KENTUCKY DOWN PAYMENT ASSISTANCE PROGRAMS FOR 2020

2020 Kentucky Down Payment Assistance Programs

KENTUCKY DOWN PAYMENT ASSISTANCE PROGRAMS FOR 2020


There are basically 4 mortgage programs for first time home buyers in Kentucky to consider:



1. FHA LOANS IN KENTUCKY


FHA Loans In Kentucky for Bad Credit


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,
Even though FHA insure a mortgage loan down to a 500 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.


Credit Score Minimums for a FHA Loan with 580 Credit score and below and 580 credit score or higher



2. Kentucky VA Home Loans




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 500. 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.



3. Kentucky USDA/Rural Housing:



100% Financing USDA Kentucky Mortgage Loans


Kentucky USDA or Rural Housing loans are not available in the more highly populated counties in Kentucky .The counties of Jefferson and Fayette Counties, parts of Boone, Kenton and Campbell, parts of Mccracken County, and parts of Bowling Green, Richmond, Frankfort, Hopkinsville, and Owensboro  and Henderson County. are not eligible for USDA loans.

Kentucky 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 Kentucky USDA mortgage investors want an Accept on the initial underwriting approval to do the loan or at least a 620 to 640 score to do a manual underwrite on 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




Kentucky Housing Corporation has $6,000 Down Payment Assistance



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.


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.






There are 4 basic things that a borrower needs to show a lender in order to get approved for a mortgage.



KHC $6,000 Down Payment Assistance



Each category has so many what ifs and sub plots that each box can read as it’s own novel.

1. Income

You need income. You need to be able to afford the home. But what is acceptable income? Let’s just say that there are two ratios mortgage underwriters look at to qualify you for mortgage payment:



First Ratio – The first ratio, top ratio or housing ratio. Basically that means out of all the gross monthly income you make, that no more that X percent of it can go to your housing payment. The housing payment consists of Principle, Interest, Taxes and Insurance. Whether you escrow or not every one of these items are factored into your ratio. There are a lot of exceptions to how high you can go, but let’s just say that if your ratio is 33% or less, generally, across the board, you’re safe.


Second Ratio- The second ratio, bottom ratio or debt ratio includes the housing payment, but also adds all of the monthly debts that the borrower has. So, it includes housing payment as well as every other debt that a borrower may have. This would include, Auto loans, credit cards, student loans, personal loans, child support, alimony….basically any consistent outgoing debt that you’re paying on. Again, if you’re paying less than 45% of your gross monthly income to all of the debts, plus your proposed housing payment, then……generally, you’re safe. You can go a lot higher in this area, but there are a lot of caveats when increasing your back ratio.


What qualifies as income? Basically, it’s income that has at least a proven, two year history of being received and pretty high assurances that the income is likely to continue for at least three years. What’s not acceptable? Unverifiable cash income, short term income and income that’s not likely to continue like unemployment income, student loan aid, VA education benefits,or short term disability are not allowed for a mortgage loan.

2. Assets


What the mortgage underwriter is looking for here is how much can you put down and secondly, how much will you have in reserves after the loan is made to help offset any financial emergencies in the future.


Do you have enough assets to put the money forth to qualify for the down payment that the particular program asks for. The only 100% financing or no money down loans still available in Kentucky for home buyers are available through USDA, VA, and KHC or Kentucky Housing Loans. Most other home buyers that don’t qualify for the no money down home loans mentioned above, will turn to the FHA program. FHA loans currently requires a 3.5% down payment.


Kentucky Home buyers that have access to putting down at least 5% or more, will usually turn to Fannie Mae or Freddie Mac mortgage programs so they can get better pricing when it comes to mortgage insurance.

These assets need to be validated through bank accounts, 401k or retirements account and sometimes gifts from relatives or employer.. Can you borrower the down payment? Sometimes. Generally if you’re borrowing a secured loan against a secured asset you can use that. But rarely can cash be used as an asset. FHA will allow for gifts from relatives for down payments with little as 3.5% down but Fannie Mae will require a 20% down payment when a gift is being used for the down payment on the home.


The down payment scenarios listed above are for Kentucky Primary Residences only. There are stricter down payment requirements for investment homes made in Kentucky.


3. Credit


620 is the bottom score (again with few exceptions) that lenders will permit. Below a 620, then you’re in a world of hurt with most FHA, VA, Fannie Mae and USDA Lenders that we deal with. I do deal with some lenders that offer a FHA loan down to a 560 credit score, but most FHA and VA lenders will wanta 580 to 620 score. Fannie Mae or Conventional loans will not go below 620.


Even at 620, people consider you a higher risk that other folks and are going to penalize you or your borrower with a more expensive loan. 720 is when you really start to get in the “as a lender we love you” credit score. 740 is even better. Watch your credit scores carefully. You have three credit scores from Experian, Equifax and Transunion, and the lender will take your middle score. For example, Experian comes back with a 598, Transunion a 620 score, and Equifax a 615 score, then your qualifying middle credit score would be 615.


Your scores will have to come from the mortgage company’s credit report bureau they use so please be aware that sites like Credit Karma and Credit Sesame will show different estimates of your scores that could vary once the lender pulls your true fico scores. Getting your fico scores costs money, so you can always pay and get your score first or have the lender pull it for free.

As far as previous Bankruptcies and foreclosures:

Kentucky FHA Mortgage Loans currently requires 3 years removal from a foreclosure or short sale and 2 years on a bankruptcy with good re established credit.


Kentucky Fannie Mae Mortgage Loans currently requires 4 years removal from a bankruptcy, and 7 years on a foreclosure.


Kentucky VA Mortgage Loans currently requires 2 years removal from a bankruptcy or foreclosure with good reestablished credit.


Kentucky USDA loans require 3 years removal from bankruptcy and foreclosure with good reestablished credit.


4. Appraisal


Generally, there’s nothing you can do to affect this. Bottom line here is…..”is the value of the house at least the value of what you’re paying for it?” If not, then not good things start to happen. Generally you’ll find less issues with values on purchase transactions, because, in theory, the realtor has done an accurate job of valuing the house prior to taking the listing. The big issue comes in refinancing. In purchase transactions, the value is determined as the
lower of the value or the contract price!!!

That means that if you buy a $1,000,000 home for $100,000, the value is established at $100,000. Conversely, if you buy a $200,000 home and the value comes in at $180,000 during the appraisal, then the value is established at $180,000. Big issues….Talk to your loan officer.


For each one of these boxes, there are over 1,000 things that can effect if a borrower has reached the threshold to complete that box. Soooooooooooo…..talk to a great loan officer. There are so many loan officers that don’t know what they’re doing. But, conversely, there’s a lot of great ones as well. Your loan is so important! Get a great lender so that you know, for sure, that the loan you want, can be closed on!

If you have questions about qualifying as first time home buyer in Kentucky, please call, text, email or fill out free prequalification below for your next mortgage loan pre-approval.






∘ What kind of credit score do I need to qualify for different first time home buyer loans in Kentucky?


Answer. Most lenders will wants a middle credit score of 640 for KY First Time Home Buyers looking to go no money down. The two most used no money down home loans in Kentucky being USDA Rural Housing and KHC with their down payment assistance will want a 640 middle score on their programs.


If you have access to 3.5% down payment, you can go FHA and secure a 30 year fixed rate mortgage with some lenders with a 580 credit score. Even though FHA on paper says they will go down to 500 credit score with at least 10% down payment, you will find it hard to get the loan approved because lenders will create overlays to protect their interest and maintain a good standing with FHA and HUD.


Another popular no money down loan is VA. Most VA lenders will want a 620 middle credit score but like FHA, VA on paper says they will go down to a 500 score, but good luck finding a lender for that scenario.


A lot of times if your scores are in the high 500’s or low 600’s range, we can do a rapid rescore and get your scores improved within 30 days.


∘ Does it costs anything to get pre-approved for a mortgage loan?


Answer: Most lenders will not charge you a fee to get pre-approved, but some lenders may want you to pay for the credit report fee upfront. Typically costs for a tri-merge credit report for a single borrower runs about $50 or less. Maybe higher if more borrowers are included on the loan application.

∘ How long does it take to get approved for a mortgage loan in Kentucky?


Answer: Typically if you have all your income and asset documents together and submit to the lender, they typically can get you a pre-approval through the Automated Underwriting Systems within 24 hours. They will review credit, income and assets and run it through the different AUS (Automated Underwriting Systems) for the template for your loan pre-approval. Fannie Mae uses DU, or Desktop Underwriting, FHA and VA also use DU, and USDA uses a automated system called GUS. GUS stands for the Guaranteed Underwriting System.


If you get an Automated Approval, loan officers will use this for your pre-approval. If you have a bad credit history, high debt to income ratios, or lack of down payment, the AUS will sometimes refer the loan to a manual underwrite, which could result in a longer turn time for your loan pre-approval answer


∘ Are there any special programs in Kentucky that help with down payment or no money down loans for KY First Time Home Buyers?


Answer: There are some programs available to KY First Time Home Buyers that offer zero down financing: KHC, USDA, VA, Fannie Mae Home Possible and HomePath, HUD $100 down and City Grants are all available to Kentucky First Time Home buyers if you qualify for them. Ask your loan officer about these programs

∘ When can I lock in my interest rate to protect it from going up when I buy my first home?


Answer: You typically can lock in your mortgage rate and protect it from going up once you have a home picked-out and under contract. You can usually lock in your mortgage rate for free for 90 days, and if you need more time, you can extend the lock in rate for a fee to the lender in case the home buying process is taking a longer time. The longer the term you lock the rate in the future, the higher the costs because the lender is taking a risk on rates in the future.


Interest rates are kinda like gas prices, they change daily, and the general trend is that they have been going up since the Presidential election in November 2016.

∘ How much money do I need to pay to close the loan?


Answer: Depending on which loan program you choose, the outlay to close the loan can vary. Typically you will need to budget for the following to buy a home: Good faith deposit, usually less than $500 which holds the home for you while you close the loan. You get this back at closing; Appraisal fee is required to be paid to lender before closing. Typical costs run around $400-$450 for an appraisal fee; home inspection fees. Even though the lender’s programs don’t require a home inspection, a lot of buyers do get one done. The costs for a home inspection runs around $300-$400. Lastly, termite report. They are very cheap, usually $50 or less, and VA requires one on their loan programs. FHA, KHC, USDAS, Fannie Mae does not require a termite report, but most borrowers get one done.


There are also lender costs for title insurance, title exam, closing fee, and underwriting fees that will be incurred at closing too. You can negotiated the seller to pay for these fees in the contract, or sometimes the lender can pay for this with a lender credit.


The lender has to issue a breakdown of the fees you will incur on your loan pre-approval.

How long is my pre-approval good for on a Kentucky Mortgage Loan?


Answer: Most lenders will honor your loan pre-approval for 60 days. After that, they will have to re-run your credit report and ask for updated pay stubs, bank statements, to make sure your credit quality and income and assets has not changed from the initial loan pre-approval.

How much money do I have to make to qualify for a mortgage loan in Kentucky?


Answer: The general rule for most FHA, VA, KHC, USDA and Fannie MAe loans is that we run your loan application through the Automated Underwriting systems, and it will tell us your max loan qualifying ratios.


There are two ratios that matter when you qualify for a mortgage loan. The front-end ratio, is the new house payment divided by your gross monthly income. The back-end ratio, is the new house payment added to your current monthly bills on the credit report, to include child support obligations and 401k loans.


Car insurance, cell phone bills, utilities bills does not factor into your qualifying rations.


If the loan gets a refer on the initial desktop underwriting findings, then most programs will default to a front end ratio of 31% and a back-end ratio of 43% for most government agency loans that get a refer. You then take the lowest payment to qualify based on the front-end and back-end ratio.


So for example, let’s say you make $3000 a month and you have $400 in monthly bills you pay on the credit report. What would be your maximum qualifying house payment for a new loan?


Take the $3000 x .43%= $1290 maximum back-end ratio house payment. So take the $1290-$400= $890 max house payment you qualify for on the back-end ratio.


Then take the $3000 x .31%=$930 maximum qualifying house payment on front-end ratio.


So now your know! The max house payment you would qualify would be the $890, because it is the lowest payment of the two ratios.



Customer Testimonials



We just moved here the first of January in 2017 from Ohio to the Louisville, KY area and we found Joel's website online. He was quick to respond to us and got back the same day on our loan approval. He was very knowledgeable about the local market and kept us up-to date throughout the loan process And  was a pleasure to meet at closing. Would recommend his services.

Angela Forsythe

"We were searching online for mortgage companies in Louisville, Ky locally to deal with and found Joel's website, and it was a godsend. He was great to work with, and delivered on everything he said he would do. I ended up referring my co-worker at UPS, and she was very pleased with his service and rates too. Would definitely vouch for him." September 2016

Monica Leinhardt

"We contacted Joel back in July 2011 to refinance our Mortgage and he was great to work with. We contacted several lenders locally and online, and most where taking almost 60 days to close a refinance, Joel got it done in 23 days start to finish,I would definitely recommend him. He got us 3.75% with just $900 in closing costs on our FHA Streamline loan.

Kayle Griffin

“Joel is one of the best Mortgage Brokers I have ever worked with in my sixteen years in the real estate and mortgage business.” May 25, 2010

Tim Beck

“Joel has always worked very hard to keep his word and to work out seasonable solutions to difficult problems. He is truly an expert in FHA and other type loans.” September 1, 2010

Nancy Nalley


“I have worked with Joel since 1998. He is a great loan professional.” I refer most of my Louisville, Kentucky area home buyers to him and he always take special care of them. August 23, 2012


Jon Clark

“Joel Lobb is a real professional in the lending industry, with many years of experience, he is the one to go to for any mortgage lending needs.” August 22, 2011


RICHARD VOLZ , Residential Sales , Remax Foursquare Realty

“When looking to purchase our new home in 2006, I had the pleasure of meeting Joel Lobb. Not only was he personable and easy to reach, he was extremely knowledgable in his field and made sure to find us the best rate and a top notch mortgage company. We were able to complete the process in less than 3 weeks with his expertise. I find Joel to have the utmost high integrity and I recommend him to anyone who say's they are need of mortgage assistance. He is also fantastic and keeping everyone up to date on the latest in the housing industry through his twitter posts. He provided great results for our family and we still communicate to this day!” August 21, 2010

Stacie Drake


"We first use Joel on our new home purchase in 2007 in St Matthews, Kentucky area and he was great to work with. We have since refinanced our home with him in 2010 when rates got really low and he has always delivered on what he says. I could not imagine using anyone else."

Melody Glasscock March 2014


Absolutely Amazing!! I emailed Joel after I had just got a denial from a bank and just thought i would try to get some advice on what my next steps would be to get a house. I honestly didn't expect to even get a reply because my credit is not great. That was about a week and a half ago. I just signed a contract on a house last night. ONLY because of Joel Lobb. He even worked with us throughout the weekend, which shocked me. Best decision I have ever made. THANK YOU SO MUCH FOR WORKING WITH US THROUGHOUT THE ENTIRE PROCESS.



Cee Bellisle August 2018


Contacted him about buying a home and he was great to work with. I was moving to Louisville Ky to take a new job and he walked me through the entire process. He explained to me all the different options for FHA, VA, USDA mortgage loans and credit score requirements versus Fannie Mae. Since I was a first time home buyer I needed alot of help and guidance. I would definitely recommend him. Fast to respond and available to answer questions that I or my realtor had after hours.

Anderson Johnson April, 2018

We moved from Michigan to Northern Kentucky area and we were really impressed. We got a USDA loan no money down and closed in less than 3.5 weeks. We shopped around online with other lenders but Joel was always first to respond and his rates were just a little better than other lenders. He kept us informed through the process along with our realtor and there was absolutely no surprises like we heard from other co-workers and friends that they experienced in their loan process. We have already referred another co-worker to Joel . He's AWESOME!


Patty Kingston July 2018


Wow, what a great loan officer. I was referred to him by our agent and he was great to work with. We used him for a USDA no money down loan in Shelby County and we were really impressed. We were afraid we could not buy a home since we did not have money saved for a down payment, but Joe l was able to get us a zero down loan and we even got our appraisal fee and good faith deposit back at closing. We actually got money back at closing!!! I Can't think him enough. Our family moved from our apartment in the south end of town to get our own home with 5 acres for our kids and 2 dogs, at a payment that is equal to our rent payment also. .Thanks Again Joel. May god bless you

Patty Locker

We contacted Joel about buying a house on our move from Ohio for my husband's job transfer with Ford. We put a lot of trust in him since we were new to the area and first time home buyers in the Louisville KY market, and he always delivered on what he said. It took us a while to find a home due to the lack of homes, but once we got one, he was always quick to respond our questions via text or email ,and kept us informed through the process. We got to meet him at the closing and he was super nice and even got us a closing gift for our home which we didn't expect at all. Super nice guy 😀!!! I would definitely recommend him for a local Home loan in the Louisville area.
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Pam Dolby

I got a VA loan with Joel and he was great. He is an ex-army guy so he could relate to my past experiences of being a veteran and moving around the country a lot. I had some credit issues that required a little extra work but Joel was able to find A VA lender to approve my situation as far as having past bad credit problems and a lower credit score. We closed yesterday on our home here in Louisville and we could not be happier. We finally have a home of our own thanks to Joel . I would definitely recommend him for a mortgage loan. Great experience and closed 8 days before expected close date so we were able to move in early.

Mandy Dickerson



I contacted Joel about the $10,000 KY Housing Grant last month and we were able to get it and I just closed on my home. He was great to work with and if you are a first time home buyer here in Louisville, I would definitely contact him. I met him at his office and he was very nice and knowledgeable and kept me informed through the process. No surprises either so I was very happy. I am new homeowner thanks to Joel .


Chad Klein





Joel Lobb (NMLS#57916)

Senior  Loan Officer


American Mortgage Solutions, Inc.
10602 Timberwood Circle Suite 3
Louisville, KY 40223

Company ID #1364 | MB73346

Text/call 502-905-3708


kentuckyloan@gmail.com

If you are an individual with disabilities who needs accommodation, or you are having difficulty using our website to apply for a loan, please contact us at 502-905-3708.

Disclaimer: No statement on this site is a commitment to make a loan. Loans are subject to borrower qualifications, including income, property evaluation, sufficient equity in the home to meet Loan-to-Value requirements, and final credit approval. Approvals are subject to underwriting guidelines, interest rates, and program guidelines and are subject to change without notice based on applicant's eligibility and market conditions.  Equal Opportunity Lender.

NMLS#57916http://www.nmlsconsumeraccess.org/
-- Some products and services may not be available in all states. Credit and collateral are subject to approval. Terms and conditions apply. This is not a commitment to lend. Programs, rates, terms and conditions are subject to change without notice. The content in this marketing advertisement has not been approved, reviewed, sponsored or endorsed by any department or government agency. Rates are subject to change and are subject to borrower(s) qualification.



Credit Score Information For Kentucky Home buyers

This offer is made by American Mortgage Solutions, NMLS #1364 and Joel Lobb, NMLS #57916,  with its main office located at 10602 Timberwood Circle Louisville, KY 40223

Text or call 502-905-3708- Not affiliated with your current lender, the FHA, or any other government agency. This message has not been approved by any government agency. Offer for FHA Cash Out Program only and all other offers will have different terms. Equity reserves is only an estimate and may be higher or lower depending on market conditions and amortization. Verification of income, employment and home value may apply. 


15-Year Fixed-Rate Mortgage:


The payment on a $200,000 15-year fixed-rate loan at 4.125% and 75% loan-to-value ratio (LTV) is $1,491.94 with .125 points due at closing. The annual percentage rate (APR) is 4.305%. Payment does not include taxes and insurance premiums. The actual payment amount will be greater. Rates shown valid on publication date of November 29, 2019. Some state and county maximum loan amount restrictions may apply.


30-Year Fixed-Rate Mortgage:


The payment on a $200,000 30-year fixed-rate loan at 4.99% (APR 5.103%) and 75% loan-to-value ratio (LTV) is $1,072.42 with .75 points due at closing. One point is equal to one percent of your loan amount. Payment does not include taxes and insurance premiums. The actual payment amount will be greater.


 Rates shown valid on publication date of September 30, 2019. Some state and county maximum loan amount restrictions may apply.To qualify for these loan programs, you must be at least 18 years of age with a valid U.S. residency.  Kentucky Mortgage Loans Only. Not licensed in any other state. 


Guidelines may vary for self-employed individuals. Formal approval will be subject to satisfactory verification of income, assets, credit, property condition and value. Additional restrictions/conditions