Kentucky USDA loans are backed by the U.S. Department of Agriculture and are available to Kentucky homebuyers in eligible rural areas of Kentucky. These loans offer 100% financing. $0 down payment
Qualifying Criteria:
Credit Score: No minimum score but most KY Rural Housing Lenders will a 620 to 640 minimum credit score
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, (www.nmlsconsumeraccess.org).
To get the best Kentucky mortgage rates in Kentucky for FHA, VA, USDA, and Fannie Mae conventional loans, you should consider several key factors and steps:
1. Improve Your Credit Score for best Kentucky Mortgage Loan Rate
Kentucky Credit Score Requirements:
Kentucky FHA Loans: Typically require a minimum score of 580, but better rates are available with scores above 780.
Kentucky VA Loans: No official minimum, but lenders often prefer scores above 780.
Kentucky USDA Loans: Generally require a minimum score of 780.
Kentucky Conventional Loans: Prefer scores above 620 for competitive rates, but the best rates are usually available for scores above 780.
Actions to Improve Your Score:
Pay bills on time. Last 24 months weighted heavily
Reduce credit card balances to less than 25% of outstanding balance
Avoid opening new credit accounts before applying for a loan. Keep inquires to a minimum
2. Save for a Larger Down Payment in Kentucky
Down Payment Impact:
Larger down payments often result in lower interest rates and better loan terms.
Kentucky FHA Loans: Minimum down payment of 3.5%.
Kentucky VA Loans: Often no down payment required.
Kentucky USDA Loans: No down payment required.
Conventional Loans: Minimum down payment of 3%, but better rates with 40% down.
3. Shop Around for Lenders in Kentucky
Compare Offers: Get quotes from multiple lenders, including banks, credit unions, and mortgage brokers like Joel Lobb in Louisville, Kentucky.
Negotiate: Use the quotes to negotiate better terms.
Consider Different Loan Types: Each loan type may offer different rates and terms, so compare FHA, VA, USDA, and conventional loans.
4. Maintain a Stable Employment History
Employment Consistency: Lenders prefer a steady employment history of at least two years in the same field.
Income Verification: Provide proof of stable and sufficient income to support mortgage payments.
5. Lower Your Debt-to-Income Ratio (DTI)
DTI Requirements:
FHA Loans: Typically require a DTI below 43%.
VA Loans: Prefer a DTI below 41%, but can go higher with strong compensating factors.
USDA Loans: Generally require a DTI below 41%.
Conventional Loans: Prefer a DTI below 36%, but can accept up to 45% in some cases.
Reducing Debt: Pay down existing debt to improve your DTI ratio.
6. Consider Mortgage Points for the best mortgage rate in Kentucky
Buying Points: Pay for discount points to lower your interest rate. One point typically equals 1% of the loan amount and can reduce your rate by about 0.25%.
7. Lock in Your Rate for a Shorter term
Rate Lock: Once you find a favorable rate, ask your lender about locking it in. Rate locks usually last 30 to 60 days and protect you from rate increases during the lock period. Locking in for shorter term, say 15 days or less will get you a better rate.
8. Leverage Government Programs and Assistance in Kentucky like the Mortgage Revenue Bond program
Kentucky State Housing Programs: Kentucky offers various first-time homebuyer programs and down payment assistance, which can help you qualify for better rates.
Federal Programs: Look into federal programs such as FHA, VA, and USDA loans that offer competitive rates and terms for eligible borrowers.
9. Work with a Knowledgeable Mortgage Broker in Kentucky to shop for the best rates with multiple lenders
Expert Advice: Mortgage brokers like Joel Lobb can help navigate the various loan options, provide personalized advice, and negotiate the best rates on your behalf.
10. Lock in rate for shorter term.
Do a 15 year, or 20 year versus a 30 year term to get a lower rate.
By focusing on these factors and steps, you can increase your chances of securing the best mortgage rates available in Kentucky for FHA, VA, USDA, and Fannie Mae conventional loans.
—
Joel Lobb Mortgage Loan Officer
American Mortgage Solutions, Inc. 10602 Timberwood Circle Louisville, KY 40223 Company NMLS ID #1364
Your credit score plays a significant role in determining the interest rate you qualify for. Lenders use credit scores to assess your creditworthiness and the risk associated with lending to you. Generally, the higher your credit score, the lower the interest rate you can secure. Here’s how different credit score ranges typically impact mortgage rates:
Excellent Credit (780 and above): Aim for a 780 score or higher for the best rates -Borrowers with excellent credit scores usually qualify for the lowest mortgage rates available.
2. Down Payment:
The down payment amount affects your loan-to-value (LTV) ratio, which is the loan amount divided by the property’s appraised value. A higher down payment reduces the lender’s risk, leading to better mortgage rates. Here’s how down payments typically impact mortgage rates:
40% or more: A down payment of 40% or more often qualifies you for the best rates and eliminates the need for private mortgage insurance (PMI).
3. Debt-to-Income Ratio (DTI):
Your DTI ratio compares your monthly debt payments to your gross monthly income. Lenders use this ratio to assess your ability to manage monthly mortgage payments alongside existing debts. A lower DTI ratio indicates less financial risk to lenders, potentially leading to better rates. Here’s how to calculate DTI and improve it:
Calculate Your DTI: Add up all your monthly debt payments (such as credit cards, car loans, student loans) and divide by your gross monthly income.
Ideal DTI: Generally, a DTI of 45% or lower is considered good by most lenders.
Improve Your DTI: Paying down debts or increasing your income can lower your DTI ratio, improving your chances of securing a better rate.
4. Term of Loan:
The term of your loan, such as 15-year or 30-year, also influences the interest rate. Shorter loan terms often come with lower interest rates but higher monthly payments. Longer terms may have slightly higher rates but offer lower monthly payments.
In conclusion, to get the best Kentucky mortgage rate:
Maintain a high credit score by managing credit responsibly. Shoot for 780 or higher for the best mortgage rate on a conventional loan
Save for a substantial down payment to reduce the loan amount and LTV ratio. To get the best rate, usually 40% down will get you the best rates on a Conventional loan.
Keep your DTI ratio low by managing debts and increasing income where possible. Try to keep the debt to income ratio less than 45%
The above scenarios are for conventional loans. Rates could vary for VA, USDA, and FHA mortgage loans due to there mortgage insurance being the same for each borrower whereas conventional loans sway more toward the down payment, credit score, and debt to income ratio.
Keep in mind shorter term loans, i.e. 15 year loans vs 30 year loans will get you a better rate for all types of loans
Larger loan amounts will yield better rates vs small loan amounts due to the profits involved in the secondary market for the above loans and how lenders are paid.
Best mortgage rates in Kentucky for FHA, VA, USDA and Conventional Home Loans-
Joel Lobb Mortgage Loan Officer
American Mortgage Solutions, Inc. 10602 Timberwood Circle Louisville, KY 40223 Company NMLS ID #1364
NMLS 57916 | Company NMLS #1364/MB73346135166/MBR1574
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, (www.nmlsconsumeraccess.org).
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.
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
Joel Lobb Mortgage Loan Officer
American Mortgage Solutions, Inc. 10602 Timberwood Circle Louisville, KY 40223 Company NMLS ID #1364
Buying your first house in Kentucky involves several steps, which can vary depending on the type of loan program you choose. Here’s a detailed guide on the steps and requirements for various Kentucky First Time Home Buyer loan programs:
Minimum credit score typically required is 580 for 3.5% down payment.
Scores between 500-579 may qualify with a 10% down payment.
Income:
Stable and sufficient income to cover the mortgage payments.
Work History:
At least 2 years of consistent employment history.
Down Payment:
3.5% of the purchase price if the credit score is 580 or higher.
FICO Score:
Minimum FICO score of 580 for maximum financing.
Bankruptcy and Foreclosure:
Chapter 7 bankruptcy: 2 years from discharge with reestablished good credit.
Chapter 13 bankruptcy: 1 year of the payout period with satisfactory payment history.
Foreclosure: 3 years from completion date.
Debt Ratio:
Typically, a maximum debt-to-income (DTI) ratio of 56.9% on backend and 45% on the front end debt ratio.
Collections:
Must be addressed if they affect the borrower’s ability to repay the loan. Collections not required to be paid but must count in debt to income ratio sometimes if aggregate total on credit report is over $1000 total…Non-medical bills only, medical bills don’t count and usually not required to be paid or figure a payment unless you have a judgement of garnishment against your paystubs.
Mortgage Insurance:
Required for all FHA loans. Includes an upfront mortgage insurance premium (UFMIP) and monthly mortgage insurance premiums (MIP).
Time to Close:
Approximately 30-45 days.
Appraisal Requirements:
Property must meet minimum property standards set by HUD.
Mortgage Documents Needed for Pre-Approval Letter in Kentucky to Buy a House using a Kentucky FHA loan:
Proof of income (pay stubs, last two years W-2s, tax returns).
Proof of employment. Last two years
Proof of assets (last two bank statements). 401k or retirement account and stocks and bonds.
Kentucky Mortgage Credit report for all three credit bureaus Experian, Equifax and Transunion
Minimum credit score of 640 is preferred for automated underwriting. No minimum score required.
Scores below 640 may qualify with manual underwriting down to a 580 credit score
Income:
Must meet USDA income eligibility guidelines (typically low to moderate income). 2 year history of income.
Work History:
Stable employment history, usually for the past 2 years.
Down Payment:
No down payment required (100% financing).
FICO Score:
Minimum FICO score of 640 for automated underwriting. can go down to 580 possible
Bankruptcy and Foreclosure:
Chapter 7 bankruptcy: 3 years from discharge.
Chapter 13 bankruptcy: 1 year of the payout period with satisfactory payment history.
Foreclosure: 3 years from completion date.
Debt Ratio:
Typically, 33% for housing expenses and 45% for total DTI.
Collections:
Must be resolved if they impact the ability to repay the loan. Collections typically don’t have to be paid but may have to count a payment in your debt to income ratio if aggregate is over 1k and non-medical
Mortgage Insurance:
Annual fee and upfront guarantee fee. Currently 1% upfront and .35% month
Time to Close:
Approximately 30-45 days, including USDA processing time.
Appraisal Requirements:
Must meet HUD FHA standards.
Mortgage Documents Needed for Pre-Approval:
Proof of income (pay stubs, last two years W-2s, tax returns).
Proof of employment. Last two years
Proof of assets (last two bank statements). 401k or retirement account and stocks and bonds.
Kentucky Mortgage Credit report for all three credit bureaus Experian, Equifax and Transunion
Varies depending on the program; typically, a minimum of 580 for some programs and with KHC it requires a 620 score. .
Income:
Must meet specific program income limits.
Work History:
Stable employment history. Last two years
Down Payment:
Assistance provided to cover down payment and closing costs. 25k welcome home grant, 10k down payment assistance loan from KHC and 5% grant used available toward closing costs and down payment
FICO Score:
Minimum FICO score requirement varies by program.
Bankruptcy and Foreclosure:
Varies by program.
Debt Ratio:
Typically aligns with Kentucky FHA, VA, or USDA requirements.
Collections:
Must be addressed if they impact the ability to repay the loan.
Mortgage Insurance:
Depends on the primary loan program (FHA, VA, USDA).
Time to Close:
Approximately 45-60 days.
Appraisal Requirements:
Must meet the requirements of the primary loan program.
Varies depending on the program; typically, a minimum of 620-640.
Income:
Must meet specific program income limits.
Work History:
Stable employment history.
Down Payment:
No down payment required (100% financing).
FICO Score:
Minimum FICO score requirement varies by program.
Bankruptcy and Foreclosure:
Varies by program; typically 2-3 years from discharge or completion.
Debt Ratio:
Varies by program, typically around 41-45%.
Collections:
Must be addressed if they impact the ability to repay the loan.
Mortgage Insurance:
Depends on the primary loan program (FHA, VA, USDA).
Time to Close:
Approximately 30-45 days.
Appraisal Requirements:
Must meet the requirements of the primary loan program.
Mortgage Documents Needed for Pre-Approval:
Proof of income (pay stubs, W-2s, tax returns).
Proof of employment.
Proof of assets (bank statements).
Credit report.
General Steps for Buying Your First Home in Kentucky
Check Your Credit Score:
Obtain a copy of your credit report and check your credit score.
Determine Your Budget:
Use a mortgage calculator to estimate your monthly payments and determine a comfortable budget.
Get Pre-Approved:
Contact a mortgage lender to get pre-approved for a loan. Provide necessary documents for income, employment, and assets.
Choose a Real Estate Agent:
Select a knowledgeable real estate agent to help you find a home that meets your needs and budget.
Start House Hunting:
Visit properties, attend open houses, and narrow down your choices.
Make an Offer:
Once you find a home, work with your real estate agent to make a competitive offer.
Home Inspection:
Hire a professional inspector to check the condition of the home.
Finalize Your Loan:
Work with your lender to finalize the loan application and submit all required documents.
Appraisal:
The lender will order an appraisal to determine the home’s value.
Closing:
Review and sign all closing documents. Pay any remaining closing costs and receive the keys to your new home.
Following these steps and meeting the specific requirements of your chosen loan program will help you successfully purchase your first home in Kentucky.
Joel Lobb Mortgage Loan Officer
American Mortgage Solutions, Inc. 10602 Timberwood Circle Louisville, KY 40223 Company NMLS ID #1364
Kentucky USDA Mortgage Lender for Rural Housing Loans 