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A Beginner's Guide to Home Mortgage in Kentucky


  • Conventional home loans - conventional mortgages are the ones that comply with the loan limits and terms set by government-backed mortgage companies Fannie Mae and Freddie Mac. They usually require a 3-5% down payment and allow you to borrow up to $647,200 (as of 2022). Typical credit score requirements are 620 and up. In reality, if scores are under 720, and with minimal down payment, it is hard to get approved for a conventional loan and best to look at doing a FHA loan. 
  • USDA Loans - these mortgages are designed for those buyers looking to invest in rural areas. They are backed by the USDA and don’t require a down payment, but only homes in certain areas might be eligible. No minimum score but 620 to 640 credit score requirement with household income limits for each county in Kentucky.
  • VA Loans - these loans are catered to members of the US military and their families. They are backed by the Department of Veterans Affairs and don’t require a down payment or no monthly Private Mortgage Insurance (PMI). No minimum score but 580 and above with most lenders.
  • FHA Loans - These are loans backed by the Federal Housing Administration and only require a minimum down payment of 3.5 and a score of 580 and 10% down with a 500 credit score.
  • KHC loans with down payment assistance of $7,500 require minimum credit score of 620

 

A Good Credit Score 

Some government-backed loans are accessible with a score no minimum score or 500 to 580, while conventional loans require a minimum credit score of 620.  


Down Payment

Thanks to today’s availability of different loan types, you no longer need to build that infamous 20% down payment, and you can access a loan with a 0-3% down. 


A Debt-To-Income Ratio Below 45%

The debt-to-income (DTI) ratio measures how much of your income is used to repay outstanding debt.