Rest assured, most Kentucky first-time home buyers in 2017 are confused and lack confidence when it comes to buying their first home in Kentucky. However, in 2016 there are some great Kentucky First Time Home Buyer Programs so you can buy a home with little or nothing down at really low fixed rates.
I have successfully originated over 375 Kentucky first time home buyer loans, so I feel confident that I can lay the groundwork in this post of what you need to know to get pre-approved so you can start shopping for your home with confidence.
There are basically 4 mortgage programs for first time home buyers in Kentucky to consider:
Kentucky FHA loans are a popular choice in Jefferson County Kentucky first time home buyers because they allow the least down payment of 3.5%, vs Fannie Mae which now requires a 5% investment on primary residences.
The current credit score requirements center around the 580 score for most FHA loans in Kentucky, with no bankruptcies in the last 2 years and no foreclosures in the last 3 years.
Even though FHA insure a mortgage loan down to a 580 credit score or lower sometimes, it is very difficult to find a lender that will approve the loan with scores below 620. Keep that in mind.
The house payment will need to be around 30% of your gross monthly income. For example if you gross around $3000 a month, then the maximum mortgage payment you would qualify would be $1000 a month. If the loan comes back as an accept, the debt to income ratio can be substantially higher than the 31% rule.
All FHA loans are pre-approved through an AUS, an automated underwriting system upfront that will dictate your loan approval. The software underwriting engine looks at your credit, income, assets and figures your loan approval and will recommend an accept, refer/eligible, or refer/ineligible, or out of scope.
Most FHA investors will want a Accept on your underwriting findings to do a loan. It it comes back referred, then there are additional conditions or overlays that could stop your loan from being approved.
Check Kentucky FHA Rates Here----->>>>>>>>
Kentucky VA loans require no down payment but you must have a VA certificate of Eligibility issued by the Veterans Administration to purchase a home using your VA loan entitlement.
The current credit score that most Kentucky VA lenders want is 580. There can be no bankruptcies or foreclosures in the last two years with good reestablished credit.
The maximum debt to income ratio is 41% with a residual income of around $1000 a month after you pay all your bills. For example, if you make $4000 gross monthly, then the maximum house payment along with your other household bills would be set at $3000 a month so as you have the $1000 residual income requirement met. There are some variances on the residual income to whereas it is based on the number of people living in the household and which state you live in.
Check Kentucky VA Mortgage Rates Here------>>>>>>>
3. USDA/Rural Housing:
USDA or Rural Housing loans are not available in the more highly populated counties in Kentucky . The counties of Jefferson and Fayette Counties are not eligible for USDA loans.
USDA loans require no down payment and are subject to income and property eligibility requirements by County..
Check Kentucky USDA Income Limits Here"----->>>>
Check Kentucky USDA Property Eligibility Limits Here--->>>>
All Kentucky Rural Housing Loans are ran through GUS, Guarantee Underwriting System, an online to determine your loan approval
The Automated Underwriting engine will come back with an Accept, Refer, or Ineligible.
Most USDA mortgage investor want an Accept on the initial underwriting approval to do the loan.
640 is the score that most USDA lenders want, but USDA will go down to a 580 credit score in their guidelines but it is very difficult to get approved.
If you have a score below 640 and trying to go USDA, work on getting your credit scores up first.
4. Kentucky Housing Corp or KHC
KHC is used for mostly applicants in urban areas of Kentucky that don't have access to USDA or other government agencies to buy a home with no down payment.
Down Payment Assistance for Ky First Time Home Buyer, 100% Financing
How the Down Payment Assistance Program (DAP) Works
- First-time and repeat homebuyers statewide
- 30-year fixed interest rate
- Principal residence ONLY
- Purchase Price Limit: $294,000
- Borrower must meet KHC's Secondary Market Income Limits
•An existing or new construction property (purchase price limit $130,000) in a county not receiving HHF DAP funds*.
•620 minimum credit score.
•FHA, VA, or RHS first mortgage options.
•Households who meet one of the following criteria:
◦At least one of the home buyers is age 62 or older.
◦At least one member of the household is disabled and receiving disability income.
◦A single-or two parent household with at least one dependent child under the age of 18 living in the household.
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