Discover how zero-down payment USDA loans can help you achieve homeownership in the Bluegrass State

Buying a home in today’s real estate market can be a challenge—but a USDA loan might be the answer for you.

Almost any mortgage loan will require a down payment upfront, meaning years of saving.

If you’d rather take a shorter route to homeownership, take a look at USDA loans.

This government-backed loan program has allowed thousands of people in the Bluegrass State to buy a home without a down payment.

📞 Ready to Get Started?
Contact Joel Lobb, Kentucky Mortgage Loan Expert with over 20 years of experience
Call/Text: 502-905-3708 | Email: kentuckyloan@gmail.com

What is a USDA Loan?

The USDA created this loan program thirty years ago. Its purpose was to motivate low- and moderate-income borrowers to buy primary residence homes in rural areas in America.

USDA loan administrators did this by providing a mortgage offering 100% financing—no requirement for any down payment.

Finally, because the government backs this program, the risk to lenders is lowered. This feature, in turn, encourages USDA lenders to offer more competitive interest rates to their customers.

Where are the USDA-Eligible Areas in Kentucky?

USDA-eligible areas of Kentucky don’t necessarily need to be in remote locations. Many are distinctly suburban both in appearance and infrastructure.

Areas in the Bluegrass State that have up to 35,000 residents could still be considered rural by USDA program rules. Therefore, many suburban-type neighborhoods could be eligible for these no-down-payment loans.

If you’re unsure about a home or area you’re interested in, the best solution is to refer to the USDA’s eligibility map. All areas that are not shaded on the map are eligible for a zero-down USDA loan.

To give you a clearer concept of the USDA-rural areas near major population centers in Kentucky, check out these five examples.

Louisville, Kentucky

Several areas that are considered USDA-eligible can be found near the city of Louisville, Kentucky. The non-shaded eligible areas are within easy commuting distance. Places like Shepherdsville, Mt. Washington, and Shelbyville are just 20-30 minutes outside the city center. With a population of over 630,000 in the metro area, Louisville offers diverse employment opportunities in healthcare, manufacturing, and logistics, including companies like UPS Worldport and Humana.

The median price for a home in the Louisville metro area is approximately $245,000, well below the national median of $454,900.

Lexington, Kentucky

Known as the “Horse Capital of the World,” Lexington and its surrounding areas offer beautiful rural settings perfect for USDA loans. USDA-eligible areas like Georgetown, Versailles, and Nicholasville are within 15-25 minutes of downtown Lexington. The city is home to the University of Kentucky and has a thriving economy based on healthcare, technology, and equine industries.

Lexington, Kentucky has a median home price of approximately $280,000.

Bowling Green, Kentucky

Located in south-central Kentucky, Bowling Green is home to Western Kentucky University and the Corvette Assembly Plant. USDA-eligible areas surround the city, including communities like Alvaton, Oakland, and Smiths Grove, all within a 20-minute commute. The area has experienced steady growth with diverse employment opportunities.

The median home price in Bowling Green is approximately $260,000.

Elizabethtown, Kentucky

Situated between Louisville and Bowling Green, Elizabethtown benefits from its proximity to Fort Knox and offers numerous USDA-eligible areas. Communities like Radcliff, Vine Grove, and Cecilia provide affordable housing options within easy commuting distance. The area has a strong military presence and growing civilian economy.

The median home sales price is approximately $235,000.

Northern Kentucky (Florence/Covington Area)

The Northern Kentucky region, including Florence and Covington, sits across the river from Cincinnati, Ohio. USDA-eligible areas like Walton, Crittenden, and Williamstown offer suburban living with easy access to the Greater Cincinnati job market. The area features the Cincinnati/Northern Kentucky International Airport and diverse employment opportunities.

Median home prices in Northern Kentucky range from $250,000 to $290,000.

Check Your Kentucky Property Eligibility

Not sure if your dream home qualifies for a USDA loan? I can help you verify eligibility in minutes.Call Now: 502-905-3708 Email Me

Income Limits for USDA Loans in Kentucky

Unlike many other loan products, USDA income limits are imposed on these loans.

Why? As we mentioned above, these loans are designed for low-to-moderate-income households. These limits ensure the loans are available to the right borrowers—those who could benefit the most.

The limits are calculated based on the household income of every adult (18 years and older) and the number of members. They have two categories of household members: those with 1-4 members and those with 5-8 members.

For Kentucky, the income limits vary by county, with higher limits for metropolitan areas like Louisville and Lexington.

County or Area	1-4 Member Household Income Limit 2024-2025	5-8 Member Household Income Limit 2024-2025
Jefferson (Louisville)	$110,650	$146,100
Fayette (Lexington)	$110,650	$146,100
Warren (Bowling Green)	$103,500	$136,600
Hardin (Elizabethtown)	$103,500	$136,600
Boone/Kenton (Northern KY)	$111,350	$147,000
Most Other Kentucky Counties	$103,500	$136,600

Keep in mind: Only the incomes of those on the application count toward the amount that can be borrowed, while all adult household members count toward the income eligibility cap.

Certain deductions might also be applied to your income if you are just over the limits. For childcare and medical expenses, members of your household who need assistance, like dependents or disabled members, could qualify for deductions.

Even if your income is technically over the limit, so long as it doesn’t exceed 115% for your area, you might still qualify.

💡 Income Questions?
I can help you determine if your household income qualifies for a Kentucky USDA loan. Contact me for a free eligibility assessment.

What About Closing Costs for USDA Loans?

While there is no requirement for a down payment with USDA loans in Kentucky, you need to have funds available for closing costs—about 2-5% of the home price.

However, if your purchase price is lower than the home’s appraised value, it’s possible to roll the closing costs into the loan itself. You can pay for closing costs via a credit from the lender or seller, through gift funds, down payment assistance programs, or through other eligible sources.

Kentucky Homebuyer Assistance Programs

Like many states, the Kentucky state government offers assistance programs to folks who need home-buying assistance. Here are some programs for borrowers that might be eligible for approval.

Kentucky Housing Corporation (KHC) Programs

The Kentucky Housing Corporation offers several programs for first-time homebuyers in Kentucky:

• KHC Down Payment Assistance: Provides funds to help with down payment and closing costs for eligible first-time homebuyers. This assistance can be combined with USDA loans.
• KHC Mortgage Credit Certificate (MCC): Offers a federal tax credit that reduces the amount of federal income tax you pay, making homeownership more affordable.
• KHC Affordable Mortgage Programs: Below-market interest rate loans available to first-time homebuyers and those purchasing in targeted areas.

🏡 Down Payment Assistance Still Available!
For Kentucky first-time homebuyers, we still have down payment assistance available through KHC programs. These funds can make a huge difference in reducing upfront costs and making homeownership more accessible. Contact me today to learn more about combining USDA loans with KHC assistance.

For further information about these or other programs for homebuyers in Kentucky, I can connect you with the appropriate resources and help you navigate the application process.

Loan Limits for Kentucky USDA Loans

According to the rules of the Guaranteed USDA loan program, there are no direct limits on the amount you may borrow. Instead, a USDA lender imposes a loan limit based on your personal finances and income.

Let’s break down how that works with this example:

Monthly Income	$8,625
Principal, Interest, Tax, Insurance, HOA, Mortgage Insurance	$2,500
Front-end Debt-to-Income	29%
Student Loans, Auto Loans, All Other Payments	$1,000
Back-end Debt-to-Income	41%
Example Mortgage Rate	6.5%*
Estimated Home Price Based on the Above	$325,000

In the above example, this person has the standard income limit of $103,500 annually or $8,625 monthly. The figures above are just examples; your costs will vary.

USDA Standard Debt-to-Income Ratio

We’ve used the above example specifically because 29/41 is the standard DTI maximum for most USDA lenders. If your own DTI is greater than the standard maximum, it may not be approved.

An Exception to the DTI Maximum

Most lenders will verify USDA loan requirements using an underwriting tool called GUS (Guaranteed Underwriting System) to calculate DTI.

Applicants who exceed the maximum DTI might still be approved for a USDA loan by the GUS system—if their personal finances contain compensating factors like a high credit score.

USDA Loan Interest Rates in Kentucky

From the lender’s perspective, one major factor that makes USDA loans so attractive is the government’s backing. Should a borrower default, the USDA will reimburse the lender for up to 90% of the loan amount.

This guarantee greatly reduces the risk to lenders, allowing them to offer much more competitive USDA interest rates and fees to their potential clients.

🔍 Current Kentucky USDA Rates
Interest rates change frequently. Contact me for today’s most competitive USDA loan rates for Kentucky borrowers. I work with multiple lenders to ensure you get the best rate possible.

Property Conditions for USDA Loans

Every USDA loan requires that the property be safe and liveable.

Property standards are similar to those required for an FHA loan approval.

Properties don’t need to be immaculate or pristine. Cosmetic problems such as a bad paint job or a disheveled lawn are not likely to be a problem.

Larger structural issues like bad electrical or foundation cracks need repairing before the sale can close.

Pros and Cons of USDA Loans

Is a USDA loan the right mortgage product for you? Let’s take a quick look at the pros and cons of USDA loans compared to most other mortgages.

✓ Pros

• No down payment required
• Lower interest rates
• Options to pay for closing costs
• Mortgage insurance costs—typically lower than FHA loans
• Can be combined with KHC down payment assistance
• Flexible credit requirements

✗ Cons

• Only homes considered ‘rural’ by the USDA allowed
• Income can’t be too high
• The extra step in processing USDA loans can cause delays
• Specific property conditions (which conventional loans don’t have)

Comparing USDA Loans to Other Loan Products

FHA Loans: With FHA loans, there are no income limits, and they don’t have conditions about geographical areas. FHA loans, however, need a minimum of 3.5% down, but the funds can come from a state down payment assistance program or as a gift.

VA Loans: VA loans do not have a down payment requirement. But, they are only available to eligible military service members and some surviving spouses.

Conventional Loans: Require a down payment. While some lenders will approve a loan with as little as 3% down (for borrowers who have high credit scores), others require at least 20%.

Loan Feature	USDA	FHA	Conventional
Income Limits	$103.5K-$147K	None	None
Geographic Restrictions?	Yes	No	No
Down Payment	0%	3.5%	3%
Min. Credit Score	580-640	580	620
Upfront Mortgage Insurance	1.0% of loan	1.75% of loan	None
Monthly Mortgage Insurance	0.35% of loan annually	0.85% of loan annually	0.40-3%+ of loan annually

📊 Not Sure Which Loan is Right for You?
With over 20 years of experience and more than 1,300 Kentucky families helped, I can guide you to the best loan program for your unique situation. I offer expertise in USDA, FHA, VA, KHC, and conventional loans.

Credit Score Minimums for USDA Loans

Lenders set their own minimum standards for credit scores. If the lender you are dealing with does not allow mortgages for someone with your credit score, try shopping around.

Most USDA lenders will typically look for applicants who have credit scores of at least 620-640.

However, with the right compensating factors, some lenders may approve borrowers with credit scores as low as 580.

Mortgage Insurance Fee for USDA Loans in Kentucky

A unique fee is added to every USDA loan—one designed to help sustain the program for future borrowers.

There are two ways this special fee is calculated. If your USDA loan has the Guarantee fee version, 1% of the loan must be paid upfront upon closing. Lenders, however, allow you to include this fee within the loan itself.

The other version, the Annual fee, is calculated at 0.35% of your outstanding balance each year, or about $29 per month per $100,000 borrowed. The fee is added to your mortgage payment each month.

What are USDA Guaranteed Loans and Direct Loans?

There are two different types of USDA loans—Guaranteed and Direct. Almost all the information we’ve provided here relates exclusively to Guaranteed loans.

This is because Guaranteed loans—the majority of USDA loans—are issued by private lenders and are more suited for moderate-income earners.

On the other hand, Direct loans are issued and managed only by the government. These loans are more suited to households that have low to very low incomes—$31,550 to $50,500/year in most areas.

Direct Loans generally have stricter requirements than Guaranteed Loans. Check out the USDA Direct Loan website to explore the differences more thoroughly.

The Process of Applying for a Kentucky USDA Loan

Applying for a USDA loan in Kentucky is essentially the same as applying for a conventional or FHA loan.

All applications must be forwarded directly to the USDA for review. This step usually delays the processing time—depending on backlogs—from a few days to a few weeks.

Luckily, you don’t have to submit the application yourself; it’s the lender’s responsibility.

Here’s a breakdown of applying for USDA loans:

1. Apply for a loan with an approved lender
2. Submit all relevant documents
3. Make an offer on the home once you find the right place
4. The lender will order a property appraisal
5. The lender submits your application to the USDA for review
6. If approved, the lender finalizes the paperwork for you to sign
7. You sign the offer, and you have your new home!

⚡ Fast Approvals Available
I offer free mortgage applications with same-day approvals to keep the process moving quickly. Let’s get your Kentucky USDA loan application started today.

Kentucky USDA Loans FAQ

Why do many people choose USDA loans in Kentucky?

The lack of a down payment requirement makes USDA loans in Kentucky an attractive choice for homebuyers. An FHA loan requires a down payment of $3,500 per $100,000 in loan amount and comes with higher mortgage insurance. USDA loans are a lower cost FHA alternative perfect for Kentucky’s many eligible rural and suburban areas.

Who is best suited to use USDA loans in Kentucky?

USDA loans are ideal for first-time homebuyers, moderate-income families, and anyone looking to purchase a home in Kentucky’s eligible rural and suburban areas without a down payment. They’re especially beneficial for those who have been saving for a down payment and want to preserve those funds for moving costs, furniture, or home improvements.

If you exceed income limits for your area, can you still qualify?

If your household income is slightly over the limit (up to 115%), you may still qualify depending on household size, deductions for childcare or medical expenses, and other factors. Contact me to discuss your specific situation and explore all available options.

How long does it take to close on a USDA loan in Kentucky?

USDA loans typically take 30-45 days to close, though this can vary depending on USDA processing times and documentation requirements. Working with an experienced Kentucky mortgage loan officer can help streamline the process.

Can I use a USDA loan to buy a home with land?

Yes! USDA loans can be used to purchase homes with acreage, which is perfect for Kentucky homebuyers looking for more space. However, the land must be for residential use and cannot exceed certain acreage limits for the area.

Start Your Kentucky USDA Loan Today

The best way to discover if you meet USDA loan requirements for Kentucky is to take a few minutes to check your eligibility status.

Discover how thousands of moderate-income Kentuckians achieved their dream of homeownership by using these great USDA loans.Call Joel: 502-905-3708 Email: kentuckyloan@gmail.com

Why Work With Me for Your Kentucky USDA Loan?

Local Expertise

I know the ins and outs of Kentucky’s housing market and loan programs. With over 20 years of experience specifically serving Kentucky homebuyers, I understand the unique opportunities and challenges in the Bluegrass State.

Fast Approvals

I offer free mortgage applications with same-day approvals to keep the process moving quickly. Time is often of the essence in real estate transactions, and I work efficiently to ensure you don’t miss out on your dream home.

Customized Loan Solutions

Whether you’re buying a home or refinancing, I’ll find the right loan program to fit your needs. I specialize in USDA, FHA, VA, KHC, and conventional loans, ensuring you get the best option for your situation.

Personalized Service

I treat every client like family, ensuring you’re supported and informed throughout the process. You’ll have direct access to me throughout your home-buying journey, not a call center.

Proven Track Record

I’ve helped more than 1,300 Kentucky families achieve their dream of homeownership or refinance their current mortgages to secure lower payments. My experience means fewer surprises and a smoother closing process.

Down Payment Assistance Expertise

For Kentucky first-time homebuyers, we still have down payment assistance available through KHC programs. I can help you navigate these programs and combine them with your USDA loan for maximum savings.

Additional Resources for Kentucky Homebuyers

Beyond USDA loans, I offer comprehensive mortgage services for Kentucky residents:

• FHA Loans: Low down payment options with flexible credit requirements
• VA Loans: Zero-down financing for eligible veterans and active military
• Kentucky Housing Corporation (KHC) Loans: Special programs for first-time homebuyers with down payment assistance
• Conventional Loans: Traditional financing with competitive rates
• Refinancing: Lower your monthly payment or access your home’s equity

Kentucky Counties I Serve

I provide USDA loan services throughout Kentucky, including but not limited to:

• Jefferson County (Louisville area)
• Fayette County (Lexington area)
• Warren County (Bowling Green area)
• Hardin County (Elizabethtown area)
• Boone, Kenton, and Campbell Counties (Northern Kentucky)
• Oldham, Shelby, Bullitt, and Spencer Counties
• And all 120 Kentucky counties!

Ready to Take the Next Step?

If you’re ready to explore USDA loan options in Kentucky, I’m here to help. Here’s what you can expect when you work with me:

1. Free Consultation: We’ll discuss your homeownership goals and determine if a USDA loan is right for you
2. Pre-Qualification: Get pre-qualified quickly so you know exactly what you can afford
3. Property Search Support: I’ll help you understand which areas and properties are USDA-eligible
4. Application Assistance: I’ll guide you through every document and requirement
5. Closing Support: I’ll be with you every step of the way until you get the keys to your new home

📋 Get Started Today
Contact me for a free consultation and same-day pre-approval. Let’s make your Kentucky homeownership dreams a reality!

Contact Joel Lobb – Kentucky Mortgage Loan Officer

Specializing in Kentucky First-Time Homebuyers

📧 Email: kentuckyloan@gmail.com

📞 Call/Text: 502-905-3708

NMLS Personal ID: 57916 | Company NMLS ID: 1738461

Kentucky Mortgage Loans Only | Equal Housing Lender

Over 20 Years Experience | 1,300+ Kentucky Families Helped

This website is not endorsed by the FHA, VA, USDA, or any government agency. It is an independent platform created to educate and assist homebuyers with expert advice and accessible tools.