Kentucky Welcome Home Grant vs KHC Down Payment Assistance: Which Program Is Right for You?
Quick Answer: The Kentucky Welcome Home Grant offers $20,000 with no monthly payment, but counts ALL household income and only opens April 6, 2026. The KHC Down Payment Assistance (DAP) provides $12,500 with ~$97/month, but only counts borrower income and is available year-round. The right choice depends on your household composition and timeline.
As a Kentucky mortgage loan officer with over 20 years of experience helping first-time homebuyers, I've seen countless families struggle with a critical question: Which down payment assistance program should I apply for?
Both the Kentucky Welcome Home Grant and KHC Down Payment Assistance Program are legitimate paths to homeownership, but they work very differently. Choose the wrong one, and you might be denied. Choose the right one, and you could save thousands.
In this guide, I'll break down both programs side-by-side so you can make an informed decision.
Welcome Home Grant vs KHC DAP: Head-to-Head Comparison
| Feature | Kentucky Welcome Home Grant | KHC Down Payment Assistance |
|---|---|---|
| Award Amount | $20,000 (TRUE GRANT) | $12,500 (Second Mortgage) |
| Monthly Payment | $0/month (FREE) | ~$97/month (15 years) |
| Program Type | Grant (forgivable) | Second mortgage (repayable) |
| Availability | April 6, 2026 ONLY* | Year-round |
| Income Counted | ALL household occupants | Borrower(s) only (varies by funding) |
| Income Limit | ≤80% MRB (~$77-89k for 3+ persons) | Varies by funding type (~$85k+) |
| Retention Period | 5 years (must stay in home) | None (sell anytime) |
| Best For | Single/couple borrowers, tight budgets | Multi-generational homes, flexibility needed |
⚠️ The "Household Income Trap" That Disqualifies Families
Most Common Mistake: Misunderstanding Who Counts as "Household"
The single biggest reason families are denied Welcome Home isn't because they make too much—it's because they don't understand which household members' income gets counted.
Here's the Critical Difference:
Welcome Home Grant
Counts ALL household occupants' income:
- Borrowers on the loan
- Non-borrowing spouses
- Adult children (even if not on mortgage)
- Elderly parents living in the home
- Any other permanent occupants
Even if they're not on the loan, their income counts.
KHC Down Payment Assistance
Counts only borrower income(s):
- Primary borrower
- Co-borrower (if on loan)
- Non-occupant co-borrowers
Adult children, parents, and other household members don't count—even if they live there.
Real-World Example: Why This Matters
Meet Sarah and Tom, a married couple buying their first home in Louisville:
What Sarah and Tom didn't realize: The daughter's $30,000 income—even though she's not on the mortgage—disqualified them from the Welcome Home Grant. But they do qualify for KHC DAP because only Sarah and Tom's combined $85,000 counts.
Watch: The Kentucky "Household Income Trap" Explained
Many Kentucky homebuyers think they qualify for the Welcome Home Grant—until underwriting reviews household income. This short video explains why that happens and how to avoid it.
š” Key Takeaway: If someone lives in the home but isn't on the loan, their income may still count for Welcome Home. This is the #1 reason families are unexpectedly denied.
Understanding the Kentucky Welcome Home Grant
What It Is
The Kentucky Welcome Home Grant is a forgivable grant (not a loan) that provides up to $20,000 toward down payment and closing costs for first-time homebuyers. "Forgivable" means you don't have to pay it back—as long as you meet the requirements.
Key Requirements
- First-time homebuyer: Haven't owned a home in the past 3 years
- Income limit: ≤80% of Median Rent-Bearing (MRB) income for your county (typically $77,000-$89,000 for 3+ person households)
- All household income counts: Every person living in the home permanently
- Property limit: Purchase price must meet county limits
- 5-year retention: You must live in the home for 5 years. If you sell before 5 years, you must repay a portion
Advantages
- $20,000 award (highest amount available)
- Zero monthly payment
- No second mortgage or debt obligation
- Truly forgivable if you keep the home 5 years
Disadvantages
- Only available once per year (usually 10-14 days in early April)
- Funds deplete quickly—often gone in hours or days
- ALL household income counts (major disqualifier for multi-generational homes)
- 5-year retention requirement is strict
- Must repay pro-rata amount if you sell before 5 years
⏰ Important Note About 2026 Opening
In 2025, the Welcome Home Grant opened on March 3 and was completely exhausted by March 13 (10 days). For 2026, it's scheduled to open April 6. Do not wait until April 7—apply on day one or you'll likely miss it.
Understanding the KHC Down Payment Assistance Program
What It Is
The KHC Down Payment Assistance Program is a second mortgage that provides up to $12,500 toward down payment and closing costs. It's called a "second mortgage" because it's a loan secured by your home (after your first mortgage).
Key Requirements
- First-time homebuyer: Haven't owned in past 3 years (some exceptions)
- Borrower income limits: Varies by funding type (~$70k-$95k depending on program)
- Only borrower income counts: Household members who aren't on the loan don't count
- Property limits: Purchase price and appraised value within county guidelines
- No retention requirement: Sell your home whenever you want
Advantages
- Available year-round (no deadline anxiety)
- Only borrower income counts (easier to qualify)
- No retention period—sell whenever
- Can be combined with other assistance programs
- Flexible funding options (conventional, FHA, VA, USDA)
Disadvantages
- Lower award amount ($12,500 vs $20,000)
- Monthly payment (~$97/month for 15 years)
- Adds a second debt obligation
- Requires qualification like a regular loan
Can You Use Both Programs? (Stacking)
No. You cannot receive both the Welcome Home Grant and KHC DAP for the same purchase. You must choose one.
However, you can combine either program with:
- FHA, VA, or USDA loans
- Conventional loans
- Employer assistance programs
- Nonprofit down payment assistance (varies by organization)
Which Program Should You Choose?
Choose Welcome Home If:
- You're a single borrower or married couple with no other household members
- Your household income is ≤80% MRB
- You plan to stay in the home for 5+ years
- You want zero monthly payment
- You can apply when it opens (April 6, 2026)
- You don't have adult children or parents living with you
Choose KHC DAP If:
- You have adult children or parents living in your home
- You might sell or move within 5 years
- You need flexibility and certainty (no deadline stress)
- You want to apply on your own timeline
- Your borrower income qualifies but household income doesn't
- You want a straightforward, predictable option
Income Limits Explained
Welcome Home: 80% Median Rent-Bearing (MRB)
Welcome Home uses the "Median Rent-Bearing" income threshold, which varies by county. Here are examples for major Kentucky counties (2026):
- Jefferson County (Louisville): ~$77,000 (3+ persons)
- Fayette County (Lexington): ~$79,000 (3+ persons)
- Boone County (Northern KY): ~$75,000 (3+ persons)
- Franklin County (Frankfort): ~$73,000 (3+ persons)
- Rural counties: ~$65,000-$72,000 (3+ persons)
Important: These limits are based on household size. Single individuals and couples have different limits.
KHC DAP: Borrower Income Limits
KHC DAP limits vary by the specific funding source (Fannie Mae, Freddie Mac, etc.), but generally range from $70,000 to $95,000 for borrower(s) income. Ask your lender for specific limits for your county and loan type.
Frequently Asked Questions
You'll be required to repay a portion of the grant. The repayment is pro-rated based on how many years you lived in the home. For example, if you sell after 3 years of a 5-year requirement, you'd owe back 40% of the grant ($8,000 on a $20,000 grant). This repayment comes from your sale proceeds at closing.
Yes. Even if your spouse isn't on the mortgage, their income counts as part of the household for Welcome Home purposes. This is the "household income trap" many families encounter. Only KHC DAP ignores non-borrowing spouse income.
No. Both programs can only be used for down payment and closing costs. They cannot be used to purchase discount points or buy down your interest rate. The funds go toward reducing what you need to bring to closing.
Yes. If Welcome Home denies you (usually due to household income or missing the April window), you can absolutely apply for KHC DAP. Many families who are rejected for Welcome Home qualify for KHC DAP because the income counting is different. This is actually a smart backup plan.
Welcome Home: Application is instant, but approval depends on program availability (only April 6, 2026). Once you apply, expect same-day approval if funds are available.
KHC DAP: Typically 3-5 business days once you submit complete documentation, since there's no artificial deadline.
Yes. Kentucky first-time homebuyers may also qualify for:
- FHA Loans: 3.5% down payment with lower credit score requirements
- VA Loans: 0% down for eligible veterans
- USDA Loans: 0% down for rural Kentucky properties
- Employer Assistance: Some employers offer their own down payment help
Down Payment Assistance Comparison: KHC vs Welcome Home Grant
Many Kentucky buyers hear about the $20,000 Welcome Home Grant and assume it is the best option. In reality, income rules and availability eliminate many borrowers. Here is a clear side-by-side breakdown of how these two programs actually differ.
$12,500 KHC Down Payment Assistance
- ✔ Available year-round statewide
- ✔ Higher income limits than Welcome Home
- ✔ Secondary Market option counts borrower income only
- ✔ Repayable second mortgage (10–15 years)
- ✔ Typical monthly payment: ~$75–$100
$20,000 Welcome Home Grant
- ⚠ Limited annual funding window (typically March)
- ⚠ Strict household income limits (all occupants counted)
- ⚠ Funds run out quickly (first-come, first-served)
- ✔ True grant with no monthly payment
- ⚠ 5-year owner-occupancy retention requirement
