Kentucky FHA Loans

An FHA loan is a home loan that is backed by the U.S. Federal Housing Administration (FHA). These loans provide accessible financing to borrowers who might otherwise be turned down for a traditional Kentucky mortgage loan at their bank. Government backing means that Kentucky FHA lenders can offer competitive rates, low down payment requirements, and more flexible credit scoring criteria than with traditional mortgage loans.

Because of the relaxed credit requirements and competitive terms, FHA loans in KY are a great choice for the first-time home buyer, recent graduate, or for families that have recently overcome financial hardships.

An FHA loan in Kentucky offers several benefits that make it a smart choice for certain buyers:

• Flexible credit criteria: You will not be immediately disqualified for having a low credit score, limited borrowing history, or a past bankruptcy. As long as your application shows responsible pay habits, consistent income, and a FICO of at least 500, you may still qualify for a mortgage.

• Low down payments: The minimum down payment for a well-qualified buyer with a Kentucky FHA home loan is 3.5% of the purchase price. This is lower than the down payment required for many other mortgages, and makes it easier for younger buyers or those without a large savings to get into homeownership.

• Competitive rates: Because the FHA is insuring the loan, lenders enjoy significantly less financial risk. This means very competitive rates for the borrower that can rival conventional mortgage loans.

• Flexible structure: With the FHA 203(k) program, you can use your Kentucky FHA loan to wrap the home purchase, as well as any necessary renovations and repairs, into one simple mortgage. There are also options for adjustable- and fixed-rate structures, depending on your needs.

If these benefits sound like what you’re looking for in a home loan, we recommend downloading the Griffin Gold app to monitor your credit, track finances, and develop an action plan to purchase your dream home.

KY FHA loan requirements are generally more flexible than those of conventional mortgage loans. Here are the most important basic requirements that must be met to apply:

• Credit score: For the best chance to secure an approval with a 3.5% down payment, your credit score should be at least 580. FICOs as low as 500 are considered, however you may need to come up with a larger down payment – usually at least 10% – to offset the higher risk.
• Down payment: You will need to show the ability to make a 3.5% to 10% down payment, depending on the strength of your mortgage application. 
• Steady employment and income: Two years worth of consistent employment is required, as well as steady income. There is no minimum income required, so recent graduates and those who have recently changed careers may still qualify.
• Debt-to-income ratio (DTI): Your DTI is a simple calculation of your monthly gross income (before taxes are taken out) that goes toward paying bills and debts. Kentucky FHA lenders are looking for an ideal DTI of no higher than 45%. However, DTIs as high as 57% will still be considered.
• Property requirements: When working with a real estate agent to find the perfect home, you’ll need to keep within the FHA loan limit for the respective county if you want to avoid a larger down payment. The home will also need to meet the condition standards set by the FHA to ensure the house is safe, sound, and structurally secure.

In Kentucky, the FHA loan limit statewide is $498,257 for a single-family home, regardless of its physical location within the state.

The FHA loan limits are set by HUD (U.S. Department of Housing and Urban Development) according to median home prices by county or population area. If a certain area is considered as “high cost,” the limit may be raised accordingly. As of this writing, however, the standard limit applies statewide.

Griffin Funding specializes in Kentucky FHA home loans, and has worked to make the application process smooth. Here is what you can expect when you apply:

1. Confirm your eligibility: Make sure your credit score is at least 580 for the best approval terms. Scores as low as 500 are considered, but 580 is the preferred minimum. Also, you’ll need to be able to show at least two years of consistent employment and income. Your DTI should be no higher than 57%, though you should aim to keep it at 45% or lower.
2. Gather required documents: You’ll need tax returns, pay stubs, and proof of employment history, as well as valid government-issued identification.
3. Get your mortgage pre-approval: You can apply online or over the phone to start the pre-approval process. One of our knowledgeable agents will reach out to answer questions or request any additional documents necessary to build a strong application.
4. Begin house hunting: Once you’ve been pre-approved, you can work with a licensed real estate agent to find a home that fits your needs while still keeping within FHA loan limits and condition standards.
5. Approval and closing: Once you’ve found a qualifying home, you can submit your official application to secure the loan and release funds to the seller. Our agents will be there every step of the way to make sure things go as smoothly as possible.

Though many Kentucky lenders offer FHA loans, many don’t possess the deep knowledge or extensive experience necessary to smoothly navigate the process. Griffin Funding is proud to specialize in FHA home loans, and will be an effective partner in working to attain your dream of homeownership.

Apply now to start the process and experience the difference of working with a Kentucky FHA loan specialist. Together, we can help you get into your first home, refurbish or refinance your existing home, or create an action plan to set you up for the best approval in the future.