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2026 FHA Loan Options for Kentucky Homebuyers

Kentucky FHA Loan Requirements – Updated for 2026

Kentucky FHA loan guidelines are established by the U.S. Department of Housing and Urban Development (HUD). FHA loans remain one of the most flexible mortgage options available to Kentucky homebuyers, particularly first-time buyers, borrowers rebuilding credit, and households using down payment assistance.

Employment and Income Requirements

Borrowers must demonstrate a stable employment history covering the most recent two years. This does not require the same employer, but the work history must show consistency in the same industry or line of work.

Recent college graduates may satisfy the two-year work history requirement by providing college transcripts, provided the current employment aligns logically with the education received.

Self-employed borrowers must document a minimum two-year history of self-employment and provide the most recent two years of federal tax returns filed with the IRS. FHA underwriting uses a two-year average of qualifying income, adjusted for business stability and trends.

All income must be verifiable through acceptable documentation such as pay stubs, W-2s, or tax returns. Cash income, undocumented deposits, or bank-statement-only income is not permitted for FHA qualifying purposes.

Down Payment Requirements

FHA loans require a minimum down payment of 3.5 percent for borrowers with credit scores of 580 or higher.

Borrowers with credit scores between 500 and 579 are limited to a maximum loan-to-value of 90 percent, requiring a minimum 10 percent down payment. In practice, most lenders apply overlays requiring higher credit scores, typically between 580 and 620, even though HUD technically allows lower scores.

Down payment funds must come from an approved source. Acceptable sources include personal savings, retirement account loans or withdrawals, and properly documented gift funds. Large or undocumented cash deposits are not allowed and remain one of the most common reasons for FHA loan delays or denials in underwriting.

Occupancy and Property Use

FHA loans are for primary residences only. The borrower must occupy the property as their primary home and move in within 60 days of closing. FHA financing may not be used for rental properties or investment homes.

Appraisal and Property Standards

The property must be appraised by a Kentucky-licensed, FHA-approved appraiser. The home must meet HUD’s minimum property standards, meaning it must be safe, sound, and secure.

Common appraisal concerns include peeling paint, exposed wiring, missing handrails, roof condition, and health or safety hazards. Most FHA appraisal issues are correctable prior to closing.

Debt-to-Income Ratio Guidelines

FHA evaluates two debt ratios:

The housing ratio (front-end), which includes principal, interest, property taxes, homeowners insurance, mortgage insurance, and HOA dues, is typically capped at 31 percent of gross monthly income.

The total debt ratio (back-end), which includes the housing payment plus all other monthly obligations reported on credit, is typically capped at 43 percent.

However, borrowers receiving an “Approve/Eligible” finding through FHA’s automated underwriting system may qualify with higher ratios, depending on credit scores, cash reserves, and other compensating factors.

Credit Score and Credit History Requirements

The minimum FHA credit score for maximum financing remains 580 in 2026. This does not guarantee approval, as lenders apply additional underwriting standards and overlays.

Borrowers must demonstrate acceptable recent payment history. FHA places significant weight on the most recent 12 months of credit performance.

Bankruptcy and Foreclosure Guidelines

Chapter 7 bankruptcy requires a minimum waiting period of two years from discharge, with re-established good credit and on-time payments afterward.

Chapter 13 bankruptcy may be eligible after at least 12 months of on-time plan payments, with trustee approval, and the borrower must qualify including the Chapter 13 payment.

Foreclosure generally requires a three-year waiting period from the date of foreclosure completion. Exceptions may be considered only for documented extenuating circumstances beyond the borrower’s control. Job relocation alone does not qualify as an extenuating circumstance.

Federal Debt and CAIVRS Requirements

Borrowers may not have delinquent federal debt, defaulted federal student loans, unpaid federal judgments, or unresolved FHA claims.

Lenders are required to check the CAIVRS (Credit Alert Interactive Voice Response System) database for all federally backed loans, including FHA, VA, USDA, and SBA loans. Title 31 of the U.S. Code prohibits delinquent federal debtors from receiving federal loan insurance or guarantees.

If a CAIVRS alert appears, the debt must be resolved or paid in full before closing.

FHA Gift Fund Rules for Down Payments

FHA permits gift funds for down payments and closing costs, provided there is no expectation of repayment.

Acceptable gift sources include relatives, employers, labor unions, close friends with a documented relationship, charitable organizations, and government or public entities.

Unacceptable gift sources include the seller, real estate agents, brokers, builders, or any party with a financial interest in the transaction.

A proper gift letter is required, stating that repayment is not expected. The donor must provide identifying information and documentation showing the transfer of funds from their account to the borrower.

Government and Employer Assistance Programs

Borrowers without access to family gift funds may qualify for state, local, or employer-assisted housing programs that provide down payment or closing cost assistance. In Kentucky, FHA loans can often be paired with Kentucky Housing Corporation (KHC) down payment assistance programs, subject to income limits and program availability.

How FHA Loans Are Used in Kentucky

FHA does not directly lend money. Instead, it insures loans made by FHA-approved lenders. These loans are designed for borrowers with limited down payment funds, past credit challenges, or non-traditional credit profiles.

Many Kentucky borrowers who do not qualify for conventional financing are still able to achieve homeownership through FHA-insured loans at competitive interest rates.

Pros and Cons of FHA Loans

Advantages include low down payment requirements, flexible credit standards, and the ability to combine FHA loans with down payment assistance programs.

Disadvantages include mandatory mortgage insurance. FHA charges an upfront mortgage insurance premium of 1.75 percent of the loan amount, which can be financed, and an annual mortgage insurance premium that ranges from approximately 0.45 percent to 1.05 percent depending on loan term, loan-to-value, and origination date. This annual premium is paid monthly and, in most cases, remains for the life of the loan unless refinanced.

Final Thoughts for Kentucky Homebuyers in 2026

FHA loans continue to be a practical, reliable option for Kentucky homebuyers who need flexibility without sacrificing long-term stability. While FHA guidelines are forgiving compared to conventional loans, preparation matters. Clean documentation, stable income, responsible credit behavior, and proper sourcing of funds are essential to a smooth approval.

Working with an experienced Kentucky FHA lender can help you navigate overlays, improve credit positioning, and pair FHA financing with available assistance programs.

Joel Lobb
NMLS #57916
Text or Call 502-905-3708
kentuckyloan@gmail.com
www.mylouisvillekentuckymortgage.com

Company NMLS #1738461
Equal Housing Lender

Information is provided for educational purposes only and does not guarantee loan approval. All loans are subject to underwriting guidelines, program availability, and lender approval.

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What are the Kentucky FHA Credit Score Requirements for Mortgage Loan Approvals?

The Best Kentucky Mortgage Loan Options When Looking for your first house in Kentucky Kentucky First-time Home Buyer Programs👀💯👇‼

Kentucky Mortgage Requirements for FHA, VA, USDA and Fannie Mae

FHA loan in Kentucky you will be confronted with minimum credit score requirements set forth by FHA and the lender. Even though FHA will insure the mortgage loan at a certain credit score, you will see that lenders will create  “credit-overlays” to protect their risk and ask for a higher credit score.

So keep in mind when you are getting an FHA  lenders will have higher credit score minimums in addition to the FHA Mortgage Insurance program.

For a Kentucky Homebuyer wanting to purchase a home or refinance their existing FHA loan, FHA requires a 3.5% down payment and the borrower must have a 580 FICO Credit Score. If the score is below 580, then you would need 10% down and still qualify on a manual underwrite.

You must have a FICO score of at least 500 to be eligible for a Kentucky  FHA loan. If your FICO score is from 500 to 579, your down payment on the loan is 10 percent of the loan.

If your FICO score is 580 or higher, your down payment is only 3.5 percent. If your credit score is less than 580, it may be more cost-effective to take the necessary steps to improve your score before taking out the loan, rather than putting the money into a larger down payment.

How do they get the credit score:  There are three main credit bureaus in the US. Equifax, Experian, and Transunion. The three scores vary but should be relatively close as long as the same creditors are reporting to the same bureaus.

You will get a variation in the scores due to all creditors or collection companies don’t report to all three bureaus. This is why they take the mid score.  So if you have a 590 Experian, 680 Equifax, and 620 TransUnion, your qualifying credit score would be 620

Based on my experience with lenders that I deal with in Kentucky on FHA loans,  most lenders require 620 middle credit score for consideration for loan approval.

How do they get the score:  They take the mid score, so if you have a 590 Experian, 680 Equifax, and 620 TransUnion, your qualifying score would be 620.

Kentucky FHA Loans with less than 620 Score

If your score is below 620, a manual underwrite is where the AUS (Automated Underwriting System) refers your loan to a human being, and they look at the entire file to see if they can overturn and approve the mortgage loan because the Desktop Underwriting Automated Software could not approve you.

With scores below 620, they typically will want to verify your rent history, have no bankruptcies in the last two years, and no foreclosures in the last 3 years.

If you have had any lates since the bankruptcy this will probably result in a denial on a refer manual underwrite file.

Your max house payment will be set at 31% of your gross monthly income,  and your new house payment plus the bills you are paying on the credit report cannot be more than 43%.

Typically, on scores below 620 for FHA loans, they will also look at reserves or money you have saved up after the loan is made to try and qualify you. For example, if you have a 401k or savings account that has at least 4 months reserves (take your mortgage payment x 4) and this would equal your reserves. They look at this as a rainy day fund and could help you keep up on your bills if you were unemployed or could not work.

 

What credit score do you need to qualify for a Kentucky mortgage loan?

The first thing to keep in mind is that qualifying for a mortgage involves a lot more than just a credit score. While your FICO score is a very important ingredient, it is just one factor. Lenders also look at your income and level of debt, among other things.

As a rule of thumb, however, a credit score below 620 will make buying a home very difficult. A FICO score below 620 is considered sub-prime. In the past, there were mortgage companies that specialized in sub-prime mortgages. Because of the challenges in the credit market over the last year or so, however, sub-prime loans have become difficult if not impossible to obtain.

A FICO score between 600 and 640  is considered fair to good credit. But keep in mind, this range of credit scores does not guarantee you will qualify for a mortgage, and if you do qualify, it won’t get you the lowest interest rate possible. Still, to buy a home aim for a score of at least 620, recognizing that other factors weigh in the decision and that some banks may require a higher score.

What credit score do you need to get a low rate mortgage?

It uses to be that a score of about 720 would yield the lowest mortgage rates available. Today, the best rates kick in with a FICO score of 760. And interest rates go up significantly as your credit score drops. To give you an idea, the following table shows current rates by credit score and calculates a monthly principal and interest payment based on a $300,000 loan:

 
lenders will pull what they call a “tri-merge” credit report which will show three different fico scores from Transunion, Equifax, and Experian. The lenders will throw out the high and low scores and take the “middle score.” For example, if you had a 614, 610, and 629 score from the three main credit bureaus, your qualifying score would be 614.
 
 
So if you only have one score, you may not qualify. Lenders will have to pull their own credit report and scores so if you had it ran somewhere else or saw it on a website or credit card you may own, it will not matter to the lender, because they have to use their own credit report and scores.
 
Lastly, lenders will pull your credit report for free nowadays so this should not be a big deal as long as your scores are high enough.
 
 
offered by FHA, VA, USDA, Fannie Mae, and KHC all have their minimum fico score requirements and lenders will create overlays in addition to what the Government agencies will accept, so even if on paper FHA says they will go down to 580 or 500 in some cases on fico scores, 
 
If you have low fico scores it may make sense to check around with different lenders to see what their minimum fico scores are for loans.
The lenders I currently deal with have the following fico cutoffs for credit scores:
 
 
As you can see, different government-backed loan programs have different minimum score requirements with most lenders for an FHA, VA, or Fannie Mae loan, and 620  is required for the no down payment programs offered by USDA and KHC in Kentucky for First Time Home Buyers wanting to go no money down.
 
 
 

By paying down your credit card balances (credit utilization) and having a good pay history (payment history) ,this is the best way to raise your score. 

 The credit bureaus don’t update immediately, so I would not add to the balance or open any new bills or have any other lender do an inquiry on your credit report while we wait for the scores to hopefully go up in the next 30 days. Try to keep everything status quo and make your payments on time and keep your balances low or lower than what is now reporting on the credit report. 

FICO-Score-usage-by-industry@2x.png

How to improve your credit score!

Pay Every Single Bill on Time, or Early, Every Month

Please understand one thing; paying your bills on time each month is the single most important thing you can do to increase your credit scores.

Depending on the credit bureau, there are 4 or 5 main items that determine everyone’s credit score. Of those items, your history of paying bills makes up about 35% of the score. THIS IS HUGE!

Paying your bills on time shows lenders that you are responsible. It will also spare you from paying late fees whether it is a charge from a credit card or an added fee from your landlord.

Use a calendar, or a phone app, or some other organized system to make sure that you pay your bills on time every single month.

MAIN TIP: Do not pay ANY bill late!

Credit Cards: Lower Balances Are Always Better 

 

( If you don’t have a credit card, I suggest getting a secured credit card through Capital one Secured  Card Or Open Sky Credit card...click this link here 

 

Another big factor in calculating a credit score is the amount of credit card debt. Credit bureaus look at two things when analyzing your credit cards.

First, they look at your available credit limit. Second, they look at the existing balance on each card. From these two figures an available ratio is developed. As the ratio goes higher, so too will your credit score increase.

Here is one simple example. Suppose a person has the following credit cards, corresponding balances, and credit limits

Credit Card Current Balance Credit Limit
Chase Visa $105 $1,000
MarterCard from local bank $236 $1,500
BP MasterCard $87 $500
Totals $428 $3,000

From these numbers, we get the following calculation

$428/$3,000 = 14%

In other words, the person is using 14% of their available credit and they have 86% available credit. The closer that ratio is to 100%, the better the credit score will be.


MAIN TIP: Keep all credit card balances as low as possible.In this particular example, if they had a problem with their car, or needed medical attention or some other emergency, the person would have the money necessary to handle the situation without incurring new debt. This is wise on the consumer’s part and lenders like to see this kind of money management.

Credit Cards Part 2: 1 or 2 is Better Than a Wallet Full

The previous example showed a person that utilized just three credit cards. This is much better than someone who has 5+ credit cards, all with available balances. Why? Lenders do not like to see someone that has the potential to get too far in debt in a short amount of time.

Some people have 5, 10 or more credit cards and they use many of them. This shows a lack of restraint and control. It is much better, and neater, to have only 2 or 3 cards with low rates that handle all of your transactions. A lower number of cards are easier to manage and it does not give a person the temptation to go on a huge shopping spree that could take years to payoff.

MAIN TIP: Try to limit yourself to no more than 2-3 credit cards.

Keep the Good Stuff Right Where it is

Too many people make the mistake of paying off old debts, such as old credit cards, and then closing the account. This is actually a bad idea.

A small part of the credit score is based on the length of time a person has had credit. If you have a couple of credit cards with a long track history of making payments on time and keeping the balance at a manageable level, it is a bad idea to close out the card.

Similarly, if you have been paying on a car or motorcycle for a long time, do not be in a hurry to pay off the balance. Continue to make the payments like clockwork each month.

An account that has a good record will help your scores. An account that has a good record and multiple years of use will have an even better impact on your score.

MAIN TIP: Keep old accounts open if you have a good payment history with them.

Stop Filling Out Credit Applications

Multiple credit inquiries in a short amount of time can really hurt your credit scores. Lenders view the various inquiries as someone that is desperate and possibly on the verge of making a bad financial choice.Too many people make the mistake of getting more credit after they are approved for a loan. For example, if someone is approved for a new credit card, they feel good about their finances and decide to apply for credit with a local furniture store. If they get approved for the new furniture, they may decide to upgrade their car. This requires yet another loan. They are surprised to learn that their credit score has dropped and the interest rate on the new car loan will be much higher. What happened?

If you currently have 2 or 3 credit cards along with either a car loan or a student loan, don’t apply for any more debt. Make sure the payments on your current debt are all up to date and focus on paying them all down.

In a few months of making timely payments your scores should noticeably go up.

MAIN TIP: Limit your new loans as much as possible

Which credit scores do mortgage lenders use to qualify people for a mortgage?

While it’s common knowledge that mortgage lenders use FICO scores, most people with a credit history have three FICO scores, one from each of the three national credit bureaus (Experian, Equifax, and TransUnion). 

  • Which FICO Score is Used for Mortgages

Most lenders determine a borrower’s creditworthiness based on FICO® scores, a Credit Score developed by Fair Isaac Corporation (FICO™). This score tells the lender what type of credit risk you are and what your interest rate should be to reflect that risk. FICO scores have different names at each of the three major United States credit reporting companies. And there are different versions of the FICO formula. Here are the specific versions of the FICO formula used by mortgage lenders:

  • Equifax Beacon 5.0
  • Experian/Fair Isaac Risk Model v2
  • TransUnion FICO Risk Score 04

Lenders have identified a strong correlation between Mortgage performance and FICO Bureau scores (FICO score). FICO scores range from 300 to 850. The lower the FICO score, the greater the risk of default.

Which Score Gets Used?

Since most people have three FICO scores, one from each credit bureau, how do lenders choose which one to use?

For a FICO score to be considered “usable”, it must be based on adequate, concrete information. If there is too little information, or if the information is inaccurate, the FICO score may be deemed unusable for the mortgage underwriting process. Once the underwriter has determined if a score is usable or not, here’s how they decide which score(s) to use for an individual borrower:

  • If all three scores are different, they use the middle score
  • If two of the scores are the same, they use that score, regardless of whether the two repeated scores are higher or lower than the third score

Lenders have identified a strong correlation between Mortgage performance and FICO Bureau scores (FICO score). FICO scores range from 300 to 850. The lower the FICO score, the greater the risk of default.

If it helps to visualize this information:

Identifying the Underwriting Score
Example Score 1 Score 2 Score 3 Underwriting Score
Borrower 1 680 700 720 700
         

Joel Lobb

Mortgage Loan Officer

Individual NMLS ID #57916

 

Text/call:      502-905-3708

email:          kentuckyloan@gmail.com

https://www.mylouisvillekentuckymortgage.com/

 

email me at kentuckyloan@gmail.com

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). USDA Mortgage loans only offered in Kentucky.

All loans and lines are subject to credit approval, verification, and collateral evaluation

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5 Things I Wish I’d Knew Before Getting an FHA Mortgage

FHAdownpaymentsKentucky FHA Loan Requirements

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Can you get a Kentucky mortgage loan while in a Chapter 13 Bankruptcy:

Here is a brief summary on getting a mortgage loan while in a Chapter 13 Bankruptcy:
 
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 grants 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 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 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:
 

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

KENTUCKY VA REFINANCE LOAN

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/


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 views of my employer. Not all products or services mentioned on this site may fit all people

This web site is not the FHA, VA, USDA, HUD or any other government organization responsible for managing, insuring, regulating or issuing residential mortgage loans.

**Download Fair Housing Booklet – CLICK HERE

All approvals and rates are not guaranteed, and are only issued based on standard mortgage qualifying guidelines



Remember, we are even available this weekend for pre-qualifications or questions.  Call our cell phone or email us.  If you miss us, leave a message and we WILL call you back 

Kentucky Mortgage Broker Offering FHA, VA, USDA, Conventional, and KHC Down Payment Assistance Home Loans Bankruptcy, bankruptcy fha, usda, va, conventional loan, Chapter 13 Bankruptcy Guidelines, chapter 7 bankruptcy

Kentucky Mortgage After a Bankruptcy

Kentucky Mortgage After a Bankruptcy

Kentucky Mortgage After a Bankruptcy

Chapter 13 bankruptcy can impact your ability to qualify for various mortgage loan programs like FHA, VA, USDA, and Fannie Mae.

Chapter 13 bankruptcy can impact your ability to qualify for various mortgage loan programs like FHA, VA, USDA, and Fannie Mae. Here are the details for each program regarding waiting times, credit score requirements, down payment, and qualification criteria after a Chapter 13 bankruptcy:

  1. FHA Loan after Chapter 13 Bankruptcy:
    • Waiting Time: Typically, you’ll need to wait at least two years after the discharge date of your Chapter 13 bankruptcy before applying for an FHA loan.
    • Credit Score: FHA loans are known for their flexibility with credit scores. While there’s no specific minimum score, a higher score (usually around 580 or above) can help you qualify for better terms.
    • Down Payment: The down payment requirement for an FHA loan after Chapter 13 bankruptcy is relatively low, usually starting at 3.5% of the purchase price.
    • Qualification with Chapter 13 Bankruptcy: To qualify, you must demonstrate that you’ve made all Chapter 13 payments on time for at least one year and receive approval from the bankruptcy court to take on new debt.
  2. VA Loan after Chapter 13 Bankruptcy:
    • Waiting Time: The waiting time for a VA loan after Chapter 13 bankruptcy is generally two years from the discharge date.
    • Credit Score: VA loans also have flexible credit score requirements, with many lenders looking for scores around 620 or higher.
    • Down Payment: VA loans are known for offering zero-down financing, but eligibility depends on your military service record and whether you’ve used your VA loan benefits before.
    • Qualification with Chapter 13 Bankruptcy: Similar to FHA, you’ll need to demonstrate a consistent payment history under your Chapter 13 plan and receive approval from the bankruptcy court.
  3. USDA Loan after Chapter 13 Bankruptcy:
    • Waiting Time: USDA loans typically require a waiting period of three years from the discharge date of your Chapter 13 bankruptcy.
    • Credit Score: While there’s no official minimum credit score, most lenders look for scores of 640 or higher for USDA loans.
    • Down Payment: USDA loans offer low to no down payment options, making them attractive for eligible borrowers in rural areas.
    • Qualification with Chapter 13 Bankruptcy: You’ll need to show that you’ve been making timely payments under your Chapter 13 plan for at least one year and obtain approval from the bankruptcy court.
  4. Fannie Mae Loan after Chapter 13 Bankruptcy:
    • Waiting Time: Fannie Mae typically requires a waiting period of two years from the discharge date of your Chapter 13 bankruptcy.
    • Credit Score: Fannie Mae loans often have stricter credit score requirements compared to FHA, VA, and USDA loans. A score of around 620 or higher is generally needed.
    • Down Payment: Down payment requirements vary based on the type of Fannie Mae loan you apply for, but they can range from 3% to 20%.
    • Qualification with Chapter 13 Bankruptcy: You’ll need to demonstrate responsible financial management after bankruptcy, including rebuilding your credit and showing a stable income.

In all cases, it’s essential to work with a knowledgeable mortgage broker like Joel Lobb, who can guide you through the specific requirements and help you navigate the loan application process after a Chapter 13 bankruptcy.

Joel Lobb  Mortgage Loan Officer NMLS 57916

EVO Mortgage
 911 Barret Ave, Louisville, KY 40204
Company NMLS ID # 173846

Text/call: 502-905-3708

email: kentuckyloan@gmail.com

http://www.mylouisvillekentuckymortgage.com/

NMLS 57916  | Company NMLS #173846

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).

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5 Things to Know about buying a house and getting a Mortgage Loan approval in Kentucky for 2023


1. Do Mortgage Rates Change Daily?

Just like the gas prices at the pump, mortgage rates can change daily or throughout the day. Typically mortgage rates are published at 10-11 am daily by most lenders and you can lock up through the close of business which is usually around 6-7 PM. Mortgage rates can change up or down throughout the day based on various financial, economics, and geopolitical news in the US Financial markets and World markets. Generally speaking, good economic news is bad for rates and vice versa, bad economic news is good for mortgage rates.

The good news is this: Once you find a home and get it under contract, you can lock your mortgage loan rate. Typically it takes about 30-45 days to close a mortgage loan in Kentucky, so the typical lock is for 30-60 days. If rates get better you may be able to negotiate a better rate with your lender, but they usually have to improve by at least 25 basis points (.25) to do that. Not all lenders offer this option. The longer you lock the loan, the greater the costs. It is usually free to lock in a loan for up to 90 days without having to pay a fee.

What a lot of lenders are experiencing now is that some loans don’t close on time for various reasons. You can always extend the lock on the loan but it will costs you usually .125 basis points to do so. If you let the lock expire on the loan, then you have to take worse case pricing on that day when you go to relock. It is usually best to extend the lock on your loan.

2. What kind of Credit Score Do I need to qualify?

When applying for a mortgage loan, lenders will pull what they call a “tri-merge” credit report which will show three different fico scores from Trans union, Equifax, and Experian. The lenders will throw out the high and low score and take the “middle score” For example, if you had a 614, 610, and 629 score from the three main credit bureaus, your qualifying score would be 614. Most lenders will want at least two scores. So if you only have one score, you may not qualify. Lenders will have to pull their own credit report and scores so if you had it ran somewhere else or saw it on a website or credit card you may own, it will not matter to the lender, because they have to use their own credit report and scores.
Most lenders will pull your credit report for free nowadays so this should not be a big deal as long as your scores are high enough.
The Secondary Market of Mortgage loans offered by FHA, VA, USDA, Fannie Mae, and KHC all have their minimum fico score requirements and lenders will create overlays in addition to what the Government agencies will accept, so even if on paper FHA says they will go down to 580 or 500 in some cases on fico scores, very few lenders will go below the 620 threshold.
If you have low fico scores it may make sense to check around with different lenders to see what their minimum fico scores are for loans.
The lenders I currently deal with have the following fico cutoffs for credit scores:
FHA–580 minimum score
VA—-580 minimum score
Fannie Mae–620 minimum score
USDA–620 minimum score
KHC with Down Payment Assistance –620 minimum score.

As you can see, 580-620 is the minimum score with most lenders for a FHA, VA, or Fannie Mae loan, is required for the no down payment programs offered by USDA for Kentucky for First Time Home Buyers wanting to go no money down.

3. What are the down payment requirements?

The most popular programs for Kentucky First Time Home Buyers usually involves one of the following housing programs outlined in bold below:
FHA:

FHA will allow a home buyer to purchase a house with as little as 3.5% down. If your credit scores are low, say 680 and below, a lot of times it makes sense to go FHA because everyone pays the same mortgage insurance premiums no matter what your score is, and the down payment can be gifted to you. Meaning you really don’t have to have any skin into the game when it comes to down payment.

They even allow down payment assistance for down payment requirements of 3.5% through eligible parties like Kentucky Housing, Welcome Home Grants and Louisville KY and Covington Kentucky Down Payment Grants.

Lastly, FHA will allow for higher debt to income ratios with sometimes getting loan pre-approvals up to 55% of your total gross monthly income. So if you have a debt to income ratio of over 50%, Fannie Mae will not do the loan and USDA usually likes their debt to income ratios no more than 45%.

Think back to the last time you financed a purchase — be it a home, automobile, or what have you… You may remember having heard the term “debt-to-income ratio.” Today I want to spend some time going over exactly what this ratio is, and to also touch on how it can effect your personal finances.

4. What is your debt-to-income ratio?

Commonly referred to as your “DTI,” your debt-to-income ratio is a personal finance benchmark that relates your monthly debt payments to your monthly gross income.
As an example… Let’s say that your gross monthly salary is $5,000 and you are spending $2,800 of it toward monthly debt payments. In that case, your DTI would be an unhealthy 56%.
This version of your DTI is sometimes referred to as your “back-end” DTI. This is often broken down further to give a front-end debt-to-income ratio, which is a component of your back-end DTI.

How to calculate your front-end DTI for a Kentucky Mortgage Loan Approval

Your front-end DTI is calculated by dividing your monthly housing costs by your monthly gross income. Front-end DTI for renters is simply the amount paid in rent, whereas for homeowners it is the sum of mortgage principal, interest, property taxes, and home insurance (i.e., your PITI) divided by gross monthly income.

From above, if that $2,800 in debt payments is attributable to $1,500 in housing costs and $1,300 in non-housing costs, then your front-end DTI is $1,500/$5,000 = 30% (and your back-end ratio is still 56%, as calculated above).
Fannie Mae:
Fannie Mae requires just 3% down with their new Home Possible Program, but if you use their traditional mortgage loan, then 5% is the Fannie Mae Standard. Fannie Mae will go down 620 score, but if your scores are below 680, I would look seriously at the FHA loan program because Fannie Mae has steep increases to the interest rate and the mortgage insurance premiums if your scores are low.
A couple of good things about Fannie Mae is that you can buy a larger priced home and have a large loan amount due to FHA only allowing most Kentucky Home Buyers a maximum mortgage loan amount of $356,000 for a max FHA loan and $545,000 for Fannie Mae Conventional loans in Kentucky for 2020.
Lastly when it comes to mortgage insurance, FHA mortgage insurance premiums are for life of loan while Fannie Mae mortgage insurance premiums drop off when you develop 80% equity position in your house.
But as a tell most people, nobody has a loan for 30 years, and the average mortgage is either refinanced or home sold within the first 5-7 years.
VA Loans-

VA loans offer eligible Veterans and Active Duty Personnel to buy a home going no money down with no monthly mortgage insurance. This is probably the best no money down loan out there since the rates are traditionally very low on comparison to other government insured mortgages and no monthly mortgage insurance. The VA loan can be used anywhere in the state of Kentucky with the maximum VA loan limit being removed for 2021
USDA Loans-

USDA loans offer people buying a home in rural areas (typically towns of $20k or less) to buy a home going zero down. You cannot currently own another home and there is household income limits of $90,200 for a household family of four, and up to $119,300 for a household of five or more. You search USDA website for eligible areas and household income limits below at the yellow highlighted link :

KHC or Kentucky Housing-
Kentucky First Time Home Buyers typically use KHC for their down payment assistance. KHC currently offers $10,000 for down payment assistance and sometimes throughout the year they will offer low mortgage rates on their mortgage revenue bond program.

The down payment assistance usually never runs out because you have to pay it back in the form of a second mortgage. It helps a lot of home buyers that want to buy in urban areas that cannot utilizer the USDA program in rural areas. Most of the time the first mortgage is a FHA loan tied with the 2nd mortgage fore down payment assistance. All KHC programs require a 620 score and rates are locked for 45 days.

5. What if I have had a bankruptcy or foreclosure in the past?

FHA and VA are the easiest on previous bankruptcies. FHA and VA both require 2 years removed from the discharge date on a Chapter 7. If you are in the middle of a Chapter 13, FHA will allow for financing with a 12 month clean history payment to the Chapter 13 courts, and with trustee permission.

VA requires 2 years removed from a foreclosure (sheriff sale date of home) and FHA requires 3 years.

USDA requires 3 years removed from both a foreclosure and bankruptcy, but on the foreclosure they do not go off the sale date. This may save you a little time if you had a previous foreclosure.

Fannie Mae (Conventional Loan)

Fannie Mae is by far the strictest. They require 4-7 years out of a foreclosure or bankruptcy

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.

Bankruptcy Requriements for a FHA, VA, USDA, and Fannie Mae Loan Approval in Kentucky
click on link to apply for free mortgage quote

Joel Lobb
Senior Loan Officer
(NMLS#57916)

Text or call phone: (502) 905-3708

email me at kentuckyloan@gmail.com

http://www.mylouisvillekentuckymortgage.com/

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 views of my employer. Not all products or services mentioned on this site may fit all people

CONFIDENTIALITY NOTICE: This message is covered by the Electronic Communications Privacy Act, Title 18, United States Code, §§ 2510-2521. This e-mail and any attached files are deemed privileged and confidential, and are intended solely for the use of the individual(s) or entity to whom this e-mail is addressed. If you are not one of the named recipient(s) or believe that you have received this message in error, please delete this e-mail and any attached files from all locations in your computer, server, network, etc., and notify the sender IMMEDIATELY at 502-327-9770. Any other use, re-creation, dissemination, forwarding, or copying of this e-mail and any attached files is strictly prohibited and may be unlawful. Receipt by anyone other than the named recipient(s) is not a waiver of any attorney-client, work product, or other applicable privilege. E-mail is an informal method of communication and is subject to possible data corruption, either accidentally or intentionally. Therefore, it is normally inappropriate to rely on legal advice contained in an e-mail without obtaining further confirmation of said advice.

Kentucky Mortgage Broker Offering FHA, VA, USDA, Conventional, and KHC Down Payment Assistance Home Loans bad credit fha loans Kentucky, Bankruptcy, bonus income fha loan, Chapter 13 Bankruptcy Guidelines, chapter 7 bankruptcy, chapter 7 or chapter 13, FHA, FHA Guidelines, FHA Streamline Refinance, income, job time, KY FHA LOANS, overtime income fha loan, Overtime, Bonus, or Tip Income, well water FHA mortgage

Kentucky FHA Guideline Update

FHA has published the following guideline updates, which will be effective for all Kentucky FHA loans with case numbers assigned on or after September 9th
  • Specific verbiage for Well Water Testing has been added indicating that it must be performed by a disinterested party in a method acceptable to the local health authority. The borrower or any other interested party may not have contact with the sample. Additionally, cases mandating a Well Water Test have been added to include (but not limited to) the following
    • Newly constructed properties and/or wells
    • Properties with deficiencies in the well or well water as determined by an appraiser
    • Areas where water has been reported or is otherwise known to be unsafe
    • Properties located in close proximity to dumps, landfills, industrial sites, farms, or other sites that could contain hazardous waste
    • Properties where distance between well and septic systems is less than 100 feet
  • Clarification issued indicating how to calculate FHA income for Overtime, Bonus, or Tip Income must be calculated using the lesser of
    • Average Overtime, Bonus, or Tip income earned over the previous 2 years (or if earned less than 2 years, the total length of time it has been received); OR
    • Average Overtime, Bonus, or Tip income earned over the previous year
  • All requirements regarding unreimbursed business expenses and Commission Income or Automobile Allowances has been completely removed to align with current IRS tax laws
  • Rent Below Fair Market has been defined as an inducement to purchase when the borrower is allowed to live in the property rent free or at a rental amount more than 10 percent under the fair market rent as determined by the appraiser.
  • Clarification has been added that Reduction in Term for Kentucky FHA Mortgage Streamline Refinances refers specifically to the reduction of the remaining amortization period of the existing mortgage.

FHA Guidelines For Bankruptcy, income, down payment, mortgage insurance, credit scores, work history for FHA loan
FHA Guidelines For Bankruptcy, income, down payment, mortgage insurance, credit scores, work history for FHA loan

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/


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 views of my employer. Not all products or services mentioned on this site may fit all people

This web site is not the FHA, VA, USDA, HUD or any other government organization responsible for managing, insuring, regulating or issuing residential mortgage loans.

**Download Fair Housing Booklet – CLICK HERE

All approvals and rates are not guaranteed, and are only issued based on standard mortgage qualifying guidelines



Remember, we are even available this weekend for pre-qualifications or questions.  Call our cell phone or email us.  If you miss us, leave a message and we WILL call you back 

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Kentucky FHA Loans in the State of Kentucky for 2022

Advantages of Kentucky FHA Mortgage Loans

  • You can often make a down payment as low as 3.5 percent down to a 580 credit score
  • You can finance a home with a 500 credit score with 10% down payment.
  •  Kentucky FHA loans are assumable meaning that if you have a good rate on your current mortgage and the potential buyer of your home meets FHA guidelines, then he can assume your low rate mortgage
  • Kentucky FHA loans offer streamline refinancing without credit score minimums, verification of income, and no appraisals to refinance to a lower rate making it easier to qualify.
  • Kentucky FHA loans offer flexible terms when it comes to previous bankruptcy or foreclosures. 2 years removed from Chapter 7 with reestablished
  •  credit, or if a Chapter 13, one year in the payment plan is eligible for FHA financing.
  • Foreclosures on a past home. FHA will finance a home 3 years removed from the sale date of your foreclosure property
  • 30 year fixed rate mortgage with usually the best going rates on government insured loans like FHA, VA, USDA etc.
  • No prepayment penalty on Kentucky FHA loans.
  • Higher debt to income ratio requirements when compared to Conventional loans because most Fannie Mae Conventional loans cannot have a higher debt to income ratio than 45% on the back-end
  • You can make an FHA loan anywhere in the state of Kentucky with no geographical restrictions.
  • Will allow for down payment assistance and grants for borrowers minimum down payments in the State of Kentucky through the likes of KHC, Welcome Home Grant, and Kentucky Housing Down Payment Second Mortgage loans.
  • Kentucky FHA loans allow for unoccupied cosigner. For example, lets say you have a daughter that is getting ready to graduate college and does not have the income or credit history established yet to buy a home. FHA allows a family-member to co-sign for them to buy a home and you don’t have to occupy as primary residence. Note, FHA co-singers are not allowed to makeup for some that has bad credit, because they will take the lowest credit scores of both applicants. FHA usually allows for co-singers lack of income purposes only.
  • Can usually close within 30 days just like a regular conventional mortgage. No extra time to close an FHA loan in Kentucky versus other secondary market loans like VA, USDA, Fannie Mae.
  • You can use the FHA loan over and over. You can actually have two FHA loans open at the same time, but it gets tricky on this. Call or text me with more info if you have an FHA loan currently and would like to use FHA Financing again.
  • FHA loans aren’t just for first time home buyers in Kentucky.
 
 

Disadvantages of Kentucky FHA Mortgage Loans

  • There are loan limits in the State of Kentucky on FHA Mortgage loans. The maximum FHA loan in the state of Kentucky is $$420,680 for 2022.  So if you were needing to finance a loan over this amount, you would need to look at doing a Conventional loan with the updated 2021 Kentucky State Loan Limits for a Fannie Mae loan being $647,250
  • If buying a condo in Kentucky, FHA requires the condo development be FHA approved. There is a >>>list here of Kentucky FHA approved condos here.
  • Seller must have own the home for 90 days before you can make an offer on the home. This comes into play where the seller bought the home as an investor and rehabbed the property and wants to sell for a quick profit. FHA mandates seller must maintain for 90 days before you can write up an offer on it. Also called FHA Flipping Policy. Read more here  
  • There is mortgage insurance. This is one of the biggest disadvantages for FHA loans. But as I tell most people, nobody rarely has a loan for 30 years, so if it meets your payment and your cash to close requirement, I tell people to go with it because it can be refinanced down the road and you are getting one of the lowers 30 year fixed rates out there. Both upfront and monthly mortgage insurance premiums you have to pay HUD/FHA. These premiums change whenever FHA/HUD replenish their insurance pool to pay claims from defaults, but currently the FHA upfront mortgage insurance premium is 1.75% and monthly is .85% and .80% of the loan amount. If you happen do a 15 year term or shorter, the mortgage insurance is cheaper monthly with .45 and .70 respectively  each month. The upfront mortgage insurance is the same for a 30 year and 15 year at 1.75%
  • FHA Mortgage insurance can be on the loan for life of loan. This is a recent change made in 2016 when FHA lowered there premiums for upfront and monthly mi premiums, but made the mortgage insurance for life of loan for some FHA loans. 
  • If you put down more than 10% on the loan, or have at least 10% equity in the home for a refinance, you only have to pay mortgage insurance for 11 years before it automatically falls off.
  • Obviously you can refinance out of an FHA loan at anytime, since it does not a prepayment penalty, and you can potentially get a refund of your upfront mortgage insurance if paid off within 3 years on sliding scale.
  • I have incorporated some charts below to illustrate the different Kentucky FHA Mortgage Insurance premiums to explain it better.
  • The upfront mortgage insurance is usually financed into the loan, so it will look like you are borrowing more than the standard 3.5% down payment because this is financed into the loan. Some borrowers elect to pay it out of pocket upfront, but I have never seen this done in my 20 years of doing FHA loans in the State of Kentucky
  • Kentucky FHA Loans Greater Than 15 Years MIP Chart
  • 👇
    Base Loan Amt. LTV Annual MIP
    ≤$625,500 ≤95.00% 80 bps (0.80%)
    ≤$625,500 >95.00% 85 bps (0.85%)
    >$625,500 ≤95.00% 100 bps (1.00%)
    >$625,500 >95.00% 105 bps (1.05%)

    Kentucky FHA Loans Less Than or Equal to 15 Years MIP Chart👇

    Base Loan Amt. LTV Annual MIP
    ≤$625,500 ≤90.00% 45 bps (0.45%)
    ≤$625,500 >90.00% 70 bps (0.70%)
    >$625,500 ≤78.00% 45 bps (0.45%)
    >$625,500 78.01% – 90.00% 70 bps (0.70%)
    >$625,500 >90.00% 95 bps (0.95%)

    When can I get the FHA mortgage insurance off my Mortgage Loan? See chart below 👇👇

Image result for fha cancellation of mortgage insurance chart kentucky

  • Appraisals. On an FHA appraisal, the FHA appraiser has to turn on the utilities to make sure they are in worked order when he gets there. This is different that Conventional loan appraisals. A lot of realtors or buyers think that FHA loans are harder due to appraisals, but honestly, they’re really not. FHA puts these minimum HUD standards in place to make sure the home is in good working order and SAFE to live in. I.e.is there any lead based paint or chipping paint that could lead to poisoning  It is all about Safety with FHA and HUD on these appraisals. The value is determined just like a regular Conventional, USDA, VA appraisals whereas they compare the house to 3 recent homes sold in the area to get a value.
  • Some lenders don’t offer FHA loans due to their complexity and sale on the secondary market, so if you call a local lender in Kentucky and they don’t offer FHA loans, the reason is usually they don’t have the team in place to do them or don’t want to do them due to lack of experience on the secondary government market.
  • Government Liens. FHA will not be an option for you usually if you have unpaid federal tax liens, delinquency  on federal backed-government loans, or a claim with social security etc. FHA loans are ran through aCAVIRS alert system to check to see if you are delinquent on any federal oblation. If so, this swill stop you until you can clear the CAVIRS alert system. For example, I did a loan for a buyer that had a delinquent federal debt with his student loan that happened over 14 years old. It was off the credit report and title search, so I had to switch to a conventional loan to make the home loan work.
  • FHA loans are not good for second homes or investment properties. FHA loans are mainly for single family residence 1-4 unit, that are going to occupied primarily as main home.

In summary, FHA loans have few drawbacks other than the mortgage insurance in my opinion. It is a great first time home buyer program or borrowers with past credit problems to get into a house of their own with very little out of pocket, at a low 30 year fixed rate, and no prepayment penalty

Questions about qualifying for a FHA loan in Kentucky . Give me text, call or email below. Love to help you out on your next home or refinance in Kentucky

Read more below about specific FHA Loans in Kentucky.👇👇👇
Joel Lobb (NMLS#57916)
Senior  Loan Officer
American Mortgage Solutions, Inc.
10602 Timberwood Circle Suite 3
Louisville, KY 40223
Company ID #1364 | MB73346


Text/call 502-905-3708
kentuckyloan@gmail.com

If you are an individual with disabilities who needs accommodation, or you are having difficulty using our website to apply for a loan, please contact us at 502-905-3708.

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#57916http://www.nmlsconsumeraccess.org/

— Some products and services may not be available in all states. Credit and collateral are subject to approval. Terms and conditions apply. This is not a commitment to lend. Programs, rates, terms and conditions are subject to change without notice. The content in this marketing advertisement has not been approved, reviewed, sponsored or endorsed by any department or government agency. Rates are subject to change and are subject to borrower(s) qualification.

Louisville Kentucky Mortgage Broker Offering FHA, VA, USDA, Conventional, and KHC Zero Down Payment Home Loans | October 17, 2018 at 3:54 pm | Tags: fha gift funds, fha loan kentucky, FHA Loans Kentucky Housing First time home buyer, fha mortgage, fha mortgage loan, gift funds for fha mortgage, kentucky fha loans |

Kentucky Mortgage Broker Offering FHA, VA, USDA, Conventional, and KHC Down Payment Assistance Home Loans Bankruptcy, bankruptcy fha, usda, va, conventional loan, Chapter 13 Bankruptcy Guidelines, chapter 7 bankruptcy, chapter 7 or chapter 13

Types of Kentucky Mortgage Loans to Consider After Bankruptcy

Types of Kentucky Mortgage Loans to Consider After Bankruptcy

If you want to try to get a Kentucky mortgage after bankruptcy, you can research a number of different types of loans. Each mortgage loan has its own unique requirements for bankruptcy filers.

Kentucky FHA Loans

Federal Housing Administration (FHA) loans are managed by the federal government and may allow you to buy a house with a down payment that’s as little as 3.5% of the purchase price. The downfall of FHA loans, however, is that you’ll have to pay for mortgage insurance, which will result in higher monthly payments.

To get a mortgage after bankruptcy using an FHA loan, you’ll have to adhere to these waiting periods:

  • Chapter 7: Two years from your discharge date
  • Chapter 11: No waiting period
  • Chapter 13: One year from your discharge date

Kentucky USDA Loans

U.S. Department of Agriculture (USDA) loans are designed for rural borrowers who meet certain income requirements. It may be a good option if you’d like to buy a house in a rural area, have a low or modest income, and aren’t eligible for a conventional loan. If you go this route, you may not have to put any money down and you may be able to secure a low interest rate.

Keep these waiting requirements in mind if you’re interested in getting a USDA mortgage after bankruptcy:

  • Chapter 7: Three years from your discharge date
  • Chapter 11: No waiting period
  • Chapter 13: One year from your discharge date

Kentucky VA Loans

If you’re a veteran or currently serving in the military, you may be eligible for a Department of Veterans Affairs (VA) loan. A VA loan doesn’t require a down payment or charge private mortgage insurance and can give you the chance to lock in a low interest rate. If you pursue a VA loan, however, you’ll have to pay a funding fee, which will be a percentage of your home price.

Here are the waiting requirements you should be aware of if you’d like to get a VA loan after bankruptcy:

  • Chapter 7: Two years from your discharge date
  • Chapter 11: No waiting period
  • Chapter 13: One year from your discharge date

Kentucky Conventional Loans

Since conventional loans are not guaranteed or insured by government agencies, you can expect stricter requirements, such as having a good credit score, if you apply for one. If you get a conventional loan and put down less than 20% of the cost of your new home, you’ll need to pay private mortgage insurance.

The waiting requirements for taking out a conventional loan after bankruptcy are as follows:

  • Chapter 7: Four years from your discharge date
  • Chapter 11: Four years from your discharge date
  • Chapter 13: Two years from your discharge date or four years from your dismissal date
Bankruptcy Guidelines for Kentucky FHA, VA, USDA, and Fannie Mae Mortgage Loans

Chapter 7 Bankruptcy

A four-year waiting period is required, measured from the discharge or dismissal date of the bankruptcy action until the application date.

Chapter 13 Bankruptcy
two years from the discharge date to the application date, or four years from the dismissal date to the application date.

The shorter waiting period based on the discharge date recognizes that borrowers have already met a portion of the waiting period within the time needed for the successful completion of a Chapter 13 plan and subsequent discharge.

A borrower who was unable to complete the Chapter 13 plan and received a dismissal will be held to a four-year waiting period.


Exceptions for Extenuating Circumstances

A two-year waiting period is permitted after a Chapter 13 dismissal, if extenuating circumstances can be documented. There are no exceptions permitted to the two-year waiting period after a Chapter 13 discharge.

Foreclosure / Short Sale

A seven-year waiting period is required. In all instances, the “date of foreclosure” is considered the date of the foreclosure deed. The end date of the waiting period is the application date.

Foreclosure / Short Sale – Extenuating Circumstance A three-year waiting period is permitted if extenuating circumstances can be documented. Additional requirements apply between three and seven years, which include:

FHA Loan Guidelines for Bankruptcy and Foreclosure 

Chapter 7

Chapter 7 bankruptcy discharged more than 24 months prior to the application date may be allowed.

Chapter 7 bankruptcy discharged between 12 and 24 months prior to the application date requires satisfactorily established credit and documentation showing the circumstances which caused the bankruptcy were beyond the borrower’s control (i.e. unemployment, medical bills not covered by insurance). In these instances, the file must be manually downgraded to a refer and manually underwritten. It falls upon the underwriter to make a final determination as to the overall quality of the file.

Chapter 7 bankruptcy discharged less than 12 months prior to the application date is not allowed.

Chapter 13 

Loans where the borrower is currently in a Chapter 13 bankruptcy or had a Chapter 13 bankruptcy which was discharged within the previous 2 years require manual downgrade and must be underwritten manually. Note that manual underwrites require Underwriting Management approval.

A borrower who is currently in a Chapter 13 bankruptcy may be eligible for FHA financing provided all of the following conditions are met in addition to standard manual underwriting requirements:


Foreclosure / Short Sale

A foreclosure less than 3 years ago is not allowed.

In all instances, the “date of foreclosure” is considered the date of the foreclosure deed. The end date of the time frame is determined by the application date.


Kentucky VA Loan Guidelines for Bankruptcy and Foreclosure

Chapter 7

Chapter 7 bankruptcy discharged more than 24 months prior to application date may be disregarded.

Chapter 7 bankruptcy discharged between 12 and 24 months prior to application date requires satisfactorily established credit and documentation showing the circumstances which caused the bankruptcy were beyond the borrower’s control (i.e. unemployment, medical bills not covered by insurance). In these instances, the file must be manually downgraded to a refer and manually underwritten. It falls upon the underwriter to make a final determination as to the overall quality of the file.

Chapter 7 bankruptcy discharged less than 12 months prior to application date is not allowed.

Note that for High Balance Transactions a minimum of 7 years must have elapsed since the discharge date regardless of AUS findings.

Chapter 13

The borrower’s credit history since the bankruptcy, the circumstances behind the bankruptcy, and the discharge date all factor in to the final determination by the underwriter.

A borrower who is currently in a Chapter 13 bankruptcy may be eligible for VA financing

Foreclosure / Short Sale

Foreclosure more than 36 months prior to application date may be disregarded.

Foreclosure less than 36 months prior to application date is not allowed.

Note that for High Balance Transactions a minimum of 7 years must have elapsed since the foreclosure date regardless of AUS findings.

In all instances, the “date of foreclosure” is considered the date of the foreclosure deed.

USDA Guidelines for Bankruptcy and Foreclosure 

Chapter 7

The Discharge date and GUS findings both play an important role in determining the viability and future repayment of the new loan. As such, Chapter 7 bankruptcy seasoning is evaluated by GUS.

Chapter 13

Loans where the borrower is currently in a Chapter 13 bankruptcy or had a Chapter 13 bankruptcy which was discharged within the previous 3 years require a manual downgrade and must be underwritten manually.

A borrower who is currently in a Chapter 13 bankruptcy may be eligible for RD financing provided all of the following conditions are met in addition to standard manual underwriting requirements:

• At least 12 months of payments have been made satisfactorily

• The Trustee or bankruptcy judge’s approval to enter into the mortgage transaction is documented

• Bankruptcy payments are included in the borrower’s debt ratio


Foreclosure / Short Sale

The foreclosure date and GUS findings both play an important role in determining the viability and future repayment of the new loan. As such, foreclosure seasoning is evaluated by GUS.

A foreclosure does not automatically disqualify a borrower from RD financing. In all instances, the “date of foreclosure” is considered the date of the foreclosure deed.

You can obtain a copy of your bankruptcy paperwork from the website below:

Bankruptcy Courts http://www.pacer.psc.uscourts.gov/

Joel Lobb (NMLS#57916)
Senior Loan Office

American Mortgage Solutions, Inc.

10602 Timberwood Circle Suite 3

Louisville, KY 40223

Company ID #1364 | MB73346

Text/call 502-905-3708

kentuckyloan@gmail.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#57916http://www.nmlsconsumeraccess.org/

— Some products and services may not be available in all states. Credit and collateral are subject to approval. Terms and conditions apply. This is not a commitment to lend. Programs, rates, terms and conditions are subject to change without notice. The content in this marketing advertisement has not been approved, reviewed, sponsored or endorsed by any department or government agency. Rates are subject to change and are subject to borrower(s) qualification.Posted by Joel Lobb, Mortgage Broker FHA, VA, KHC, USDA  Email ThisBlogThis!Share to TwitterShare to FacebookShare to PinterestLabels: 100% Financing, bad credit, bankruptcy, fico scores first time home buyer, foreclosure, Kentucky First Time Home buyer zero down payment

Kentucky Mortgage Broker Offering FHA, VA, USDA, Conventional, and KHC Down Payment Assistance Home Loans 500 credit score FHA loan, 580 credit score FHA, 620 credit score FHA loan, Bankruptcy, Chapter 13 Bankruptcy Guidelines, Collections Accounts, credit scores, credit scores FHA loan, Credit Scores/Credit Reports, Down payment assistance, down payment grant, employment, Employment Gaps, FHA, FHA Back to Work Program Ky, FHA Co-signors, fha mortgage insurance premiums, FHA Streamline Refinance, fico score, fico scores FHA loan, first time buyer, First Time Home Buyer, Gift funds, Grants And Down payment Assistance, Home Mortgage Rates Ky, Homeownership Assistance Programs: Kentucky, HUD Foreclosure, HUD HOMES $100 Down, HUD HOMES FOR SALE KENTUCKYK, HUD REO PROPERTIES ELIGIBLE FOR THE $100 DOWN PAYMENT, income, judgements, Kentucky FHA HUD Homes for $100 Down, Kentucky FHA Important Links, Kentucky Housing, Kentucky Mortgage Interest Rates, kentucky mortgage requirements, khc down payment assistance, KY FHA LOANS, Loan Limits for FHA, louisville ky fha seller contributions, mi changes for FHA, mortgage charge-offs, Refinance, rental income, Self Employed

How to qualify for a Kentucky FHA Home Loan ?

How to qualify for a Kentucky FHA Home Loan ?

Image result for fha loans ky

 

FHA stands for the Federal Housing Administration which is a government agency created to increase home-ownership across the United States all the way back in 1934. The agency itself doesn’t offer home loans but insures loan that are offered by private lenders (i.e. mortgage companies).

It’s important to understand the different types of loan programs available to you and what benefits and drawbacks there are to each type.

For example, if you’re looking to find a fixer upper this may not be the right loan program for you. But an FHA loan may be a better fit for you if you have little cash saved up for a down payment or if you don’t have a high credit score.

Kentucky FHA loan requirements:

  • At least 18 years old to apply
  • No age limit. just must be 18 years of age to apply.
  • Must occupy the home as a primary residence, no rental homes or investment property
  • An appraisal must be done by an FHA-approved appraiser.Typically FHA appraisal in Kentucky costs anywhere from low-end $325 to $525 with most FHA lenders in KY.
  • Home inspection is not required
  • Termite inspection not required
  • 2 years removed from Chapter 7 bankruptcy, and 1 year in Chapter 13 bankruptcy is possible to get a loan while in bankruptcy
  • Foreclosure or short sale on previous home mortgage requires 3 years removal from those dates.
  • Mortgage insurance (MIP) is required
  • Upfront Mortgage Insurance Premium is 1.75% and monthly mortgage insurance is .85% or .80% depending on loan term and loan to value.
  • Mortgage insurance is for life of loan.
  • No matter your credit scores, everyone pays the same mortgage insurance premiums.
  • Must have 2 years of employment history proving a reliable source of income
  • 500 FICO score requirement with at least 10% down payment
  • 580 FICO score requirement with at least 3.5% down payment
  • Gifts and down payment assistance programs are allowed to meet your down payment requirements. Cannot come from seller, but seller can contribute up to 6% of the sales price toward buyer’s closing costs and prepaids.
  • Student loan payments are factored into the debt-to-income ratio when applying. Typically if loans are deferred, or in an income=based repayment plan, the FHA underwriters will use 1% of the outstanding balance, which sometimes can make it difficult to qualify.
  • Your debt-to-income ratio must not be higher than 31% or total debt obligation cannot be higher than 43% of your current income. This is for a manual underwriter, meaning that if the AUS underwriting system by mortgage lenders will approve you for a higher debt to income ratio, that is fine.

 

 

 

Joel Lobb (NMLS#57916)
Senior  Loan Officer
American Mortgage Solutions, Inc.
10602 Timberwood Circle Suite 3
Louisville, KY 40223
Company ID #1364 | MB73346

Text/call 502-905-3708kentuckyloan@gmail.com

If you are an individual with disabilities who needs accommodation, or you are having difficulty using our website to apply for a loan, please contact us at 502-905-3708.

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#57916http://www.nmlsconsumeraccess.org/

— Some products and services may not be available in all states. Credit and collateral are subject to approval. Terms and conditions apply. This is not a commitment to lend. Programs, rates, terms and conditions are subject to change without notice. The content in this marketing advertisement has not been approved, reviewed, sponsored or endorsed by any department or government agency. Rates are subject to change and are subject to borrower(s) qualification.

FHA vs Conventional Infograhic
Kentucky Mortgage Broker Offering FHA, VA, USDA, Conventional, and KHC Down Payment Assistance Home Loans 500 credit score FHA loan, 580 credit score FHA, 620 credit score FHA loan, Bankruptcy, credit scores, credit scores FHA loan, Credit Scores/Credit Reports, FHA, FHA Guidelines, first time buyer kentucky, First Time Home Buyer, foreclosure, KY FHA LOANS

How long do you have to wait to get approved for a mortgage loan after a bankruptcy in Kentucky?

GETTING A MORTGAGE LOAN IN KENTUCKY WHEN YOU HAVE HAD A BANKRU
ARE YOU CURRENTLY IN A CHAPTER 13 BANKRUPTCY OR HAD A CHAPTER 7 BANKRUPTCY IN THE PAST?

Qualifying For A Kentucky Mortgage After Bankruptcy

Home Buyers can qualify for a Kentucky mortgage after bankruptcy:

  • 2 year waiting period to qualify for FHA Loan to qualify for a FHA Loans after discharge of Chapter 7.
  • One year into a Chapter 7 Bankruptcy to qualify for a Chapter Loan into a Chapter 13 Bankruptcy repayment plan.
  • No waiting period after a Chapter 13 Bankruptcy discharge date.
  • 4 year waiting period to qualify for a Chapter 7 Bankruptcy discharge date to qualify for a Conventional Loan.
  • Two year waiting period to qualify for a Chapter 13 after Chatper 13 discharged date to qualify for a Conventional Loan.
  • Four year waiting period to qualify for a Conventional Loan if you had a mortgage part of bankruptcy but the foreclosure needs to be be finalized

Bankruptcy Chart for FHA, VA, USDA and Fannie Mae Guidelines for Chapter 7, Chapter 13 and Foreclosure and Short Sale

Joel Lobb (NMLS#57916)
Senior  Loan Officer
 
American Mortgage Solutions, Inc.
10602 Timberwood Circle Suite 3
Louisville, KY 40223
Company ID #1364 | MB73346
 


Text/call 502-905-3708
kentuckyloan@gmail.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.

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