Kentucky FHA Mortgage Information

Louisville Kentucky Mortgage Lender for FHA, VA, KHC, USDA and Rural Housing Kentucky Mortgages: Kentucky FHA Mortgage Information: 

 How to Qualify For a Kentucky FHA Mortgage Loan 1. Low Down Payment   –  FHA Mortgage Loans only require a 3.5% down payment. And what m...

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.

How to Qualify For a Kentucky FHA Mortgage Loan

General Kentucky FHA loan requirements include:

• The loan must be for a property used for your primary residence.
• The property must be appraised by an FHA-approved appraiser.
• The property must be safe, sound and secure, in compliance with minimum property standards as defined by the U.S. Department of Housing and Urban Development, or HUD.
• You must have a valid Social Security number and be a legal resident of the U.S.
• You must have a minimum credit score of 580 with a down payment of at least 3.5 percent, or a minimum credit score of 500 with a down payment of at least 10 percent.
• You may not have delinquent federal debt or judgments, or debt associated with past FHA loans.
• You must have steady employment history.
• You must make a down payment of at least 3.5 percent of the purchase price. If the down payment was gifted by a family member, documentation is required.
• You must have a DTI ratio that does not exceed limits.
• Any judgments or collections on the credit report must be resolved or satisfactorily explained.
• Any required waiting period has passed, as follows:

Event	Waiting period	Waiting period with extenuating circumstances (nonrecurring events beyond your control that result in sudden, significant, prolonged reduction in income or a catastrophic increase in financial obligations)
Chapter 7 or 11 bankruptcy	Four years	Two years
Chapter 13 bankruptcy	Two years from discharge, or four years from dismissal	Two years
Multiple bankruptcies	Five years if more than one filing in last seven years. Most recent bankruptcy must have been caused by extenuating circumstances.	Three years from most recent discharge or dismissal
Foreclosure	Seven years	Three years, with additional requirements after three years up to seven years: 90 percent maximum loan-to-value purchase, principal residence, limited cash-out refinance
Deed-in-lieu of foreclosure, preforeclosure sale (short-sale), or charge-off of mortgage account	Four years	Two years

Debt-to-Income Ratio Limits for Kentucky FHA Loans

Two DTI ratio figures are calculated when considering an Kentucky FHA mortgage. The front-end DTI ratio is your total monthly housing expense, which includes the mortgage principal and interest, mortgage insurance, homeowners insurance, property taxes and applicable homeowners association fees, divided by your total monthly income. The back-end DTI ratio is your total monthly debt obligation, including housing, minimum credit card payments, auto loans, student loans and any other required monthly debt payment, divided by your total monthly income.

Standard FHA front- and back-end DTI limits are 31 percent and 43 percent, respectively. If you earn $3,500 per month, your front-end DTI cannot exceed $1,085 and the sum of all your monthly debt obligations cannot exceed $1,505.
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Applications for Kentucky FHA borrowers with lower salaries and higher DTIs are manually underwritten. Manual underwriting means that your lender assigns a person to review your loan application and documents, versus running your information through an automated underwriting system. Manually underwritten FHA loans allow for front- and back-end DTI ratios of up to 40 percent and 50 percent, respectively. To qualify for these higher DTI limits, you will need to meet other requirements.

Joel Lobb
Mortgage Loan Officer

Individual NMLS ID #57916

American Mortgage Solutions, Inc.

10602 Timberwood Circle 

Louisville, KY 40223

Company NMLS ID #1364

click here for directions to our office

Text/call:      502-905-3708

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

https://www.mylouisvillekentuckymortgage.com/

 

How to Qualify For a Kentucky FHA Mortgage Loan

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FHA CHANGES TO HANDLING OF COLLECTIONS, JUDGEMENTS AND DISPUTED ACCOUNTS ON CREDIT REPORT

FHA CHANGES TO HANDLING OF COLLECTIONS

AND DISPUTED ACCOUNTS

FHA recently released Mortgagee Letters 2013-24 and 2013-25, to amend guidance on collections and disputed accounts and to clarify guidance on judgments. These changes will become effective for all case numbers assigned on or after October 15, 2013. This will apply to all FHA programs, with the exception of non-credit qualifying streamline refinances and Home Equity Conversion Mortgages. The changes are found below. Should you have any questions, please contact your Account Manager.

1.           Credit Analysis of Collections and Judgments. Collections and judgments may indicate a borrower's disregard for credit obligations and must be considered in the creditworthiness analysis. The guidance below applies to loans with collection accounts and all judgments. Medical collections and charge off accounts are excluded from this guidance.

• Applicable to Manually Underwritten Loans: The lender must document reasons for approving a mortgage when the borrower has collection accounts or judgments.

Regardless of the amount of outstanding collection accounts or judgments, the lender must determine if the collection account or judgment was a result of:

• The borrower's disregard for financial obligations;
•  The borrower's inability to manage debt; or
• Extenuating circumstances.

The borrower must provide a letter of explanation with supporting documentation for each outstanding collection account and judgment. The explanation and supporting documentation must be consistent with other credit information in the file.

• Applicable to Loans Run Through TOTAL Mortgage Scorecard: TOTAL Mortgage Scorecard Accept/Approve - There are no documentation or letter of explanation requirements for loans with collection accounts or judgments run through TOTAL Mortgage Scorecard receiving an "Accept/Approve" despite the presence of collection accounts or judgments. These accounts have been already taken into consideration in the borrower's credit score. If TOTAL Mortgage Scorecard generates a"Refer," the lender must manually underwrite the loan in accordance with the guidance above applicable to manually underwritten loans with collection accounts and judgments. 

All medical collections and charge off accounts are excluded from this guidance and do not require resolution.

2.           Capacity Analysis of Collections and Judgments.

Collections - FHA does not require collection accounts to be paid off as a condition of mortgage approval. However, FHA does recognize that collection efforts by the creditor for unpaid collections could affect the borrower's ability to repay the mortgage. To mitigate this risk, FHA is requiring a capacity analysis of collection accounts with an aggregate balance equal to or greater than $2,000, as described below.

If the total outstanding balance of all collection accounts for all borrowers is equal to or greater than $2,000, the lender must perform a capacity analysis as detailed below. Unless excluded under state law, collection accounts of a non-purchasing spouse in a community property state are included in the cumulative balance.

All medical collections and charge off accounts are excluded from this guidance and do not require resolution.

Capacity analysis includes any of the following actions:

• At the time of or prior to closing, payment in full of the collection account (verification of acceptable source of funds required).
• The borrower makes payment arrangements with the creditor. If the borrower has entered into a payment arrangement with the creditor, a credit report or letter from the creditor verifying the monthly payment is required. The monthly payment must be included in the borrower's debt-to-income ratio.
• If evidence of a payment arrangement is not available, the lender must calculate the monthly payment using 5% of the outstanding balance of each collection, and include the monthly payment in the borrower's debt-to-income ratio.

TOTAL Mortgage Scorecard Accept/Approve/Refer - Regardless of the Accept/Approve/Refer recommendation by TOTAL Mortgage Scorecard, the lender must include the payment amount in the calculation of the borrower's debt-to-income ratio.

               Judgments - FHA requires judgments to be paid off before the mortgage loan is eligible for FHA insurance. An exception to the payoff of a court ordered judgment may be made if the borrower has an agreement with the creditor to make regular and timely payments. The borrower must provide a copy of the agreement and evidence that payments were made on time in accordance with the agreement, and a minimum of three months of scheduled payments have been made prior to credit approval.

Borrowers are not allowed to prepay scheduled payments in order to meet the required minimum of three months of payments. Furthermore, lenders are instructed to include the payment amount in the agreement in the calculation of the borrower's debt-to-income ratio.

FHA requires judgments of a non-purchasing spouse in a community property state to be paid in full, or meet the exception guidance for judgments above, unless excluded by state law.

    3.           Handling of Disputed Accounts - The existence of potentially inaccurate information on a borrower's credit report resulting in a dispute must be reviewed by an underwriter. Accounts that appear as disputed on the borrower's credit report are not considered in the credit score utilized by TOTAL Mortgage Scorecard in rating the application. Therefore, FHA requires the lender to consider them in the underwriting analysis as described below.

With this ML, FHA is revising policy on manual downgrades for applications with disputed accounts to reflect the risk associated with derogatory and non-derogatory disputed accounts for factors such as age and size of outstanding balance.

Disputed Derogatory Accounts Indicated on the Credit Report - If the credit report utilized by TOTAL Mortgage Scorecard indicates that the borrower is disputing derogatory credit accounts, the borrower must provide a letter of explanation and documentation supporting the basis of the dispute. The lender must analyze the documentation provided for consistency with other credit information in the file to determine if the derogatory credit account should be considered in the underwriting analysis.

Guidance for TOTAL Mortgage Scorecard Accept/Approve loans with disputed accounts.

Disputed Derogatory Credit Accounts greater than or equal to $1,000	If the cumulative outstanding balance of disputed derogatory credit accounts of all borrowers is equal to or greater than $1,000, the mortgage application must be downgraded to a"Refer" and a Direct Endorsement underwriter is required to manually underwrite the loan as described above.
Disputed Derogatory Credit Accounts less than $1,000	If the cumulative outstanding balance of disputed derogatory credit accounts of all borrowers is less than $1,000, a downgrade is not required.
Excluded Accounts	Disputed medical accounts are excluded from the $1,000 limit and do not require documentation. Disputed derogatory credit accounts resulting from identity theft, credit card theft, or unauthorized use are also excluded from the $1,000 limit. However, the lender must provide in the case binder a credit report, letter from the creditor, or other appropriate documentation to support the dispute, such as a police report disputing the fraudulent charges.

Disputed derogatory credit accounts are defined as follows:

• disputed charge-off accounts,
• disputed collection accounts, and
• disputed accounts with late payments in the last 24 months.

Disputed derogatory credit accounts of a non-purchasing spouse in a community property state are not included in the cumulative balance for determining if the mortgage application is downgraded to a "Refer".

Non-derogatory disputed accounts are excluded from the $1,000 cumulative total.

Non-Derogatory Disputed Accounts and Disputed Accounts Not Indicated on the Credit Report - Non-derogatory disputed accounts include the following types of accounts:

• disputed accounts with zero balance,
• disputed accounts with late payments aged 24 months or greater, and
• disputed accounts that are current and paid as agreed.

 If a borrower is disputing non-derogatory accounts, or is disputing accounts which are not indicated on the credit report as being disputed, the lender is not required to downgrade the application to a "Refer." However, the lender must analyze the effect of the disputed accounts on the borrower's ability to repay the loan. If the dispute results in the borrower's monthly debt payments utilized in computing the debt-to-income ratio being less than the amount indicated on the credit report, the borrower must provide documentation of the lower payments.

If you have loans pending that these changes will affect, be sure to order the FHA case number prior to October 15, 2013.

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Joel Lobb (NMLS#57916)
Senior  Loan Officer
502-905-3708 cell
kentuckyloan@gmail.com

Fill out my form for mortgage pre-approval by clicking this link!

Mortgage Loans In Kentucky for Conventional, FHA, and VA Mortgages for 2020

Mortgage Loans In Kentucky 

Kentucky Conventional Mortgages – These mortgages are not insured by the government, but they do conform to the government standards known as Freddie Mac and Fannie Mae. One thing to note about a conventional mortgage is that they require mortgage insurance unless you can put down at least 20%; once the loan’s principal balance drops below 78% of the home’s value, you no longer have to pay mortgage insurance.

• Qualifying credit: 620-740
• Loan terms: 15 or 30 years
• 3% Down Payment minimum

Kentucky FHA Loans – An FHA loan is insured by the Federal Housing Administration, who guarantees a portion of the loan should the borrower default. This minimizes the lender’s risk and allows them to expand their borrowing parameters to the benefit of first-time homebuyers who might not have large savings or strong credit. Keep in mind that closing costs will be much higher for this type of mortgage and the home must meet rigorous appraisal standards.

• Qualifying credit: 500 minimum with 10% down payment and 580 score higher 3.5% down payment 

Kentucky VA Loans If you are an active duty military personnel (or veteran in California and Hawaii), you may be eligible for this mortgage plan backed by the Dept. of Veteran Affairs. Income and credit requirements are significantly lower than other loans, making the approval process much easier, but be prepared to face longer closing periods than you would experience through a private lender.

• Qualifying credit: No minimum Credit score for va loans

• Outstanding debt---debt ratios usually around 45% on the backend 

• Credit background-----looking at last 2-4 years mostly in regards to bankruptcies, foreclosures, short-sales,

• Employment history--2 year work history not really the same job but same line of work and pay being consistent.