Category: fico scores

5 Bad Credit Mortgage Options in Kentucky for Homebuyers


Bad Credit Mortgage Options in Kentucky for Homebuyers

5 Bad Credit Mortgage Options in Kentucky for Homebuyers

By Joel Lobb, Senior Loan Officer | NMLS #57916 | Louisville, KY

Bad Credit Mortgage Options in Kentucky | FHA, VA, USDA, and More

Discover 5 bad credit mortgage solutions in Kentucky. Learn about FHA, VA, USDA, Non-QM loans, and KHC Down Payment Assistance with Joel Lobb, Mortgage Loan Officer.

Can You Get a Mortgage with Bad Credit in Kentucky?

Absolutely. As a mortgage broker who has helped over 1,300 Kentucky families achieve homeownership, I can assure you that bad credit doesn’t have to be a deal-breaker. With the right loan program and personalized guidance, you can buy a home even with less-than-perfect credit.

Several government-backed and alternative loan programs are designed specifically for buyers facing credit challenges. Let’s dive into the top 5 options available in Kentucky today.

1. FHA Loan – Credit Scores from 500+

Best For: First-time homebuyers and low-credit borrowers

Key Features:

  • Minimum Credit Score: 500 (requires 10% down) or 580+ (requires 3.5% down)
  • Loan Type: HUD-backed
  • Down Payment: 3.5% for scores 580+, 10% for 500-579
  • Benefits: Flexible credit standards, low down payments
  • Considerations: Mortgage insurance premium (MIP) required

Other Requirements:

  • No bankruptcies in the past 2 years
  • No foreclosures in the past 3 years
  • Stable 2-year work history
  • 1-3 months’ reserves recommended

Bonus: Down payment assistance programs may be available for scores 580+

FHA loans are a great option if you’ve overcome past credit issues but have stable income and rental history.

2. VA Loan – For Veterans and Active-Duty Service Members

Best For: Veterans, active-duty personnel, and eligible surviving spouses

Key Features:

  • Minimum Credit Score: No VA-mandated minimum; most lenders prefer 620+
  • Down Payment: 0%
  • Loan Type: VA-backed
  • Benefits: No PMI, competitive rates, flexible DTI ratios

Other Requirements:

  • Must meet VA residual income requirements
  • Requires a Certificate of Eligibility (COE)
  • 2 years stable employment history
  • No bankruptcies or foreclosures within the past 2 years
  • Termite inspection required

As a veteran myself, I’ve closed over 300 VA loans across Kentucky. You’ve earned these benefits — let’s use them.

3. USDA Loan – Rural Housing with 100% Financing

Best For: Low- to moderate-income buyers in rural areas

Key Features:

  • Minimum Credit Score: 620-640 (varies by lender)
  • Down Payment: 0%
  • Loan Type: USDA-backed
  • Benefits: No money down, competitive rates, flexible underwriting

Other Requirements:

  • Income limits apply ($112,450 for 1-4 household members; $148,450 for 5+)
  • 3 years removed from bankruptcy/foreclosure
  • Primary residence only
  • Upfront mortgage insurance (1%) and monthly (0.35%) for life of loan

USDA loans are perfect for buyers in eligible Kentucky counties seeking affordable paths to homeownership.

[View USDA Eligible Areas and Income Limits Here]

4. Non-Qualified Mortgage (Non-QM)

Best For: Self-employed, investors, recent credit events

Key Features:

  • Flexible Income Documentation: Use bank statements, rental income (DSCR), or asset depletion
  • Waiting Period: As little as 1 year after bankruptcy or foreclosure
  • Down Payment: 10%-20% typically required
  • Benefits: Alternative income accepted, flexible underwriting
  • Considerations: Higher rates, not government-backed

If you’re a 1099 contractor, truck driver, gig worker, or recovering from a bankruptcy, Non-QM loans open new doors.

5. Kentucky Housing Corporation (KHC) Down Payment Assistance (DAP)

Best For: Buyers needing help with down payment or closing costs

Key Features:

  • Loan Amount: Up to $10,000 assistance
  • Credit Score: Minimum 620 (FHA/VA/USDA); higher for conventional
  • Interest: 0% loan
  • Forgiveness: Potential after set time period

Other Requirements:

  • Primary residence only
  • Income and purchase price limits apply
  • Homebuyer education course completion
  • No recent bankruptcy or foreclosure

Combine KHC DAP with FHA, VA, or USDA loans for an even stronger path to affordable homeownership in Kentucky.

Who These Programs Help

  • First-time homebuyers
  • Low- to moderate-income families
  • Borrowers with prior collections or credit dings
  • Self-employed or gig workers
  • Veterans and rural buyers

What’s Next?

Don’t guess which loan fits you best. Let’s build a personalized mortgage plan based on your unique credit profile, income, and homeownership goals.

📞 Call or Text: (502) 905-3708
📧 Email: kentuckyloan@gmail.com
🌐 Website: www.mylouisvillekentuckymortgage.com

Joel Lobb — Mortgage Loan Officer
911 Barret Ave., Louisville, KY 40204
Evo Mortgage | Company NMLS# 1738461 | Personal NMLS# 57916

#BadCreditMortgage #KentuckyHomeLoans #FirstTimeHomebuyerKY #FHAloanKY #VALoanKY #USDALoanKY #KHC #MortgageHelpKY

how to get a free credit score for a mortgage loan approval?


To get a free mortgage FICO score (FICO Score 2, 4, or 5), which are the models most commonly used by mortgage lenders, you will need to use the next resources below:

  1. MyFICO: MyFICO provides the exact FICO Score versions (2, 4, and 5) used for mortgages. Although it’s not free, they sometimes offer free trials or one-time purchases. It’s worth checking their promotions.
  2. Contact a Mortgage lender that will give you the free fico mortgage credit scores for free. Some lenders will give them to you with a credit application, and some will make you pay for them. If you end up doing the loan with the lender, you will pay for them at the closing. This payment will be on the settlement statement. You will not have to pay out of pocket upfront. The costs of credit reports and credit scores have tripled in the last 2 years. Some lenders now require you to pay for them.
  3. As a mortgage broker, we will give you FICO mortgage credit scores versions 2, 4, 5 for free. We will collect them at closing if you end up doing a loan with us. If you are denied or your loan application is withdrawn, the fee is not collected.

Credit scores used for a Kentucky mortgage loan approval for Experian, Equifax and transunion

A mortgage broker or lender, like Joel Lobb in Kentucky, may run your mortgage-specific FICO scores during prequalification. This service is often provided at no cost.

Would you like me to guide you on how to access any of these?


1 –  Email – kentuckyloan@gmail.com 

2.   Call/Text – 502-905-3708

Joel Lobb
Mortgage Loan Officer – Expert on Kentucky Mortgage Loans


www.mylouisvillekentuckymortgage.com
 Address: 911 Barret Ave., Louisville, KY 40204

Evo Mortgage
Company NMLS# 1738461
Personal NMLS# 57916

For assistance with Kentucky mortgage loans, reach out via email, call, or text Joel Lobb directly.

What are the Kentucky Credit Score Requirements for a Mortgage Loan Approval?


What are the Kentucky FHA Credit Score Requirements for Mortgage Loan Approvals?


1 –  Email – kentuckyloan@gmail.com 2.   Call/Text – 502-905-3708

Joel Lobb
Mortgage Loan Officer – Expert on Kentucky Mortgage Loans


🌐 Website: www.mylouisvillekentuckymortgage.com
🏢 Address: 911 Barret Ave., Louisville, KY 40204

Evo Mortgage
Company NMLS# 1738461
Personal NMLS# 57916

For assistance with Kentucky mortgage loans, reach out via email, call, or text Joel Lobb directly.

Featured Post

Credit Scores for Kentucky Mortgages


Minimum Credit Score Requirements for a Kentucky Mortgage Loan Approval Loan

Here are the most common loan programs and their general guidelines on credit scores:

FHA Loans in Kentucky
FHA mortgage loans are issued by federally qualified lenders and insured by the U.S. Federal Housing Authority, a division of the U.S. Department of Housing and Urban Development. These loans are an attractive option for many borrowers, not just first-time homeowners.

FHA loans are available to borrowers with credit scores as low as 500. Borrowers with scores under 580 will need to have a 10% down payment.

VA Loans In Kentucky 
VA Loans are designed to offer long-term financing to American Veterans. These loans are issued by federally qualified lenders and are guaranteed by the United States Veterans Administration. The Veterans Administration determines eligibility and issues a certificate to qualifying applicants to submit to their mortgage lender of choice.

The Veterans Administration does not set a minimum credit score; however, lenders do impose their own limits. Some lenders will go down to a 500 credit score and will also do loans for borrowers without a credit score.

Conventional Loans In Kentucky
Conventional loans are mortgage loans offered by private lenders that are not guaranteed or insured by a government agency. These loans may also be referred to as conforming loans.

Conventional loans are available to borrowers with credit scores as low as 620.

USDA Loans in Kentucky
The United States Department of Agriculture offers a home loan program designed to help individuals living in small towns or rural areas. This loan program is designed to help qualifying applicants, who may not be able to qualify for other types of mortgage loans, purchase homes as their primary residences.

USDA Guaranteed loans are available to borrowers with credit scores as low as 581 and borrowers with no credit scores.

A note for Borrowers with No and Low Credit Scores
While it’s not impossible to qualify for a home loan with a low credit score or no credit score, it does make it harder to qualify. If you have a low credit score or you do not have a credit score, lenders will look more critically at other risk factors that you may have. This includes recent late payments, collection accounts, the amount of funds you have saved up, employment history and the time at your current job, etc.

If you do not have a credit score, it means that the credit bureaus do not have enough information about you to give you a score. While there are some options available to borrowers without a credit score, most lenders will require that you provide proof of payment history on “alternative trade lines”. These are lines of credit or utilities that do not report to the credit bureaus, such as rent, cell phone, electric, cable/internet, car insurance, etc. Acceptable “alternative trade line” accounts must meet certain criteria. The account must be in your name, it must be 12 months old, every payment must have been made on time every single month, and proof of payment must be provided on the creditor’s letterhead.

GETTING APPROVED WITH LOW OR NO CREDIT SCORES
You are more likely to be approved with low or no credit scores if you:

Make a larger down payment than is required.
Have sufficient reserves in checking and/or savings accounts.
Have low debt-to-income ratios, which is the percentage of your income that needs to be used towards paying your proposed mortgage and other lines of credit such as auto loans, student loans, credit cards, etc. Paying down existing debt will improve your debt-to-income ratio.

The best part about credit scores is that they aren’t set in stone! It’s never too late start working on improving your credit. If our team can’t pre-approve you today, we’ll come up with a custom plan to help you get to where you need to be. There’s nothing to lose, so apply today!

Joel Lobb  Mortgage Loan Officer NMLS 57916

EVO Mortgage
911 Barret Ave, Louisville, KY 40204
Company NMLS ID # 173846

Text/call: 502-905-3708

email: kentuckyloan@gmail.com

http://www.mylouisvillekentuckymortgage.com/

NMLS 57916  | Company NMLS #173846
The view and opinions stated on this website belong solely to the authors, and are intended for informational purposes only. The posted information does not guarantee approval, nor does it comprise full underwriting guidelines. This does not represent being part of a government agency. The views expressed on this post are mine and do not necessarily reflect the view of my employer. Not all products or services mentioned on this site may fit all people.
NMLS ID# 57916, (http://www.nmlsconsumeraccess.org).

I can answer your questions and usually get you pre-approved the same day. 


Call or Text me at 502-905-3708 with your mortgage questions.

Email Kentuckyloan@gmail.com



Kentucky Mortgage Broker Offering FHA, VA, USDA, Conventional, and KHC Down Payment Assistance Home Loans's avatarLouisville Kentucky Mortgage Loans

via Credit Scores for Kentucky Mortgages

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Are you looking for a Kentucky mortgage and wondering what score is used for a home loan approval?


When you are ready to apply for a Kentucky mortgage loan approval to buy a house in the state of Kentucky, you will need a more accurate picture of how a mortgage lender may view your Transunion, Experian, Equifax credit reports and their scores. Scores go from 344 to 850 on each three credit bureaus and they take the middle score of the three, throwing out the highest and lowest score.  Kentucky Mortgage lenders look at your credit on Equifax as well as TransUnion and Experian — all 3 bureaus.
Illustration of a credit report based on Experian, TransUnion and Equifax data
 

components of Fico Score are payment history, amounts owed, credit types, new credit and length of credit

Although FICO Score version 8 is one of the latest and most predictive versions of the FICO Score, the mortgage industry generally uses the “classic” versions 5, 4 and 2 from Transunion, Equifax and Experian

Louisville Kentucky Mortgage Lender for FHA, VA, KHC, USDA and Rural Housing Kentucky Mortgages: WHAT IS THE MINIMUM CREDIT SCORE FOR A KENTUCKY FHA MORTGAGE HOME LOAN APPROVAL?

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Joel Lobb  Mortgage Loan Officer

American Mortgage Solutions, Inc.
10602 Timberwood Circle
Louisville, KY 40223
Company NMLS ID #1364

Text/call: 502-905-3708

email: kentuckyloan@gmail.com

http://www.mylouisvillekentuckymortgage.com/

NMLS 57916  | Company NMLS #1364/MB73346135166/MBR1574