy or refinance homes. I always use the best loan programs available.

Joel Lobb 

 Email - kentuckyloan@gmail.com 

 Call/Text - 502-905-3708

 www.mylouisvillekentuckymortgage.com
 911 Barret Ave., Louisville, KY 40204

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Evo Mortgage
Company NMLS# 1738461
Personal NMLS# 57916

Kentucky Mortgage Loan Expert For Kentucky FHA, VA, USDA, Fannie Mae and KHC Down payment Assistance Loans

Kentucky Mortgage Approval Underwriting Myths Debunked for FHA, VA, USDA and Fannie Mae

 Mortgage Approval Underwriting Myths Debunked

Getting approved for a loan is not as hard as some make it. The 3C approach breaks it down in its simplest form so no need to overthink or complicate with “what if’s” or variable situations and these factors are the same in every state. They all have to line up for your loan to be approved but here there are in order of significance

Capacity

- No matter if your credit is in 800’s the ability to afford a loan (capacity aka DTI) is the MOST important C and why most applications either get denied or reduced. Income is EVERYTHING.

To get a conforming (FHA / VA / Conventional) loan you need 2yrs of verifiable Full time income even if it’s pieced together with different employers with 2yrs W2’s and your most recent paystub if you’re an employee and OT and/or bonus cannot be used if you’ve been with your employer for less than 2yrs.

If you have part time employment as well that income cannot be used unless you’ve worked both jobs for at least 2yrs UNLESS your P/T job is the exact same as your F/T job and your hours are not variable then in most cases you can get an exception if you’ve been there for at least 1yr. If you’re self employed 2 most recent tax returns with positive income on line 31 of your schedule C.

If homeownership is your goal, then don’t be cheap and have a certified tax preparer prepare your taxes because it’s likely you’ll need certain docs to get approved only they can provide. Also DO NOT write off all your income to avoid paying the IRS taxes because this will disqualify you from a loan and you’ll have to get a more expensive loan with a bigger down payment.

Credit - 
 

many people think this is the most important but it’s not but it is important. With a high enough capacity (low DTI) I’ve seen clients with minimum scores get approved. FHA requires 580, VA does not have a minimum score requirement and while some lenders can do down in the 500’s generally most lenders do not go below 580, and conventional requires 620.

Having said all that just because you meet the minimum score does not mean you’ll get an approval before credit profile (positive tradeline history, collection activity, credit usage) is what matters most. I’ve seen applicants with 680+ get denied for conventional loans because they have a poor credit profile or low capacity (higher DTI).

FHA is a little more forgiving which is why they are easier loans to get than conventional. Obviously the higher the score, the better the chances are for approval but high scores aren’t needed if capacity and collateral are strong.

Collateral - aka down payment.

 

Underwriters request either 1 bank statement for FHA or 2 bank statements for conventional and all they are looking for is verification of cash to close, large deposit (FHA more than 1% of loan amount deposited in 1 deposit) activity and reserves if needed, not spending habits. Large purchases are irrelevant and NSF’s can be explained with an explanation letter. The higher the down payment in percentages (3.5 or 5%, 10%, 15%, 20% etc…) not dollars ($2000 or $5000 more than required) then the lower the risk and higher chance of approval especially for conventional loans. Plus dollars don’t noticeably reduce your monthly payment but percentages do.

Overlays - 

 

additional restrictions some lenders have in addition to standard mortgage guidelines. If your lender is telling you anything more is required than what’s posted above it’s because they have overlays which make it more difficult to get approved with them.
Example - Veteran’s United will not take credit scores under 620 = OVERLAY

 

 

 

If you want a personalized answer for your unique situation call, text, or email me or visit my website below:

Joel Lobb 

 Email - kentuckyloan@gmail.com 

 Call/Text - 502-905-3708

 www.mylouisvillekentuckymortgage.com
 911 Barret Ave., Louisville, KY 40204

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Evo Mortgage
Company NMLS# 1738461
Personal NMLS# 57916

Kentucky Mortgage Loan Expert For Kentucky FHA, VA, USDA, Fannie Mae and KHC Down payment Assistance Loans

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Denied for a Home Loan in Kentucky? 10 Real Reasons Why (FHA, VA, USDA & Fannie Mae)

Buying a home in Kentucky? Don’t let your mortgage application get denied.

In this video, I break down the Top 10 Reasons Mortgage Loans Are Denied in Kentucky — including FHA, VA, USDA, and Fannie Mae programs.

Whether it’s a high debt-to-income ratio, low credit score, or appraisal issues, I’ll walk you through what really causes a loan denial and how you can avoid these pitfalls before you apply.

As a Kentucky Mortgage Loan Officer with over 20 years of experience, I’ve helped more than 1,300 families become homeowners — even when they thought approval was out of reach.

 Watch until the end for pro tips to boost your approval odds and get that “Clear to Close”!

Joel Lobb 

 Email - kentuckyloan@gmail.com 

 Call/Text - 502-905-3708

 www.mylouisvillekentuckymortgage.com
 911 Barret Ave., Louisville, KY 40204

---

Evo Mortgage
Company NMLS# 1738461
Personal NMLS# 57916

Kentucky Mortgage Loan Expert For Kentucky FHA, VA, USDA, Fannie Mae and KHC Down payment Assistance Loans

Top 10 Reasons Mortgage Loans Are Denied in Kentucky

Top 10 Reasons for Mortgage Loan Denial in Kentucky

Essential Knowledge for Kentucky Homebuyers

1

Low Credit Score

Credit scores below program minimums are the leading cause of denial. Most conventional loans require a minimum score of 620, while FHA loans may accept scores as low as 580 with 3.5% down.

Solution: Work on improving your credit score before applying. Pay down credit card balances, make all payments on time, and avoid opening new credit accounts. Even a small increase can make the difference between approval and denial.

2

High Debt-to-Income Ratio (DTI)

Lenders typically want your total monthly debt payments (including the new mortgage) to be no more than 43-50% of your gross monthly income. High credit card balances, car loans, and student loans can push you over this limit.

Solution: Pay down existing debts before applying, or consider increasing your income through a raise, second job, or adding a co-borrower with income.

3

Insufficient Employment History

Most lenders require at least two years of steady employment in the same field. Frequent job changes, gaps in employment, or switching careers can raise red flags about income stability.

Solution: Wait until you have a consistent two-year work history. If you've changed jobs, be prepared to explain how it was a lateral or upward move in the same industry.

4

Inadequate Down Payment or Reserves

While some Kentucky programs offer low or no down payment options, lacking sufficient funds for closing costs and reserves can still cause denial. Lenders want to see you have financial cushion beyond just the down payment.

Solution: Explore Kentucky Housing Corporation (KHC) down payment assistance programs, which can help cover both down payment and closing costs for qualified first-time buyers.

5

Property Appraisal Issues

If the home appraises for less than the purchase price, or if the appraisal reveals significant property defects, your loan may be denied. This is especially common with FHA, VA, and USDA loans which have stricter property standards.

Solution: Work with your real estate agent to negotiate a lower price, bring extra cash to cover the difference, or find a different property that meets lending standards.

6

Recent Bankruptcy or Foreclosure

Past financial difficulties require waiting periods before you can qualify for a mortgage. For conventional loans, you typically need to wait 4 years after foreclosure or 2-4 years after bankruptcy.

Solution: FHA loans may allow shorter waiting periods (2-3 years) with documented extenuating circumstances. Focus on rebuilding credit during the waiting period and be prepared to explain what happened.

7

Undocumented or Inconsistent Income

Self-employed borrowers, commission-based workers, or those with variable income often struggle to document sufficient, stable income. Lenders typically average two years of tax returns to determine qualifying income.

Solution: Keep meticulous records, minimize business write-offs in the years before applying, and work with a loan officer experienced with self-employed borrowers. Bank statement loan programs may be an alternative option.

8

Recent Large Deposits or Undocumented Funds

Unexplained large deposits in your bank accounts raise concerns about borrowed money or gift funds that haven't been properly documented. Lenders need to verify that all funds used for the purchase are legitimate.

Solution: Avoid moving money around or making large deposits during the mortgage process. If you receive gift funds, they must be properly documented with a gift letter. Keep your accounts stable and well-documented.

9

Taking on New Debt During the Process

Opening new credit cards, financing a car, or making other major purchases during the mortgage process can change your debt-to-income ratio and credit score, potentially causing denial even after pre-approval.

Solution: Wait until after closing to make any major purchases or take on new debt. Even furniture for your new home should wait. Lenders re-check your credit right before closing.

10

Incomplete or Inaccurate Application

Missing documents, inconsistent information, or errors on your application can delay or deny your loan. This includes failing to disclose debts, previous addresses, or employment gaps.

Solution: Be thorough and completely honest on your application. Respond quickly to document requests. Work with an experienced loan officer who will guide you through the process and help ensure nothing is missed.

Don't Let These Issues Stop Your Dream!

With proper preparation and expert guidance, most of these obstacles can be overcome.

As a Kentucky mortgage specialist with over 20 years of experience, I've helped more than 1,300 families navigate these challenges successfully.

Ready to Get Started?

📧 Email: kentuckyloan@gmail.com

📞 Call/Text: 502-905-3708

Joel Lobb - Mortgage Loan Officer
NMLS #57916 | Company NMLS #1738461
Equal Housing Lender

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Why Kentucky Mortgage Loans Are Denied

When applying for a Kentucky mortgage loan, several factors play a crucial role in the approval and denial process. 

Understanding why Kentucky mortgage loans may not get approved due to credit score, bankruptcy, income ratio, work history, and foreclosure is essential for prospective homebuyers. 

Credit Score of 620 or below:

A credit score reflects an individual's creditworthiness. Lenders use this score to assess the risk of lending money. A lower credit score, typically below 620, can raise concerns for lenders. It may indicate past financial challenges, missed payments, or high levels of debt. To improve mortgage approval chances, borrowers should aim for a higher credit score by paying bills on time, reducing debt, and fixing any errors on their credit report.

Bankruptcy less than 2 years or foreclosure less than 3 years:


Bankruptcy can significantly impact mortgage approval. Depending on the type of bankruptcy (Chapter 7 or Chapter 13) and how long ago it occurred, lenders may view it as a red flag. 

Bankruptcies stay on credit reports for 10 years, affecting credit scores and indicating financial instability. Lenders may require a waiting period after bankruptcy before considering a mortgage application.

 
Chapter 7

If you have filed a Chapter 7  Bankruptcy, the mortgage waiting periods begin after the discharge date:

Fannie Mae (conventional) loan – 4 years from discharge date
FHA loan – 2 years from discharge date
VA loan – 2 years from discharge date
USDA loan – 3 years from discharge date

Chapter 13 Bankruptcy

On the other hand, if you have filed a Chapter 13 Bankruptcy, the mortgage waiting periods are shorter:

Fannie Mae (conventional) loan – 2 years from discharge date, and also 4 years from the dismissal date.
FHA loan – 1 year from the payout period. However, you also need court permission, and proof of satisfactory bankruptcy payment and performance.
VA loan – 1 year from the payout period. Also, court permission, and proof of satisfactory bankruptcy payment and performance.
USDA loan – 1 year of the payout must elapse and payment performance must be satisfactory. In addition, you need court permission to borrow again.

After Short Sale/Deed-in-Lieu of Foreclosure

The mortgage waiting periods after a short sale begin after the completion date:Fannie Mae (conventional) loan – 4 years
FHA loan – 3 years
VA loan – 2 years
USDA loan – 3 years



Debt to Income Ratio over 50% 

Lenders assess income ratios to determine if borrowers can afford mortgage payments. The debt-to-income ratio (DTI) compares monthly debt payments to gross monthly income. A high DTI suggests financial strain and may lead to loan denial. Lenders typically prefer a DTI below 50% for conventional loans. Increasing income or reducing debt can help improve this ratio and enhance loan approval chances.


Work History less than 2 years with job gaps: 

2 year Stable employment and consistent income are vital for mortgage approval. Lenders evaluate work history to ensure borrowers have a reliable source of income to repay the loan. Job changes, gaps in employment, or irregular income can raise concerns. Ideally, borrowers should demonstrate a steady work history with consistent or increasing income over time.











Joel Lobb Mortgage Loan Officer

Text/call: 502-905-3708

email: kentuckyloan@gmail.com


http://www.mylouisvillekentuckymortgage.com/








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).