Kentucky First-Time Home Buyer Approval Requirements for a Mortgage Loan (2025 Guide)
Buying your first home in Kentucky can feel overwhelming, but knowing the requirements upfront makes the process smoother. Lenders look closely at your credit score, down payment, and debt-to-income (DTI) ratio before issuing a pre-approval. Here’s what you need to know in 2025.
Core Approval Requirements
Credit Score
Conventional loans: Minimum 620 (better rates at 700+)
FHA loans: 580 with 3.5% down; 500 with 10% down
VA loans: No set minimum, but most lenders prefer 620+
USDA loans: Typically 640, though some approvals possible with 580–639 via manual underwriting
Down Payment
Conventional: 3%–20% (20% avoids PMI)
FHA: 3.5% minimum, or 10% if under 580 credit
VA & USDA: Zero down payment required
KHC DAP: Up to $12,500 (through Nov. 30, 2025) for down payment and closing costs
Debt-to-Income (DTI) Ratios
Front-end ratio: Housing costs only — aim for under 31%–36%
Back-end ratio: Housing + debts — typically capped at 41%–50% depending on program
Kentucky First-Time Homebuyer Loan Options
Conventional Loan: Best for strong credit; competitive rates and terms
FHA Loan: Great for lower scores or limited savings; includes mortgage insurance
USDA Rural Housing Loan: Zero down for rural areas; income/location limits apply
VA Loan: Zero down, no MI, and favorable terms for veterans/service members
Kentucky Housing Corporation (KHC) Programs:
