Home financing in Mclean County.

Home financing — most commonly called a mortgage — is a loan that lets you buy a home by spreading the cost over many years, usually 15 to 30.

You make a monthly payment that covers both the amount you borrowed (the principal) and interest.

Most home loans also include property taxes and homeowner's insurance bundled into the monthly payment through an escrow account.

There are several types of home loans you might encounter:

• **Conventional loans** — offered by banks and credit unions, typically requiring a credit score of 620 or higher and a down payment of 3–20%.

• **FHA loans** — backed by the federal government, with lower down payment requirements (as low as 3.5%) and more flexible credit guidelines. These are popular with first-time buyers.

• **USDA Rural Development loans** — because much of McLean County is classified as a rural area, many properties here qualify for USDA loans, which can offer zero-down-payment financing for eligible buyers.

• **VA loans** — for veterans and active-duty military, offering favorable terms and no down payment requirement.

• **ITIN loans** — for buyers who do not have a Social Security Number but do have an Individual Taxpayer Identification Number. Some local and regional lenders offer these.

Federal programs like FHA and USDA set the rules, but it is local lenders, credit unions, and nonprofit intermediaries who process and fund these loans for you. That local layer is where your journey really begins.

McLean County is a small, close-knit rural county in western Kentucky, anchored by the county seat of Calhoun.

Its economy is rooted in agriculture, small business, and trades.

Many residents are self-employed, work seasonal jobs, or earn income in ways that do not show up neatly on a W-2 form. The good news is that lenders familiar with rural economies understand this.

**General eligibility factors most lenders look at:**

• **Income** — Lenders want to see that you have a reliable income to make monthly payments. Self-employed borrowers typically need two years of tax returns to demonstrate consistent earnings.

• **Credit history** — A score of 580 or above opens up FHA loan options. Some ITIN lenders and CDFIs work with buyers who have limited or no traditional credit history by looking at alternative records like rent payments, utility bills, and bank statements.

• **Down payment** — This can range from zero (USDA) to 3–20% depending on the loan type. Down payment assistance programs are available through Kentucky Housing Corporation (see Section 4).

• **Debt-to-income ratio** — Most lenders prefer your total monthly debts to be no more than 43–45% of your gross monthly income.

• **Property location** — USDA Rural Development loans require the property to be in an eligible rural area. Most of McLean County qualifies, but always confirm on the USDA eligibility map.

**ITIN borrowers:** If you file taxes with an ITIN rather than an SSN, you are not excluded from homeownership. Several lenders in the broader western Kentucky region accept ITINs. You will typically need two years of ITIN tax returns, a solid bank history, and a down payment of 10–20%.

**Solo contractors and gig workers:** Bring two years of self-employment tax returns (Schedule C), bank statements, and any 1099 forms. Lenders will average your net income over two years.

Gathering your documents before you meet with a lender saves time and shows you are serious. Here is what most home loan applications require:

**Identity & legal status:**

- Government-issued photo ID (driver's license, passport, or consular ID)

- Social Security Number or ITIN

- If applicable, immigration documents (green card, visa, work authorization)

**Income & employment:**

- Last two years of federal tax returns (all pages, all schedules)

- Last two years of W-2s or 1099s

- Most recent 30 days of pay stubs (for W-2 employees)

- If self-employed: business tax returns, profit and loss statement, and business bank statements

**Assets:**

- Last two to three months of bank statements (all pages, all accounts)

- Documentation of any gift funds used for a down payment (a gift letter is required)

- Retirement or investment account statements, if applicable

**Property:**

- Purchase agreement (once you have one)

- Address of the property

**Credit:**

- Your lender will pull your credit report directly — you do not need to bring it

- If you have limited credit, bring 12 months of rent receipts, utility payment records, or insurance payment history as alternatives

**ITIN-specific:**

- ITIN confirmation letter from the IRS

- Two years of ITIN tax returns

- Additional bank statements (typically 12–24 months)