Home Loan Programs for Kentucky First-Time Homebuyers

Are you a first-time homebuyer in Kentucky looking to navigate the world of home loans? Understanding the various types of home loan programs available to you can help you make informed decisions about financing your dream home. In this article, we’ll explore different home loan programs, including their credit score requirements, down payment requirements, bankruptcy considerations, debt-to-income ratio requirements, loan limits, and income limits.

Kentucky FHA Loans

Kentucky FHA Credit Score Requirements:

• Minimum credit score typically ranges from 500 to 580, depending on the lender.

Kentucky FHA Down Payment Requirements:

• A down payment as low as 3.5% of the purchase price is required. 10% down payment required for scores below 580

Kentucky FHA Bankruptcy Requirements:

• Chapter 7 bankruptcy: Generally, two years must have passed since the discharge date.
• Chapter 13 bankruptcy: Typically, one year of on-time payments and approval from the bankruptcy court are required.

Kentucky FHA Debt-to-Income Ratio Requirements:

• Front-end ratio (housing expenses): Up to 31% of gross monthly income.
• Back-end ratio (total monthly debt payments): Up to 43% of gross monthly income.
• Up to 45% and 56% respectively for borrowers with higher credit scores, down payment and reserves along with good residual income

Kentucky FHA Loan Limits and Income Limits:

• Loan limits vary by county and property type. Currently $498,257 in all Kentucky Counties
• Income limits—-No income limits just loan limits.

Kentucky VA Loans

Kentucky VA Credit Score Requirements:

• While there is no official minimum credit score requirement, most lenders prefer a score of 580 to 620 or higher.

Kentucky VA Down Payment Requirements:

• No down payment is required for eligible veterans, active-duty service members, and certain spouses.

Kentucky VA Bankruptcy Requirements:

• Chapter 7 bankruptcy: Generally, two years must have passed since the discharge date.
• Chapter 13 bankruptcy: Typically, one year of on-time payments and approval from the bankruptcy court are required.

Kentucky VA Debt-to-Income Ratio Requirements:

• Flexible debt-to-income ratio requirements, with consideration given to residual income.

Kentucky VA Loan Limits and Income Limits:

• VA loan limits do not apply, but lenders may have their own limits.
• No specific income limits, but income must be sufficient to cover monthly expenses.

Kentucky USDA Loans

Kentucky USDA Credit Score Requirements:

• No minimum score, but credit score typically ranges from 580 and above, depending on the lender.

Kentucky USDA Down Payment Requirements:

• No down payment is required for eligible properties in designated rural areas.

Kentucky USDA Bankruptcy Requirements:

• Chapter 7 bankruptcy: Generally, three years must have passed since the discharge date.
• Chapter 13 bankruptcy: Typically, one year of on-time payments and approval from the bankruptcy court are required.

Kentucky USDA Debt-to-Income Ratio Requirements:

• Maximum total debt-to-income ratio is usually 45%.

Kentucky USDA Loan Limits and Income Limits:

• Loan limits vary by county.
• Income limits are based on area median income and household size.

Kentucky Conventional Loans

Kentucky Conventional Credit Score Requirements:

• Minimum credit score typically ranges from 620 to 680, depending on the lender and loan type.

Kentucky Conventional Down Payment Requirements:

• Down payment requirements can range from 3% to 20% or more, depending on the loan type and borrower qualifications.

Kentucky Conventional Bankruptcy Requirements:

• Chapter 7 bankruptcy: Generally, four years must have passed since the discharge date.
• Chapter 13 bankruptcy: Typically, two years of on-time payments and approval from the bankruptcy court are required.

Debt-to-Income Ratio Requirements:

• Maximum total debt-to-income ratio is typically 43% to 50%, depending on the loan type and borrower qualifications.

Loan Limits and Income Limits:

• Loan limits vary by property type and location.
• No specific income limits, but income must be sufficient to qualify for the loan amount.

Conclusion

As a first-time homebuyer in Kentucky, you have several home loan programs to choose from, each with its own requirements and benefits. Whether you opt for an FHA loan, VA loan, USDA loan, or conventional loan, it’s essential to understand the credit score requirements, down payment requirements, bankruptcy considerations, debt-to-income ratio requirements, loan limits, and income limits associated with each program. Working with a knowledgeable lender can help you navigate the process and find the best loan program for your financial situation and homeownership goals.

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).

Qualifications for a USDA Loan to Buy a Home in Kentucky

USDA loan in Kentucky

The difference in Kentucky USDA Direct loans vs. Kentucky USDA Guaranteed Loans

The difference in Kentucky USDA Direct loans vs. Kentucky USDA Guaranteed Loans

Kentucky FHA Loan Requirements

Kentucky FHA Mortgage Loan Lender Guidelines

The requirements for Kentucky FHA loans are set by HUD.

• Borrowers must have a steady employment history of the last two years within the same industry or line of work. Recent college graduates can use their transcripts to supplant the 2-year work history rule as long as it makes sense.
• Self-Employed will need a 2-year history of tax returns filed with IRS. They will take a 2-year average.
• FHA requires a 3.5% down payment. Can be gifted from family member or from retirement savings plan, or money saved-up. Any type of cash deposits is not allowed for down payments. No exceptions to this rule!! This is one of the biggest issues I see in FHA underwriting nowadays.
•  FHA loans are for primary residence occupancy. Not rental houses.
• Borrowers must have a property appraisal from a FHA-approved appraiser.
• Borrowers’ front-end ratio (mortgage payment plus HOA fees, property taxes, mortgage insurance, homeowners’ insurance) needs to be less than 31 percent of their gross income, typically. You may be able to get approved with as high a percentage as 43 percent. If the Automated Underwriting System gives you an Approved Eligible you can go higher on the debt ratios
• Borrowers must have a minimum credit score of 580 for maximum financing with a 3.5% down payment
• Borrowers must have a minimum credit score of 500-579 for maximum LTV of 90 percent with a minimum down payment of 10 percent. Most lenders will not go below 580 to 620 score, and very few lenders will go to 580 score. It’s best to work on getting your scores up before you apply or work with a loan officer to improve them.
• 2 years removed from Chapter 7 is required with good pay history after bankruptcy
• 1 year removed from Chapter 13 is okay with an excellent pay history with the Chapter 13 plan and permission from trustee. You will need to qualify with the Chapter 13 payment along with new house payment. Again, scores will play into your loan pre-approval.
• Typically, borrowers must be three years out of foreclosure and have re-established good credit. Exceptions can be made if there were extenuating circumstances and you’ve improved your credit. If you were unable to sell your home because you had to move to a new area, this does not qualify as an exception to the three-year foreclosure guideline.

FHA 

Low Down Payment which can be 100% gift from family member or Grant Program
Seller can pay closing costs-Maximum 6% of purchase price
There is maximum mortgage amount for each county. Check FHA loan limit for your county.
Non-occupant co-signers are allowed on this program.
FHA Approved Condos-Single family home-2-4 unit properties, and PUDs are eligible.
Fast automated underwriting approval available. Also, the file can be manually underwritten by a live person to get loan approval if you do not receive approval through automated underwriting system.

FHA Foreclosure Program 

Must be HUD Owned property or FHA Foreclosure in HUD Participating Communities
$100 Down Payment than standard FHA program
580 minimum credit score
Single family, 1-4 unit properties, HUD approved condominiums, and PUDS eligible

Kentucky USDA Rural Housing Underwriting Guideline Updates

USDA Rural Housing Underwriting Guideline Updates

Kentucky USDA Rural Housing Underwriting Guideline Updates