Here are action steps you can take right now to buy a home in Kentucky
1. Focus on your credit score
FICO credit scores are among the most frequently used credit scores, and range from 350-800
(the higher, the better). A consumer with a credit score of 750 or higher is considered to have excellent credit,
while a consumer with a credit score below 620 is considered to have poor credit.
To qualify for a mortgage and get a low mortgage rate, your credit score matters.
Each credit bureau collects information on your credit history and develops a credit score that lenders use
to assess your riskiness as a borrower. If you find an error, you should report it to the credit bureau immediately
so that it can be corrected.
2. Manage your debt-to-income ratio
Many lenders evaluate your debt-to-income ratio when making credit decisions, which could impact the
interest rate you receive.
A debt-to-income ratio is your monthly debt payments as a percentage of your monthly income.
Lenders focus on this ratio to determine whether you have enough excess cash to cover your
living expenses plus your debt obligations.
Since a debt-to-income ratio has two components (debt and income), the best way to lower your debt-to-income
ratio is to:
3. Keep credit utilization low on your credit cards
Lenders also evaluate your credit card utilization, or your monthly credit card spending as a percentage
of your credit limit.
Ideally, your credit utilization should be less than 30%. If you can keep it less than 10%, even better.
For example, if you have a $10,000 credit limit on your credit card and spent $3,000 this month, your
credit utilization is 30%.
Here are some ways to manage your credit card utilization:
- set up automatic balance alerts to monitor credit utilization
- ask your lender to raise your credit limit (this may involve a hard credit pull so check with your lender first)
- pay off your balance multiple times a month to reduce your credit utilization
There are various types of down payment assistance, even if you have student loans.
Here are a few:
FHA loans - federal loan through the Federal Housing Authority
USDA loans - zero down mortgages for rural and suburban homeowners
VA loans - if military service
Kentucky Housing Down Payment Assistance of $6000
There are federal, state and local assistance programs in Kentucky, i.e Northern Kentucky, Louisville,
and the Welcome Grant
programs as well so be on the lookout.
