Credit Scores Needed To Qualify For A Kentucky Mortgage Loan Approval?


What Credit Score do You Need to qualify for a FHA VA KHC Kentucky Mortgage?

What Credit Score do You Need to Buy a  Kentucky Home?

When it comes to mortgages and credit scores, there are two really important questions to ask:

–What credit score do I need to qualify for a mortgage?

–What credit score do I need to get the lowest interest rate on a mortgage?

These different but related questions are important if you are looking to buy a home. And the second question is particularly important. With a high FICO score, you can literally save tens of thousands of dollars in interest over the life of a home loan. So let’s take a look at both questions. And if you don’t know you score, be sure to get you free credit score.

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

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 640 will make buying a home very difficult. A FICO score below 640 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 640, 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 use 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:

When applying for a mortgage loan, lenders will pull what they call a “tri-merge” credit report which will show three different fico scores from Transunion, Equifax, and Experian. The lenders will throw out the high and low score and take the “middle score.” For example, if you had a 614, 610, and 629 score from the three main credit bureaus, your qualifying score would be 614.
Most lenders will want at least two scores. So if you only have one score, you may not qualify. Lenders will have to pull their own credit report and scores so if you had it ran somewhere else or saw it on a website or credit card you may own, it will not matter to the lender, because they have to use their own credit report and scores.
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.
The Secondary Market of Mortgage loansThe Secondary Market of Mortgage loans offered by FHA, VA, USDA, Fannie Mae, and KHC all have their minimum fico score requirements and lenders will create overlays in addition to what the Government agencies will accept, so even if on paper FHA says they will go down to 580 or 500 in some cases on fico scores, very few lenders will go below the 620 threshold.
If you have low fico scores it may make sense to check around with different lenders to see what their minimum fico scores are for loans.
The lenders I currently deal with have the following fico cutoffs for credit scores:
As you can see, 580 is the minimum score with most lenders for a FHA, VA, or Fannie Mae loan, and 640 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.

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Joel Lobb
Senior  Loan Officer

 Company ID #1364 | MB73346

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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, ( USDA 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.




91 thoughts on “Credit Scores Needed To Qualify For A Kentucky Mortgage Loan Approval?

    • Here are six tips for improving your credit score for a fresh financial start in 2016.

      1. Pay Your Monthly Bills on Time
      Paying monthly bills is a necessary chore that has a definite effect on your credit score. According to the FICO scoring model, your payments account for as much as 35 percent of your total score. Create reminders for due dates or establish a calendar for yourself to ensure you get everything paid on time.

      2. Reduce Your Debts
      Got credit card debt? Start paying it off now. Part of your credit score is based on the amount of available credit you have, known as your credit utilization ratio. So if you’re carrying high balances, you’ll want to lower them as soon as possible. Create a personal budget with a goal of reducing your spending so that it’s lower than your income. Then, use any monthly surplus for your credit card debts until they’re gone for good.

      3. Limit Credit Inquiries
      Looking for a new apartment? What about a mortgage? In either situation, try and group your applications together as much as possible. Applications for new lines of credit will generate a “hard pull” on your credit, and having too many of them in a short period of time can lower your score. However, credit reporting agencies usually consider a group of applications within a short period of time as one pull, as long as they’re in the same category.

      Similarly, limit yourself to opening up no more than one or two credit cards per year, which also generate hard pulls. Even if you get a ton of offers in the mail for stellar sign-up bonuses, they’re likely to be offset by the damage to your credit. FICO reports that new credit and credit inquiries account for 10 percent of your total score.

      4. Don’t Cancel Old Cards
      Have a card you don’t use anymore? Don’t close it. This can negatively affect your score as it lowers your amount of available credit. Instead, use it about once per month and don’t forget to pay the bills in full, and on time.

      5. Request Credit Limit Increase
      If you only have one card and you’re constantly approaching your spending limit, call the bank and ask for an increase in your credit line. This will raise the amount of available credit, which will eventually improve your score.

      6. Take Care of Late Payments Before They Hit Your Score
      If you do happen to miss a payment, contact the card issuer immediately. If you have good history built up, the company may agree to not report your late payment. Even if you can’t avoid a late-payment fee, be sure to get your account up to date as soon as possible so you can limit the damage.
      Your credit score is yours to own. It reflects your financial history and helps lenders predict how you will manage your finances in the future. Due to the lingering effects of credit, you don’t want to waste any time to improve your credit.

  1. Transunion logo is a registered trademark of Transunion Inc;Experian logo is a registered trademark of Experian Corporation, Equifax logo is a registered trademark of Equifax Fair Isaacs Corporation. No association is implied. The credit score provided by this system is an approximate score based upon your answers to your credit history questions and using similar algorithms as major credit bureaus in the United States to gauge your unique score.

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  55. Credit: Most lenders want a 640 credit score, however there are some lenders now doing FHA loans down to a 580 score with no bankruptcies in the last 2 years and no foreclosures in the last 3 years.

    If you have a 580-639 credit score there is a possibility of doing a FHA loan with a 3.5% down payment.

    Down Payment: There are still housing programs that exist for Kentucky home buyers whereas you can purchase a home with no down payment. You will need a 640 mid credit score to purchase a home using the USDA or KHC loan programs for their no down payment credit requirements.

    If you have access to at least 3.5% down payment or more, we can always look at doing a Fannie Mae or FHA loan and possibly securing a little better rate on the terms of your loan. I will go over your options once we get you pre-approved to let you decide which is best for your situation.

    Income: The maximum house payment is usually limited to 1/3 of your gross monthly income. For example, if you make $3000 gross a month, then x that by 30%, and this would equal about a $900 maximum house payment.

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