How To Buy A Kentucky Home With No Money Down
These loans are through a federal government-backed loan program. Eligible homebuyers in Kentucky can use the following loan programs without having to put money down.
Kentucky USDA Home Loan
A U.S. Department of Agriculture (USDA) home loan is also known as a Rural Housing Loan. While it typically applies to those who live in rural areas, the program is also available to low-to-moderate-income households in some less-populated suburban areas within or near major cities. With this loan, there is no down payment required and no set maximum home purchase price. Additionally, homeowners may have the option to include home repair costs in the loan.
To apply for a USDA home loan, applicants must meet the following requirements:
- The gross total of a household's income cannot exceed 115 percent of the county's average income.
- A homebuyer's debt-to-income ratio cannot exceed 45 percent.
- The location of a homebuyer's potential home must be in an area deemed eligible according to the USDA's eligibility map.
- The home must be a primary residence.
Kentucky VA Home Loan
A Kentucky VA home loan is backed by the U.S. Department of Veteran Affairs and is set aside for active-duty military members, veterans and their family members. This loan allows homebuyers to pay a one-time-only funding fee of 2.3 percent of the loan value instead of purchasing mortgage insurance. For every use of a VA loan thereafter, the required funding fee without a down payment is 3.6 percent.
To qualify for a VA home loan, homebuyers must meet at least one of the following requirements:
- Served 90 days of consecutive service during wartime.
- Served 181 days of consecutive service during peacetime.
- Is the widow of a qualifying service member.
- Served in the National Guard or Reserves for more than six years.
What is a Kentucky USDA Loan?
The U.S. Department of Agriculture offers a 100% financing mortgage. The program is also technically called a Section 502 mortgage, however, it’s more commonly known as ’Rural Housing Loan’ or a ’USDA loan.’
Despite the term “rural loan“ the USDA loan program is also available to low-to-moderate income homebuyers in less-populated suburbs of some major U.S. cities suburban areas.
Some key benefits of the USDA loan include:
- No down payment requirement
- No maximum home purchase price
- Eligible home repairs and improvements may be included in your loan amount
- Upfront guarantee fee can be added to the loan balance at closing; mortgage insurance is collected monthly
USDA Home Loan Requirements
To be eligible for many USDA loans, household income must meet certain guidelines. Also, the home to be purchased must be in an eligible rural area as defined by USDA. According to the USDA website applicants interested in obtaining a direct loan must have an adjusted income that is at or below the applicable low-income limit for the area where they wish to buy a house as well as demonstrate a willingness and ability to repay debt. (Note: household income includes the income of all adult household members.)
Additional eligibility requirements can be found at the USDA Income and Property Eligibility website.
USDA mortgage rates are often lower than rates for comparable, low- or no-down-payment mortgages. For qualified applicants, financing a home via the USDA can be the lowest-cost path to homeownership.
What is a VA Loan?
A VA loan is a loan guaranteed by the United States Department of Veteran Affairs. Designed for active-duty military, Veterans, and their families, this loan requires zero money down. While standard mortgage insurance is not required, the Funding Fee is specific to VA loans and is paid upfront. For purchase loans, the one-time fee usually ranges from 1.4% to 2.6% of the loan amount, depending on the loan down payment.
The VA is technically not a mortgage lender as private lenders originate the loan, and the VA guarantees a portion of it. No down payment is required if the sales price isn’t higher than the properties appraised value.
Although VA loans are credit flexible, applicants must have a stable income, and a steady job, however, a Veteran may be retired to qualify. All applicants must also meet some basic military service requirements.
VA Loan Requirements
Here are a few of the requirements listed by the U.S. Department of Veterans Affairs.
- Served 90 consecutive days of active service during wartime (or less if you were discharged for a service-connected disability.
- Served 181 days of active service during peacetime
- Served more than six years with the National Guard or Reserves (or 90 days under Title 32 with at least 30 of those days being consecutive)
There are also VA loan programs for surviving spouses of a service member who died in the line of duty or from a service-related disability.
For the lender to make a VA-backed loan you must provide proof that you meet the eligibility requirements. A Certificate of Eligibility, or (COE,) serves as that proof. Your COE will have the entitlement amount on it so the lender knows exactly how much the VA will give them if you were to default. Detailed information on how to obtain a COE for a loan can be found on the VA website.
Kentucky FHA Loan Down Payment
Benefits of the Kentucky FHA Home Loan:
- Low down payment requirement (as low as 3.5% for 580 score )
- Flexibility on debt-to-income ratio up to 56.9%
- Qualify with less-than-perfect credit with a 500 credit score with 10% down and 580 credit score with 3.5% down payment
- Down payment funds can be gifted, grants, down payment assistance from approved funds
- Purchase or refinance loan options available
- Low down payment requirement (as low as 3.5% for 580 score )
- Flexibility on debt-to-income ratio up to 56.9%
- Qualify with less-than-perfect credit with a 500 credit score with 10% down and 580 credit score with 3.5% down payment
- Down payment funds can be gifted, grants, down payment assistance from approved funds
- Purchase or refinance loan options available
Mortgage Loan Officer
email: kentuckyloan@gmail.com
