Kentucky Home Loan Programs available to buy a home with low or no down payment options

There are many Kentucky Home Loan Programs available to buy a home with  low or no down payment options.

Kentucky VA loans are available to military veterans and active military members. I love these loans since they don’t always require a down payment and typically have lower interest rates than conventional mortgages with no monthly mortgage insurance . They also allow for higher debt-to-income ratios, lower credit scores and don't require private mortgage insurance. There is a funding fee, but it can be financed into the loan and possibly exempt if you have a service connected disability

Kentucky USDA loans are guaranteed for homes in areas deemed rural. The credit score requirements are higher (640), and the debt-to-income ratios are tighter (45% max backed-end ratio), but they offer no down payment loan options with an upfront fee of 1% that is financed into the loan and a monthly mi premium of .35% that is for life of loan.

The Kentucky Housing Corporation offers zero down mortgage loans with a 2nd  mortgage loans and down payment assistance grants that can help you with your down payment and closing costs with up to $6,000 available at 1% or 5% rate over 10 years depending on your gross monthly income and which county you buy a home in.

Kentucky FHA loans, which are insured by the Federal Housing Administration, only require a down payment of 3.5%, which can be gifted from a family member or money saved-up or money taken from a 401k or retirement account. You cannot bring cash to closing, so keep that in mind or get a personal loan or credit card advance for the 3.5% down payment investment. If your credit score is 500 to 579, you will need 10% down payment. ***Be aware, most FHA lenders nowadays will want a 620 credit score, so lenders can create overlays to the minimum credit score requirements.

Most people believe conventional loans require higher down payments. However, the Home Ready program only requires a 3% down payment and a standard conventional loan can be as low as a 5% down payment. You will typically need a 680 to 720 credit score with a low debt to income ratio (under 45%) to get approved for these loans.

All the loans above include other requirements, including some that require the home to be the primary residence, different guidelines for borrowers with past foreclosures, bankruptcies, etc. It is important to work with a lender that knows all the guidelines and can work with you to place you in the right loan based on your down payment requirements.


Joel Lobb
Mortgage Loan Officer
Individual NMLS ID #57916

American Mortgage Solutions, Inc.

Text/call:      502-905-3708
fax:            502-327-9119

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