Kentucky Mortgage Overview
Known for the Kentucky Derby and all things
horse racing, Kentucky is known as the 'Bluegrass State.' The scenery is
gorgeous and there are homes for all price ranges, but Kentucky is a great
place for first-time homebuyers because the median home price is $151,000 and
the median mortgage payment is just $1,300.
If you're thinking about moving to Kentucky,
here are your mortgage options:
Kentucky FHA loans
FHA loans offer flexible
underwriting guidelines for first-time and subsequent homebuyers. Borrowers
need just a 580 credit score and a 45 percent debt ratio. With just 3.5 percent
down, you can buy a home, but you'll have mortgage insurance for the life of
the loan, so include it in your budget.
Kentucky VA loans
Veterans of the military or
even current military members have access to 100% financing if they have at
least a 620 credit score. VA loans have the most flexible guidelines and VA
lenders focus mostly on a borrower's disposable income to make sure you can
cover the cost of daily living. VA loans don't require mortgage insurance but
do have an upfront funding fee.
Kentucky USDA loans
Borrowers who love the
wide open or living in areas of lower population may be eligible for a Kentucky
USDA loan. Your household income must be less than 115% of the area's median
income to be eligible and you must buy an owner-occupied home. USDA loans don't
require a down payment but do have mortgage insurance for the life of the loan.
Kentucky conventional loans
great credit and low debt ratios get the best interest rates and terms with conventional
loans. You need just 3 percent down, but with less than a 20 percent down
payment, you'll pay Private Mortgage Insurance until you owe less than 80
percent of the home's value.
First-Time Homebuyer Programs in Kentucky
Down Payment Assistance
Receive down payment
assistance up to $6,000 that's repayable over 10 years at 1 percent interest.
To qualify, you must meet the income
Borrowers with at least a 660 credit score may
qualify for the Conventional
Preferred program which requires a 3 percent down payment, allows down
payment assistance and doesn't require borrower contribution.
Borrowers with a 620 credit score may qualify
for the FHA program through the Kentucky Housing Corporation. You'll need a 3.5
percent down payment but can use down payment assistance for it.
Veterans with at least a 620 credit score can
use the VA program with no down payment requirements. You can use the DAP funds
for closing costs or to earn some equity in the home right away.
First-time homebuyers may be
eligible for a tax credit equal to 25 percent of the interest paid for the
year, up to $2,000 but only if you buy a home that's worth $294,600 or less.