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- Homebuyers can receive mortgages, down-payment assistance, and tax credits through the Kentucky Housing Corporation.
- Your income must not exceed certain thresholds to be eligible for most of these programs.
- You could also qualify for programs with the city of Louisville, the US Department of Housing and Urban Development, or your lender.
Buying a home is an expensive endeavor. But if you live in Kentucky, you may be eligible for financial assistance through the government. Most first-time homebuyer programs are through the Kentucky Housing Corporation (KHC), although there are a few additional options.
Kentucky first-time homebuyer loan programs
KHC Conventional Preferred Program
A KHC 30-year fixed-rate mortgage is for both first-time and repeat homebuyers, and it comes with discounted mortgage insurance.
To qualify, you'll need to have credit score of at least 660 and be able to make a 3% down payment. The price of the home must not exceed $349,525, and the applicant can't earn more than 80% of the area median income. The maximum income limit ranges from $49,360 to $77,920 in 2023, depending on the county. Keep in mind that income limits for this program are for the applicant, not the entire household.
KHC Conventional Preferred Plus 80
The KHC Conventional Preferred Plus 80 Program is similar to the regular Conventional Preferred Program, with two key differences. First, you'll pay a standard price on mortgage insurance. Second, the income limits for applicants are higher.
Kentucky down payment assistance programs
KHC Regular Down Payment Assistance Program
The Regular Down Payment Assistance Program can be combined with either of the aforementioned KHC mortgages. You'll receive as much as $10,000 to put toward a down payment or closing costs. It comes in the form of a loan with a 3.75% interest rate, and you'll pay it back over 10 years.
To be eligible, you must buy a home that costs $349,525 or less. Income limits vary by county, and range from $128,800 to $173,425.
Louisville Down Payment Assistance
Louisville residents may qualify for a zero-interest down payment loan for up to 20% of your home price through the local government. The city will forgive 50% of your loan if you live in the house for five to 15 years. (The required length of stay will depend on how much you borrow.) You'll pay off the remaining amount when you sell, refinance, or pay off the mortgage in full.
To qualify, your household income must be no more than 80% of the area median income. Income limits start at $47,450 for a single person and increase with more members in a household. An eligible existing single-family home can cost up to $220,000, and a new construction can cost up to $257,000.
You also must already be preapproved by a lender, have no debt collections (other than up to $10,000 in medical), and have at least $1,500 in savings. You'll complete a homebuyer education course.
Other Kentucky first-time homebuyer programs
KHC Home Buyer Tax Credit
The Mortgage Credit Certificate (MCC) helps first-time homeowners save money on taxes. Each year, you'll receive a credit of 20% of the interest paid on your mortgage that year, not to exceed the amount of your federal tax liability.
To be eligible, your home purchase price must be $349,525 or less. There are also household income limits that vary by county.
Assistance through your lender or local resources
You might qualify for a program through your mortgage lender, such as a down payment loan or a low-interest mortgage.
Darrin English, senior community development loan officer at Quontic Bank, has a tip for finding assistance if you aren't eligible through the Kentucky Housing Corporation, the city of Louisville, or your lender.
"I would recommend that every individual buying a home for the first time, no matter your socioeconomic background, align yourself with a Housing and Urban Development-sponsored not-for-profit whose job it is to educate the public on buying a home for the first time," English says.
Assistance through the not-for-profits associated with the federal housing agency can often be combined with programs offered by the state government. English suggests searching for a HUD-sponsored homebuying education counselor to learn about all of your options.
The best first-time homebuyer program for you will probably depend on your income and price of the home you want to buy.