Louisville Kentucky FHA Mortgage Loans for Purchases and Refinance
Call/Text: 502-905-3708
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.
Below are Kentucky FHA guidelines for a property that has well water and septic tanks for waste disposal . The Kentucky FHA appraiser should be able to address the distance between the well and septic for distance requirements, and comment if public sewers are available.
Well water test will be required as a closing condition. FHA mortgages loans in Kentucky require a septic inspection unless the appraiser mentions it is necessary.
(O) Water Supply Systems in Kentucky
(1) Public Water Supply System The Mortgagee must confirm that a connection is made to a public or Community Water System whenever feasible and available at a reasonable cost. If connection costs to the public or community system are not reasonable, the existing onsite systems are acceptable, provided they are functioning properly and meet the requirements of the local health department.
(2) Individual Water Supply Systems (Wells) When an Individual Water Supply System is present, the Mortgagee must ensure that the water quality meets the requirements of the health authority with jurisdiction. If there are no local (or state) water quality standards, then water quality must meet the standards set by the EPA, as presented in the National Primary Drinking Water regulations in 40 CFR §§ 141 and 142. Soil poisoning is an unacceptable method for treating termites unless the Mortgagee obtains satisfactory assurance that the treatment will not endanger the quality of the water supply. Requirements for the location of wells for FHA-insured Properties are located in 24 CFR § 200.926d (f) (3). The following tables provide the minimum distance required between wells and sources of pollution for Existing Construction:
| Individual Water Supply System for Minimum Property Requirements for Existing Construction* |
|
| 1 | Property line/10 feet |
| 2 | Septic tank/50 feet |
| 3 | Drain field/100 feet |
| 4 | Septic tank drain field reduced to 75 feet if allowed by local authority |
| 5 | If the subject Property line is adjacent to residential Property then local well distance requirements prevail. If the subject Property is adjacent to non-residential Property or roadway, there needs to be a separation distance of at least 10 feet from the property line. |
| * distance requirements of local authority prevail if greater than stated above | |
The following provides the minimum requirements for water wells:
| Water Wells Minimum Property Standards for New Construction 24 CFR § 200.926d(f)(1) |
|
| 1 | Lead-free piping |
| 2 | If no local chemical and bacteriological water standards, state standards apply |
| 3 | Connection of public water whenever feasible |
| 4 | Wells must deliver water flow of five gallons per minute over at least a four-hour period |
| Water Wells Minimum Property Requirements for Existing Construction | |
| 1 | Existing wells must deliver water flow of three to five gallons per minute |
| 2 | No exposure to environmental contamination |
| 3 | Continuing supply of safe and potable water |
| 4 | Domestic hot water |
| 5 | Water quality must meet requirements of local jurisdiction or the EPA if no local standard |
Shared WellsThe Mortgagee must confirm that a Shared Well:
For both proposed and existing Properties, the Mortgagee must ensure that the shared well agreement complies with the guidance provided in the following table.
| Item | Provisions that must be reflected in any acceptable shared well agreement include the following: |
| 1 | Require that the agreement is binding upon signatory parties and their successors in title, recorded in local deed records when executed and recorded, and reflects joiner by any Mortgagee holding a Mortgage on any Property connected to the Shared Well. |
| 2 | Permit well water sampling and testing by the local authority at the request of any party at any time. |
| 3 | Require that corrective measures be implemented if testing reveals a significant water quality deficiency, but only with the consent of a majority of all parties. |
| 4 | Ensure continuity of water service to “supplied” parties if the “supplying” party has no further need for the shared well system. (“Supplied” parties normally should assume all costs for their continuing water supply.) |
| 5 | Prohibit well water usage by any party for other than bona fide domestic purposes. |
| 6 | Prohibit connection of any additional living unit to the shared well system without:· the consent of all parties;
· the appropriate amendment of the agreement; and · compliance with item 3. |
| 7 | Prohibit any party from locating or relocating any element of an individual sewage disposal system within 75 feet (100 feet for Proposed Construction) of the Shared Well. |
| 8 | Establish Easements for all elements of the system, ensuring access and necessary working space for system operation, maintenance, improvement, inspection and testing. |
| 9 | Specify that no party may install landscaping or improvements that will impair use of the Easements. |
| 10 | Specify that any removal and replacement of preexisting site improvements, necessary for system operation, maintenance, replacement, improvement, inspection or testing, will be at the cost of their owner, except for costs to remove and replace common boundary fencing or walls, which must be shared equally between or among parties. |
| 11 | Establish the right of any party to act to correct an emergency in the absence of the other parties onsite. An emergency must be defined as failure of any shared portion of the system to deliver water upon demand. |
| 12 | Permit an agreement amendment to ensure equitable readjustment of shared costs when there may be significant changes in well pump energy rates or the occupancy or use of an involved Property. |
| 13 | Require the consent of a majority of all parties upon cost sharing, except in emergencies, before actions are taken for system maintenance, replacement or improvement. |
| 14 | Require that any necessary replacement or improvement of a system element(s) will at least restore original system performance. |
| 15 | Specify required cost sharing for:· the energy supply for the well pump;
· system maintenance, including repairs, testing, inspection and disinfection; · system component replacement due to wear, obsolescence, incrustation or corrosion; and · system improvement to increase the service life of a material or component to restore well yield or to provide necessary system protection. |
| 16 | Specify that no party is responsible for unilaterally incurred shared well debts of another party, except for correction of emergency situations. Emergency correction costs must be equally shared. |
| 17 | Require that each party be responsible for:· prompt repair of any detected leak in this water service line or plumbing system;
· repair costs to correct system damage caused by a resident or guest at their Property; and · necessary repair or replacement of the service line connecting the system to the dwelling. |
| 18 | Require equal sharing of repair costs for system damage caused by persons other than a resident or guest at a Property sharing the well. |
| 19 | Ensure equal sharing of costs for abandoning all or part of the shared system so that contamination of ground water or other hazards will be avoided. |
| 20 | Ensure prompt collection from all parties and prompt payment of system operation, maintenance, replacement or improvement costs. |
| 21 | Specify that the recorded agreement may not be amended during the term of a federally-insured or -guaranteed Mortgage on any Property served, except as provided in items 5 and 11 above. |
| 22 | Provide for binding arbitration of any dispute or impasse between parties with regard to the system or terms of agreement. Binding arbitration must be through the American Arbitration Association or a similar body and may be initiated at any time by any party to the agreement. Parties to the agreement must equally share arbitration costs. |
|
Joel Lobb
Mortgage Broker – FHA, VA, USDA, KHC, Fannie Mae
EVO Mortgage • Helping Kentucky Homebuyers Since 2001
|
 Call/Text: 502-905-3708 Email: kentuckyloan@gmail.com Website: www.mylouisvillekentuckymortgage.com  Address: 911 Barret Ave, Louisville, KY 40204NMLS #57916 | Company NMLS #1738461 |
| Free Info & Homebuyer Advice → |
|
Kentucky Mortgage Loan Expert
FHA | VA | USDA | KHC Down Payment Assistance | Fannie Mae
Equal Housing Lender. This is not a commitment to lend. All loans are subject to credit approval and program requirements.
|
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.
What credit score do you need to qualify for a Kentucky FHA loan? Straight talk: the Federal Housing Administration (FHA) requires a minimum credit score of 500 to be eligible. However, your final terms depend on your score and your lender’s additional requirements (known as overlays).
There are two layers of approval you must clear:
Lenders add overlays to manage risk. Even if you meet FHA’s minimums, lenders evaluate:
In practice, most FHA approvals fall in the 600–699 range. Lower-score approvals (500–579) are possible but typically carry higher down payments, stricter DTI limits, and sometimes higher rates.
If you’re below 580, you have tactical options:
Meet FHA’s minimum of 500 to be eligible, but 580 or higher is the practical target to get the best terms (3.5% down and competitive rates). Your lender’s overlay will often be the deciding factor — so work with a lender who understands Kentucky’s market and can help you position your application.
Get pre-approved — Start your free applicationYour Trusted Kentucky Mortgage Expert
I specialize in assisting Kentucky First-Time Homebuyers with mortgage loans, including FHA, VA, USDA & Rural Housing, KHC (Kentucky Housing Corporation), and Fannie Mae programs. With over 20 years of experience in the mortgage industry, I’ve helped more than 1,300 Kentucky families achieve their dream of homeownership or refinance their current mortgages to secure lower payments.
Whether you’re a first-time buyer or looking to refinance, I am here to guide you through every step of the process with personalized attention, expert advice, and the best loan options available to fit your unique needs.
Down Payment Assistance:
For Kentucky first-time homebuyers, we still have down payment assistance available through KHC programs. These funds can make a huge difference in reducing upfront costs and making homeownership more accessible.
Why Work With Me?
About My Website
Visit my website for a wealth of resources tailored to Kentucky homebuyers. You’ll find:
Please Note: My website is not endorsed by the FHA, VA, USDA, or any government agency. It is an independent platform created to educate and assist homebuyers with expert advice and accessible tools.
Contact Me Anytime
📞 Call/Text: 502-905-3708
📧 Email: kentuckyloan@gmail.com
🌐 Website: www.mylouisvillekentuckymortgage.com
Licensing Info: Kentucky Mortgage Loan Only
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Joel Lobb, Mortgage Broker FHA, VA, KHC, USDA
Why Work With Me? Local Expertise: I know the ins and outs of Kentucky’s housing market and loan programs. Fast Approvals: I offer free mortgage applications with same-day approvals to keep the process moving quickly. Customized Loan Solutions: Whether you’re buying a home or refinancing, I’ll find the right loan program to fit your needs. Personalized Service: I treat every client like family, ensuring you’re supported and informed throughout the process. About My Website Visit my website for a wealth of resources tailored to Kentucky homebuyers. You’ll find: Step-by-step guides for first-time homebuyers. Information on loan programs like FHA, VA, USDA, and KHC. Tools to help you calculate potential payments and affordability. Blog posts with tips and updates on the Kentucky housing market. A secure portal to start your loan application and upload documents. Please Note: My website is not endorsed by the FHA, VA, USDA, or any government agency. It is an independent platform created to educate and assist homebuyers with expert advice and accessible tools.
https://reviewsonmywebsite.com/js/v2/embed.js?id=8ed8fd45a2fd062872f56952886c1ec5FHA Mortgage Insurance Premium (MIP) guidelines is correct. As of March 2025, FHA loans require an upfront MIP of 1.75% of the loan amount. The annual MIP rates and their duration are influenced by factors. These factors include the loan term, loan amount, and loan-to-value (LTV) ratio.
Annual MIP Rates for FHA Loans with Terms Greater Than 15 Years:
Annual MIP Rates for FHA Loans with Terms 15 Years or Less:
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.
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
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.
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 FHA Mortgage Lender 