1. WHAT KIND OF CREDIT SCORE DO YOU NEED TO GET APPROVED FOR A VA MORTGAGE LOAN IN KENTUCKY?
Most VA mortgage lenders in Kentucky are looking for at least a 620 credit score for a VA loan approval. However, VA in their official published guidelines for credit scores says they don’t have a minimum credit. What happens with VA Lenders they will create credit overlays to push out lower credit score borrowers because if they do too many VA loans that default, then they run the risk of getting shut out from VA from them insuring their loans.
FICO credit scores range from 300 to 850. Most borrowers are in the 600 to 700 ranges with very few in the 300 to 400 range and few limited 800 scores.
It pays to shop around with different VA lenders in Kentucky to see what their…
Conventional loans – these are secured by Fannie Mae or Freddie Mac and they’re also responsible for setting the program guidelines. This is one of the most common loan programs people choose when buying a house.
Conventional loans have a First Time Home Buyer option that allows for as little as 3% down. The typical down payment for a Conventional loan is 3-5% and with a 20% down payment can avoid PMI (Private Mortgage Insurance) completely.
Conventional loans require a 620 minimum FICO score and allow debt-to-income ratios as high as 50%. They can be more challenging to qualify for than some of the other programs and the interest rates are very credit sensitive, meaning that the lower the credit score the higher your rate will be. PMI is also credit score based, so the lower the scores the higher the mortgage insurance rates will be as well.
Ideally suited for: 2nd home or investment property purchase. 10% or more down, or somebody with excellent credit.
FHA loan – FHA mortgages are the second most common program when buying a house. This is a HUD/government-backed program and was originally created for people with fair to good credit or higher debt-to-income ratios. FHA loans allow down to a 520 credit score but you’ll often need a higher score to get a loan approved.
FHA loans require a minimum down payment of 3.5% and have competitive interest rates (often better than Conventional loans), regardless of credit score. FHA allows up to a 57% debt-to-income ratio, making it easier to qualify.
Typically, a borrower with 580-680 credit would be best suited to go with an FHA loan because the interest rate will often be lower and the MIP (Mortgage Insurance Premium) on an FHA loan is based on the loan amount and is not credit score driven.
Ideally suited for: less money down, under 690 credit and/or higher debt-to-income ratios.
Comparison chart of Kentucky FHA Loans vs Kentucky Conventional Loans for 2019
Kentucky Conventional Loan versus Kentucky FHA Loan comparison chart
KY Conventional Loan
Kentucky FHA Loan
Limits
Max $484,350 for all Kentucky Counties
Max $314,827 for all Kentucky Counties
Required credit score
620 or higher required for Fannie Mae. You have three credit scores from Transunion, Experian and Equifax, and they take the middle score. Throw out high and low score. They take the Fico Score model 8 for Mortgage loans.
Minimum score of 500 to qualify for 10% down payment. Credit scores above 580 can go with a minimum credit score of 500. They take the middle credit score of the three credit bureaus just like Fannie Mae.**However, most FHA lenders will not go below 620 so keep that in mind on your FHA lenders. Credit Overlays exist for lenders that choose not to participate on lower credit…
Joel Lobb, FHA, VA, USDA, KHC, First Time Home Buyer Expert Louisville, Kentucky Source: Joel Lobb, FHA, VA, USDA, KHC, First Time Home Buyer Expert Louisville, Kentucky, Louisville, KY, Key Financial Mortgage of Kentucky reviews & blog Joel Lobb Mortgage Loan Officer 1 - Email - kentuckyloan@gmail.com 2. Call/Text - 502-905-3708 https://www.mylouisvillekentuckymortgage.com/2010/10/get-approved-for-mortgage-or-home-loan.html NMLS 57916 | Company NMLS#173846
Kentucky First-Time Home Buyer Programs | USDA, FHA, VA & KHC Loans 