Tag: Real estate

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

Kentucky First-Time Home Buyer Mortgage Guide


Loan Program Comparison

Kentucky First-Time Homebuyer Loan Comparison (Quick View)

ProgramDown PmtMin Credit*DTI LimitMI/PMITermiteAUS
FHA3.5%580+31/43%+YesOptionalDU
VA0%580–62041% + ResidualNoRequiredDU
USDA0%640+29/41%+YesOptionalGUS
KHC DPA0%†620+ gov
660+ conv		≤ 50%Based on primaryOptionalDU/GUS

† When used with FHA, VA, or USDA
*Lender overlays may apply

Credit Score Requirements

. Minimum scores vary significantly by program:

  1. Conventional Loans: Require a minimum credit score of 620, with higher scores (660+) needed for Kentucky Housing Corporation (KHC) assistance programs
  2. FHA Loans: Permit scores as low as 500 with a 10% down payment or 580 with 3.5% down, though lenders often impose stricter floors (580–620) due to risk assessments.
  3. USDA Loans: Typically mandate 640+ scores for automated underwriting. However, manual reviews may accept 620–640 with compensating factors like stable employment
  4. VA Loans: While the U.S. Department of Veterans Affairs does not set a minimum, most lenders require 580–620 for favorable terms

Income Limits

Income restrictions apply primarily to state-assisted programs:

  • KHC Programs: Income caps
  • USDA Loans: Target low-to-moderate income households, with limits adjusted by county and household size

Debt-to-Income (DTI) Ratios

Lenders evaluate borrowers’ ability to manage monthly payments relative to income:

  • Conventional Loans: Maximum DTI of 43%, though KHC programs extend this to 50% with strong credit profiles
  • FHA Loans: Allow DTIs up to 57% if justified by Automated Underwriting System (AUS) approvals
  • VA Loans: Cap DTI at 41%, supplemented by residual income requirements

Property Requirements

  • Primary Residence: All programs mandate occupancy within 60 days of closing
  • Purchase Price Limits: KHC-imposed ceilings of $510,939 for single-family homes, adjusted periodically for inflation
  • Geographic Restrictions: USDA loans apply only to properties in rural areas, as defined by the U.S. Department of Agriculture

Kentucky Housing Corporation (KHC) Programs

Conventional Preferred and Plus 80

These flagship programs offer 30-year fixed-rate mortgages with reduced mortgage insurance premiums:

  1. Down Payment: Minimum 3%, sourced from personal savings, gifts, or KHC assistance
  2. Credit Score: 660+ for Conventional Preferred; slightly lower scores may qualify for Plus 80 with higher income thresholds
  3. Income Limits: Up to 80% of AMI for Conventional Preferred; Plus 80 accommodates incomes up to $183,400 in designated counties
  4. Education: Completion of a HUD-approved homebuyer education course is mandatory for conventional loans

Mortgage Revenue Bond Program

This initiative provides below-market interest rates for government-backed loans:

  • Eligibility: First-time buyers in non-targeted areas; repeat buyers permitted in targeted zones
  • Combined Assistance: This may be paired with KHC’s Down Payment Assistance (DPA). It offers up to $10,000 as a second mortgage at 3.75% interest over 10 years

Down Payment Assistance (DPA)

  • Structure: Second mortgage with 10-year term, forgivable if the borrower retains the property for the duration
  • Usage: Funds applicable to down payments, closing costs, and prepaid expenses
  • Cannot be used to fix up house or buy stuff for home

Loan Programs

FHA Loans

Insured by the Federal Housing Administration, these loans cater to borrowers with imperfect credit:

  • Down Payment: 3.5% with a 580+ credit score; 10% for scores between 500–579
  • Mortgage Insurance: Upfront premium of 1.75% plus annual premiums of 0.45–1.05%
  • Flexibility: Higher DTIs permitted with compensating factors like significant cash reserves
USDA Loans

Designed for rural homebuyers, USDA loans offer 100% financing:

  • Income Limits: 115% of AMI for most counties, adjusted for household size
  • Credit Requirements: 640+ for automated approval; manual underwriting required for scores 620–640
  • Property Eligibility: Must be located in USDA-designated rural zones,
VA Loans

Exclusive to veterans, active-duty personnel, and eligible spouses:

  • Down Payment: 0% required, with no private mortgage insurance (PMI)
  • Funding Fee: 1.25–3.3% of the loan amount, varying by service category and down payment
  • Credit Standards: Most lenders require 580–620 scores, though the VA itself imposes no minimum

Income and Purchase Price Limitations

  1. KHC Programs: Income limits fluctuate by county;
  2. USDA Income limits fluctuate by county;
  3. VA has no income limits
  4. FHA had no income limits

Employment Verification

  • Stability: Most programs require two years of steady employment, with exceptions for graduates entering the workforce
  • Self-Employment: Requires two years of tax returns to verify income consistency


 kentuckyloan@gmail.com 

  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.

Kentucky Local Home Loan Lender Services

 First-Time Home Buyers Welcome
 FHA, Rural Housing (USDA), VA, and Kentucky Housing Corporation (KHC) Loans
 Conventional Loan Options Available
Fast Local Decision-Making
 Experienced Guidance Through the Home Buying Process

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.

How to Get $2,500 in Grant Assistance for Your New Home in Kentucky in 2025!


$2500 Grant from Fannie Mae and Freddie Mac To Buy a home in Kentucky

Kentucky Homeownership just got more affordable for low-to-moderate income Kentucky residents! If you’re planning to buy a home in 2025, you could qualify for a $2,500 grant.

This grant is available through Freddie Mac’s Home Possible® and Fannie Mae’s HomeReady® programs. This limited-time offer can help cover your down payment. It also assists with closing costs. This makes the dream of homeownership more accessible. Let’s break it down!

What Are HomeReady® and Home Possible® Programs?

HomeReady®:

Offered by Fannie Mae, this program provides:

  1. Low down payments as little as 3%.
  2. Flexible mortgage options for borrowers with household incomes below the area median income.
  3. Reduced mortgage insurance requirements, making homeownership more affordable.
  4. 620 credit scores or higher
  5. lower mortgage insurance
  6. 3 percent down payment
  7. 4 years removed from bankruptcy

Home Possible®:

Freddie Mac’s Home Possible® program offers:

  1. 3% down payment options for eligible buyers.
  2. Flexible credit terms and lower mortgage insurance premiums.
  3. Special features to assist low-income buyers achieve their homeownership goals.
  4. 620 credit scores or higher
  5. lower mortgage insurance
  6. 3 percent down payment
  7. 4 years removed from bankruptcy

The $2,500 Grant: What You Need to Know

This $2,500 credit can be used toward:

  • Down payment costs and prepaids for taxes, home insurance and prepaid interest
  • Closing costs, helping to reduce the financial burden of purchasing a home.

Eligibility Criteria

  1. Property Types: The grant applies to purchases of 1-4 unit properties.
  2. Income Limits: Borrower’s income must not exceed 50% of the Area Median Income (AMI).
  3. Loan Programs: The credit is available exclusively through Fannie Mae’s HomeReady® and Freddie Mac’s Home Possible® loan programs.

Program Duration

  • Loans must achieve “purchase-ready” status by February 28, 2026.
  • For loans delivered into mortgage-backed securities (MBS), the deadline is February 1, 2026.

Why Take Advantage of This Program?

This grant is a game-changer for first-time and low-income homebuyers in Kentucky. The financial relief offered helps bridge the gap for individuals and families working toward their goal of owning a home.

Get Started Today!

If you’re ready to make your move, contact an experienced loan officer who specializes in HomeReady® and Home Possible® programs. They can guide you through the eligibility process. They will help you take the next step toward achieving your dream of homeownership with this incredible grant opportunity.

If you’re in Kentucky, don’t miss this chance to access $2,500 in grant assistance. Make your homeownership dream a reality in 2025. For more information, get in touch with a local expert today!

What You Need to Know:

  1. Eligibility: Your income must be ≤ 50% of the Area Median Income (AMI) to qualify.
    👉 Check the AMI Map for Your Area
  2. Property Types: Applies to 1-4 unit properties.
  3. Programs: Available through HomeReady® and Home Possible® loan programs.
  4. Deadlines: Loans must achieve “purchase-ready” status by February 28, 2026.

Don’t miss this opportunity to reduce your upfront homebuying costs. Find out if you qualify and connect with a local loan officer today. These grants are limited and offered for a short time—act before the deadlines pass!

Eligibility Requirements for the $2,500 Grant

This $2,500 credit is available exclusively through Fannie Mae’s HomeReady® mortgage. Here’s what you need to qualify:

1. Mortgage Insurance

  • If you put less than 20% down, you’ll need mortgage insurance. However:
    • HomeReady® mortgage insurance premiums are reduced once your loan-to-value ratio reaches 90%.
    • The insurance is canceled when you reach 80% equity. Unlike FHA loans, they often require mortgage insurance for the loan’s life.

2. Kentucky First-Time or Repeat Homebuyers

  1. You don’t need to be a first-time Kentucky homebuyer to qualify for HomeReady®.
  2. If all borrowers on the loan are first-time buyers, at least one must complete a homeownership education course. This course can be Fannie Mae HomeLier.
  3. Income limits below for Major Cities in Kentucky

Why Choose HomeReady® Over Other Loan Options?

  1. Lower Down Payment: Only 3% is required, compared to 3.5% for FHA loans.
  2. Reduced Mortgage Insurance Costs: Save money over the life of the loan.
  3. Flexible Eligibility: The program is open to both first-time and repeat buyers. The flexibility in household income allows multi-generational income to help you qualify.

How to Get Started

  1. Check Your Eligibility: Use the AMI Lookup Tool to determine if your income qualifies for the grant.
  2. Contact a Lender: Work with a lender who offers HomeReady® mortgages. They can guide you through the application process and help determine your grant eligibility.
  3. Complete a Homebuyer Education Course: If you’re a first-time homebuyer, complete the required course to meet eligibility.

Take the First Step Toward Homeownership in Kentucky

The $2,500 credit from Fannie Mae’s HomeReady® mortgage offers a fantastic way to reduce your upfront costs. It helps make homeownership more affordable. Whether you’re a first-time buyer or looking to upgrade, this grant is here to help.

Don’t miss out on this limited-time opportunity to take advantage of a program designed to help Kentucky homebuyers like you. Start your journey today and make your dream home a reality!

Below is a snapshot of current income limits for Homeready and Home Possible. These are the income limits for Jefferson, Fayette, Warren, and Daviess County. This is for 2025 household income limits.

Click on picture for more info for other Kentucky properties.

🏠 COMPANY NMLS# 1738461
Advertised in: KY

ADVERTISEMENT |EVO Mortgage  is an Equal Housing Opportunity Lender NMLS # 1738461   (Nationwide Multistate Licensing System –

 www.nmlsconsumeraccess.org) Terms, conditions, and restrictions may apply. All information contained herein is for informational purposes only and, while every effort is made to ensure accuracy, no guarantee is expressed or implied. Not a commitment to extend credit.

Borrower must meet all loan program and eligibility requirements. Information is subject to change without any notice. This is not an offer for an extension of credit or a commitment to lend. Restrictions may apply.

TERMS AND CONDITIONS: Eligibility for the $2,500 credit is based on qualifying income at or below 50% of the Area Median Income (AMI). This is determined via Fannie Mae’s and Freddie Mac’s respective tools. The credit must be applied toward down payment and/or closing costs for eligible 1-unit properties. It is also applicable for 2-4 unit properties with LTV ≤ 80%. The program applies to FNMA HomeReady® loans with closing dates between March 1, 2024, and February 28, 2025. It also applies to FHLMC Home Possible® loans within the same dates. All loans must be approved via DU or LPA

 Email – kentuckyloan@gmail.com 

 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.

Kentucky Housing Corporation (KHC) Mortgage Loans


KHC Path to Affordable KENTUCKY Homeownership

If you’re a first-time homebuyer in Kentucky, the Kentucky Housing Corporation (KHC) offers exceptional programs. If you’re looking for affordable mortgage solutions, they also offer exceptional programs. These programs are designed to make homeownership more accessible. KHC provides options for down payment assistance. They offer low-interest mortgage revenue bond (MRB) loans and support for finding your dream home. KHC is a trusted resource for Kentucky residents.

Here’s a complete guide to KHC’s homebuyer programs. Learn how they can help you achieve your goal of owning a home.

Step 1: Contact a KHC-Approved Lender

To get started, reach out to a lender approved by KHC. These lenders will guide you through the qualification process, reviewing key factors such as:

  • Credit score and history
  • Income and employment
  • Debt-to-income (DTI) ratio

Your lender will help determine your eligibility for KHC mortgage programs. They will also assist in tailoring a loan that meets your financial needs.

Step 2: See If You Qualify for Down Payment Assistance

KHC provides up to $10,000 in down payment assistance, helping cover one of the biggest barriers to homeownership.

  • Assistance can also be applied toward closing costs.
  • Discuss the specific terms with your lender. Determine if this assistance aligns with your financial goals. Also, check the program requirements.

Why This Matters: Many first-time buyers lack the upfront funds for a down payment. KHC’s down payment assistance bridges the gap, making homeownership more affordable and attainable.

Step 3: Explore the Mortgage Revenue Bond (MRB) Program

KHC’s Mortgage Revenue Bond (MRB) Program offers 30-year fixed-rate mortgages at below-market interest rates. This program is ideal for:

  • Buyers seeking affordable monthly payments.
  • Those who meet specific income and purchase price limits.

How It Works:
Your lender will evaluate whether your income falls within the program guidelines. They will help you take advantage of these low mortgage rates.

Step 4: Find a House You Love

With pre-approval in hand, work with a trusted real estate agent to find a home that:

  • Fits your budget and lifestyle.
  • Meets KHC program requirements (e.g., within purchase price limits).

This step is all about aligning your long-term housing goals with a property that qualifies under the KHC guidelines.

Step 5: Close the Deal

Once your loan is approved and inspections are completed, it’s time to finalize the purchase.

  • Sign the closing documents to officially become a homeowner.
  • Celebrate reaching this milestone and enjoy your new home!

Why Choose KHC Mortgage Programs?

  1. Down Payment Assistance: With up to $10,000 available, KHC reduces the financial burden for first-time buyers.
  2. Low Mortgage Rates: Through the MRB program, KHC offers competitive, below-market interest rates.
  3. Trusted Guidance: Approved lenders provide personalized assistance to guide you through every step of the process.
  4. Support for Kentucky Residents: Tailored programs ensure that Kentucky homebuyers have access to affordable housing solutions.

Who Is Eligible for KHC Mortgage Programs?

Eligibility for KHC programs depends on:

  1. Income Limits: Your household income must fall within program guidelines, which vary by county and household size.
  2. Credit Requirements: A minimum credit score is required (varies by lender and loan type).
  3. Property Location: Homes must meet KHC’s criteria, such as price limits and condition requirements.

Take the First Step Toward Homeownership

Whether you’re a first-time buyer or looking for affordable financing options, KHC’s programs can help you secure your dream home. With no-money-down options, low mortgage rates, and tailored assistance, homeownership is within reach.

Contact an Approved KHC Lender Today:

  1. Find out how much you qualify for.
  2. Explore available down payment assistance programs.
  3. Start your journey to affordable homeownership in Kentucky!