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.
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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.
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
