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Louisville, Kentucky

FHA Loans in Kentucky

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You don’t have to love horse racing or own a fancy derby hat to settle down in Kentucky. With positive job growth, a cost of living about 10% lower than the national average and affordable home costs, it’s no wonder the population of the “Bluegrass State” has grown over the past decade.

FHA loans are a great option for those looking to buy a home in Kentucky, especially if it’s your first time applying for a home loan. FHA loans have lower down payment and credit requirements than conventional loans, which equates to some pretty big savings. Keep reading to learn why a Kentucky FHA loan could be the right option for you.

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Why choose an FHA Loan in Kentucky

With Kentucky’s population growing nearly 10 percent every year, it’s no wonder so many homes are being purchased. As of April 2019, the Kentucky residents financed over $131.8 million to buy houses. Whether you want to live in Bowling Green, Frankfort, or one of Kentucky’s many charming small towns, an FHA loan can be a reliable mortgage option.

Benefits of using FHA Loans in KY

  • FHA loans are great for first-time homebuyers, especially those who can’t or don’t want to put down a large down payment.
  • FHA mortgage rates are typically lower than conventional mortgage rates.
  • FHA down payment and credit score requirements are typically lower than conventional loans
  • Sellers can contribute up to 6% of the purchase price or appraised value (whichever is less) towards the buyers’ closing costs.
  • FHA loans are assumable

FHA Loan Limits in Kentucky

There is a maximum FHA loan amount for Kentucky FHA loans, and you'll need to have some idea of how much you can borrow before you start shopping. The maximum is adjusted every year and, for 2021, is currently $331,760 for single family dwellings. If you live in a high cost of living area, never fear. The amount is adjusted for these areas so that regardless of your location, you'll be able to afford a house. Use the table below for a full list of FHA loan limits.

Kentucky FHA Loan Limits by County

County FHA Loan Limit
Bullitt $333,500
Henry $333,500
Jefferson $333,500
Oldham $333,500
Shelby $333,500
All other areas $331,760

Are You Eligible for an FHA Loan in KY?

You may be eligible for an FHA loan, if you:

  • Have 2 years of steady employment, preferably with the same employer.
  • Have had steady income (or increasing income) in the past two years.
  • Have had less than two 30-day periods of late payments on your credit report.
  • Have declared bankruptcy no less than two years ago and have maintained good credit since.
  • Have not been a party in a foreclosure for at least three years and have maintained good credit since.
  • Anticipate your mortgage payment will be equal to or less than 30% of your gross income.

What Do You Need to Apply for an FHA Loan in KY?

Buyers must be able to provide the following information and documents as requested by lenders:

  • The addresses of all your residences over the past two years.
  • The names of your employers over the past two years.
  • W2's for the past two years and current paycheck stubs.
  • Your current gross monthly salary.
  • Your Social Security Number.
  • Names, addresses, and account numbers with balances on all checking and savings accounts.
  • Addresses and loan information of any other real estate you owned.
  • Self-employed individuals will need to provide personal tax returns for the past two years and a current income statement and balance sheet for the business.
  • Students will need to provide evidence of enrollment. If you have student loans, you need to provide verification information.

Note: Facts and figures sourced from the latest statistics available at the time of this writing including data from the United States Department of Labor, United States Census Bureau and the United States Department of Housing and Urban Development.