Kentucky First Time Home Buyer Questions to Ask Your Lender?

 KHC's First Mortgage Government Loan Products

Kentucky First Time Home Buyer Questions to Ask Your Lender?

∘ What kind of credit score do I need to qualify for different first time home buyer loans in Kentucky?

Answer. Most lenders will wants a middle credit score of 640 for KY First Time Home Buyers looking to go no money down. The two most used no money down home loans in Kentucky being USDA Rural Housing and KHC with their down payment assistance will want a 640 middle score on their programs.

If you have access to 3.5% down payment, you can go FHA and secure a 30 year fixed rate mortgage with some lenders with a 580 credit score. Even though FHA on paper says they will go down to 500 credit score with at least 10% down payment, you will find it hard to get the loan approved because lenders will create overlays to protect their interest and maintain a good standing with FHA and HUD.

Another popular no money down loan is VA. Most VA lenders will want a 620 middle credit score but like FHA, VA on paper says they will go down to a 500 score, but good luck finding a lender for that scenario.

A lot of times if your scores are in the high 500’s or low 600’s range, we can do a rapid rescore and get your scores improved within 30 days.


Does it costs anything to get pre-approved for a mortgage loan?

Answer: Most lenders will not charge you a fee to get pre-approved, but some lenders may want you to pay for the credit report fee upfront. Typically costs for a tri-merge credit report for a single borrower runs about $50 or less. Maybe higher if more borrowers are included on the loan application.
∘ How long does it take to get approved for a mortgage loan in Kentucky?

Answer: Typically if you have all your income and asset documents together and submit to the lender, they typically can get you a pre-approval through the Automated Underwriting Systems within 24 hours. They will review credit, income and assets and run it through the different AUS (Automated Underwriting Systems) for the template for your loan pre-approval. Fannie Mae uses DU, or Desktop Underwriting, FHA and VA also use DU, and USDA uses a automated system called GUS. GUS stands for the Guaranteed Underwriting System.

If you get an Automated Approval, loan officers will use this for your pre-approval. If you have a bad credit history, high debt to income ratios,  or lack of down payment,  the AUS will sometimes refer the loan to a manual underwrite, which could result in a longer turn time for your loan pre-approval answer

Are there any special programs in Kentucky that help with down payment or no money down loans for KY First Time Home Buyers?

Answer: There are some programs available to KY First Time Home Buyers that offer zero down financing: KHC, USDA, VA, Fannie Mae Home Possible and HomePath, HUD $100 down and City Grants are all available to Kentucky First Time Home buyers if you qualify for them. Ask your loan officer about these programs
∘ When can I lock in my interest rate to protect it from going up when I buy my first home?

Answer: You typically can lock in your mortgage rate and protect it from going up once you have a home picked-out and under contract. You can usually lock in your mortgage rate for free for 90 days, and if you need more time, you can extend the lock in rate for a fee to the lender in case the home buying process is taking a longer time. The longer the term you lock the rate in the future, the higher the costs because the lender is taking a risk on rates in the future.

Interest rates are kinda like gas prices, they change daily, and the general trend is that they have been going up since the Presidential election in November 2016.
∘ How much money do I need to pay to close the loan?

Answer: Depending on which loan program you choose, the outlay to close the loan can vary. Typically you will need to budget for the following to buy a home: Good faith deposit, usually less than $500 which holds the home for you while you close the loan. You get this back at closing; Appraisal fee is required to be paid to lender before closing. Typical costs run around $400-$450 for an appraisal fee; home inspection fees. Even though the lender’s programs don’t require a home inspection, a lot of buyers do get one done. The costs for a home inspection runs around $300-$400. Lastly, termite report. They are very cheap, usually $50 or less, and VA requires one on their loan programs. FHA, KHC, USDAS, Fannie Mae does not require a termite report, but most borrowers get one done.

There are also lender costs for title insurance, title exam, closing fee, and underwriting fees that will be incurred at closing too. You can negotiated the seller to pay for these fees in the contract, or sometimes the lender can pay for this with a lender credit.

The lender has to issue a breakdown of the fees you will incur on your loan pre-approval.
How long is my pre-approval good for on a Kentucky Mortgage Loan?

Answer: Most lenders will honor your loan pre-approval for 60 days. After that, they will have to re-run your credit report and ask for updated pay stubs, bank statements, to make sure your credit quality and income and assets has not changed from the initial loan pre-approval.


How much money do I have to make to qualify for a mortgage loan in Kentucky?

Answer: The general rule for most FHA, VA, KHC, USDA and Fannie MAe loans is that we run your loan application through the Automated Underwriting systems, and it will tell us your max loan qualifying ratios.

There are two ratios that matter when you qualify for a mortgage loan. The front-end ratio, is the new house payment divided by your gross monthly income.  The back-end ratio, is the new house payment added to your current monthly bills on the credit report, to include child support obligations and 401k loans.

Car insurance, cell phone bills, utilities bills does not factor into your qualifying rations.

If the loan gets a refer on the initial desktop underwriting findings, then most programs will default to a front end ratio of 31% and a back-end ratio of 43% for most government agency loans that get a refer. You then take the lowest payment to qualify based on the front-end and back-end ratio.

So for example, let’s say you make $3000 a month and you have $400 in monthly bills you pay on the credit report. What would be your maximum qualifying house payment for a new loan?

Take the $3000 x .43%= $1290 maximum back-end ratio house payment. So take the $1290-$400= $890 max house payment you qualify for on the back-end ratio.

Then take the $3000 x .31%=$930 maximum qualifying house payment on front-end ratio.

So now your know! The max house payment you would qualify would be the $890, because it is the lowest payment of the two ratios.





Joel Lobb
Senior  Loan Officer
text or call my phone: (502) 905-3708
email me at
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, ( 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. Manufactured and mobile homes are not eligible as collateral.


Kentucky Private Mortgage Insurance or PMI

Kentucky Private Mortgage Insurance or PMI.

Mortgage Insurance Tax Deduction
Frequently Asked Questions

For mortgage loans originated in 2018, 2019 and 2020, Congress recently restored the mortgage insurance (MI) premium tax deduction to eligible borrowers who itemize. Learn more from our FAQ below.

MI Tax-Deductibility Overview

1. What is private mortgage insurance (MI) tax-deductibility and how does it work?

Recent legislation restored an itemized deduction on federal tax returns for the cost of private MI paid by eligible borrowers. This deduction law applies to borrower-paid MI certificates issued by Arch MI.

The new law is effective for amounts paid for MI attributable to the 2018, 2019 and 2020 tax years.

2. What is the reason for this MI tax-deductibility legislation?

The federal government supports home ownership and helps make home ownership more affordable for more homebuyers through this MI tax deduction.

3. How does the MI tax deduction work?

The federal MI tax deduction allows borrowers with adjusted gross incomes up to $100,000 to take advantage of the full MI tax deduction — 100% of the MI premium for a qualifying loan is subject to this tax deduction.

Borrowers with adjusted gross incomes up to $109,000 can take advantage of a partial MI tax deduction. For each additional $1,000 of gross household income above $100,000, the MI deduction is reduced by 10%, with a cutoff of any deduction at $109,000.

Married persons filing separately, with adjusted gross income of $50,000 or less are each able to deduct 50% of their MI premiums. For each additional $500 of gross household income above $50,000, the MI deduction is reduced by 5%, with a cutoff of any deduction at $54,500.

4. What kinds of loans qualify for the deduction?

The deduction applies to existing homeowners as well as to first-time homebuyers. The MI tax deduction applies to MI premiums for purchase and refinance loans for “qualified residences” as defined in the Internal Revenue Code. This generally includes the borrower’s primary residence and one other qualified residence. Investor loans are not eligible. Arch MI’s Monthly, Single- and Split-Premium MI payment plans are all eligible for the tax deduction. For upfront payment plans, borrowers should consult with a professional tax adviser to determine the amount of the MI premium eligible for the tax deduction.

5. What savings amount can a typical homeowner with MI expect?

Individual savings will vary, depending on the size of the loan and a borrower’s adjusted gross income and tax bracket.

6. How many people in the United States use MI?

Millions of people use private MI every year — it’s an important factor in facilitating home purchases for first-time homebuyers, low- to moderate-income borrowers and minority and immigrant borrowers. Most lenders require a 20% down payment for a home loan, which is the single biggest obstacle prospective homebuyers face. MI makes it possible for more families and individuals to purchase homes with low down payments that meet their budgets.

7. How long will this tax deduction be available?

The current tax deduction legislation applies to MI premiums attributable to the 2018, 2019 and 2020 tax years. Congress has the power to extend the tax deduction to later years through future legislation.


1. Is the deduction only for first-time homebuyers?

No. The deduction applies to existing homeowners as well as to first-time homebuyers.

2. Does the MI tax deduction apply to new purchases only? Are refinances also included?

The MI tax deduction applies to purchases and refinances up to the amount of acquisition indebtedness as defined in the Internal Revenue Code. This could include first and second mortgages but may not include the full amount of a cash-out refinance. Borrowers with cash-out refinances should consult a professional tax adviser to determine the amount of MI premium eligible for the tax deduction.

3. Are there any occupancy restrictions?

The deduction applies to a “qualified residence.”. Generally, that includes the taxpayer’s principal residence and up to one other residence selected by the taxpayer for purposes of the deduction for qualified residence interest. Note: The other residence must be used for personal purposes by the taxpayer for 14 days or 10% of the days during the tax year that the unit is rented for fair value, whichever is greater, among other tax code criteria.

4. Are investor loans eligible?

No, investor loans are not eligible.

5. Is there a loan amount limit?

No. The available tax deduction is only limited by the taxpayer’s income.

6. Is deductibility applicable for all loan types?

There is no differentiation among loan types. But the premium has to be for what is considered “acquisition indebtedness” on a “qualified residence.”

7. When refinancing a piggyback loan, for purposes of the deduction, is the original loan amount considered the sum of the two mortgages or only the primary mortgage amount without the second lien included?

The loan amount applicable to the deduction would be the sum of the two mortgages, up to the amount of “acquisition indebtedness.”

8. Do tax deductions have to be itemized on tax returns in order to take the deduction?

Yes. In order to take advantage of the MI tax deduction, borrowers must include their MI premium payment information on an itemized tax return.


Kentucky Mortgage Industry Links

Kentucky Mortgage Industry Links

There are many Government and Industry Specific Organizations which provide a wealth of information to consumers concerning home financing and home ownership. We have provided a comprehensive set of Mortgage Industry Links for you to use as you gather information.





















Appraisal Institute
American Society of Appraisers
Appraisal Subcommittee, Federal Financial Institute Examination Council
Credit Info Center
Dept. of Veterans Affairs
Electronic Privacy Information Center
Equifax, Inc. (credit reporting)
Experian (credit reporting)
Fair Isaac Corporation (credit scoring)
Federal Deposit Insurance Corp. (FDIC)
Federal Home Loan Mortgage Corp. (FREDDIEMAC)
Federal Housing Administration (FHA)
Federal Housing Finance Board (FHFB)
Federal National Mortgage Assn. (FANNIEMAE)
Federal Trade Commission (FTC)
FHA/HUD Foreclosures
Government National Mortgage Assn. (GINNIEMAE)
HSH Associates, Financial Publishers
Mortgage Bankers Assn. (MBA)
Mortgage Guarantee Insurance Corp. (MGIC)
National Assn. of Mortgage Brokers (NBAMB)
National Assn. of Realtors (NAR)
National Assn. of Realtors Multiple Listings
National Reverse Mortgage Lenders Association (NRMLA)
On Line Credit Report Information Guide
Real Estate Cyberspace Society
Real Estate Settlement Procedures Act (RESPA)
TransUnion (credit reporting)
USDA Rural Development
US Dept. of Housing & Urban Development (HUD)
Veterans Benefits Administration