Best for buyers in rural areas with moderate incomes.
Down Payment: 0%
Credit Score: 620 to 640+ preferred
Income Limits: Varies by household size and county
Location: Must be USDA-eligible rural area
Mortgage Insurance: Annual guarantee fee required
Pros:
No money down
Low monthly mortgage insurance
Cons:
Location and income limits apply
Slower processing due to USDA approval layer
If you have questions about qualifying as a first-time home buyer in Kentucky, please call, text, or email. You can also fill out a free prequalification below for your next mortgage loan pre-approval.
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).
Chapter 13 Bankruptcy and Mortgage Loans: Buying a Home in Kentucky
Are you currently in or have recently completed a Chapter 13 bankruptcy and want to buy a home in Kentucky? Navigating the mortgage process after bankruptcy can feel overwhelming, but it’s entirely possible to qualify for a home loan with the right knowledge and preparation. Here’s what you need to know about how Chapter 13 bankruptcy impacts your ability to qualify for popular mortgage loan programs like FHA, VA, USDA, and Fannie Mae.
Chapter 13 bankruptcy can impact your ability to qualify for various mortgage loan programs like FHA, VA, USDA, and Fannie Mae. Here are the details for each program regarding waiting times, credit score requirements, down payment, and qualification criteria after a Chapter 13 bankruptcy:
Waiting Time: Typically, you’ll need to wait at least two years after the discharge date of your Chapter 13 bankruptcy before applying for an FHA loan.
Credit Score: FHA loans are known for their flexibility with credit scores. While there’s no specific minimum score, a higher score (usually around 580 or above) can help you qualify for better terms.
Down Payment: The down payment requirement for an FHA loan after Chapter 13 bankruptcy is relatively low, usually starting at 3.5% of the purchase price.
Qualification with Chapter 13 Bankruptcy: To qualify, you must demonstrate that you’ve made all Chapter 13 payments on time for at least one year and receive approval from the bankruptcy court to take on new debt.
Waiting Time: The waiting time for a VA loan after Chapter 13 bankruptcy is generally two years from the discharge date.
Credit Score: VA loans also have flexible credit score requirements, with many lenders looking for scores around 620 or higher.
Down Payment: VA loans are known for offering zero-down financing, but eligibility depends on your military service record and whether you’ve used your VA loan benefits before.
Qualification with Chapter 13 Bankruptcy: Similar to FHA, you’ll need to demonstrate a consistent payment history under your Chapter 13 plan and receive approval from the bankruptcy court.
Waiting Time: USDA loans typically require a waiting period of three years from the discharge date of your Chapter 13 bankruptcy.
Credit Score: While there’s no official minimum credit score, most lenders look for scores of 640 or higher for USDA loans.
Down Payment: USDA loans offer low to no down payment options, making them attractive for eligible borrowers in rural areas.
Qualification with Chapter 13 Bankruptcy: You’ll need to show that you’ve been making timely payments under your Chapter 13 plan for at least one year and obtain approval from the bankruptcy court.
Waiting Time: Fannie Mae typically requires a waiting period of two years from the discharge date of your Chapter 13 bankruptcy.
Credit Score: Fannie Mae loans often have stricter credit score requirements compared to FHA, VA, and USDA loans. A score of around 620 or higher is generally needed.
Down Payment: Down payment requirements vary based on the type of Fannie Mae loan you apply for, but they can range from 3% to 20%.
Qualification with Chapter 13 Bankruptcy: You’ll need to demonstrate responsible financial management after bankruptcy, including rebuilding your credit and showing a stable income.
In all cases, it’s essential to work with a knowledgeable mortgage broker like Joel Lobb, who can guide you through the specific requirements and help you navigate the loan application process after a Chapter 13 bankruptcy.
† When used with FHA, VA, or USDA *Lender overlays may apply
Credit Score Requirements
. Minimum scores vary significantly by program:
Conventional Loans: Require a minimum credit score of 620, with higher scores (660+) needed for Kentucky Housing Corporation (KHC) assistance programs
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.
USDA Loans: Typically mandate 640+ scores for automated underwriting. However, manual reviews may accept 620–640 with compensating factors like stable employment
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:
Down Payment: Minimum 3%, sourced from personal savings, gifts, or KHC assistance
Credit Score: 660+ for Conventional Preferred; slightly lower scores may qualify for Plus 80 with higher income thresholds
Income Limits: Up to 80% of AMI for Conventional Preferred; Plus 80 accommodates incomes up to $183,400 in designated counties
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
KHC Programs: Income limits fluctuate by county;
USDA Income limits fluctuate by county;
VA has no income limits
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
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
$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:
Low down payments as little as 3%.
Flexible mortgage options for borrowers with household incomes below the area median income.
Reduced mortgage insurance requirements, making homeownership more affordable.
620 credit scores or higher
lower mortgage insurance
3 percent down payment
4 years removed from bankruptcy
Home Possible®:
Freddie Mac’s Home Possible® program offers:
3% down payment options for eligible buyers.
Flexible credit terms and lower mortgage insurance premiums.
Special features to assist low-income buyers achieve their homeownership goals.
620 credit scores or higher
lower mortgage insurance
3 percent down payment
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
Property Types: The grant applies to purchases of 1-4 unit properties.
Income Limits: Borrower’s income must not exceed 50% of the Area Median Income (AMI).
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!
Programs: Available through HomeReady® and Home Possible® loan programs.
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:
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
You don’t need to be a first-time Kentucky homebuyer to qualify for HomeReady®.
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.
Income limits below for Major Cities in Kentucky
Why Choose HomeReady® Over Other Loan Options?
Lower Down Payment: Only 3% is required, compared to 3.5% for FHA loans.
Reduced Mortgage Insurance Costs: Save money over the life of the loan.
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
Check Your Eligibility: Use the AMI Lookup Tool to determine if your income qualifies for the grant.
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.
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.
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
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Address: 911 Barret Ave., Louisville, KY 40204
COMPANY NMLS# 1738461
Kentucky USDA Mortgage Lender for Rural Housing Loans 