Kentucky Housing Income Limits for Mortgage Loans

Kentucky Housing Corporation (KHC) Income & Purchase Price Limits for 2026

Last updated: February 2026  |  By Joel Lobb, Mortgage Loan Officer (NMLS #57916)

📌 Quick Summary for 2026:

• KHC Maximum Purchase Price: $544,232 (effective June 23, 2025)
• KHC Down Payment Assistance (DAP): Up to $12,500
• Minimum Credit Score: 620 for all KHC-backed programs
• Maximum Debt-to-Income Ratio: 50% (with AUS approval)
• Front-End Ratio Cap: Eliminated as of June 24, 2024
• 2026 FHA Loan Limit (Kentucky): $541,288

If you are a first-time homebuyer in Kentucky — or even a repeat buyer — one of the most important steps before shopping for a home is understanding the Kentucky Housing Corporation (KHC) income limits and purchase price limits that apply to your county and loan program. These limits determine whether you qualify for KHC's lower interest rates, down payment assistance, and other homebuyer benefits.

This guide has been fully updated for 2026 to reflect the latest KHC guidelines, FHA loan limits, and down payment assistance amounts. Whether you're exploring an FHA, VA, USDA, or conventional loan through KHC's Secondary Market program, read on for everything you need to know.

What Is the Kentucky Housing Corporation (KHC)?

The Kentucky Housing Corporation (KHC) is a self-supporting public agency created by the Kentucky General Assembly in 1972. Its mission is to create affordable housing opportunities for low- and moderate-income Kentuckians. KHC does this by offering below-market interest rate mortgages, down payment assistance, and homebuyer education programs statewide.

KHC loans are available through a network of KHC-approved lenders — including local mortgage brokers like myself — and they can be combined with FHA, VA, USDA, and Fannie Mae (conventional) loan products. This flexibility makes KHC one of the most powerful tools available for Kentucky first-time homebuyers.

2026 KHC Purchase Price & Income Limits

KHC operates two primary loan tracks: the Secondary Market Program (open to first-time and repeat buyers) and the Mortgage Revenue Bond (MRB) Program (generally limited to first-time buyers with stricter income caps). Both have county-specific income limits you must meet.

KHC Secondary Market Program — 2026 Key Numbers

Requirement	2026 Limit / Guideline
Maximum Purchase Price	$544,232
Minimum Credit Score	620
Maximum Debt-to-Income (DTI)	50% (with AUS approval)
Front-End Ratio Cap	Eliminated (as of June 24, 2024)
Eligible Buyers	First-time and repeat buyers
Property Types	Single-family, primary residence

⚠️ Important: KHC income limits are county-specific and are based on total household income — not just the borrowers on the loan. Adult members of the household who are not on the loan may still have their income counted. Always verify your county's specific limit with a KHC-approved lender before assuming you qualify.

General Income Limit Ranges (by Program)

While KHC publishes county-by-county tables on their website, the general income limit ranges for Kentucky in 2026 are approximately:

Program	Approximate Income Limit Range	Who Qualifies
KHC Secondary Market	$82,000 – $140,000 (varies by county & household size)	First-time & repeat buyers
KHC MRB (Mortgage Revenue Bond)	Lower limits — county-specific	First-time buyers only (some exceptions)
KHC Down Payment Assistance (DAP)	Must meet KHC first mortgage income limits	All KHC first-mortgage borrowers

For exact income limits by county, visit KyHousing.org or call/text me at 502-905-3708 for a quick eligibility check.

KHC-Eligible Loan Programs for 2026

KHC works with multiple loan types. Here is a breakdown of each program's key requirements for 2026:

🏠 FHA Loans (Federal Housing Administration)

FHA Guideline	2026 Requirement
Minimum Credit Score	620 (KHC overlay; FHA allows lower)
Down Payment	3.5% of purchase price (can be covered by KHC DAP)
Maximum Financing	96.5% of lesser of sales price or appraised value
Maximum DTI	50% (with AUS approval)
2026 FHA Loan Limit (KY)	$541,288 (all 120 Kentucky counties)
Upfront MIP (UFMIP)	1.75% of base loan amount
Annual MIP — LTV ≤ 95%	0.50% annually
Annual MIP — LTV > 95%	0.55% annually

🌿 USDA / Rural Housing Service (RHS) Loans

USDA Guideline	2026 Requirement
Minimum Credit Score	620 (640+ preferred for automated approval)
Down Payment	None (100% financing)
Maximum Financing	100% of appraised value + 1.00% guarantee fee
Annual Fee	0.35% of outstanding loan balance
Maximum DTI	50% (with AUS approval)
Loan Limit	No fixed limit — based on income & county eligibility
Property Location	Must be in a USDA-designated rural or suburban area

Many areas outside Louisville, Lexington, and Bowling Green still qualify for USDA. "Rural" does not mean farmland — many suburban communities are eligible.

🏆 VA Loans (Veterans Administration)

VA Guideline	2026 Requirement
Minimum Credit Score	620 (KHC overlay)
Down Payment	None (100% financing for eligible veterans)
Maximum Financing	100% of lesser of appraised value or sale price + VA funding fee
Monthly Mortgage Insurance	None
Maximum DTI	50% (with AUS approval)
VA Loan Limit	No limit for veterans with full entitlement
Who Qualifies	Active-duty, veterans, & eligible surviving spouses

KHC Down Payment Assistance (DAP) — 2026 Update Up to $12,500

One of the most valuable tools KHC offers is its Down Payment Assistance Program (DAP). This is a second mortgage loan designed to run alongside your KHC first mortgage to help cover your down payment and/or closing costs.

DAP Feature	2026 Details
Maximum Assistance Amount	Up to $12,500
Minimum Amount	$1,000
Interest Rate	3.75% fixed
Loan Term	10 years (amortized)
Maximum Purchase Price	$544,232
Who Is Eligible	Any KHC first-mortgage borrower who meets income/price limits
Can Be Combined With	FHA, VA, USDA, or Conventional KHC loans
Required Repairs	Buyer or seller must pay for repairs from own funds (not DAP)

💰 Example: A first-time buyer in Louisville uses an FHA loan with a KHC DAP loan of $12,500. The DAP covers the 3.5% FHA down payment on a $200,000 home ($7,000) plus a portion of closing costs — significantly reducing out-of-pocket expenses at closing. The DAP loan adds approximately $125/month to the total payment over 10 years.

🎁 Also in 2026: Welcome Home Grant (Up to $20,000)

The Federal Home Loan Bank of Cincinnati Welcome Home Grant program is expected to open in April 2026. This program offers up to $20,000 in forgivable grant money — but it counts all household income (including non-borrowers) and funds are distributed on a first-come, first-served basis until exhausted. It is not available year-round. If you want to be ready when grants open, getting pre-approved now is essential.

Frequently Asked Questions About KHC Income Limits in 2026

Q: Do I have to be a first-time homebuyer to use KHC in 2026?

No — the KHC Secondary Market Program is available to both first-time and repeat buyers, as long as you meet income and purchase price limits. The MRB (Mortgage Revenue Bond) program is generally limited to first-time buyers, though exceptions exist in federally designated "targeted areas" of Kentucky.

Q: What is the KHC income limit for my county in 2026?

KHC income limits vary by county and household size. For example, Jefferson County (Louisville) typically allows borrower income in the $82,000–$140,000 range depending on the program and household size. The fastest way to confirm your county's exact limit is to call or text me at 502-905-3708 — I can check your eligibility in minutes at no cost.

Q: What is the maximum home purchase price for a KHC loan in 2026?

The KHC maximum purchase price is $544,232 (effective June 23, 2025). This applies to both the KHC Secondary Market and the Down Payment Assistance programs.

Q: Can I combine KHC down payment assistance with an FHA loan?

Yes — in fact, combining a KHC first mortgage with an FHA loan and the KHC DAP is one of the most popular strategies for Kentucky first-time buyers. The DAP can cover your 3.5% FHA down payment and even a portion of closing costs, depending on the home's purchase price and your eligibility.

Q: What credit score do I need for a KHC loan?

KHC requires a minimum credit score of 620 for all programs, including FHA, VA, USDA, and conventional loans. Some programs may have slightly different score requirements, and compensating factors can sometimes help borderline files get approved.

Q: Does KHC have a front-end debt ratio limit in 2026?

No — KHC eliminated its 40% front-end ratio requirement effective June 24, 2024. The current maximum DTI is 50% with an Automated Underwriting System (AUS) approval. This change made it easier for many buyers with higher housing costs to qualify.

Q: What is the 2026 FHA loan limit in Kentucky?

The 2026 FHA loan limit for all 120 Kentucky counties is $541,288 for a single-family home — up from $524,225 in 2025. This increase allows buyers to finance higher-priced homes with only 3.5% down through FHA.

Why Work With Joel Lobb for Your KHC Mortgage Loan?

With over 20 years of experience and more than 1,300 Kentucky families helped, I specialize exclusively in Kentucky mortgage loans — including FHA, VA, USDA, KHC, and Fannie Mae programs. I know how to structure your loan to maximize your KHC benefits and minimize your out-of-pocket costs.

• Local KHC Expertise: I know Kentucky's housing market and KHC guidelines inside and out.
• Free Applications & Same-Day Approvals: No cost, no obligation — fast pre-approvals so you can make competitive offers.
• All 120 Kentucky Counties: Whether you're in Louisville, Lexington, Bowling Green, or a rural county — I can help.
• DAP Specialists: I'll help you layer KHC down payment assistance for maximum savings at closing.
• Personalized Service: You'll work directly with me — not a call center.

🏠 Ready to see if you qualify for a KHC loan in 2026?

Get a free, same-day mortgage pre-approval and find out exactly how much KHC down payment assistance you may qualify for.

📧 Email: kentuckyloan@gmail.com
📞 Call/Text: 502-905-3708

Joel Lobb  |  Mortgage Loan Officer  |  NMLS #57916  |  Company NMLS #1738461
Equal Housing Lender  |  www.nmlsconsumeraccess.org

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Disclaimer: The views and opinions stated on this website belong solely to the author and are intended for informational purposes only. Posted information does not guarantee approval, nor does it constitute full underwriting guidelines. This website is not endorsed by or affiliated with FHA, VA, USDA, KHC, or any government agency. All loan approvals are subject to underwriting guidelines, income and property requirements, and final credit approval. KHC income and purchase price limits are subject to change. Contact a KHC-approved lender to verify current program details. NMLS #57916 | Company NMLS #1738461 | www.nmlsconsumeraccess.org

Kentucky Mortgage Application Apply

Kentucky Mortgage Pre-Qualification

FHA • VA • USDA • KHC • Conventional
Joel Lobb · NMLS #57916 · Company NMLS #1738461 · Equal Housing Lender
Call/Text: 502-905-3708 · kentuckyloan@gmail.com

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Your Contact Information

First Name * Last Name * Phone * Email *

What Are You Looking For?

Loan Purpose * Select one Purchase Refinance Cash-Out Refinance Loan Program * Select one FHA VA USDA Rural Housing KHC Down Payment Assistance Conventional Not Sure First-Time Homebuyer? Yes No Not Sure Estimated Purchase Price Under $100,000 $100,000 – $200,000 $200,000 – $300,000 $300,000 – $400,000 $400,000+

Quick Financial Snapshot

Gross Annual Household Income Under $30,000 $30,000 – $50,000 $50,000 – $75,000 $75,000 – $100,000 $100,000+ Estimated Credit Score Below 580 580 – 619 620 – 659 660 – 699 700 – 779 780+ Excellent Employment Status Employed (W-2) Self-Employed 1099 Contractor Retired Military / Veteran When Do You Want to Buy? ASAP / Already under contract 0–3 months 3–6 months 6+ months Just exploring Questions or Comments By submitting, I authorize Joel Lobb (NMLS #57916) to contact me about mortgage options by call, text, and/or email. This is not an application for credit and does not guarantee loan approval. Not endorsed by FHA, VA, USDA, KHC, or any government agency.

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Joel Lobb NMLS #57916 | Company NMLS #1738461
Kentucky Mortgage Only
This site is not endorsed by or affiliated with FHA, VA, USDA, KHC, or any government agency.

Kentucky FHA Loans for Bad Credit for Kentucky First-Time Buyers

Explore how to qualify for a Kentucky FHA loan with bad credit. 

 What is an FHA Loan in Kentucky?

A Kentucky FHA loan is a government-backed mortgage program insured by the Federal Housing Administration. It’s designed to help first-time homebuyers and borrowers with poor credit qualify for homeownership. These loans offer lower down payment options and more flexible credit and employment standards compared to conventional loans.

👉 Compare Kentucky FHA, VA, USDA, and KHC Loan Programs in Kentucky by clicking here

FHA Credit Score Requirements in Kentucky

You can qualify for a Kentucky FHA loan with a credit score as low as 500.

Credit Score	Minimum Down Payment
580+	3.5%
500–579	10%

Keep in mind: many Kentucky FHA lenders may require a minimum score of 620. Always shop multiple lenders.

 Read more here about FHA loans and credit scores

Employment History and Income Requirements for a FHA Loan

To qualify for an FHA loan in Kentucky, you typically need:

• 2-year work history in the same job or field-Does not have to be same job.

• Proof of stable income (W-2s, pay stubs, tax returns)

• Acceptable DTI ratio (ideally under 43%, up to 50% with strong compensating factors)

• Job Gaps- If you have been laid off for more than 6 months in the last two years, start of application date, then you will need to be on your current job for 6 months. They are only looking at the last 2 year work history....They are looking for stability in your pay and income so you can make the house payment. 

• Self-employed borrowers need 2 years of tax returns showing consistent or growing income.

• Gross Income is used to qualify for the mortgage loan, not net income, but some loans require a certain residual income to meet addition income approval requirements for income and dti. 

• Read more here at this link for Employment history and income guidelines for FHA loan approval

Debt-to-Income (DTI) Ratio Guidelines

Lenders analyze how much of your income goes toward housing costs and total debt. Keeping your DTI in check increases your chances of approval.

Read more here at this link for Debt to Income Requirements for FHA loan approval

FHA Loan Limits in Kentucky (2025)

In 2025, the FHA loan limit in Kentucky is set at $524,225 for single-family homes in most counties. This limit may be higher in more expensive areas.

🔗 Check Kentucky FHA Loan Limits by County – HUD by clicking the here

Property Requirements for FHA Loans in Kentucky

FHA loans require that the home meet Minimum Property Standards (MPS):

• Safe, structurally sound, and sanitary

• No major plumbing, roof, or electrical issues

• Must be owner-occupied (no investment properties)

• Pass FHA appraisal, including checking for lead paint, safety hazards, and proper utility function

• Read more here at this link about FHA Appraisal Requirements for a Kentucky FHA loan approval

Can You Get an FHA Loan After Bankruptcy or Foreclosure?

Yes, you can still qualify for a Kentucky FHA loan after bankruptcy or foreclosure, but waiting periods apply:

🔗 HUD Mortgagee Handbook on Bankruptcy & Foreclosure

 Best FHA Lenders in Kentucky

When looking for a Kentucky FHA lender, prioritize those who:

• Work with low-credit borrowers

• Offer KHC down payment assistance

• Provide transparent loan estimates

• Have strong local market experience

• 
  

 Recommended FHA Lender in Kentucky:

Common FHA Loan Mistakes to Avoid

• Applying before checking your credit report

• Not getting pre-approved

• Ignoring your DTI ratio

• Making large purchases before closing

• Choosing a lender unfamiliar with Kentucky FHA loans

 FHA Loan Application Checklist

Prepare these documents to fast-track your Kentucky FHA approval:

• Government-issued ID

• Social Security card

• 2 years of W-2s and tax returns

• 60 days of bank statements

• 30 days of pay stubs

FHA Loans Are a Smart Move for Kentucky Buyers

If you're a first-time homebuyer in Kentucky with bad credit, an FHA loan may be your best opportunity to buy a home in 2025. With flexible criteria, down payment assistance, and support from experienced local lenders, you can secure financing even if your credit score is 500.

 Take the next step toward homeownership by getting pre-approved today!

📎 Additional Links 

• Kentucky FHA Loan with 500 Credit Score

• Qualifying for an FHA Loan After Bankruptcy in Kentucky

• FHA vs. USDA Loans in Kentucky

Kentucky FHA Mortgage Guidelines

🏠 Kentucky FHA Loan Guidelines for 2026

Everything Kentucky homebuyers need to know — updated for 2026 with the latest loan limits, credit score requirements, down payment assistance, and more.

FHA loans have been the go-to mortgage solution for Kentucky first-time homebuyers for decades — and in 2026, they remain one of the most flexible and accessible loan programs available across all 120 Kentucky counties. Whether you're buying your first home in Louisville, Lexington, Bowling Green, or a small rural community, this guide covers everything you need to know before you apply.

📊 2026 FHA Loan Limits in Kentucky

Effective January 1, 2026, FHA increased the baseline loan limit for a single-family home to $541,288 — up from $524,225 in 2025. That's an increase of approximately $17,000, giving Kentucky buyers more purchasing power. Kentucky uses the national floor limit across all 120 counties, with no high-cost county designations.

Property Type	2026 FHA Loan Limit (Kentucky)
Single-Family Home	$541,288
2-Unit (Duplex)	$693,000
3-Unit (Triplex)	$837,900
4-Unit (Fourplex)	$1,041,200

💳 Credit Score Requirements for a Kentucky FHA Loan

FHA's official written guidelines allow for credit scores as low as 500, but here's the real-world picture for Kentucky buyers:

Credit Score Range	Down Payment Required	Real-World Reality
500 – 579	10%	Very few lenders will approve at this range; options are extremely limited.
580 – 619	3.5%	Technically qualifies; more lender options but still limited. Focus on getting to 620+.
620+	3.5%	Sweet spot. Most Kentucky FHA lenders work at this level with the widest program access.

💡 Joel's Advice: If your score is below 580 right now, don't give up — let's work together on a credit improvement plan. A few months of focused effort can get you to 620+ and open significantly more doors. I've helped many Kentucky buyers go from "not yet" to "approved."

💰 Down Payment Requirements

One of the biggest advantages of an FHA loan is the low down payment:

• 3.5% down with a credit score of 580 or higher
• 10% down with a credit score between 500–579

On a $200,000 Kentucky home, 3.5% is just $7,000. Down payment funds may come from your own savings, a gift from a family member, or an approved down payment assistance program — all sources must be documented and verified.

🏦 Kentucky Housing Corporation (KHC) Down Payment Assistance — 2026

Up to $12,500 in Down Payment & Closing Cost Assistance for Eligible Kentucky Buyers

For many Kentucky first-time homebuyers, the down payment is the biggest hurdle to homeownership. That's exactly what the Kentucky Housing Corporation (KHC) Down Payment Assistance Program (DAP) is designed to solve — and it's one of the most powerful tools available to buyers right now.

How Does the KHC DAP Work?

The KHC DAP is a second mortgage that works alongside your primary KHC first mortgage. It is not a grant — it is a repayable loan — but the terms are very favorable and make homeownership accessible to buyers who can afford a monthly payment but struggle with the upfront lump sum.

KHC DAP Program	Max Assistance	Interest Rate	Loan Term
KHC Regular DAP	Up to $12,500	3.75%	10 years

Note: Program amounts and interest rates are subject to change. Contact me for the most current figures.

Who Qualifies for KHC Down Payment Assistance?

• Must be purchasing a primary residence in Kentucky
• Must obtain a KHC first mortgage (FHA, VA, USDA, or Conventional)
• Must meet KHC income limits
• Minimum credit score of 620 for most KHC programs
• Home must meet KHC purchase price limits for your county
• First-time buyers and some repeat buyers may qualify
• Debt-to-income ratio up to 50% (up to 50% with AUS approval)

✅ Pro Tip: Combining a Kentucky FHA loan (3.5% down) with KHC down payment assistance can reduce your out-of-pocket costs to nearly zero at closing. Many Kentucky families have used this combination to buy their first home with very little upfront cash.

What About the Kentucky Welcome Home Grant?

The 2026 Kentucky Welcome Home Grant is expected to open in Spring 2026 (historically around April) and provides up to $20,000 in forgivable grant funds. Unlike the KHC DAP, this is a true grant — no monthly payment required — but it comes with important differences:

Factor	🏠 KHC DAP	🎁 Welcome Home Grant
Amount	Up to $12,500	Up to $20,000
Type	Repayable 2nd mortgage	Forgivable grant (5-yr retention)
Monthly Payment	~$97	None
Availability	Year-round	Limited — typically depleted quickly
Income Calculation	Borrower(s) income only	All household income counted
2026 Opening	Available now	Expected ~April 2026
Can Combine Both?	YES

⚠️ Important Note: The 2025 Welcome Home Grant sold out on March 13, 2025 — in just a few weeks. If you want to take advantage of the 2026 grant, get pre-approved now so you can act immediately when the program opens. The KHC DAP is available year-round and is a reliable alternative for buyers who can't wait.

📐 Debt-to-Income (DTI) Ratio

Your DTI ratio compares your total monthly debt payments to your gross monthly income. For 2026 FHA loans in Kentucky:

• Standard maximum DTI: 45% to 56.99 %
• With strong compensating factors (good savings, long employment, higher credit score), some lenders will go up to 50% or higher with automated underwriting system (AUS) approval
• FHA targets a housing payment (PITI — Principal, Interest, Taxes, Insurance) of no more than 31% of gross monthly income, though this can flex

📋 Bankruptcy Requirements for a Kentucky FHA Loan

Chapter 7 Bankruptcy

You must wait 2 years from the discharge date before applying for an FHA mortgage. After the waiting period, you'll need to have re-established good credit and meet all other guidelines.

Chapter 13 Bankruptcy

You may be eligible for an FHA loan after just 12 months of on-time payments into your Chapter 13 repayment plan — you don't need to wait for a full discharge. Requirements include written permission from the bankruptcy trustee, and your Chapter 13 monthly payment must be included in your DTI calculation.

🏚️ Foreclosure & Short Sale Guidelines

FHA requires a 3-year waiting period after a foreclosure or short sale before you can obtain new FHA financing. Here's an important detail many people miss:

⚠️ Critical Detail: The 3-year waiting period starts from the date the deed was transferred at the courthouse — not the date you moved out of the home, and not the date of a bankruptcy discharge (even if the mortgage was included in the bankruptcy). The clock doesn't start until the title officially transfers back to the lender or new buyer via the courthouse records.

📬 Collection Accounts on Your Credit Report

If the cumulative balance of collection accounts on your credit report is $2,000 or more, one of the following must happen before FHA approval:

• All collection accounts are paid in full at or before closing, OR
• A payment arrangement is made with each creditor and the monthly payment is included in your DTI, OR
• A monthly payment equal to 5% of the outstanding balance of each collection is factored into your DTI ratio

This rule applies to all borrowers. Collection accounts of non-borrowing spouses in community property states must also be included in the $2,000 calculation. (Kentucky is not a community property state, so this typically won't apply to Kentucky buyers.)

🎓 Federal Delinquencies: Student Loans & Tax Liens

Any delinquency with a federal government agency is a significant roadblock to FHA approval. All FHA applicants are run through the CAIVRS system (Credit Alert Verification Reporting System) administered by HUD, which flags anyone with a defaulted federal student loan, IRS tax lien, or other federal delinquency.

Defaulted Federal Student Loans

This is the most common federal delinquency issue I see with Kentucky buyers. If your federal student loans are in default, you must enter a 9-month loan rehabilitation repayment plan to clear the CAIVRS flag. The good news: the monthly payment can be as small as $5–$10/month. What matters is getting started. After completing the rehab period, the default flag is cleared and FHA financing becomes available again.

IRS Tax Liens

If you have an existing repayment agreement already in place with the IRS or your student loan servicer, we may be able to work with that arrangement and still get you approved depending on the lender. Call me to discuss your specific situation.

👨‍👧 Child Support Obligations

Paying child support does not disqualify you from an FHA loan. If child support appears as a deduction on your pay stubs, we simply factor that payment into your DTI calculation. If there is a delinquent child support judgment on your credit report, the underwriter will review the current agreement to verify your actual monthly obligation and payment status.

🛡️ FHA Mortgage Insurance (MIP) in 2026

All FHA loans require mortgage insurance regardless of credit score or down payment size:

MIP Type	Rate	How It's Paid
Upfront MIP (UFMIP)	1.75% of loan amount	Typically rolled into the loan at closing
Annual MIP	~0.55% per year (most borrowers)	Paid monthly; divided across 12 payments

• Less than 10% down: MIP remains for the life of the loan (until you sell or refinance)
• 10% or more down: MIP automatically cancels after 11 years

⚖️ FHA vs. USDA: Which Loan is Right for Kentucky Buyers?

Kentucky is uniquely positioned because a large portion of the state — including many suburban and rural areas — qualifies for USDA Rural Housing loans. Here's a side-by-side comparison to help you decide which program fits your situation best:

Factor	🏠 FHA Loan	🌾 USDA Rural Housing Loan
Down Payment	3.5% (with 580+ score)	0% — 100% financing
Credit Score	580+ (most lenders want 620+)	Typically 640+ (varies by lender)
Location Requirement	Any location in Kentucky	Must be in a USDA-eligible rural area (large portions of KY qualify)
Income Limits	No income limits	Yes — household income limits apply (typically 115% of area median income)
Mortgage Insurance	Upfront MIP (1.75%) + monthly MIP (~0.55%/yr)	Upfront guarantee fee (1%) + annual fee (0.35%/yr) — lower than FHA
Bankruptcy Waiting Period	2 years (Chapter 7)	3 years (Chapter 7)
Foreclosure Waiting Period	3 years	3 years
Loan Limits	$541,288 (single-family)	No set maximum — based on income and DTI
Property Types	1–4 unit homes, condos, manufactured	Single-family primary residences only
Best For	Buyers in cities/suburbs, lower credit scores, or prior bankruptcy/foreclosure	Buyers in rural/suburban areas with stable income who want zero down

✅ Kentucky Advantage: Many areas that buyers think of as "suburban" — including parts of Bullitt County, Spencer County, Oldham County, Warren County, and dozens of others — actually qualify for USDA financing. If zero down payment sounds appealing, it's worth checking your specific address. I can run an eligibility check for you in minutes.

FHA vs. USDA: Which Should You Choose?

Choose FHA if you're buying in Louisville, Lexington, or another urban area; if your credit score is between 580–639; or if you've had a recent bankruptcy or foreclosure and are past the waiting period.

Choose USDA if you're buying in a rural or qualifying suburban area, you meet the income limits, your credit score is 640+, and you want to eliminate the down payment entirely. USDA also has lower monthly mortgage insurance than FHA, which can save you $50–$100+ per month over the life of the loan.

In some cases, both programs are available to the same buyer — and we'll compare them side by side so you can make the best decision for your family.

💼 Employment & Income Requirements

• Most FHA lenders require a 2-year employment history in the same field or industry
• Recent college graduates may use transcripts to help document their employment timeline
• Self-employed borrowers typically need 2 years of tax returns
• Part-time income may be used if it has a documented 2-year history
• Social Security, disability, and pension income are all eligible

🚀 Ready to Get Pre-Approved? Let's Talk.

I've helped over 1,300 Kentucky families buy their first home or refinance over the past 20+ years. I offer free mortgage consultations and same-day pre-approvals — and I'll walk you through every step of the process with personalized attention.

📞 Call or Text: 502-905-3708

📧 kentuckyloan@gmail.com

🌐 www.mylouisvillekentuckymortgage.com

Apply Online — Free & Secure →

Joel Lobb
Joel Lobb, Mortgage Broker FHA, VA, KHC, USDA
NMLS Personal ID #57916 | Company NMLS #1738461
Joel Lobb, Mortgage Broker FHA, VA, KHC, USDA | 10602 Timberwood Circle, Louisville, KY 40223
📞 502-905-3708 | 📧 kentuckyloan@gmail.com | Equal Housing Lender

Disclaimer: This website is not endorsed by the FHA, VA, USDA, or any government agency. It is an independent platform created to educate and assist Kentucky homebuyers with expert advice and accessible tools. Loan limits, rates, program availability, and guidelines are subject to change without notice. All loans are subject to credit approval. Always verify current information with your licensed loan officer before applying. NMLS Consumer Access: www.nmlsconsumeraccess.org.

KHC Down Payment Assistance 2026: Up to $12,500 in Kentucky (Income + Credit Rules)

KHC Down Payment Assistance 2026: How to Get Up to $12,500 in Kentucky
(Income Limits, Credit Rules & County Breakdown)

If you're trying to buy a home in Kentucky and the biggest obstacle is cash to close, Kentucky Housing Corporation (KHC) down payment assistance can be a practical solution. In 2026, KHC down payment assistance is structured as a repayable second mortgage that helps cover down payment, closing costs, and prepaid items — so qualified buyers aren't forced to delay homeownership simply because they haven't saved a large sum.

This guide covers the rules that matter most: the assistance amount, credit score overlays, income limits by county, purchase price limits, and the DTI cap you need to plan around before you write an offer.

🏠 Ready to See If You Qualify for KHC Down Payment Assistance?

Call or text Joel Lobb for a free, same-day pre-approval — no obligation, no cost.

📞 502-905-3708  |  ✉️ [email protected]

Serving Kentucky first-time homebuyers for over 20 years · NMLS #57916

What Is Kentucky Housing Corporation (KHC)?

Kentucky Housing Corporation is Kentucky's state housing finance agency. KHC partners with approved lenders across the state to support affordable homeownership through specific first mortgage options and down payment assistance programs. KHC is not a bank — and you generally cannot add KHC down payment assistance later if your first mortgage is not a KHC first mortgage.

Practical takeaway: If you want KHC down payment assistance, structure the loan correctly from day one. KHC assistance is designed to be paired with a KHC first mortgage through a participating lender — like Joel Lobb.

How Much KHC Down Payment Assistance Is Available in 2026?

The standard KHC option most buyers ask about is the Regular Down Payment Assistance Program (Regular DAP). Under 2026 program terms, Regular DAP is offered up to $12,500 (in $100 increments) and is set up as a repayable second mortgage with a 15-year term at a fixed interest rate published by KHC (rate subject to change — contact Joel for the current rate).

This is a significant update from older information still circulating online that references lower amounts or different repayment terms. Always confirm current terms with a participating KHC lender before shopping.

What Can KHC Down Payment Assistance Be Used For?

KHC down payment assistance is intended for purchase-related costs only. It can typically be applied to:

• Down payment
• Closing costs
• Prepaid items (property taxes, homeowners insurance, and escrow setup)

KHC down payment assistance cannot be used for:

• Repairs or renovations
• Furniture, appliances, or other personal items
• Cash back to the borrower beyond what program rules allow

If the house needs repairs, KHC down payment assistance is not a rehab solution. Repairs must be handled within the rules of the underlying mortgage program and purchase contract.

Do You Have to Be a First-Time Homebuyer for KHC?

Not necessarily. Many buyers assume KHC is only for first-time buyers, but KHC eligibility can include repeat buyers depending on the program structure and funding source. The real deciding factors are household income limits, credit score overlays, the property itself, and the borrower's ability to qualify within the program's DTI cap.

KHC Purchase Price Limits in 2026

KHC programs use purchase price limits. Current KHC published materials commonly reference a statewide purchase price limit around $544,232 for certain programs. Because purchase price limits can change, confirm the current limit with Joel before your contract is accepted to avoid surprises.

2026 KHC Income Limits by Kentucky County

This is one of the most common reasons a buyer is surprised late in the process. KHC uses a gross annual income limit per county — this applies to all applicants and is not split by household size. Importantly, KHC evaluates household income, not just the income used to qualify on the loan application. If someone living in the home earns income, it typically counts.

KHC uses a single gross annual income limit per county — this applies to all applicants regardless of household size. The figures below are from the official KHC Secondary Market income limit schedule, effective June 23, 2025.

County	Gross Annual Income Limit
Anderson	$162,400
Boone	$195,650
Bourbon	$179,200
Bracken	$195,650
Bullitt	$169,050
Campbell	$195,650
Christian (Hopkinsville)	$153,475
Clark	$179,200
Daviess (Owensboro)	$150,850
Fayette (Lexington)	$179,200
Franklin (Frankfort)	$161,000
Gallatin	$195,650
Hancock	$148,925
Harrison	$148,225
Henry	$169,050
Jefferson (Louisville)	$169,050
Jessamine	$179,200
Kenton	$195,650
Lyon	$156,275
Madison (Richmond)	$154,700
McCracken (Paducah)	$157,850
McLean	$150,850
Meade	$151,900
Mercer	$159,075
Nelson	$153,125
Oldham	$169,050
Pendleton	$195,650
Scott	$179,200
Shelby	$185,150
Spencer	$169,050
Trigg	$153,475
Washington	$155,750
Woodford	$179,200
All other Kentucky counties	$147,350

⚠️ Source: KHC Secondary Market Gross Annual Applicant's Income Limitations, effective June 23, 2025. Purchase price limit: $544,232. KHC updates these limits periodically — always confirm the current figure for your county before writing an offer. Contact Joel at 502-905-3708 for the latest information.

Not sure if your household income qualifies? Call or text Joel Lobb at 502-905-3708 — he'll run a quick eligibility check at no cost before you start shopping.

Credit Score Requirements for KHC in 2026

KHC applies credit score overlays on top of the underlying mortgage program:

• Government loans (FHA, VA, RHS/USDA): 620 minimum credit score
• Conventional loans: 660 minimum credit score

One important point: each borrower on the loan must meet the minimum score requirement. Adding a co-borrower with insufficient credit can create an issue even when automated underwriting results appear favorable.

KHC DTI Rules in 2026: What Ratios Are Allowed?

KHC caps the maximum debt-to-income ratio at 50%. This matters because even if automated underwriting might allow a higher ratio in certain scenarios, the KHC cap can still be the limiting factor. If your buyer is close to the edge on qualifying, structure the purchase price and payment with the KHC DTI cap in mind from the start to avoid contract fallout late in the process.

Which Loan Programs Can Be Paired with KHC in 2026?

KHC down payment assistance must be paired with a KHC first mortgage. The underlying first mortgage is typically one of the following:

• FHA loans — 3.5% down required; mortgage insurance applies; 620 minimum score overlay
• VA loans — 0% down for eligible veterans; no monthly mortgage insurance; 620 minimum score overlay
• RHS/USDA 502 Guaranteed loans — 0% down in eligible rural areas; guarantee fees apply; 620 minimum score overlay
• Conventional loans — commonly 3% down; mortgage insurance rules apply; 660 minimum score overlay

The best fit depends on your credit, household income, property location (especially for USDA), and long-term payment tolerance. Joel will walk you through which option saves you the most money over time.

📋 Get Your Free KHC Eligibility Review Today

Joel Lobb has helped over 1,300 Kentucky families buy or refinance their home. With same-day approvals and 20+ years of experience, he knows exactly how to structure your KHC loan for a smooth closing.

📞 Call or Text: 502-905-3708

✉️ [email protected]

How Long Does It Take to Close a KHC Loan in 2026?

Most KHC purchase transactions fall into a 30–45 day closing window when documentation is clean and the file is structured correctly upfront. The biggest risk is documentation and eligibility verification. The cleanest closings happen when income, household income limits, and DTI planning are reviewed before the contract clock starts — which is exactly what Joel does on the front end.

Bottom Line

KHC down payment assistance in 2026 is a strong strategy for Kentucky buyers who are cash-limited but otherwise qualify. The rules are not complicated, but they are strict where it counts: household income limits, minimum credit overlays, a 50% DTI cap, and purchase price limits.

If you want to use KHC to reduce upfront cash, the best next step is a quick eligibility review with Joel. Once the file passes the program guardrails, you can shop confidently and structure your offer with realistic terms.

Kentucky FAQ: KHC Down Payment Assistance 2026

What is KHC down payment assistance in 2026?

KHC down payment assistance in 2026 is typically a repayable second mortgage (Regular DAP) that helps cover down payment, closing costs, and prepaid items when paired with a KHC first mortgage through a participating lender.

How much is KHC down payment assistance in 2026?

Regular DAP is up to $12,500 in $100 increments, repayable over 15 years at a fixed rate published by KHC. Contact Joel for the current rate.

What credit score do I need for KHC in 2026?

620 minimum for FHA/VA/RHS/USDA and 660 minimum for conventional. Each borrower on the loan must meet the minimum score requirement.

What is the max DTI for KHC loans in 2026?

KHC caps DTI at 50%. Even if automated underwriting might approve higher in some cases, the KHC cap controls the file.

Are there income limits for KHC down payment assistance in Kentucky?

Yes. KHC uses gross household income limits that vary by county and household size. Check the table above for your county, and call Joel to verify the current figures before writing an offer.

Can I use KHC down payment assistance for repairs?

No. KHC assistance is for down payment, closing costs, and prepaids — not repairs, renovations, or personal items.

Can I get KHC down payment assistance without a KHC first mortgage?

No. KHC down payment assistance is only available when paired with a KHC first mortgage through a participating lender.

Does KHC down payment assistance have to be repaid?

Yes. Regular DAP is a second mortgage repaid over 15 years, not a grant. Your monthly payment will include the first mortgage plus the DAP repayment. Joel can show you exactly what your total payment would look like.

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📞 502-905-3708  |  ✉️ [email protected]

Joel Lobb · Mortgage Loan Officer · NMLS #57916 · Company NMLS #1738461

Kentucky Mortgage License Only  |  Equal Housing Lender

Disclosure: This content is for educational purposes only and is not a commitment to lend. Program guidelines, income limits, rates, and purchase price limits are subject to change without notice. Eligibility is subject to credit approval and program requirements. Income limits shown in the table above are approximate and provided for illustrative purposes — always verify current limits with a KHC-approved lender before contract acceptance. This website is not endorsed by the FHA, VA, USDA, KHC, or any government agency.

Joel Lobb · NMLS Personal ID: #57916 · Company NMLS ID: #1738461 · www.nmlsconsumeraccess.org · Equal Housing Lender