Kentucky FHA Appraisal Requirements For A Mortgage Loan Approval.

Kentucky FHA Appraisal Requirements For A Mortgage Loan Approval.


  • Ordered through a third party source. Interested/vested parties may not initiate the appraisal. I.E> buyers, sellers, realtors, loan officer, family members
  • Property must meet HUD’s minimum property standards. i.e.: permanent heat source, utilities must be on and in working order at time of inspection
  • Flips < 90 days – not allowed Per HUD -If current owner owned less than 90 days FHA will not insure. Sometimes a second appraisal will be required by FHA investor if sold within the last 6 months for a large profit. Receipts of work done may be needed to substantiate  increase in value of home in short-time period.
  • Transferred appraisal – ok
  • Appraisal valid 120 days – 30 day extension possible*
  • Property eligibility – No location restrictions.
  • New Construction Available


Resales Occurring 90 Days or Fewer after Acquisition:
 Not eligible for FHA financing
Resales occurring between 91 days and 180 Days after Acquisition:
 Obtain 2nd appraisal if resold between 91 to 180 days after acquisition
 Obtain 2nd appraisal if resale price is 100% or more over price paid by seller
 If 2nd appraisal is more than 5% lower than value of first appraisal, the lower value must be used
 Borrower not allowed to pay for 2nd appraisal
Exceptions to FHA Flipping Rules:
 Property purchased by an employer or relocation company due to relocation of an employee
 Resales by HUD – REO program
 Sales by other government agencies (i.e., IRS, court-ordered, DEA, etc.)
 Sales of non-profit agencies approved to purchase HUD properties
 Acquisition due to inheritance
 Sales of properties by federally chartered financial institutions
 Sales of properties by GSE’s
 Sales of properties by local or state governments
 Sales by builders selling a new home
 Sales of properties in federally declared disaster areas
NOTE: Mortgage Company must obtain a 12-month chain of title to document time restrictions above.

 No Flipping Rules – Overlays may apply or at Underwriter’s discretion

 Lender is responsible to ensure that any recently sold property’s value is strongly supported when a significant
increase between sale and purchase occurs.
 Lender must ensure that the appraisal value is supported with validated comps and protect the borrower from
predatory lending.

Fannie Mae Appraisal Flipping Rules
 No Flipping Rules – Lender overlays may apply
Freddie Mac
 No Flipping Rules – Lender overlays may apply


Joel Lobb
Senior  Loan Officer
text or call my phone: (502) 905-3708
email me at
The view and opinions stated on this website belong solely to the authors, and are intended for informational purposes only. The posted information does not guarantee approval, nor does it comprise full underwriting guidelines. This does not represent being part of a government agency. The views expressed on this post are mine and do not necessarily reflect the view of my employer. Not all products or services mentioned on this site may fit all people. NMLS ID# 57916, ( Mortgage loans only offered in Kentucky.
All loans and lines are subject to credit approval, verification, and collateral evaluation and are originated by lender. Products and interest rates are subject to change without notice.





What are the 2014 Kentucky FHA Guidelines for credit scores, down payments, cash out, and mortgage insurance requirements for a FHA Mortgage loan?

Kentucky FHA Program guidelines have been updated as follows:

For a Kentucky FHA Purchase Loan, we can go down to a 600 credit score with the minimum down payment of 3.5%.  No bankruptcies or foreclosures in the last 2 years.

If you are getting cash out, then the max loan to value or equity position is limited to 85% of the homes value. For example, if you had a home that was valued at $100,000, then the max loan for a FHA Cash Out in Kentucky would be $85,000.00. You still have to may mortgage insurance for life of loan so think carefully about using FHA for a cashout refinance.

The maximum debt to income ratios will be set by the AUS when we run it, but for a refer, it will be limited to 31% and 43% respectively. For example, if you make $3000 a month gross income, the max house payment would be $930.00 piti, and the maximum monthly payments including the new house payment would be $1290.00. So in the above example, the most you could have left in monthly bills listed on the credit report would be $360.00–If you had child support this would count in the dti calculation on the backend ratio of 43%

The seller can pay up to 6% of the buyer’s closing costs and prepaids (property taxes, home insurance for 1st years escrows) of the sales price. So, if you purchased a home for $100,000.00, the seller could give you a concession at closing to pay your closing costs and prepaids. A lot of Kentucky First Time homebuyers use this to limit their cash to close.

The minimum down payment of 3.5% for Kentucky FHA Loans can come from a family member in the form of a gift, or can be borrowed from a 401k, retirement account, or secured asset like a car.

• Seller must own the property a minimum of 90 days prior to the contract date.

FHA loans do not require a termite or home inspection, but they do require a HUD appraisal by a FHA approved Appraiser.

The following changes are effective for all Kentucky  FHA case numbers assigned on or after June 3, 2013: FHA is changing the duration for the collection of MIP
o For all mortgages with an original principal LTV of 90% or less, regardless of loan term, the annual MIP will be assessed for 11 years.
o For all mortgages with an original principal LTV greater than 90%, regardless of loan term, the annual MIP will be assessed for the entire life of the loan.

Loans of 15 year terms or less with LTV 78% or less will pay an MIP amount of 45 bps.

FHA Streamlines Prior to June 2009
FHA Streamlines with case numbers dated June 11, 2012 or later will have new MIP rules applied. If the loan being refinanced was endorsed on or before May 31, 2009, the new Streamline will receive a flat annual MIP of 55 basis points, regardless of loan amount, and the UFMIP ratio will decrease to 0.01% of the base loan amount.



2014 Kentucky FHA Loan Guidelines for Credit, Down payment, income,

Senior Loan Officer

American Mortgage Solutions, Inc.
800 Stone Creek Pkwy, Ste 7,
Louisville, KY 40223

phone: (502) 905-3708
Fax: (502) 327-9119

Company ID #1364 | MB73346


FHA loans are secured through the FHA, or Federal Housing Administration
FHA loans are secured through the FHA, or Federal Housing Administration


Effective immediately,  will now accept Kentucky HUD REO purchases where the property is eligible for the $100 down payment incentive when obtaining Kentucky  FHA 203(b) financing. Properties must be in as-in condition and UNOTU subject to any repair escrow requirements. These incentives are provided by HUD and may be changed or discontinued by HUD at any time. Submissions for use of the $100 down payment incentive must meet the following guidelines:


  • The $100 down payment incentive is only available if it is on the executed sales contract or cover letter from HUD accompanying the HUD sales contract.


  • When using the $100 dollar down incentive the LTV will exceed the maximum 96.5%. The AUS will return an “ineligible” findings when ran through DU. Review the findings to ensure that the loan is only ineligible due to exceeding the max allowed LTV. Borrowers using this program may finance the cost of the Up Front MIP through their Kentucky FHA insured loan provided the total mortgage amount (base loan amount + Up Front MIP = Total loan amount) does not exceed 100% of the “as-is” appraised value. Approved borrowers are not eligible to finance prepaid expenses and/or financing/closing cost through their Kentucky FHA insured mortgage. (See HUHUD Mortgagee Letter 2011-19UH)
  • UExample scenario when sales price equals value:

Sales Price:                                       $100,000

Value:                                                 $100,000

Maximum total mortgage:           $100,000

Maximum base mortgage:           $99,010  ($100,000 value / 1.01 …..Assuming 1% UFMIP)

UFMIP:                                               $990.10   (only $990 of this gets financed since total loan is rounded down to nearest dollar)

Total loan amount:                          $100,000 ($99,010 base PLUS $990 whole dollar portion of UFMIP).


Required down payment:            $990          (Sales price minus base loan amount).
Required cash to close:    $     (down payment plus closing costs and prepaids [other than UFMIP] not paid by seller)


Example when Value exceeds sales price:

Value: $100,000

Sales price: $95,000

Maximum FHA loan amount can receive is calculated as follows:

($95,000 – $100 down payment= $94,900 + 1% UFMIP of $949 = $95,849. The upfront MIP is allowed in this example since the total loan amount will not exceed 100% of the appraised value.



  • All loans require borrowers to make a $100 down payment. The standard FHA policy requiring that borrowers make a 3.5% investment is not required for the FHA $100 down payment incentive. Borrowers may not receive any cash back at closing. The seller (HUD) contributions stated on the HUD REO sales contract, if any, can only be used toward closing costs and prepaid expenses.


  • Owner occupied only. Non- occupying co-borrowers not permitted.


  • All loans utilizing the $100 down incentive will be underwritten according to standard FHA guidelines. Loans must be run through Total Scorecard using DU. Total Scorecard should return an “ineligible” for mortgage amount calculation when using this program. Please review the DU findings to ensure that the loan is only ineligible due to the max mortgage amount and/or LTV.


  • To calculate the FHA maximum mortgage amount using the $100 down incentive, take the lesser of the sales price or appraised value minus the $100 down payment. This will be the new base loan amount. Calculate the Up Front MIP accordingly to determine total loan amount which cannot exceed 100% of the appraised value.

2019 Kentucky FHA Loan Requirements

What are the Kentucky FHA Credit Score Requirements for 2019 Mortgage Loan Approvals?

Kentucky Conventional Loan versus Kentucky FHA Loan comparison chart

Joel Lobb
Mortgage Loan Officer
Individual NMLS ID #57916
American Mortgage Solutions, Inc.

Text/call:      502-905-3708

fax:            502-327-9119


Disclaimer: No statement on this site is a commitment to make a loan. Loans are subject to borrower qualifications, including income, property evaluation, sufficient equity in the home to meet Loan-to-Value requirements, and final credit approval. Approvals are subject to underwriting guidelines, interest rates, and program guidelines and are subject to change without notice based on applicant’s eligibility and market conditions. Refinancing an existing loan may result in total finance charges being higher over the life of a loan. Reduction in payments may reflect a longer loan term. Terms of any loan may be subject to payment of points and fees by the applicant  Equal Opportunity Lender. NMLS#57916
— Some products and services may not be available in all states. Credit and collateral are subject to approval. Terms and conditions apply. This is not a commitment to lend. Programs, rates, terms and conditions are subject to change without notice. The content in this marketing advertisement has not been approved, reviewed, sponsored or endorsed by any department or government agency. Rates are subject to change and are subject to borrower(s) qualification.
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