Kentucky First Time Home Buyers Programs
Rest assured, most Kentucky first-time homebuyers are confused and lack confidence when it comes to buying their first home in Kentucky.
There are basically 4 mortgage programs for first time home buyers in Kentucky to consider:
1. FHA:
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.
2. VA:
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 620. There can be no bankruptcies or foreclosures in the last two years with good re-established 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.
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
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 620 mid credit score to purchase a home using the KHC loan programs for their no down payment credit requirements.
How the Down Payment Assistance Program (DAP) Works
A minimum of 3.5% down payment is required with this loan. Down payment assistance loans are available from $4500-$6,000, and are paid back over a period of ten years. They are typically offered to buyers with limited cash reserves and carry an interest rate of 1 to 5.5%.
These loans can make a critical difference to buyers for whom the down payment is an obstacle. Buyers whose 3.5% down payment is less than the $6000 limit may choose to use the remainder of a down payment loan to pay closing costs, further reducing the amount needed to bring to closing.
Joel Lobb (NMLS#57916)
Senior Loan Officer
text or call 502-905-3708 cell
Home Buyer Eligibility
• KHC can help both first time and repeat home buyers statewide.
• Must be a U.S. citizen or legal status to be in U.S.
• Applicant’s income ONLY through Secondary Market.
• Property must be the borrower’s principal residence.
• Any Borrower that meets both the income and purchase price limit can have access to
Down Payment Assistance.
Kentucky Housing Credit Standards
• 620 minimum credit score required for FHA, VA, & RHS.
• 660 minimum credit score required for Conventional.
• Debt ratios: 40/50%
• Collections in most cases do not need to be paid-off in full.
• Bankruptcies and foreclosures must be discharged two to seven years.
• Non-taxable income can be grossed-up.
Property Eligibility
• Both new and existing property.
• Both new & existing Manufactured Housing.
• With RHS only new construction Manufactured housing is allowed.
• Purchase price limit of $346,644 for Secondary Market or $311,997 for Tax Credit.
• Full appraisal required on all KHC loans.
• With Existing Property, VA is the only loan product that requires a termite inspection.
• A termite soil treatment certificate is required on ALL new construction properties
except on conventional loans.
Joel Lobb (NMLS#57916)
Senior Loan Officer
text or call 502-905-3708 cell
kentuckyloan@gmail.com
This web site is not the FHA, VA, USDA, HUD or any other government organization responsible for managing, insuring, regulating or issuing residential mortgage loans.
All approvals and rates are not guaranteed, and are only issued based on standard mortgage qualifying guidelines
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
