Getting a mortgage in Kentucky involves meeting certain criteria set by lenders
General Requirements:
Credit Score: A minimum credit score of 620 is generally required, but higher scores (around 720+) can unlock better interest rates and loan options. Lower credit scores are allowed on FHA, VA, and USDA loans. USDA and VA have no minimum credit score requirement but most lenders will want a 580 credit score or higher and FHA will go down to a 500 credit score with 10% down.
Debt-to-Income (DTI) Ratio: This compares your monthly debt payments to your gross monthly income. Aim for a DTI ratio below 40%, with some lenders allowing up to 50% depending on the loan type.
Down Payment: While 20% is traditional, Kentucky has programs allowing 3% down with assistance.
Employment and Income: Steady employment history and sufficient verifiable income are crucial.
Savings: Lenders prefer to see reserves covering several months of mortgage payments.
Additional factors:
Loan Type: Different loan types (FHA, VA, USDA) have specific eligibility requirements.
First-Time Homebuyer Status: Kentucky offers programs with relaxed criteria for first-time buyers.
Area Median Income (AMI): Income limits apply to some Kentucky assistance programs.
Tips for Qualifying:
Check your credit score and report for errors.
Pay down debt to lower your DTI ratio and improve your credit utilization to increase your score .
Save consistently for your down payment and closing costs. Get a gift lined up for down payment
Consider down payment assistance programs.
Get pre-approved for a mortgage to understand your budget and cash to close along with out of pocket expenses before closing.
Resources:
Kentucky Housing Corporation: https://www.kyhousing.org/
My Louisville Kentucky Mortgage: https://www.mylouisvillekentuckymortgage.com/p/documents-needed-for-mortgage-loan.html
Kentucky First Time Home Buyer: https://kyfirsttimehomebuyer.wordpress.com/2024/01/20/kentucky-welcome-home-grant-5000-00/
