Kentucky FHA Loan Program

FHA Loan Requirements in Kentucky

Navigating the process of securing an FHA loan in Kentucky can be made simpler with the right information.

Down Payment

Minimum 3.5% Down Payment of purchase price on a 580 credit score or higher

Minimum 10% Down payment on credit scores 500-579

Credit Score

• Borrowers must have a minimum credit score of 500-579 for maximum LTV of 90 percent with a minimum down payment of 10 percent. Most lenders will not go below 580 to 620 score, and very few lenders will go to 580 score. It's best to work on getting your scores up before you apply or work with a loan officer to improve them.

Debt-to-Income Ratio

Front-end: 45% max, Back-end: 50-56.99% max

Work History

2 years consistent employment preferred

Top 3 Benefits of Kentucky FHA Loans

Low Down Payment

Only 3.5% down payment required, which can be gifted from a relative, own funds, 401k, savings and checking account, no cash allowed. Secured asset can be used to borrow off for the donw payment. ie.. car, house, securities, 

Flexible Credit

Credit scores as low as 500 with at least 10% down payment or equity position.

Seller-Paid Closing Costs

Sellers can pay up to 6% of the purchase price in closing costs.

FHA Loan Eligibility

Income Requirements

Your debt-to-income ratio must be within the limits of the FHA and your lender. There are both front-end and back-end DTI ratios to be considered. The front-end is capped at 45% and the back-end ratio is limited to 50-56.99% in most cases.

Credit Background

Your credit history will be reviewed, with most weighted over the last 2-3 years. Bankruptcies, foreclosures, collections, and pay history will be reviewed over the last two years.

Down Payment

You must be able to make a down payment and cover closing costs if the seller will not pay for it or it cannot be covered by lender credit. You must have your own down payment. The seller and lender cannot supply you with the down payment requirements for an FHA loan.

Maximum FHA Loan Amounts

County Limits

Maximum loan amount varies by county in Kentucky. All 120 counties have the same approval amount. And there are no income limits on FHA loans, just have to meet debt to income ratio requirement's.

Highest Limit

The highest maximum FHA loan in Kentucky is $524,225- see limits for Kentucky for 2025 below

https://www.hud.gov/program_offices/housing/sfh/lender/origination/mortgage_limits

Financing Percentage

Maximum financing is 96.5% of appraised value or selling price, whichever is lower.

Down Payment and Closing Costs

Minimum Investment

Buyers must invest at least 3.5% of the sales price for down payment and closing costs. if score is below 580, will need to 10% down payment. Minimum score is 500 for a FHA loan.

Acceptable Sources

Down payment can come from gifts, government agencies, or other approved sources.

Eligible Property Types

Single-Family Homes

Traditional detached houses qualify for FHA loans.

Condos

Approved condominium units are eligible if on HUD approved list. See list below

https://entp.hud.gov/idapp/html/condlook.cfm

Multi-Unit Properties

1-4 family residences where the borrower occupies one unit.

Types of FHA Refinance Loans

Rate/Term Refinance

For borrowers with conventional mortgages wanting to switch to an FHA loan.

Cash-Out Refinance

Access home equity for homeowners whose property value has increased.

Streamline Refinance

Minimum Credit Score

General Requirement

A minimum credit score of 500 is required for FHA loans in Kentucky with some lenders requiring a 620. If below 580 and higher than 500, then you will need a 10% down payment.

Lower Score Option

Borrowers with credit scores between 500 and 579 may still qualify with a larger down payment of 10%.

Credit History

The FHA considers your payment history, credit utilization, and other factors when assessing your creditworthiness.

Down Payment Amounts

Standard Down Payment

The standard down payment for FHA loans in Kentucky is 3.5% of the purchase price.

Lower Credit Score

If your credit score falls between 500 and 579, you'll need a 10% down payment.

Gift Funds

Down payment funds can be gifted from family members or other eligible sources.

Debt-to-Income Ratio Limits

Understanding Debt-to-Income Ratio

The debt-to-income (DTI) ratio measures the percentage of your monthly income that goes towards debt payments.

• Mortgage payment
• Credit card payments
• Student loans
• Auto loans

FHA Loan DTI Limit

FHA loans in Kentucky generally have a maximum DTI limit of 50%, which means that your debt payments cannot exceed 50% of your monthly income.

Employment and Income Requirements

Stable Employment

FHA lenders typically require a minimum of two years of consistent employment history.

Verifiable Income

You'll need to provide documentation, such as pay stubs or tax returns, to verify your income.

Self-Employment

If you are self-employed, you may need to provide additional financial documentation, such as tax returns and bank statements.

Property Eligibility Criteria

Property Type	Eligibility
Single-family homes	Eligible
Condominiums	Eligible with certain restrictions
Townhouses	Eligible
Multi-family units	Not eligible for FHA financing

Mortgage Insurance Premiums

Annual Premium

You'll pay an annual mortgage insurance premium (MIP) on your FHA loan.

Upfront Premium

An upfront MIP is also required at closing, typically 1.75% of the loan amount.

MIP Duration

The MIP can be paid for the life of the loan or for a set period of time depending on your down payment and loan term.

Applying for an FHA Loan in Kentucky

Credit Check

Your credit history is crucial for FHA loan approval.

Property Appraisal

An appraisal is conducted to determine the fair market value of the property.

Income Verification

You'll need to provide documentation to verify your income.

Loan Underwriting

The lender will review your application and make a decision on your loan.

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.

What is an FHA Loan and Is It Right for You?

What is an FHA Loan and Is It Right for You?

The Federal Housing Administration insures what are called FHA loans. These mortgage loans provide opportunities for buyers with less-than-perfect credit or limited down payments to purchase homes, but they aren’t without potential pitfalls.

FHA loans are available to borrowers with a credit score of at least 580, and you have to make a minimum 3.5% down payment. They’re a popular option for first-time home buyers.

Lenders such as banks and credit unions issue the mortgages, which are insured by the FHA. That protects the lender if the borrower defaults, which is why the terms are more favorable than a traditional mortgage.

Around eight million single-family homes have loans insured by the FHA.

What Can an FHA Loan be Used For?

You can use an FHA loan to refinance single-family houses, to buy a single-family home, to buy some multifamily homes and condos and certain mobile and manufactured homes. There are particular types of FHA loans that can be used to renovate an existing property or for new construction.

How is an FHA Loan Different from a Conventional Mortgage Loan?

The biggest differentiator between an FHA loan and a conventional mortgage is that it’s easier to qualify for an FHA loan. You may get a loan with a lower credit score than you would otherwise, and your mortgage insurance payments may be lower too.

There are also fewer restrictions as far as using gifts from family or donations for your down payment.

If you have a FICO score of at least 580, you have to make a 3.5% down payment. With a FICO score between 500 and 579, you’re required to make a 10% down payment, and mortgage insurance is required. Your debt-to-income ratio needs to be less than 56.99% whereas with a conventional loan it’s usually 45%. You do need to have proof of income and steady employment, as you would need with a conventional loan.

Are There FHA Loan Limits?

There are limits on the mortgage amount you can get with an FHA-guaranteed loan. The limits vary based on your county, Yes, FHA loans have limits based on your county's median home prices. 

 In 202​5, Max FHA loan in Kentucky for Kentucky FHA Loan Limits by County are: $524,225 1 unit $671,200 2 unit $811,275 3 unit $1,008,300 4 unit– This changes every year 

The limit amounts are updated by the FHA each year based on fluctuations in home prices.

The Benefits of the FHA Loan

The primary benefits of an FHA loan are that buyers who wouldn’t otherwise qualify may be able to own a home and for a lower down payment. Sometimes the FHA will help facilitate coverage of closing costs. If you have problems making payments on an FHA loan you may be eligible for a forbearance period if you qualify.

What Are the Downsides of an FHA Loan?

You will have to pay an upfront mortgage insurance premium with an FHA loan to protect the lender. The fee is due when you close and it’s 1.75% of your loan. You will also have to pay an annual mortgage insurance premium for the life of your loan. The amount can range between 0.45% and 1.05%.

When you buy a home with an FHA loan, it has to meet strict standards in terms of health and safety.

Also, while there are set standards from the FHA, approved lenders can create their own requirements.

Applying for an FHA Loan

You’ll have to first find an FHA-approved lender to get one of these home loans. You’ll need some documents, including proof of U.S. citizenship, legal permanent residency, or eligibility to work in America. You’ll need bank statements for at least the past 30 days, and you’ll probably need to show pay stubs.

Some of the information your lender may be able to obtain on your behalf, such as your credit reports, tax returns and employment records.

There are advantages to an FHA loan because it expands homeownership to more people than conventional loans. It’s just important that if you’re considering this loan you understand the costs and that you’re not taking on more than you’re financially prepared for because of the less stringent approval requirements.

Written by Ashley Sutphin for www.RealtyTimes.com Copyright © 2020 Realty Times All Rights Reserved.

If you’re planning to buy your first home in Kentucky, FHA loans in Kentucky may be the ideal solution. They may help if you have faced challenges qualifying for a conventional mortgage. FHA loans in Kentucky may be the ideal solution. These loans are backed by the Federal Housing Administration (FHA). They offer flexibility and affordability. Lower barriers to entry make homeownership a reality for many borrowers.

Joel Lobb

Mortgage Loan Officer

Individual NMLS ID #57916

 

click here for directions to our office

 

Text/call:      502-905-3708

fax:            502-327-9119
email:          kentuckyloan@gmail.com

 

https://www.mylouisvillekentuckymortgage.com/