USDA, VA, FHA, and Conventional Loans in Kentucky: Key Differences for First-Time Homebuyers

Choosing the right mortgage program is crucial for Kentucky homebuyers, especially first-timers. Here’s a clear comparison of USDA, VA, FHA, and Conventional loans. We also provide a detailed breakdown of these loans. Learn how Kentucky-specific programs like KHC Down Payment Assistance fit in.

Loan Program Comparison Table

FeatureUSDAVAFHAConventional
Max Financing100%100%96.5%97% (3%–5% down)
Finance Closing CostsYesNoNoNo
Upfront Fee1% Guarantee Fee2.3–3.6% Funding Fee1.75% MIPVaries
Monthly Mortgage Ins.0.35%None0.85%Varies, can drop at 80% LTV
Bankruptcy Wait3 Years2 Years2 Years (Ch. 7)4–7 Years
Foreclosure Wait3 Years2 Years3 Years7 Years
Short Sale Wait3 Years2 Years3 Years4 Years
Seller Concessions6%No cap (4% to debts)6%3–9% (LTV dependent)

Detailed Loan Program Breakdown

USDA Rural Housing Loan

  • Best for: Rural Kentucky buyers with low to moderate income
  • Down Payment: 0% required
  • Credit Score: 640+ preferred for automated approval
  • Mortgage Insurance: Low (0.35% monthly, 1% upfront guarantee fee)
  • Location: Must be USDA-eligible rural area
  • Bankruptcy/Foreclosure Wait: 3 years
  • Key Benefit: 100% financing for eligible rural buyers Kentucky USDA Home Buyers info click here for more info.

VA Loan (For Veterans and Military)

  • Best for: Veterans, active duty, and eligible military members
  • Down Payment: 0% required
  • Credit Score: Typically 580–620+ (no official VA minimum, but lenders set overlays)
  • Mortgage Insurance: None
  • Funding Fee: 2.3% (first-time), 3.6% (subsequent use)
  • Location: Anywhere in Kentucky
  • Bankruptcy/Foreclosure Wait: 2 years
  • Key Benefit: No down payment is needed. There is no monthly mortgage insurance. The credit requirements are flexible. Click here for more info on VA Mortgage Loans In Kentucky.

FHA Loan

  • Best for: First-time buyers or those with credit challenges
  • Down Payment: 3.5% (580+ score), 10% (500–579 score)
  • Credit Score: 580 minimum for most lenders
  • Mortgage Insurance: 0.85% monthly (for life of loan), 1.75% upfront
  • Bankruptcy Wait: 2 years (Ch. 7), 1 year (Ch. 13)
  • Foreclosure Wait: 3 years
  • Grants Allowed: Yes (e.g., KHC Down Payment Assistance)
  • Key Benefit: Easier qualification and lower down payment for lower credit scores. Click here for more info on Kentucky FHA Mortgage Loans.

Conventional Loan

  • Best for: Buyers with strong credit and stable income
  • Down Payment: 3%–5%
  • Credit Score: 620 minimum (680+ for best rates)
  • Mortgage Insurance: Required if <20% down, but can be removed at 80% LTV
  • Closing Costs: Often higher unless lender-paid via higher rate
  • Bankruptcy Wait: 4 years (Ch. 7), 2 years (Ch. 13)
  • Foreclosure Wait: 7 years
  • Key Benefit: Lower long-term costs for buyers with higher credit and down payment click here for more info on Conventional Mortgage Loans.

Kentucky-Specific Assistance: KHC Down Payment Assistance

  • Program: Kentucky Housing Corporation (KHC) Down Payment Assistance
  • Amount: Up to $10,000 as a second mortgage, paid over 10 years
  • Eligible Loans: FHA, VA, USDA, Conventional
  • Min Credit Score: 620 (660 for Conventional)
  • Debt Ratio Cap: 50%
  • Best for: Buyers who qualify for a loan. They lack down payment funds. Click here for more info on KHC Down payment Assistance Programs.

Louisville-Specific: The Louisville Down Payment Assistance Program offers up to 20% of the purchase price. It provides a maximum of $40,000 for those earning 80% or less of the local median income. This assistance is partially forgivable after 15 years

Which Loan Is Right for You?

  • Choose USDA if you want zero down and live in a rural area.
  • Choose VA if you’re a veteran or active-duty military-no down payment, no MI, and flexible credit.
  • Choose FHA if you have lower credit or limited down payment funds.
  • Choose Conventional if you have good credit and can put at least 3%–5% down, aiming to avoid long-term mortgage insurance.

Working with a Kentucky-based mortgage expert, like Joel Lobb, can help you in several ways. He helps you navigate these options. He also assists in comparing rates and securing the best program for your needs. He specializes in all major loan types and KHC assistance, offering personalized support for first-time homebuyers.


Each loan program has unique advantages. Consider your credit, income, location, and down payment ability. You can leverage Kentucky’s down payment assistance if needed. Consult a local mortgage expert to make the most informed choice for your situation.

 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.

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