Here's a more comprehensive breakdown of what it takes to get approved for a mortgage loan in Kentucky as a first-time homebuyer:
* Credit Score: While the minimum score for most conventional loans in Kentucky is 580, aiming for a higher score can significantly improve your interest rates. FHA loans allow for scores as low as 500, but keep in mind that you'll typically pay mortgage insurance (MI) with a lower credit score and need at least 10% down payment
* Down Payment: The size of your down payment impacts your loan options, interest rates, and monthly payments. While 20% is the traditional benchmark for conventional loans, FHA loans require just 3.5%. Kentucky has excellent down payment assistance programs to help eligible buyers bridge the gap.
* Debt-to-Income Ratio (DTI): Maintaining a healthy DTI ratio (ideally below 45%) demonstrates your ability to manage debt and reassures lenders of your financial stability. They're are two ratios: Front-end ratio and backend ratio.
* Conventional Loan: The gold standard for many homebuyers, conventional loans offer competitive rates and terms but require a 20% down payment and a strong credit score.
* Kentucky FHA Loan: Insured by the Federal Housing Administration, FHA loans are more lenient on credit scores and down payments, making them accessible to first-time buyers with limited savings. However, you'll likely pay MI throughout the loan term.
* Kentucky USDA Loan: Designed for rural homeownership, USDA loans require no down payment for eligible borrowers in designated areas. Income limits apply, and the property must be your primary residence.
* Kentucky VA Loan: Veterans and eligible service members can leverage VA loans with zero down payment and favorable rates. This benefit requires meeting specific service requirements.
* Kentucky Down Payment Assistance: Kentucky boasts several programs to help first-time homebuyers with down payments and closing costs.
Explore options like the Kentucky Housing Corporations' Mortgage Revenue Bonds (MRB) program or the KHC Down Payment Assistance Programs.
View Video Below for more info about buying your first house in Kentucky
Joel Lobb Mortgage Loan Officer
American Mortgage Solutions, Inc.10602 Timberwood Circle
Louisville, KY 40223
Company NMLS ID #1364
Text/call: 502-905-3708
fax: 502-327-9119
email: kentuckyloan@gmail.com
http://www.mylouisvillekentuckymortgage.com/
NMLS ID# 57916, (www.nmlsconsumeraccess.org).
