Kentucky Mortgage Guidelines for Income, Employment, and credit scores

Kentucky Mortgage Loan Preapproval: What To Know

What affects your home loan preapproval

Your income, work history, credit score, money down and  saving are key factors that lenders will consider during the mortgage process.

Employment Status for Kentucky Mortgage Pre-Approval

Self-employed individual requires two-year tax returns'.

Only borrowers who have an ownership interest of 25% or more in a business and are not W-2 employees are considered “self-employed.” However, there is an exception if the borrower can show a two-year history in a similar line of work, which includes having documentation that proves an equal or higher income in the new role compared to the W2 position.

Debt-to-Income Ratio

The debt-to-income ratio is the percentage of your monthly gross income that goes toward paying debts. There are two types of DTI that lenders will consider during the mortgage process: front-end and back-end. The first consists only of your housing-related expenses, whereas the latter also includes all your minimum required monthly debts.

The lower your DTI, the better your chances of securing a home loan. 

For example, FHA loans secured by the government have more lenient requirements — you can have a DTI of up to 57% and still get approved for an FHA home loan. USDA loans used to buy homes in rural areas have a lower maximum DTI of 45%.

Loan-to-Value Ratio

The loan-to-value ratio (LTV) is a number lenders use to determine how risky a loan to a potential borrower might be. It measures the relationship between the loan amount and the market value of the property you want to buy, and it can also determine whether mortgage insurance will be required.

All mortgages have a maximum LTV to qualify. However, just like with DTI, the LTV varies depending on the loan. FHA loans, for example, have an LTV of 96.5% since they allow down payments of as little as 3.4%.

Going for an LTV of 80% or less is “ideal” because you get unique benefits as a buyer, but that requires a down payment of 20%. Ultimately, each buyer will need to figure out their own LTV based on how large a down payment they can afford.

Credit History and FICO Score for Kentucky Mortgages 

Your credit history is one of the most important factors when it comes to getting a mortgage.

Best Kentucky Mortgage Lender for First Time Home Buyers in Kentucky

You don’t need a perfect credit score to buy a house, but those with outstanding scores are usually rewarded with lower interest rates and a greater variety of payment options. Buyers with very poor credit have the option of finding a co-signer who has better credit than them to help secure the loan.

Why Getting Preapproved Is Such a Big Deal

Getting preapproved for a mortgage helps you shop for homes that you can afford and shows you are a serious buyer.

But a letter of preapproval is more than just a way to look good to sellers. It also helps you find the right mortgage lender and provides some flexibility in bargaining or negotiating for a better price range or specific costs, repairs, and improvements to a home.

Getting preapproved makes the entire closing process faster, too. It takes an average of 30 to 45 days to close on a house in Kentucky, and part of that period is due to the process of mortgage approval, title search, appraisal report, home inspections, verifying employment and bank account info along with taxes and w-2s and paystubs to validate the pre-approval.

What are standard continuity of employment requirements?

A borrower will need to verify a two-year cumulative employment history. Less than two year may be 

offset via school transcripts; if guaranteed hourly (40) or salaried in nature, the base income 

will be allowable. Variable earnings will require at minimum 12 months receipt on current position; 

OT, Bonus and commission are considered variable however, must reflect a cumulative two- year 

history of receipt.

What income can I use for a traveling nurse?

A minimum 12-month history of contract nursing work is required. Income documentation must

 include  copies of applicable contracts and WVOE’s for each position. The income will be averaged. 

Standard two- year employment history required.

Do we allow one score on a conventional transaction? No score?

Yes! If the borrower has three scores, the middle score is to be used; two scores, the lower score 

is to be used; one score, that score is to be used.  If no score, only allowable with AUS A/E and 

less than 50% of transactional income contributions. We do not average scores.

Can I use part time or secondary income for qualifying purposes?

Yes! Conventional~ secondary employment will require a two- year history of receipt to use in 

conjunction with the primary employment earnings. Multiple second jobs over this time frame are 

allowable however the borrower may not have a job gap > one month in length. Part time employment 

alone will be considered variable in nature and will require a minimum 12- month history; earnings 

will be averaged. FHA~ will require an uninterrupted two- year history for utilization.

When must a borrower start a new job in conjunction with future employment?

Conventional requires a start date within 90 days of the Note date. FHA requires a start date 

within 60 days of note date. VA max 60 days of note date. Non contingent contract required for each 

entity.

What type of income(s) are considered illegal?

Foreign shell banks; medical marijuana dispensaries; any business or activity related to 

recreational marijuana-use , growing, selling or supplying- even if permitted by state or local law.

 Policy is not limited to  owner of business.

Joel Lobb
Mortgage Loan Officer

Individual NMLS ID #57916

https://www.mylouisvillekentuckymortgage.com/

How to get approved for a Kentucky Mortgage Loan with Bad Credit

There are several mortgage loans programs for Kentucky Homebuyers that may have had experienced bad credit in the past. 

Below is a summary of programs that borrowers can use to get approved for a mortgage loan with bad credit..

 FHA loans in Kentucky, FHA will go down to a 500 minimum credit score with at least 10% down payment or 10% equity on a refinance. 

If your scores is over 580, then you could use a FHA loan in Kentucky to with just 3.5% down payment or refinance with that much equity. 

If it turns out that you have a 620 credit score or higher, you can look at doing an Conventional loan with just 3 to 5% down payment. Typically on conventional loans if your score is below 660, you would need 5% down payment.

If you happen to be a Veteran and qualify for a Kentucky VA loan,  you could possibly get approved for a VA loan with no minimum credit score. 

In reality, it is very difficult to get for a VA loan with a score below 560 to 580 range, with most VA lenders requiring a 620 credit score. 

If you are looking to purchase a home in a rural area, you can look at doing a Kentucky USDA loan because they have no minimum credit score but most lenders will want a 620 to 640 credit score. 

Kentucky FHA Loan are your best bet you have a lower fico score or credit score.

FHA loans are good for home buyers with lower credit scores and no much down, or with down payment assistance grants. FHA will allow for grants, gifts, for their 3.5% minimum investment and will go down to a 580 credit score. You can go down to a 500 credit score potentially with a 10% down payment. 

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

---

Evo Mortgage
Company NMLS# 1738461
Personal NMLS# 57916

For assistance with Kentucky mortgage loans, reach out via email, call, or text Joel Lobb directly.

6 Tips to Boost Your Credit Score for Kentucky Mortgage Loans (FHA, VA, USDA, KHC)

6 Tips to Boost Your Credit Score for Kentucky Mortgage Loans (FHA, VA, USDA, KHC)

If you’re looking to buy a home in Kentucky, having a solid credit score is essential for qualifying for popular mortgage programs like FHA, VA, USDA, or KHC loans. Here are six actionable tips to improve your credit score and increase your chances of getting approved for your dream home loan.

1. Pay Your Monthly Bills on Time

Here are six tips for improving your credit score for a fresh financial start 

1. Pay Your Monthly Bills on Time
Paying monthly bills is a necessary chore that has a definite effect on your credit score. According to the FICO scoring model, your payments account for as much as 35 percent of your total score. Create reminders for due dates or establish a calendar for yourself to ensure you get everything paid on time.

2. Reduce Your Debts
Got credit card debt? Start paying it off now. Part of your credit score is based on the amount of available credit you have, known as your credit utilization ratio. So if you're carrying high balances, you'll want to lower them as soon as possible. Create a personal budget with a goal of reducing your spending so that it's lower than your income. Then, use any monthly surplus for your credit card debts until they're gone for good.

3. Limit Credit Inquiries
Looking for a new apartment? What about a mortgage? In either situation, try and group your applications together as much as possible. Applications for new lines of credit will generate a "hard pull" on your credit, and having too many of them in a short period of time can lower your score. However, credit reporting agencies usually consider a group of applications within a short period of time as one pull, as long as they're in the same category.

Similarly, limit yourself to opening up no more than one or two credit cards per year, which also generate hard pulls. Even if you get a ton of offers in the mail for stellar sign-up bonuses, they're likely to be offset by the damage to your credit. FICO reports that new credit and credit inquiries account for 10 percent of your total score.

4. Don't Cancel Old Cards
Have a card you don't use anymore? Don't close it. This can negatively affect your score as it lowers your amount of available credit. Instead, use it about once per month and don't forget to pay the bills in full, and on time.

5. Request Credit Limit Increase
If you only have one card and you're constantly approaching your spending limit, call the bank and ask for an increase in your credit line. This will raise the amount of available credit, which will eventually improve your score.

6. Take Care of Late Payments Before They Hit Your Score
If you do happen to miss a payment, contact the card issuer immediately. If you have good history built up, the company may agree to not report your late payment. Even if you can't avoid a late-payment fee, be sure to get your account up to date as soon as possible so you can limit the damage.
Your credit score is yours to own. It reflects your financial history and helps lenders predict how you will manage your finances in the future. Due to the lingering effects of credit, you don't want to waste any time to improve your credit.

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

---

Evo Mortgage
Company NMLS# 1738461
Personal NMLS# 57916

For assistance with Kentucky mortgage loans, reach out via email, call, or text Joel Lobb directly.

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). Mortgage loans only offered in Kentucky.

What is the minimum Credit Score Needed to Buy a House and get a Kentucky Mortgage Loan?

Kentucky Home Buyers: What Credit Score Do You Need?

Buying a home in Kentucky? Your credit score plays a crucial role in determining which mortgage loans you qualify for and how much you’ll pay in interest rates. Understanding the minimum credit score requirements for FHA, VA, USDA, and Conventional loans can help you prepare for homeownership and secure the best loan options.

While there's no single, simple answer, this guide will break down the minimum credit score requirements for various Kentucky mortgage options, empowering you to understand where you stand and how to achieve your homeownership goals. We'll cut through the confusion and give you the straight facts!

Why Your Credit Score Matters: More Than Just a Number

Think of your credit score as your financial reputation. Lenders use it to assess the risk of lending you money. A higher score signals lower risk, translating to better interest rates, more favorable loan terms, and potentially lower down payment requirements.

Here's the credit score impact on interest rates and your wallet (in general terms):

• 760-850: The Gold Standard! Expect the lowest interest rates and the most attractive loan options.
• 700-759: Excellent! You'll still qualify for very competitive rates and favorable terms.
• 640-699: Good. You'll likely be approved, but interest rates will be slightly higher.
• 620-639: Acceptable. This range is often the minimum for conventional loans, but be prepared for less favorable rates.

As the guide shows, aiming for a 740+ score can lead to best rates and closing costs on mortgage loans, especially Conventional Mortgage Loans,.

Kentucky Mortgage Options: Credit Score Requirements Deconstructed. 

Let's explore the minimum credit score requirements for different Kentucky mortgage types:

Conventional Loan

• At least 3%-5% down• Closing costs will vary on which rate you choose and the lender. Typically, the higher the rate, the lesser closing costs due to the lender giving you a lender credit back at closing for over par pricing. Also, called a no-closing costs option. You have to weigh the pros and cons to see if it makes sense to forgo the lower rate and lower monthly payment for the higher rate and less closing costs.

Fico scores needed start at 620, but most conventional lenders will want a higher score to qualify for the 3-5% minimum down payment requirements Most buyers using this loan have high credit scores (over 720) and at least 5% down.

The rates are a little higher compared to FHA, VA, or USDA loan but the mortgage insurance is not for life of loan and can be rolled off when you reach 80% equity position in home. Conventional loans require 4-7 years removed from Bankruptcy and foreclosure.
Kentucky USDA Rural Housing Program

If you meet income eligibility requirements and are looking to settle in a rural area, you might qualify for the KY USDA Rural Housing program. The program guarantees qualifying loans, reducing lenders’ risk and encouraging them to offer buyers 100% loans. That means Kentucky home buyers don’t have to put any money down, and even the “upfront fee” (a closing cost for this type of loan) can be rolled into the financing.

 
Fico scores usually wanted for this program center around 620 range, with most lenders wanting a 640 score so they can obtain an automated approval through GUS. GUS stands for the Guaranteed Underwriting system, and it will dictate your max loan pre-approval based on your income, credit scores, debt to income ratio and assets.

 
They also allow for a manual underwrite, which states that the max house payment ratios are set at 29% and 41% respectively of your income.

They loan requires no down payment, and the current mortgage insurance is 1% upfront, called a funding fee, and .35% annually for the monthly mi payment. Since they recently reduced their mi requirements, USDA is one of the best options out there for home buyers looking to buy in a rural area

A rural area typically will be any area outside the major cities of Louisville, Lexington, Paducah, Bowling Green, Richmond, Frankfort, and parts of Northern Kentucky. There is a map link below to see the qualifying areas.

There is also a max household income limits with most cutoff starting at 109,500 for a family of four, and up to $136,000 for a family of five or more.

The income limits change every spring, so make sure and check to see what updated income limits are.
USDA requires 3 years removed from bankruptcy and foreclosure
There is no max USDA loan limit.

 

Kentucky FHA Loan

FHA loans are good for home buyers with lower credit scores and no much down, or with down payment assistance grants. FHA will allow for grants, gifts, for their 3.5% minimum investment and will go down to a 580-credit score.

 
The current mortgage insurance requirements are kind of steep when compared to USDA, VA, but the rates are usually good so it can counteract the high mi premiums. As I tell borrowers, you will not have the loan for 30 years, so don’t worry too much about the mi premiums.

 
The mi premiums are for life of loan like USDA.

 
FHA requires 2 years removed from bankruptcy and 3 years removed from foreclosure. 

 

Kentucky VA Loan

VA loans are for veterans and active-duty military personnel. The loan requires no down payment and no monthly mi premiums, saving you on the monthly payment. It does have an funding fee like USDA, but it is higher starting at 2% for first time use, and 3% for second time use. The funding fee is financed into the loan, so it is not something you have to pay upfront out of pocket.

 
VA loans can be made anywhere, unlike the USDA restrictions, and there is no income household limit and no max loan limits in Kentucky

 
Most VA lenders I work with will want a 580-credit score, even though VA says in their guidelines there is no minimum score, good luck finding a lender
VA requires 2 years removed from bankruptcy or foreclosure
Clear Caviars needed to for a VA loan.

 

Kentucky Down Payment Assistance

This type of loan is administered by KHC in the state of Kentucky. They typically have $10,000 down payment assistance year around, that is in the form of a second mortgage that you pay back over 10 years. Current terms are $10,000 over 10 years at 3.75% 

Sometimes they will come to market with other down payment assistance and lower market rates to benefit lower income households with not a lot of money for down payment.

KHC offers FHA, VA, USDA, and Conventional loans with their minimum credit scores being set at 620 for all programs. The conventional loan requirements at KHC requires 660 credit score.
The max debt to income ratios is set at 50% and 50% respectively.

 FHA Loans – Best for First-Time Homebuyers with Low Credit

500-579 Credit Score – Requires 10% down payment
580+ Credit Score – Requires 3.5% down payment
Flexible credit guidelines & lower down payments
Easier approval for first-time buyers & those with past credit issues

VA Loans – Best for Veterans and Active Military

No official minimum credit score
 Most lenders require 580-620+
0% down payment – No mortgage insurance required
Best for veterans, active-duty military & eligible spouses

USDA Loans – Best for Rural & Suburban Homebuyers

Minimum 620 to 640+ Credit Score (for automatic approval through GUS )
 Some lenders may approve below 640 with manual underwriting with a minimum score of 581 and above
0% down payment required
Best for low-to-moderate-income homebuyers in rural areas Income limits and property locations restrictions 

Conventional Loans – Best for Borrowers with Good Credit

Minimum 620+ Credit Score-Truthfully, if scores are 620 and less than 20% down payment look at going to the government loan programs like FHA, USDA and VA 
Higher scores (760+) qualify for better interest rates
Down payment: 3%-5% or more
Best for buyers with strong credit & stable income

Kentucky Housing Corporation (KHC) Loans – First-Time Buyer Assistance

Minimum 620+ Credit Score, Income limits and max dti is 50% usually used for the down payment and closing costs on a FHA, VA, USDA or Conventional loan with the $10k DAP assistance
Offers down payment assistance for eligible buyers
Best for first-time homebuyers needing financial help 

Non-QM Loans – Alternative Financing for Unique Situations

Minimum 500-620 Credit Score (Varies by lender)
 Includes Bank Statement Loans, DSCR Loans, Asset-Based Loans
Best for self-employed borrowers, real estate investors & those with non-traditional income sources

Why Choose Non-QM? These non-traditional loans are great for borrowers who don’t qualify for conventional or government-backed loans due to income verification challenges.

How Credit Scores Affect Mortgage Interest Rates

Your credit score doesn’t just determine loan eligibility—it also affects the interest rate you receive.

Here’s how credit scores impact mortgage rates (examples based on typical loan rates):

Credit Score	Estimated Interest Rate	Kentucky Mortgage Loan Options Available
760-850	Best Rate (Lowest Cost)	Kentucky Conventional, FHA, VA, USDA
700-759	Good Rate	Kentucky Conventional, FHA, VA, USDA
640-699	Higher Rate	Kentucky FHA, VA, USDA, Some Conventional
620-639	Even Higher Rate	Kentucky FHA, VA, USDA, Some Conventional
Below 620	Limited Options, Highest Rates	FHA, VA, USDA and  (with higher down payment), Non-QM

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

---

Evo Mortgage
Company NMLS# 1738461
Personal NMLS# 57916

For assistance with Kentucky mortgage loans, reach out via email, call, or text Joel Lobb directly.

Kentucky Local Home Loan Lender Services

 First-Time Home Buyers Welcome
 FHA, Rural Housing (USDA), VA, and Kentucky Housing Corporation (KHC) Loans
 Conventional Loan Options Available
 Fast Local Decision-Making
 Experienced Guidance Through the Home Buying Process

2025 Kentucky Homebuyers Guide: Getting Approved for a Mortgage Loan in Kentucky

If you’re a Kentucky homebuyer, this blog post will guide will help you. It will help you navigate the mortgage approval process in 2025.

If you're looking to purchase your next home, this guide is for you too. Whether you're considering FHA, VA, USDA, or KHC loans with down payment assistance, we’ll cover everything you need to know.

This includes credit score requirements and debt-to-income ratios. We will also discuss appraisals, inspections, bankruptcy, and foreclosure guidelines.

Zero Down Payment Options for Kentucky Homebuyers in 2025

Kentucky offers several programs that allow eligible home-buyers to buy a home with little to no down payment:

Kentucky Housing Corporation (KHC) Loans

FHA Loans with down payment assistance

VA Loans for veterans and active-duty personnel

USDA Rural Housing Loans

Special grants, like the $25,000 Kentucky Welcome Home Grant

Each program has its own qualifying criteria. Let’s dive into the specifics.

Kentucky FHA loan with Down Payment Assistance

Kentucky FHA loan

KHC offers affordable loans paired with down payment assistance (DPA) to help Kentucky homebuyers.

Credit Score: Minimum 620 for government loans and 660 for conventional loans

Down Payment: 3.5% (may be offset by DPA programs)

Income Limits: Varies by county and household size click yellow link>---See income limits and purchase price limits here <

Debt-to-Income Ratio (DTI): 50% for housing costs; 50% for all debts

Work History: Minimum two years of stable employment

KHC Down Payment Assistance (DPA) Options:

Up to $10,000, repayable over 10 years at 3.75% interest. It can be used for down payment and closing costs and prepaids (property taxes, home insurance and odd days interest)

FHA Loans in Kentucky

Kentucky FHA loans are government-backed mortgages requiring low down payments, making them ideal for Kentucky first-time homebuyers with lower credit scores, scores under 620 and higher debt to income ratios over 45% on the backend.

Credit Score:

580+ with 3.5% down payment

500-579 with 10% down payment

Debt-to-Income Ratio: Generally up to 45.99% on front end ratio or housing ratio and up to 56.99% on the back-end ratio, meaning new house payment plus monthly payments on the credit report.

Work History: Two years of consistent income. Does not have to be the same job. If off work more than 6 months in the past 2 years, may require you to be on current job for 6 months, 

Bankruptcy/Foreclosure Requirements:

Two years after bankruptcy Chapter 7 and 1 year removed from A Chapter 13 with a perfect pay history can do a FHA loan while in Chapter 13 with 12 months paid on time and trustee approval form courts

Three years after foreclosure

Kentucky FHA Loan Limits for 2025 

The Federal Housing Administration (FHA) loan program is a popular choice for homebuyers due to its lower credit score requirements and modest down payment needs. Here are the updated FHA loan limits for Kentucky in 2025:

One-Unit Properties: $472,030

Two-Unit Properties: $604,400

Three-Unit Properties: $730,525

Four-Unit Properties: $907,800

Kentucky VA Loans for Active Duty and Veterans

Kentucky VA loans are a top choice for veterans and active-duty military members. They require no down payment. They also require no mortgage insurance monthly but does have upfront mortgage insurance. see link here for guidelines > 

Certified of Eligibility Certificate of Eligibility (COE) Is Required

To qualify for a Kentucky VA mortgage loan, borrowers must obtain a Certificate of Eligibility (COE) from the VA. This document proves you meet the eligibility criteria for a VA loan. Here’s what you’ll need to get your COE:

Veterans: DD Form 214 (showing character of service and reason for separation).

Active-duty service members: A statement of service signed by your commander or personnel officer.

Surviving spouses: VA Form 26-1817 and the veteran’s DD Form 214, if available.

You can apply for your COE online, via mail, or through your lender.

Credit Score: No official minimum, but most lenders require 580-620. The higher your score and lower your debt to income ratio and the higher your residual income your changes of approval is greater

Income: Must demonstrate stable and sufficient income.

Work History: Two years of consistent employment. If getting out of the military and using your VA COE to buy a house the job must line up with your MOS. Military Occupational Specialty

Bankruptcy/Foreclosure Requirements:

Two years after bankruptcy or foreclosure

Debt-to-Income Ratio: No set maximum, can go much higher on the debt to income ratio on VA loans due to they have a residual income requirements. I have see a backend ratio get an approval as high as 75% but they had a great credit score (740 or higher),  high residual income and a lot of assets in the bank as far as checking, savings, 401k or retirement. 

VA loans also include a residual income requirement to ensure borrowers can afford living expenses after the mortgage payment, monthly payments on the credit report, child care expenses, maintenance, and utilities for the house. See the residual income chart below. This is very important for VA loan approval. If you are over this amount, you will not qualify, even with a great credit score, low debt ratio, and a lot of reserves in the bank.

Example: Residual Income for a VA Loan Approval in Kentucky

Example: Residual Income for a VA Loan Approval in Kentucky
Family Size: 5
Loan Amount: Over $80,000
Required Residual Income: $1,158 (for 4 family members) + $80 (for the 5th member) = $1,238
Actual Residual Income: $1,500
Outcome: The borrower qualifies for the VA loan, as their residual income of $1,500 exceeds the required $1,238.

Outcome: The borrower qualifies for the VA loan, as their residual income of $1,500 exceeds the required $1,238.

Residual income is a critical requirement for VA loan approvals, ensuring borrowers have enough to cover living expenses, including housing utilities, child care, and maintenance costs. If residual income falls below the threshold, loan approval may not be possible, regardless of credit score or debt-to-income ratio.

 The higher your score and lower your debt to income ratio and the higher your residual income your changes of approval is greater

USDA Rural Housing Loans in Kentucky

The USDA Rural Housing Loan Program is perfect for Kentucky homebuyers looking to purchase in eligible rural areas. It offers 100% financing with low mortgage insurance premiums.

Credit Score:

640 for automated approval

Manual underwriting is available for borrowers with credit scores below 640. If they decide to manually underwrite a loan, they will ask for more information about the borrower's credit history from the past year.

All loans are ran through GUS Automated Underwriting Engine, and your pre-approval is based off this

Property Restrictions:

Eligible Properties:
Must be located in a designated rural area.
Includes single-family primary residences, modular homes, and detached or attached planned unit developments (PUDs).
Thermal standards must meet or exceed the International Energy Conservation Code (IECC).

Ineligible Properties:
Cooperatives.
Income-producing properties.
Manufactured or mobile homes.
Non-rural designated properties.
Non-owner-occupied homes.

How to Determine Eligibility

You need to confirm if a property is located in a designated rural area. Visit the USDA Property Eligibility Map by clicking this link 

👇
Kentucky USDA Rural Housing Map for 2025 for Eligible Property Locations

Income Limits: Varies by county and household size

$112,450 for 1-4 person households

$148,450 for 5+ person households

To check income limits for your county, use the

➡️ USDA Income Eligibility Tool.

Work History: Two years of stable income required.

Debt-to-Income Ratio:

Front-end: 31%

Back-end: 45%

Key Advantage: USDA loans don’t need a down payment, and the upfront mortgage insurance can be rolled into the loan.

Kentucky Down Payment Assistance and Grants

$25,000 Kentucky Welcome Home Grant for 2025

This grant provides significant assistance for down payments and closing costs.

Eligibility:

Must complete a homebuyer counseling program.

Contribute at least $500 toward closing costs.

Grant Repayment: Prorated repayment required if the home is sold within five years.

Eligible Loans: Can be used with FHA, USDA, VA, and conventional loans.

5% Kentucky Homebuyer Grant

Offers up to 5% of the buying price for down payment or closing costs.

Fully forgivable or repayable options available.

$25,000 Kentucky Welcome Home Grant for 2025

How the 2025 Kentucky Welcome Grant Works

Offered through local banks and credit unions partnered with the Federal Home Loan Bank of Cincinnati.

The program becomes available annually on March 1st.

Funds are distributed on a first-come, first-serve basis and are typically depleted within 15 days due to high demand.

Application and Closing Timeline

The program requires an application for approval tied to a specific property.

Due to the nature of the grant, the closing process may take longer, so planning ahead is crucial.

Why Choose the Kentucky Welcome Home Grant?

This grant offers an unparalleled opportunity to reduce the financial burden of homebuying. With the Kentucky Welcome Home Grant of  $25,000 available for qualified applicants, it can significantly lower the amount you need upfront for your new home.

Other Mortgage Loan Requirements in Kentucky

Credit Score Requirements

Conventional Loans: Minimum 620 (higher scores preferred for better terms).

FHA Loans: 580+ (or 500-579 with 10% down).

VA Loans: 580-620 (varies by lender).

USDA Loans: 620-640 for most lenders.

KHC Down Payment Assistance. 620 for FHA, VA, USDA and 660 for Conventional Scores

Debt-to-Income Ratio

Conventional Loans: 45% max with mortgage insurance 50% max without mortgage insurance

FHA Loans: 40%-56% max

VA Loans: Flexible, no max debt to income but must meet residual income requirements

USDA Loans: 31% front-end; 45% back-end, much tighter dti restriction's when compared to FHA, VA, USDA and KHC ...

Work History and Income Verification

Lenders require at least two years of stable employment. Self-employed borrowers must provide two years of tax returns.

Appraisals and Inspections

Appraisals ensure the home’s value matches the purchase price.

Home appraisals are required by a lender. Home inspections aren’t.
You must set up an inspection yourself while the lender will order an appraisal for you.
An appraisal may impact your ability to get the loan amount you need. An inspection won’t.
Appraisers typically only spot things visible to the naked eye, whereas inspectors use special devices and training to spot deeper issues.

Home buyers are allowed and encouraged to walk through the home with the inspector during the inspection.

An inspector will explain and educate during the interactive process. An appraiser won’t tell you their findings until they complete their report.

A home inspection only examines the condition of the home when making the assessment. A home appraisal considers the condition of the home, comparable home prices, lot size, home features, area crime rates and school zones.

Typically, an appraiser will go through the appraisal process alone.
The inspector and appraiser have a different set of skills, are trained and certified in different processes and have different areas of expertise.

Bankruptcy and Foreclosure Requirements

FHA: Two years after bankruptcy; three years after foreclosure.

VA: Two years after bankruptcy or foreclosure.

USDA: Three years after bankruptcy or foreclosure.

Conventional: Four years after bankruptcy; seven years after foreclosure.

Time to Close

Most loans in Kentucky take 30-45 days to close, depending on the lender and loan program.

Here’s a blog post based on the text and flow chart steps provided in the image, tailored for Kentucky homebuyers:

Step-by-Step Guide to Getting Approved for a Mortgage Loan in Kentucky

Buying a home in Kentucky can feel overwhelming, especially for first-time homebuyers. Understanding the mortgage process, the timeline involved, and what is needed to close your loan will make the journey smoother and less stressful. Here’s a step-by-step guide to walk you through the process.

Step 1: Pre-Purchase Consultation

The first step is scheduling a pre-purchase consultation with a mortgage professional. During this meeting:

Discuss your financial goals and homeownership plans.

Review your credit score, income, and overall qualifications for a mortgage loan.

Understand the loan options available, including FHA, VA, USDA, and conventional loans.

Tip: Be prepared to ask questions and clarify your expectations during this phase.

Step 2: Pre-Qualification

Once your consultation is complete, gather the necessary documents (such as pay stubs, tax returns, and bank statements) to verify your financial situation. After reviewing these, your lender will issue a pre-qualification letter, which shows sellers that you are a serious buyer with financing in place.

Step 3: Find a Home and Negotiate the Contract

With your pre-qualification letter in hand, you can now:

Start searching for your dream home.

Work with a realtor to make an offer and negotiate the purchase contract.

Note: Ensure that the home you choose aligns with your loan requirements, such as USDA property eligibility for rural housing loans.

Step 4: Review Loan Terms and Sign Initial Disclosures

After your contract is accepted:

Your lender will provide initial disclosures outlining the loan terms, estimated costs, and required steps.

Carefully review the loan documents and sign them to proceed with the loan application.

Step 5: Order Inspection, Appraisal, and Title

At this stage, the following steps are initiated:

Home Inspection: Ensures the property is in good condition and identifies potential issues.

Appraisal: Confirms the home’s value matches the purchase price.

Title Work: Verifies there are no legal issues with property ownership.

Tip: Coordinate closely with your realtor and lender to ensure these steps are completed in a timely manner.

Step 6: Submit Loan Package to Underwriting

Once all initial documents are gathered, your lender will submit the complete loan package to underwriting. The underwriter reviews:

Credit score

Debt-to-income ratio

Employment history

Property appraisal

Title work

Expect the underwriter to request updated documents or clarification on certain details.

Step 7: Clear Underwriting Conditions

After the underwriter reviews your loan file, they may issue conditional approval. This means you need to provide additional documentation, such as:

Updated bank statements

Proof of funds for closing

Explanations for any credit inquiries

Once all conditions are met, the underwriter will issue final approval.

Step 8: Closing Disclosure and Waiting Period

Before closing, you’ll receive a Closing Disclosure (CD), which outlines the final terms and costs of your mortgage. By law, you must review this document during a 3-day waiting period before the closing.

Step 9: Closing Day

Congratulations, it’s time to finalize your loan! On closing day:

Sign the final loan documents.

Pay any remaining closing costs (if applicable).

Receive the keys to your new home.

What to Expect Throughout the Process

Timeline: The mortgage process typically takes 30-45 days from pre-qualification to closing, though this can vary depending on the loan type and how quickly documents are provided.

Communication: Stay in close contact with your lender, realtor, and title company to avoid delays.

Updated Documents: Be prepared to provide updated pay stubs, bank statements, or other documentation throughout the process.

Tips for a Smooth Closing

Stay Organized: Keep all required documents in one place for easy access.

Respond Quickly: Promptly address any requests from your lender or underwriter.

Ask Questions: Don’t hesitate to clarify terms or processes you don’t understand.

Be Financially Stable: Avoid making major purchases or changes to your financial situation during the process.

Ready to Get Started?

If you’re ready to purchase a home in Kentucky, partnering with an experienced loan officer will make the process seamless. Whether you're a first-time homebuyer or upgrading, programs like FHA, VA, USDA, and KHC down payment assistance are designed to help you achieve your dream of homeownership.

For personalized guidance and support, contact:

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

---

Evo Mortgage
Company NMLS# 1738461
Personal NMLS# 57916

For assistance with Kentucky mortgage loans, reach out via email, call, or text Joel Lobb directly.

Your paragraph text by joel lobb

Untitled (Website) by joel lobb