Category: FHA Guidelines

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Kentucky FHA Manual Underwriting: A Complete Guide

 

KENTUCKY FHA MORTGAGE MANUAL UNDERWRITING GUIDELINES FOR VA RESIDUAL INCOME

 

Kentucky FHA Mortgage Manual Undewriting Guidelines for FHA Mortgage Refer Eligible or Manual Downgrades

 

Continue reading “Kentucky FHA Manual Underwriting: A Complete Guide” →

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Kentucky FHA Appraisal Requirements For A Mortgage Loan Approval.

Kentucky FHA Appraisal Requirements For A Mortgage Loan Approval.
Kentucky FHA Appraisal Requirements For A Mortgage Loan Approval.
  • Ordered through a third party source. Interested/vested parties may not initiate the appraisal. I.E> buyers, sellers, realtors, loan officer, family members
  • Property must meet HUD’s minimum property standards. i.e.: permanent heat source, utilities must be on and in working order at time of inspection
  • Flips < 90 days – not allowed Per HUD -If current owner owned less than 90 days FHA will not insure. Sometimes a second appraisal will be required by FHA investor if sold within the last 6 months for a large profit. Receipts of work done may be needed to substantiate  increase in value of home in short-time period.
  • Transferred appraisal – ok
  • Appraisal valid 120 days – 30 day extension possible*
  • Property eligibility – No location restrictions.
  • New Construction Available
Kentucky FHA Appraisal Requirements For A Mortgage Loan Approval.
Kentucky FHA Appraisal Requirements For A Mortgage Loan Approval.

FHA MORTGAGE LOANS AND FLIPPING RULE FOR APPRAISALS
Resales Occurring 90 Days or Fewer after Acquisition:
 Not eligible for FHA financing
Resales occurring between 91 days and 180 Days after Acquisition:
 Obtain 2nd appraisal if resold between 91 to 180 days after acquisition
 Obtain 2nd appraisal if resale price is 100% or more over price paid by seller
 If 2nd appraisal is more than 5% lower than value of first appraisal, the lower value must be used
 Borrower not allowed to pay for 2nd appraisal
Exceptions to FHA Flipping Rules:
 Property purchased by an employer or relocation company due to relocation of an employee
 Resales by HUD – REO program
 Sales by other government agencies (i.e., IRS, court-ordered, DEA, etc.)
 Sales of non-profit agencies approved to purchase HUD properties
 Acquisition due to inheritance
 Sales of properties by federally chartered financial institutions
 Sales of properties by GSE’s
 Sales of properties by local or state governments
 Sales by builders selling a new home
 Sales of properties in federally declared disaster areas
NOTE: Mortgage Company must obtain a 12-month chain of title to document time restrictions above.
VA MORTGAGE AND FLIPPING RULE

 No Flipping Rules – Overlays may apply or at Underwriter’s discretion

 
USDA RURAL HOUSING MORTGAGE FLIPPING RULES
 Lender is responsible to ensure that any recently sold property’s value is strongly supported when a significant
increase between sale and purchase occurs.
 Lender must ensure that the appraisal value is supported with validated comps and protect the borrower from
predatory lending.

Fannie Mae Appraisal Flipping Rules
 No Flipping Rules – Lender overlays may apply
Freddie Mac
 No Flipping Rules – Lender overlays may apply

Applies to case numbers assigned on or after June 1, 2022

Updates the initial appraisal validity period from 120 days to 180 days from the effective date of the appraisal report;
Extends the appraisal update validity period from 240 days to one year from the effective date of the initial appraisal report;

Allows the appraisal update to be ordered AFTER an appraisal expires; and
Eliminates the optional 30-day extension.

✨This is big news for FHA ✨

The guideline change also puts FHA appraisal expirations on par with conventional loan expiration dates.

Kentucky FHA appraisals can take home buyers by surprise. That’s why we’ve put together some good-to-know info about the process. Feel free to use this to help educate your clients.

Joel Lobb
Senior  Loan Officer
(NMLS#57916)
text or call my phone: (502) 905-3708
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). Mortgage loans only offered in Kentucky.
All loans and lines are subject to credit approval, verification, and collateral evaluation and are originated by lender. Products and interest rates are subject to change without notice.






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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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Qualifying for an FHA Loan in Kentucky

FHA loans are a popular choice for many first-time homebuyers in Kentucky. This is due to their flexible qualifying criteria. If you’re considering an FHA loan in the Bluegrass State, understanding the key qualifying factors is crucial. Here’s a comprehensive guide to the criteria you need to know:

  1. Credit Score Requirements:
    • FHA loans are known for accommodating borrowers with lower credit scores. The minimum required credit score can vary. Typically, a credit score of 580 or higher is needed to qualify for the minimum down payment of 3.5%. Borrowers with credit scores between 500 and 579 might still qualify. They will need a higher down payment, usually around 10%.
  2. Down Payment:
    • The minimum down payment for an FHA loan in Kentucky is 3.5% of the home’s purchase price. This is advantageous for buyers who may not have substantial savings for a larger down payment, making homeownership more accessible.
  3. Work History:
    • Lenders typically look for a steady 2 year employment history when considering FHA loan applications. A consistent work history is beneficial. It is preferable to have worked with the same employer or within the same field. This helps demonstrate financial stability and the ability to repay the loan.
  4. Debt-to-Income Ratio (DTI):
    • The debt-to-income ratio is a crucial factor in mortgage approval. For FHA loans, the maximum allowable DTI ratio is typically around 40% to 45% of your gross monthly income. It can go higher up to 56% with good credit scores, a large down payment, or a shorter-term loan. Lenders may also consider higher ratios in certain cases if compensating factors are present.
  5. Bankruptcy and Foreclosure:
    • FHA loans have lenient guidelines regarding bankruptcy and foreclosure. Generally, borrowers with a past bankruptcy may qualify for an FHA loan after two years. This is possible if they have re-established good credit and demonstrated responsible financial behavior. For foreclosures, the waiting period is usually three years.
  6. Mortgage Term:
    • FHA loans offer various mortgage term options, including 15-year, 20 year, 25 year and 30-year fixed-rate loans. The choice of term depends on your financial goals and ability to manage monthly payments.
    • Occupancy: Primary residences with 1-4 units. Not for investment properties or second homes.
    • Mortgage Insurance on the loan for life of loan. Larger down payments and shorter terms will reduce the upfront mi and monthly mi premiums
    • can be used for refinances, not only for purchases.
    • Max FHA loan in Kentucky for 2025 is Kentucky FHA Loan Limits by County
      $524,225 1 unit
      $671,200 2 unit
      $811,275 3 unit
      $1,008,300 4 unit– This changes every year
    • No income limits nor property restrictions on where home is located
    • Can close within 30 days typically with good appraisal and title work

FHA Loan Requirements in Kentucky for Credit scores, Down payment, Debt Ratio and work history below

RequirementDetails
Credit Score– 580+: Eligible for a 3.5% down payment.
– 500-579: Requires a 10% down payment.
Down PaymentMinimum of 3.5% for qualified buyers; 10% for lower credit scores below 580 to 500 score range
Debt-to-Income Ratio (DTI)– Ideal: 45% or lower on front end ratio or housing ratio.
– Acceptable: Up to 57% with compensating factors. There are two ratios. Front end and back end with front end being maxed at 45% and the backed end ratio being 56.99% with an AUS approval. If manually underwritten, see guidelines here
Employment HistoryMust provide at least **2 years of consistent employment—College transcripts can supplement with a less than 2 year work history

Key Benefits of FHA Loans in Kentucky

  1. Low Credit Score Requirements
    • FHA loans accept borrowers with credit scores as low as 500. However, a score of 580+ qualifies you for the lowest down payment option.
  2. Low Down Payment Options
    • You can purchase a home with as little as 3.5% down if you meet credit requirements, making FHA loans more accessible than conventional loans.
  3. Competitive Interest Rates
    • FHA loans typically offer rates comparable to conventional mortgages. They may even offer lower rates. This could save you money over the life of the loan.
  4. Flexible Loan Uses
    • With an FHA 203(k) loan, you can bundle home purchase and renovation costs into a single mortgage.
  5. Assumable Loans
    • FHA loans can be transferred to a new buyer. This feature is especially valuable if you sell your home when interest rates are higher.

Understanding these qualifying criteria can help you navigate the FHA loan application process in Kentucky more effectively. Working with an experienced mortgage professional can provide valuable guidance. They offer assistance tailored to your specific financial situation and homeownership goals.

Joel Lobb  Mortgage Loan Officer

Any questions, please don’t hesitate to reach out via, text, email,  or call.  Advice is always free. 
 
One of Kentucky’s highest rated mortgage loan officers for FHA, VA, USDA, Kentucky Housing KHC and conventional mortgage loans.  
1 – 📅 Email – kentuckyloan@gmail.com 
2.  📞 Call/Text – 502-905-3708
 

Joel Lobb
Mortgage Loan Officer – Expert on Kentucky Mortgage Loans


🌐 Website: www.mylouisvillekentuckymortgage.com
🏢 Address: 911 Barret Ave., Louisville, KY 40204

Evo Mortgage
Company NMLS# 1738461
Personal NMLS# 57916

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

Kentucky Local Home Loan Lender Services

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

 

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.
(www.nmlsconsumeraccess.org).


Kentucky First Time Homebuyers FHA, VA, USDA & Rural Housing, KHC and Fannie Mae mortgage loans
 
Kentucky Mortgage Broker Offering FHA, VA, USDA, Conventional, and KHC Down Payment Assistance Home Loans Down payment assistance, down payment grant, FHA, FHA Guidelines, Identity of Interest Transactions, KY FHA LOANS

What does Identity Of Interest mean for FHA Loans?

Does FHA Restrict down payment requirements on Identity of Interest Transactions?

The 85 percent maximum LTV restriction does not apply for Kentucky FHA Loans in regards to FHA Identity-of-Interest transactions under the following circumstances:

👇👇👇

FAMILY MEMBER TRANSACTIONS•  the principal residence of another family member; or  a property owned by another family member in which the borrower has been a tenant for at least six months immediately predating the sales contract. A lease or other written evidence to verify occupancy is required.

BUILDER’S EMPLOYEE PURCHASE• An employee of a builder, who is not a family member, purchases one of the builder’s new houses or models as a principal residence.

CORPORATE TRANSFER • A corporation transfers an employee to another location, purchases the employee’s house, and sells the house to another employee.

TENANT PURCHASE• the current tenant purchases the property where the tenant has rented the property for at least six months immediately predating the sales contract. A lease or other written evidence to verify occupancy is required.

Source: FHA Handbook 4000.1

What You Need To Know About Identity Of Interest Transactions
What You Need To Know About Identity Of Interest Transactions

 
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Louisville, KY 40223
 


Text/call 502-905-3708
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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/
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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

Kentucky Mortgage Broker Offering FHA, VA, USDA, Conventional, and KHC Down Payment Assistance Home Loans FHA Approved Condo Kentucky, FHA Co-signors, FHA Guidelines, FHA LOAN FLOOD INSURANCE KENTUCKY, fha mortgage insurance premiums, FHA Refund Upfront MIP, FHA Streamline Refinance, fico scores FHA loan, flipping guidelines FHA loans, FORBEARANCES FOR KENTUCKY FHA LOANS, job gaps FHA Kentucky Loan, Kentucky FHA HUD Homes for $100 Down, Kentucky FHA Important Links, KY FHA LOANS

How to Qualify for an FHA Mortgage Loan in Kentucky: A Guide for First-Time Homebuyers

There are many ways to get the mortgage to buy your first home. The FHA is one option. If you are a first-time homebuyer in Kentucky, an FHA loan could be the perfect option for you. There are many flexible requirements, low down payments, and financial assistance options available. These are just a few of the many things that can help make homeownership more accessible.

What is an FHA Loan?

An FHA loan is a government-backed mortgage insured by the Federal Housing Administration (FHA). It’s designed for low-to-moderate-income borrowers, offering relaxed qualification standards compared to conventional loans. Here are the main advantages:

  • Low down payment: As little as 3.5% of the purchase price.
  • Lower credit score requirements: Minimum score of 500 with 10% down or 580 with 3.5% down.
  • Seller-paid closing costs: Sellers can contribute up to 6% of the purchase price.
  • Flexible qualifying criteria: Higher debt-to-income (DTI) ratios and options for non-occupant co-signers.

How to Qualify for a Kentucky FHA Loan

1. Credit Score Requirements

  • 580 or higher: You’ll need a minimum credit score of 580 to qualify for the 3.5% down payment option.
  • 500-579: You can still qualify with a 10% down payment, but many lenders prefer a score of 580 or higher.
  • Bankruptcy or Foreclosure:
    • Chapter 7 bankruptcy: Must be 2 years removed, with good credit since.
    • Chapter 13 bankruptcy: Can qualify after 1 year of on-time payments with trustee approval.
    • Foreclosure: Must be 3 years removed, unless there are extenuating circumstances.

2. Income and Debt-to-Income Ratio

  • DTI ratio: Typically, up to 45%% of your income can go toward your mortgage payment, and up to 56.9% can go toward all debts, depending on your credit and financial history.
  • Work history: You must have a stable employment history of at least 2 years in the same field. Recent graduates can use college transcripts as a substitute.

3. Down Payment and Gift Options

  • 3.5% down payment: This can be gifted by a family member, employer, or nonprofit organization, drawn off a retirement account like a 401k or money saved up.
  • Cash deposits: Cash cannot be used as proof of funds for your down payment—only traceable sources are allowed.

4. Property Requirements

  • Must be your primary residence. FHA loans are not for investment properties or second homes.
  • Eligible property types: Single-family homes, townhomes, condos (must be approved condo development on HUD approved list), duplexes, and some manufactured homes (if affixed to a permanent foundation).
  • Appraisal: The property must be appraised by an FHA-approved appraiser to meet HUD standards.

5. Mortgage Insurance Premium (MIP)

  • Upfront MIP: 1.75% of the loan amount, which can be rolled into the loan.
  • Annual MIP: 0.45%-1.05% of the loan amount, depending on the down payment and loan term.

Kentucky FHA Loan Limits for 2025

In all Kentucky counties, the FHA loan limit is $524,225 for a single-family home up to $1,008,300 for a four-unit property

Why Choose an FHA Loan as a Kentucky First-Time Buyer?

Pros

  • Lower credit thresholds: You can qualify with a credit score as low as 500.
  • Smaller down payments: With as little as 3.5% down with a 580 credit score
  • Seller-paid costs: The seller can pay a significant portion of your closing costs.
  • Higher debt to income ratios
  • Lenient on past bankruptcies and foreclosures.

Cons

  • Mortgage insurance: You’ll pay MIP for the life of the loan if your down payment is less than 10%.
  • Property requirements: Homes must meet specific standards, which may limit your options.
  • a lot of sellers will not accept an FHA mortgage as a offer due to property may need work to meet FHA HUD minimum standards
  • Purchase price limits and only can be used for primary residence

FHA Loans vs. Conventional Loans

Feature FHA Loan Conventional Loan
Credit Score 500+ 620+
Down Payment 3.5% (580+ credit score) 3%-20%
Mortgage Insurance Required for life of loan Can be removed at 20% equity
Debt-to-Income Ratio Up to 55% Up to 45%
Property Standards Strict requirements More flexibility

Other Kentucky First-Time Homebuyer Programs

1. Kentucky Housing Corporation (KHC)

  • Down payment assistance up to $10,000.
  • Tax credit programs for first-time buyers.

2. USDA Loans

  • Zero-down-payment option for eligible rural areas.
  • Minimum credit score of 620-640 preferred.

3. VA Loans

  • No down payment or private mortgage insurance required for eligible veterans. No minimum credit score, higher debt to income ratios allowed and no monthly mortgage insurance and low 30 year fixed rates

Need Help Getting Approved for an FHA Loan in Kentucky?

As an experienced mortgage loan officer specializing in FHA loans for Kentucky first-time homebuyers, I’m here to guide you every step of the way.

Contact Me Today:

Joel Lobb
Mortgage Loan Officer – Expert on Kentucky Mortgage Loans

Website: www.mylouisvillekentuckymortgage.com
Address: 911 Barret Ave., Louisville, KY 40204

Evo Mortgage
Company NMLS# 1738461
Personal NMLS# 57916

Equal Housing Lender

www.nmlsconsumeraccess.org

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

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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 $100 down FHA program, 500 credit score FHA loan, 580 credit score FHA, 620 credit score FHA loan, annual mortgage insurance premiums fha, Appraisers FHA, back to work program FHA KY, bad credit fha loans Kentucky, bankruptcy fha, usda, va, conventional loan, bonus income fha loan, conventional loans vs FHA loans, credit scores FHA loan, FHA, FHA Announces COVID-19 Temporary Guidance for Kentucky FHA Mortgage Loans, FHA Approved Condo Kentucky, FHA Back to Work Program Ky, FHA Co-signors, FHA Guidelines, FHA LOAN FLOOD INSURANCE KENTUCKY, fha mortgage insurance premiums, FHA Refund Upfront MIP, FHA Streamline Refinance, fico scores FHA loan, flipping guidelines FHA loans, FORBEARANCES FOR KENTUCKY FHA LOANS, job changes fha, job gaps FHA Kentucky Loan, job history FHA loan, KY FHA LOANS, Loan Limits for FHA, work history requirements FHA

Kentucky FHA Mortgage Changes on Gifts and Deposits for Mortgage Loan Approval

 
Exciting news on Kentucky FHA guidelines. No more donor bank statements.
The second concerns large deposits. FHA now follows conventional guidelines; a large deposit is over 50% of qualifying income.
 
 
Kentucky FHA Mortgage has announced changes to its guidelines for gifts and deposits for mortgage loan approval.The two changes are: 1) Donor bank statements are no longer required. 2) FHA now follows conventional guidelines for large deposits; a large deposit is over 50% of qualifying income.Kentucky FHA Mortgage Changes on Gifts and Deposits for Mortgage Loan Approval
 
Kentucky FHA Mortgage has announced changes to its guidelines for gifts and deposits for mortgage loan approval.The two changes are: 1) Donor bank statements are no longer required. 2) FHA now follows conventional guidelines for large deposits; a large deposit is over 50% of qualifying income.Kentucky FHA Mortgage Changes on Gifts and Deposits for Mortgage Loan Approval
 
 
 
Kentucky FHA Mortgage has announced changes to its guidelines for gifts and deposits for mortgage loan approval.The two changes are: 1) Donor bank statements are no longer required. 2) FHA now follows conventional guidelines for large deposits; a large deposit is over 50% of qualifying income.Kentucky FHA Mortgage Changes on Gifts and Deposits for Mortgage Loan Approval
Kentucky FHA Mortgage has announced changes to its guidelines for gifts and deposits for mortgage loan approval.The two changes are: 1) Donor bank statements are no longer required. 2) FHA now follows conventional guidelines for large deposits; a large deposit is over 50% of qualifying income.Kentucky FHA Mortgage Changes on Gifts and Deposits for Mortgage Loan Approval

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: joel@loansolutionsnow.com

http://www.mylouisvillekentuckymortgage.com/

 

 

 
NMLS 57916  | Company NMLS #1364/MB73346135166/MBR1574
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Kentucky FHA Loans: Your Complete Guide to FHA Loans in Kentucky

 

Are you considering a home purchase in Kentucky ? If so, then a Kentucky FHA loan might be for you. This Kentucky FHA Mortgage  guide will provide you with all the FHA loan information you need to buy a home in Kentucky using the FHA loan program

What Is A Kentucky FHA Loan?

If you’re looking to buy a home but have limited funds for a down payment or a lower credit score, then an Kentucky  FHA loan might be a good option for you. This is a type of a  Kentucky mortgage insured by the Federal Housing Administration (FHA), which allows Kentucky FHA  lenders to be more flexible with their requirements for borrowers who may not meet traditional criteria. 

How do Kentucky FHA loans work?

KEntucky FHA loans are a government-backed program which makes homeownership more accessible through more lenient lending requirements. With an FHA loan, a borrower could put down as little as 3.5% if their credit score is at least 580, or 10% if their credit score is at least 500. Nevertheless, there is a trade-off; regardless of the amount you put down, there is a requirement to pay for mortgage insurance upfront and monthly  premiums and it is for life of loan 

The FHA collects a one-time upfront mortgage insurance premium (UFMIP). This premium needs to be entirely financed into the mortgage or paid in full at closing. Additionally, there is an annual mortgage insurance premium, also called monthly MIP, which is collected in monthly installments.

The annual mortgage insurance amount depends on factors such as the loan-to-value ratio (LTV), down payment size, and mortgage term length. Lenders calculate the annual payment as a percentage of the base loan value.

 
 

Benefits Of Kentucky FHA Loan 

There are several key benefits that make Kentucky FHA loans an attractive option. Here are a few of the benefits: 

  • Low to zero down Down Payments: FHA loans are designed to help borrowers with limited funds for down payments. Specifically, if your credit score is above 580, you could qualify for a down payment of 3.5%.  
  • Flexible Credit Requirements: FHA loans have lower credit score requirements compared to conventional loans. Even with a credit score as low as 500, you may qualify with a 10% down payment. 
  • Lower Debt-to-Income Ratio (DTI): Compared to conventional loans, FHA loans typically allow borrowers with higher levels of debt to still qualify by allowing a higher Debt-to-Income Ratio (DTI). 
  • Gift Funds and Grants: You could leverage gift funds and grants from family or approved organizations to contribute towards your down payment.  

Kentucky FHA Loan Requirements 

To be eligible for an Kentucky FHA loan there are some specific requirements you must meet. Here is an overview of these requirements:   

FHA Loan Down Payment  

The amount you’ll need to pay as a down payment on an FHA loan depends on your credit score. If your credit score is 580 or higher, then you could pay as little as 3.5% of the loan amount. However, if your credit score falls between 500 and 579, you’ll need to pay a larger down payment of 10%. If you’re short on funds, there are several DPA programs available which could help for Kentucky Homebuyers with zero down payments to get into a house.! 

Kentucky FHA Mortgage Insurance Premiums 

All FHA borrowers, no matter how much of a down payment they make, must purchase both upfront and annual mortgage insurance. 

What does Kentucky FHA mortgage insurance cover on your home loan? 

Kentucky FHA mortgage insurance protects lenders in case you, the borrower, default on your mortgage. This allows lenders to offer FHA loans with lower down payments and potentially less strict credit score requirements. Essentially, it mitigates the lender’s risk, making Kentucky FHA loans more accessible to first-time homebuyers or those with limited savings. 

How much is FHA mortgage insurance? 

FHA mortgage insurance has two components – an upfront premium and an annual premium. The upfront premium is a one-time payment that you need to make at the time of loan closing, and it amounts to 1.75% of the loan amount. 

On the other hand, the annual premium is a recurring cost that you need to pay as a part of your monthly mortgage payment. The amount of the annual premium may vary depending on factors such as the loan term, loan amount, and loan-to-value ratio (LTV). 

Oftentimes, with credit improvement and an increase in home equity (at least 80% loan-to-value), borrowers with FHA loans opt to refinance to a conventional loan program. This helps eliminate the monthly mortgage insurance premium portion of the monthly mortgage payment. 

How To Calculate Kentucky FHA Mortgage Insurance 

To calculate your Kentucky  FHA Mortgage Insurance, you can either use the HUD Calculator or follow these simple steps using your specific information: 

  1. Determine the amount of your loan. 
  2. Calculate your loan-to-value (LTV) ratio by dividing the loan amount by the appraised value of the home. 
  3. Find the annual MIP rate based on your LTV ratio and loan term. You can find this information on the HUD website
  4. Multiply the loan amount by the annual MIP rate to get the annual MIP amount. 

 

Can I remove KEntucky FHA mortgage insurance? 

If you have an FHA loan, you can’t remove the Mortgage Insurance Premium (MIP) as easily as you can with Private Mortgage Insurance (PMI). To remove MIP from your FHA loan, you could refinance into a Conventional Loan. Once your home has at least 20% equity, you typically won’t have to pay PMI with a conventional loan. 

Kentucky FHA Minimum Credit Score 

 To qualify for an Kentucky FHA loan, your FICO credit score needs to be at least 580. IF below 580, you will need 10% down payment and few lenders will do this honestly so it is best to raise your score above 580

Kentucky  FHA Mortgage Debt to Income Ratios 

Your debt-to-income ratio is the percentage of your gross income used to cover your mortgage and other debt payments. 

Debt to income  ratio for FHA loans is 3o to 45%  on the front end although this may vary based on your credit score and may go up to 57% with an AUS approval though Fannie Mae DO or Freddie Mac LP underwriting system. 

Calculating Your DTI for kentucky FHA Mortgage 

To calculate your Debt-to-Income Ratio (DTI) you could either use our mortgage calculator or follow these simple steps:  

  1. Add up all your monthly debt payments, including car loans, student loans, credit card debt, and the estimated monthly mortgage payment for the FHA loan you are considering. 
  1. Calculate your pre-tax gross monthly income. 
  1. Once you have these numbers, use the following formula to calculate your DTI Ratio: DTI Ratio = Total Monthly Debt Payments / Gross Monthly Income. 

Kentucky FHA Loan Income Requirements 

Kentucky HA loans don’t have any specific minimum or maximum income requirements.

 
 

Kentucky FHA Loan Limits 

The maximum amount you can borrow on an FHA loan (which is set by The Federal Housing Administration)  As of May 2024, the Federal Housing Administration (FHA) loan limits for single-family homes in Kentucky are $498,257

Kentucky FHA Mortgage Rates 

Kentucky FHA loans typically have lower interest rates than conventional loans but inline with other government backed loans like Kentucky VA and USDA loans . This is because the Federal Housing Administration (FHA) or HUD , which manages the FHA loan program in Kentucky , insures these mortgages. This insurance protects private lenders from the risk of borrower default, which enables them to offer lower rates with a government guarantee if loan defaults

Types Of Kentucky FHA Loans 

 FHA loans available, each with unique requirements and benefits. Here are some of the most common options. 

Home Purchase  

Kentucky FHA loans are commonly used to finance the purchase of a single-family house, townhouse, or condominium, 2-4 units homes in Kentucky. 

FHA Rate Term Refinance 

A Kentucky FHA Rate Term Refinance enables you to refinance your current Kentucky FHA loan and potentially obtain a lower interest rate or adjust the loan term.  

Kentucky FHA Streamline Refinance

The Kentucky FHA Streamline option allows refinancing without an appraisal, providing a fast and simple process for borrowers with existing FHA-insured mortgages that can reduce closing costs due to not having to do an appraisal and skipping a lot of verifications that was done when you use the FHA loan the first time to buy the house. 

Kentucky FHA Cash Out Refinance  

An Kentucky FHA Cash Out Refinance allows you to leverage the equity you’ve built up in your home by letting you finance up to 80% of the home’s value to use the cash home equity –Refinance must be in a 1st lien position due to FHA does not allow for second mortgages

Kentucky FHA Cash Out Refinance 

These loans cater to homebuyers interested in purchasing a fixer upper. FHA 203k loans combine financing for both the purchase and renovation of a property, allowing you to roll renovation costs into your mortgage payment. This eliminates the need for a separate renovation loan, simplifying the financing process. 

Kentucky FHA 100% Financing 

This program provides homebuyers with 100% financing for Kentcky FHA loans, without requiring a down payment (closing costs are still required). This is achieved through a combination of a 1st and 2nd mortgage. 

This DPA program through KHC, 5% grant, and 3.5% grant from Federal Agency  can be used to obtain an FHA loan. The 2nd mortgage can be up to 3.5% of the sales price or the appraised value, whichever is less. The term for the 2nd mortgage is 10 years. 

Kentucky FHA vs Kentucky  Conventional Loan 

Kentucky FHA and Kentucky conventional loans are two popular options for financing a home. Nevertheless, there are some differences between the two

Kentucky FHA loans are provided by lenders approved by the Federal Housing Administration and guaranteed by the government. These loans usually have more relaxed eligibility requirements compared to conventional loans, and FHA loans may require smaller down payments. However, you will need to pay mortgage insurance premiums (MIPs) for at least 11 years, or the full term of the loan. 

On the other hand, conventional loans are not backed by any government agency and may have stricter lending standards. They may require larger down payments than FHA loans, and if you provide less than 20% as a down payment, you will have to pay for private mortgage insurance (PMI). However, you can request to cancel PMI when your balance reaches 80% of the original home value. 

How To Apply For A Kentucky FHA Loan 

 

Find an approved- FHA Lender in Kentucky 

To apply for an Kentucky FHA loan,  contact me below 


Text/call: 502-905-3708
fax: 502-327-9119
email: kentuckyloan@gmail.com

http://www.mylouisvillekentuckymortgage.com/

Documents Needed for a FHA loan in Kentucky

Kentucky FHA Mortgage Application Checklist of Documents Needed below 👇

W-2 forms (previous 2 years)
Paycheck stubs (last 30 days – most current)
Employer name and address with phone number to verify employment (2 year history including any gaps)
Bank accounts statement (recent 2 months – all pages
Statements for 401(k)s, stocks and other investments (most recent)
federal tax returns (previous 2 years)
Residency history (2 year history)
Photo identification for applicant and co-applicant (valid Driver’s License

Can You Have Two Kentucky FHA Loans at One Time?

 
 
FHA will not insure more than one Property as a Principal Residence for any Borrower, except as noted below. FHA will not insure a Mortgage if it is determined that the transaction was designed to use FHA mortgage insurance as a vehicle for obtaining Investment Properties, even if the Property to be insured will be the only one owned using FHA mortgage insurance.

Properties previously acquired as Investment Properties are not subject to these restrictions.

Listed below are the only circumstances in which a Borrower with an existing FHA-insured Mortgage for a Principal Residence may obtain an additional FHA-insured Mortgage on a new Principal Residence:

RELOCATION – A Borrower may be eligible to obtain another FHA-insured Mortgage without being required to sell an existing Property covered by an FHA-insured Mortgage if the Borrower is:
– relocating or has relocated for an employment-related reason; and
– establishing or has established a new Principal Residence in an area more than 100 miles from the Borrower’s current Principal Residence.

If the Borrower moves back to the original area, the Borrower is not required to live in the original house and may obtain a new FHA-insured Mortgage on a new Principal Residence provided the relocation meets the two requirements above.

INCREASE IN FAMILY SIZE – A Borrower may be eligible for another house with an FHA-insured Mortgage if the Borrower provides satisfactory evidence that:
– the Borrower has had an increase in legal dependents and the Property now fails to meet family needs; and
– the Loan-to-Value (LTV) ratio on the current Principal Residence is equal to or less than 75% or is paid down to that amount, based on the outstanding Mortgage balance and a current residential appraisal.
  
VACATING A JOINTLY-OWNED PROPERTY – A Borrower may be eligible for another FHA-insured Mortgage if the Borrower is vacating (with no intent to return) the Principal Residence which will remain occupied by an existing co-Borrower.

NON-OCCUPYING CO-BORROWER – A non-occupying co-Borrower on an existing FHA-insured Mortgage may qualify for an FHA-insured Mortgage on a new Property to be their own Principal Residence.

Can you buy a Kentucky duplex with an Kentucky FHA loan? 

FHA loans are a great way to finance the purchase of a duplex. Remember, you must live in one of the units as your primary residence for at least one year in order to be eligible for an FHA loan. This requirement is in place because FHA loans are intended to help people buy homes they will live in, not as investment home opportunities. Buying a duplex allows you to earn rental income while also enjoying the experience of being a homeowner. 

Can you get an Kentucky FHA loan twice? 

 
 
FHA will not insure more than one Property as a Principal Residence for any Borrower, except as noted below. FHA will not insure a Mortgage if it is determined that the transaction was designed to use FHA mortgage insurance as a vehicle for obtaining Investment Properties, even if the Property to be insured will be the only one owned using FHA mortgage insurance.

Properties previously acquired as Investment Properties are not subject to these restrictions.

Listed below are the only circumstances in which a Borrower with an existing FHA-insured Mortgage for a Principal Residence may obtain an additional FHA-insured Mortgage on a new Principal Residence:

RELOCATION – A Borrower may be eligible to obtain another FHA-insured Mortgage without being required to sell an existing Property covered by an FHA-insured Mortgage if the Borrower is:
– relocating or has relocated for an employment-related reason; and
– establishing or has established a new Principal Residence in an area more than 100 miles from the Borrower’s current Principal Residence.

If the Borrower moves back to the original area, the Borrower is not required to live in the original house and may obtain a new FHA-insured Mortgage on a new Principal Residence provided the relocation meets the two requirements above.

INCREASE IN FAMILY SIZE – A Borrower may be eligible for another house with an FHA-insured Mortgage if the Borrower provides satisfactory evidence that:
– the Borrower has had an increase in legal dependents and the Property now fails to meet family needs; and
– the Loan-to-Value (LTV) ratio on the current Principal Residence is equal to or less than 75% or is paid down to that amount, based on the outstanding Mortgage balance and a current residential appraisal.
  
VACATING A JOINTLY-OWNED PROPERTY – A Borrower may be eligible for another FHA-insured Mortgage if the Borrower is vacating (with no intent to return) the Principal Residence which will remain occupied by an existing co-Borrower.

NON-OCCUPYING CO-BORROWER – A non-occupying co-Borrower on an existing FHA-insured Mortgage may qualify for an FHA-insured Mortgage on a new Property to be their own Principal Residence.

. 

Are Kentucky FHA loans assumable? 

 

Assumable Mortgages are a type of financing arrangement in which the outstanding mortgage and its terms can be transferred from the current owner to a buyer.
 
By assuming the previous owner’s remaining debt, the buyer can avoid having to obtain his or her own mortgage. Buyers are typically attracted to homes with existing assumable mortgages during times of rising interest rates. This is because they can assume the seller’s mortgage, which was created when interest rates were lower, and use it to finance their purchase.
 
If the home’s purchase price exceeds the mortgage balance by a significant amount, the buyer will either need to provide a sizable down payment or obtain a new mortgage anyway.
 
For example, if a buyer is purchasing a home for $250,000, and the seller’s assumable mortgage only has a balance of $110,000, the buyer would need a down payment of $140,000 to cover the difference, or would have to get a separate mortgage to secure the needed funds.

fha assumable homes in louisville

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/MBR1574The 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).