After more than 20 years helping Kentucky families get into homes through FHA loans, VA loans, USDA Rural Housing programs, and KHC (Kentucky Housing Corporation) programs, I’ve seen the same mistakes trip up buyers again and again. These aren’t complicated mistakes — they’re often simple ones that are completely avoidable if you know what lenders are looking for.

The biggest one? Not understanding how your bank deposits will be scrutinized.

Why Your Bank Statements Are Under a Microscope

When you apply for a mortgage in Kentucky, your lender will request your last two to three months of bank statements. This isn’t just to confirm how much money you have — it’s to verify that every dollar is legitimate and can be documented as an acceptable source for your down payment and closing costs.

Lenders — and the government-backed programs like FHA, VA, and USDA Rural Development — have strict rules about where your money comes from. Undocumented cash deposits are one of the top reasons mortgage approvals are delayed or denied in Kentucky today.

The 5 Bank Deposit Scenarios Every Kentucky Buyer Must Understand

Here’s how lenders evaluate your deposits — and what you’ll need to provide in each situation. These guidelines apply to most programs including FHA, USDA, VA, KHC, and conventional Fannie Mae loans in Kentucky.

Other Common Mortgage Mistakes Kentucky Homebuyers Make

Bank deposits are just one piece of the puzzle. Here are other mistakes that frequently derail Kentucky mortgage approvals:

1. Applying for New Credit Before Closing

Opening a new credit card, financing a car, or applying for any loan between your pre-approval and your closing date can change your debt-to-income ratio and credit score — potentially killing the deal. Wait until after you’ve closed on your Kentucky home before making any new credit moves.

2. Changing Jobs During the Loan Process

Lenders verify your employment right before closing. Switching jobs — even for a higher salary — can disrupt the process significantly. If you’re changing from salaried to self-employed, it can require up to two years of tax returns in your new capacity before lenders will count that income. Talk to me before you make any career changes during a purchase transaction.

3. Underestimating Closing Costs

Kentucky homebuyers typically need 2–5% of the loan amount in closing costs, on top of the down payment. If you’re using a KHC Down Payment Assistance program, some of these costs can be covered — but you still need to understand what you’re bringing to the table.

4. Not Getting Pre-Approved Early Enough

In today’s Kentucky housing market, sellers want pre-approved buyers. A pre-approval isn’t just a formality — it tells you exactly how much home you can afford, what programs you qualify for, and gives you a competitive edge when you make an offer.

5. Ignoring Your Debt-to-Income Ratio

Your debt-to-income (DTI) ratio is one of the most important numbers in your mortgage file. Most Kentucky loan programs prefer a DTI below 43–50%. Paying down credit cards and auto loans before applying can dramatically improve your approval odds and the rate you qualify for.

Quick Checklist: How to Prepare Your Bank Accounts Before Applying

• Avoid depositing large amounts of cash within 60 days of applying for a mortgage.
• If you receive a gift for your down payment, get the gift letter and paper trail in order before the money moves.
• Keep your bank accounts clean and consistent — avoid unusual transfers between accounts without clear documentation.
• Deposit any side job or freelance income at least 60–90 days before applying so it can be fully seasoned.
• Talk to your mortgage loan officer before you start saving so you know exactly what your lender will need to see.
• Avoid opening or closing any credit accounts in the 90 days before or during your loan process.
• Save your pay stubs and tax returns — lenders will need at least two years of employment/income history.

The Bottom Line for Kentucky Homebuyers

Getting a mortgage in Kentucky doesn’t have to be stressful — but it does require preparation. The more organized and transparent your financial picture is when you sit down to apply, the smoother and faster your approval will be.

The good news: most of these issues are completely preventable if you start planning early. If you have questions about your specific situation — whether you’re dealing with cash deposits, gift funds, side income, or just aren’t sure where you stand — I’m here to help. I offer free mortgage applications with same-day approvals and have helped over 1,300 Kentucky families achieve homeownership.

Don’t let an avoidable mistake stand between you and your Kentucky home. Reach out today.