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

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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 Get Approved for a Kentucky Mortgage Loan with Bad Credit.

Buying a home in Kentucky with bad credit can be done with the right mortgage loan officer to guide you through the process.

 There are various loan programs, including Kentucky FHA, VA, USDA, and conventional mortgages, have different criteria and offer opportunities for individuals with less-than-perfect credit to become homeowners. 

In this blog post, we'll explore the options available for Kentucky homebuyers with bad credit and provide tips on improving your credit scores to enhance your chances of loan approval to buy your first house in Kentucky

Understanding Your Credit Score or Fico Score 

Your credit score is a critical factor in determining your eligibility for a mortgage loan. It reflects your creditworthiness and helps lenders assess the risk of lending you money.

Credit scores range from 300 to 850, with higher scores indicating better credit health. Scores below 620 are generally considered "bad" credit, but don't be discouraged. There are still options available.

Loan Options for Kentucky Homebuyers with Bad Credit

Kentucky FHA Loans

Federal Housing Administration (FHA) loans are popular among Kentucky first-time homebuyers and those with bad credit. They offer more lenient credit requirements and lower down payment options.

• Credit Score Requirement: As low as 500 with a 10% down payment, or 580 with a 3.5% down payment.
• Benefits: Flexible credit requirements, low down payment, and competitive interest rates.
• Drawbacks: Mortgage insurance premiums (MIP) are required, which increase the overall cost of the loan. A lot of sellers view FHA buyers as weaker buyers vs Conventional loans and may hold that against you if you are making an offer with a FHA loan. 
• Bankruptcy: 2 years removed from Chapter 7 and 1 year in Chapter 13 pan with on time pay history and trustee approval is possible for FHA loans

Kentucky VA Loans

Veterans Affairs (VA) loans are available to veterans, active-duty service members, and eligible surviving spouses. These loans offer significant benefits, including no down payment and no private mortgage insurance (PMI).

• Credit Score Requirement: No official minimum, but most lenders prefer a score of at least 580 to 620.
• Benefits: No down payment, no PMI, competitive interest rates.
• Drawbacks: VA funding fee, which can be financed into the loan or waived for some eligible veterans. 
• Bankruptcy: 2 years removed from Chapter 7 and 1 year in Chapter 13 pan with on time pay history and trustee approval is possible for FHA loans

Kentucky USDA Loans

The United States Department of Agriculture (USDA) loans are designed for rural and suburban homebuyers with low to moderate incomes. These loans offer zero down payment options and low-interest rates.

• Credit Score Requirement: Generally, 640, but exceptions can be made for lower scores with compensating factors down to a 580 credit score. 
• Benefits: No down payment, low mortgage insurance, competitive interest rates.
• Drawbacks: Geographic and income restrictions apply and harder to qualify for vs FHA loans and VA loans when it comes to government backedmortgae loans. Much more restrictive on debt to income ratio and income limits for household see here 

Kentucky Conventional Mortgage Loans

Conventional loans are not backed by the government and typically require higher credit scores. However, there are programs available for those with lower scores.

• Credit Score Requirement: Generally, at least 620. Typically 720 or higher preferred--
• Benefits: Potentially lower overall costs compared to government-backed loans if you have a higher credit score and substantial down payment. No maximum purchase price or loan amount-Mortgage insurance not for life of loan and can recast your mortgage loan and remove mi unlike government backed loans via FHA, VA USDA ---Can be done anywhere and no income limits
• Drawbacks: Stricter credit requirements, higher down payments, and PMI required for down payments less than 20%. 

Joel Lobb
Mortgage Loan Officer

Individual NMLS ID #57916

Text/call:      502-905-3708

email:          kentuckyloan@gmail.com

https://www.mylouisvillekentuckymortgage.com/

Disclaimer: No statement on this site is a commitment to make a loan. Loans are subject to borrower qualifications, including income, property evaluation, sufficient equity in the home to meet Loan-to-Value requirements, and final credit approval. Approvals are subject to underwriting guidelines, interest rates, and program guidelines and are subject to change without notice based on applicant's eligibility and market conditions. Refinancing an existing loan may result in total finance charges being higher over the life of a loan. Reduction in payments may reflect a longer loan term. Terms of any loan may be subject to payment of points and fees by the applicant Equal Opportunity Lender. NMLS#57916 http://www.nmlsconsumeraccess.org/

How to Get Approved for a Kentucky Mortgage While in A Chapter 13 Bankruptcy:

Can you get a mortgage loan while in a Chapter 13 Bankruptcy?

Here is a brief summary:

You must have 12 payments paid into the Chapter 13 before you can apply for a mortgage loan.

The payments must be made on time for last 12 months or after 12 months if you have been in longer, so no late payments to the Chapter 13 while in it.

You have to ask permission from the courts to seek a mortgage loan. They usually grant this. I have never not seen them grant it.

You have to qualify with the new house payment along with Chapter 13 payments and other debts listed on credit report. Debt to income ratios usually center around 31 and 43% respectively, meaning the new house payment should not be more than 31% of your gross monthly income and your total house payment and debts listed on credit report along with Chapter 13 payment should not be more than 43% of your total gross monthly income.

Credit scores: Most FHA lenders I work with will want a 620-middle score. You have three fico scores from Experian, Equifax, and Transunion, and they throw out the high and low score and take middle score. For example, if you had a 598, 679, and 590 scores respectively for all three bureaus listed above, your qualifying score would be 598.

There are some FHA investors that I am set up with that will go down to 580, but I have seen in my past experiences 620 will get you a better deal and far greater chance of closing on your loan with FHA.

Down payment: For FHA loans, you will need to have at least 3.5% down payment saved up. It is extremely hard to find a no money down loan program to get you approved for a mortgage while you are in a Chapter 13 plan.

FHA, VA and USDA are really the only two options that I know of that offer financing for a borrower with a current Chapter 13 Bankruptcy plan, so keep that in mind.

Conventional loan program offered by Fannie Mae will not allow a mortgage loan for someone in a Chapter 13 Bankruptcy plan.

On USDA loans, it is possible to get 100% Financing after you have paid into the plan for 12 months with a good pay history. The credit scores needed for a USDA loan approval really need to be above 640 in my past experience in getting them approved. 

A lot of USDA lenders will say they will do down to 620, but it is very difficult getting them approved. Best to get your scores up to increase your changes in qualifying for a USDA loan. There is not much that difference in getting your scores up to that range if you are at a 620 score now.

With USDA loans, they have income and property eligibility requirements that FHA does not have, so below is a rough run down of FHA vs USDA loan for you:


Typically, USDA-eligible properties are located in rural areas. It is a mistake, however, to think that you have to live far out in the country to qualify for a USDA loan. USDA-eligible properties are often located near urban areas.

A property’s eligibility is determined by its location with respect to USDA’s map of eligible locations. The USDA program also places limits on your household income based on median earnings in an area. If you exceed that limit, you can’t obtain a USDA loan.

The FHA, by contrast, does not place limits on household earnings. The FHA, however, does establish a maximum limit on the amount of money that can be borrowed through the program.

So, if you were in a hurry to buy, after you have been in your Chapter 13 plan for 12 months, I can look at getting you approved to buy a home if you wish:

So, if you were in a hurry to buy, after you have been in your Chapter 13 plan for 12 months, I can look at getting you approved to buy a home if you wish:




If you have questions about qualifying as first time home buyer in Kentucky, please call, text, email or fill out free prequalification below for your next mortgage loan pre-approval.


Joel Lobb
Senior Loan Officer

(NMLS#57916)


Text or call phone: (502) 905-3708

email me at kentuckyloan@gmail.com

http://www.mylouisvillekentuckymortgage.com/

Can You Buy A House After Bankruptcy in Kentucky?

Mortgage Loan Options After Bankruptcy in Kentucky

In some cases, you have exhausted your emergency fund, and have decided there is no option other than to file for bankruptcy to pay off your debt. You may decide to work with a bankruptcy attorney. Plus, you should know all real estate agents and mortgage lenders who have experience working with people with bankruptcy on their credit score.

When you declare bankruptcy, you may find it hard to improve your credit score and financial condition. Even worse, you may think you will never be able to buy a house again, but the reality is different.

Who wants bankruptcy? Of course, no one wants to fall into this drastic situation. But people dealing with financial troubles may think it is the only way to get out of debts and start from the beginning.

However, bankruptcy may minimize financial stress and allow you to focus on making positive financial decisions for your future. So are you ready to move forward and make your dream of owning a home come true? So, adopt the following strategies to achieve the goal.

How Long after a Bankruptcy Can I Qualify for a Kentucky Mortgage?

You can buy a house approximately one or two years after filing for bankruptcy, only if you restore your credit and avoid new debt. Filing a Chapter 7 or Chapter 13 bankruptcy will impact your credit report and put a negative score on your credit. But it does not mean that you cannot buy your own house.

Chapter 7 Bankruptcy

The standard type of bankruptcy is Chapter 7, in which the court wipes down your qualifying debts. In this case, your credit score is affected. If you file Chapter 7 bankruptcy, you have to wait for about four years after the court dismisses your bankruptcy to make you eligible for a conventional loan.

However, government-backed mortgage loans are more complex. You have to wait for about three years after your bankruptcies' dismissal to qualify for a USDA loan. At the same time, you have to wait for about two years in order to qualify for a VA or FHA loan.

Chapter 13 Bankruptcy

Chapter 13 bankruptcy involves the restructuring of your debts. That means you have to make scheduled payments to your creditors. It does not have a substantial effect on your credit score. Moreover, you can keep your assets as well. While regulations for chapter 13 are less severe than Chapter 7, these loans also have a waiting period.

Conventional loans after chapter 13 bankruptcy usually require a waiting period depending on the court’s choice to handle your bankruptcy. Generally, the waiting period is about four years from the date you file bankruptcy and two years from your dismissal date.

While chapter 7 bankruptcy standards are relaxed for government-backed loans, USDA loans have a 1-year waiting period after filing for Chapter 13 bankruptcy. FHA and VA loans need a court to dismiss or discharge approval of your loan before your apply. However, the waiting period remains the same in both cases, whether dismissal or discharge.

How Long after a Kentucky Bankruptcy Can I Qualify for a Mortgage Loan in Kentucky?

There are bankruptcy lenders who can help with your mortgage application even just one day out of chapter 7 or chapter 13 bankruptcy. You will likely need a larger down payment and show that you are taking financial steps to improve your credit.

Below, we will take you through some mortgage after bankruptcy options and then connect you with some of the best bankruptcy lenders. We understand that you area dealing with a lot and having a bankruptcy is not easy. Let us help guide you through this process.

Type of Loan	Chapter 7	Chapter 13
Conventional	4 years	2 years
FHA	2 years	1 year
VA	2 years	1 year
USDA	3 years	1 year

* Mortgage after bankruptcy waiting period chart

Kentucky Mortgage after Bankruptcy Waiting Period

Every type of loan has different waiting period requirements. Here are some of the basics:

• Kentucky VA Loans after bankruptcy– 2 year waiting period 
• Kentucky FHA Loans after bankruptcy – 2 year waiting period
• Kentucky USDA Loans after bankruptcy – 3 year waiting period
• Conventional mortgages after bankruptcy – 4 year waiting period after chapter 7 and 2 years after chapter 13
• Non-QM Subprime Mortgages – Available just one day out of bankruptcy.

Depending upon your scenario, we can find a mortgage for you just ONE DAY after your bankruptcy has been discharged. The rules for applying for a mortgage is the same regardless as to whether you filed a chapter 7 bankruptcy or chapter 13 bankruptcy.

Joel Lobb  Mortgage Loan Officer

American Mortgage Solutions, Inc.
10602 Timberwood Circle
Louisville, KY 40223
Company NMLS ID #1364

Text/call: 502-905-3708

email: kentuckyloan@gmail.com

http://www.mylouisvillekentuckymortgage.com/

NMLS 57916  | Company NMLS #1364/MB73346135166/MBR1574

How to get a Kentucky mortgage loan with bad credit through FHA, VA, USDA, or the Kentucky Housing Corporation (KHC)

 To get a Kentucky mortgage loan with bad credit through FHA, VA, USDA, or the Kentucky Housing Corporation (KHC), you'll need to take specific steps tailored to each program:

1. Kentucky FHA Loan with Bad Credit:

   • Credit Score Requirement: FHA loans typically accept lower credit scores than conventional loans. While the minimum credit score can vary, aiming for at least a 580 score can increase your chances.
   • Down Payment: With a credit score below 580, a 10% down payment may be required. If your score is 580 or above, you can qualify with a 3.5% down payment.
   • Work on Your Credit: Prioritize improving your credit score by paying bills on time, reducing debt, and disputing any errors on your credit report.

2. Kentucky VA Loan with Bad Credit:

   • Credit Score Requirement: VA loans are known for being flexible with credit requirements. While there's no set minimum score, lenders often look for scores around 620 or higher.
   • VA Loan Guaranty: The VA doesn't directly issue loans but guarantees a portion of the loan, making lenders more willing to approve applicants with lower credit scores.
   • Proof of Financial Stability: Highlight stable income and employment history to strengthen your application.
   • 
     

3. Kentucky USDA Loan with Bad Credit:

   • Credit Score Requirement: USDA loans typically require a minimum credit score of 640. However, some lenders may consider scores as low as 580 with compensating factors.
   • Income Limits: Ensure your income falls within USDA's income limits for the area where you're buying.
   • Compensating Factors: Emphasize factors like a steady job, low debt-to-income ratio, and a history of making timely payments to offset a lower credit score.

4. Kentucky Housing Corporation (KHC) Loan with Bad Credit:

   • Credit Score Requirement: KHC loans may have varying credit score requirements depending on the specific program. Aim for a score of at least 620 for better chances of approval.
   • Down Payment Assistance: KHC offers down payment assistance programs that can help lower-income and first-time homebuyers. Check eligibility and requirements for these programs.
   • Prequalification: Consider getting prequalified to understand your options and improve your negotiating position.

Hope your day is full of sunshine

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 57916  | Company NMLS #1364/MB73346135166/MBR1574

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).

For all these loans, working with a knowledgeable mortgage broker like Joel Lobb can be beneficial. They can guide you through the specific requirements, help you understand your options, and assist in improving your chances of approval despite bad credit.

Kentucky Mortgage Loan Programs

FHA Pricing Improvements Any FICO (down to 550) Conventional Pricing Improvements Any FICO ( down to 580) Non-Traditional Credit/ No Score Options Available on FHA, VA and USDA FreddieMac ChoiceRenovation Down to 580 Fico EasyPath FHA 203K Limited and standard Down to 620 FICO Purchase and Refinance options LOWER FICO OPTIONS Down to 550 FICO on FHA and VA Down to 580 FICO on USDA and Conventional MANUAL UW OPTIONS FHA, VA & USDA CASH OUT REFINANCES FHA and VA down to 550 FICO VA cash-out up to 100 LTV Manual Underwrite options Manufactured housing options MANUFACTURED HOMES Single and multi-wide options Available for FHA, VA, USDA and conventional Options for manufactured homes built after June 15th 1976 USDA 97% of the USA is eligible 100% LTV available USDA Streamline NO FICO allowed Escrow holdbacks allowed DACA and EAD allowed FICOs down to 580 Temporary Buydowns Currently available on FHA, VA and Conventional loans