Last updated: July 2026 · Joel Lobb, Mortgage Loan Officer, NMLS #57916 — 20+ years in Kentucky mortgages, 1,300+ families closed.
Short answer: Kentucky buyers have six realistic ways to cover a down payment and closing costs in 2026. KHC down payment assistance (up to $12,500, statewide, repayable) is the workhorse. Louisville and Lexington run their own local grant and forgivable programs. The Welcome Home Grant pays $20,000 — $25,000 for veterans — but only during an annual funding round. VA and USDA loans need no down payment at all. And seller-paid closing costs are the most overlooked option, because nothing is ever repaid. Which combination is right depends on your county, your income, and whether you can carry a second mortgage payment.
Most Kentucky buyers are told about one program — whichever one the loan officer sells most of. This page compares all of them honestly, including which ones you repay, which are limited to certain cities, and which one I steer people toward that nobody advertises.
Every Kentucky down payment program compared
| Program | Amount | Repay? | Where it applies |
|---|
| KHC Down Payment Assistance | Up to $12,500 | Yes — 15-yr second mortgage | All 120 Kentucky counties |
| Welcome Home Grant (FHLB Cincinnati) | $20,000 — $25,000 veterans, active duty & surviving spouses | No — 5-year retention period | Statewide, annual funding round only |
| Lexington-Fayette Homebuyer Assistance | Up to ~$15,000 | No — grant | Lexington-Fayette only |
| Louisville Metro Down Payment Assistance | Varies by income | Forgivable over time | Louisville Metro only |
| Louisville-area closing cost grant | Up to $2,000 | No — grant | Louisville area only |
| Seller-paid closing costs | Up to 6% of price (FHA) | No | Anywhere — negotiated |
| VA loan | $0 down required | N/A | Eligible veterans, statewide |
| USDA / Rural Housing | $0 down required | N/A | USDA-eligible areas |
Program terms are set by KHC, FHLB Cincinnati and local governments and change without notice. Call or text 502-905-3708 for today's figures and current funding status.
Important correction if you have read this page before: the $2,000 closing cost grant is a Louisville-area program. It is not a statewide KHC add-on, and it should not be added to KHC's $12,500 to advertise a blanket "$14,500 for Kentucky buyers." If you are buying in Bowling Green, Paducah or Somerset, that $2,000 is not available to you. I would rather correct that here than have you find out at the closing table.
KHC down payment assistance: the statewide workhorse
Up to $12,500, available in every Kentucky county, all year. No funding race, no city boundary. It is a second mortgage amortized over 15 years at roughly 4.75%, which costs about $97 per month on the full amount.
That monthly payment is the tradeoff. It is real money and it counts in your debt-to-income ratio, which means taking the maximum can slightly lower the price you qualify for. Assistance comes in $100 increments, so borrow what actually closes your gap rather than what is on the brochure.
For the full mechanics — credit minimums, debt ratios, the $566,354 purchase price limit and which loan types pair with it — see my complete guide to KHC down payment assistance. For the honest cost breakdown, see do you pay back down payment assistance. For income eligibility, see the 2026 KHC income limits by county.
The Welcome Home Grant: biggest money, hardest to catch
The Welcome Home Program through FHLB Cincinnati is the largest assistance available to Kentucky buyers — up to $20,000, and up to $25,000 for honorably discharged veterans, active-duty military and surviving spouses. It is a true grant with a five-year retention period rather than a loan.
The catch is timing. Funds open in a single annual round and are reserved first-come, first-served until exhausted, which historically happens fast.
2026 funding status: the 2026 round opened April 6, 2026 and has reached capacity — it is no longer accepting new applications this year. If you want this money in the next round, the work happens now: be pre-approved and contract-ready before funds open. Buyers who start looking the week the round opens almost never get it. Call or text 502-905-3708 and I will make sure you are positioned.
The most underused option is the one nobody markets
Seller-paid closing costs. No application, no income limit, no second mortgage payment, no funding round, no city boundary. On an FHA loan a seller may contribute up to 6% of the purchase price toward your closing costs and prepaid items. On a $200,000 house that is up to $12,000 — comparable to KHC assistance, with nothing to repay.
It costs you nothing but negotiating room. On a house that has been sitting three weeks, asking for $6,000 in seller-paid costs is very often accepted. Nobody advertises this because no institution earns anything when you use it, which is exactly why it belongs at the top of your list rather than the bottom.
What can you actually stack?
Sometimes two, rarely three, and geography decides most of it. Seller-paid closing costs combine with almost anything. Local city programs and KHC assistance can occasionally be layered, but each carries its own lien-position rules, income caps and homebuyer education requirements, and some explicitly prohibit combining with other assistance.
Stacking is also where deals fall apart. Two programs that each look fine alone can conflict on lien priority and blow up two days before closing. That is worth a phone call before you write an offer, not after.
Which one should you actually use?
- Veteran or active duty? Start with VA — zero down, no mortgage insurance. You may not need assistance at all. If a Welcome Home round is open, you are eligible for the higher $25,000 tier.
- Buying outside a city? Check USDA eligibility first. Zero down beats borrowing $12,500 to create a down payment you never needed.
- Buying in Louisville or Lexington under the local income caps? Apply to the city programs first. Forgivable and grant money always beats a repayable second mortgage.
- Everyone else, statewide? KHC assistance — available year-round in every county with no funding race.
- Tight monthly budget? Skip assistance and negotiate seller-paid costs. A $97 second payment can be the difference between qualifying and not.
Frequently asked questions
How much down payment assistance can you get in Kentucky in 2026?
Up to $12,500 statewide through Kentucky Housing Corporation, available year-round. During an open Welcome Home funding round, eligible buyers can receive up to $20,000, or up to $25,000 if they are a veteran, active duty, or a surviving spouse. Local Louisville and Lexington programs add more for buyers inside those areas.
Which Kentucky down payment assistance do you not have to pay back?
The Welcome Home Grant, the Lexington-Fayette grant, and the Louisville-area closing cost grant are not repaid, though Welcome Home carries a five-year retention period. Louisville Metro assistance is forgivable over time. KHC assistance is a repayable second mortgage. Seller-paid closing costs are never repaid.
Can you combine KHC assistance with a grant?
Sometimes, but not freely. Each program has its own lien-position rules, income caps and education requirements, and some prohibit combining with other assistance. Seller-paid closing costs stack with nearly everything. Confirm the combination before you write an offer.
Is the 2026 Kentucky Welcome Home Grant still available?
No. The 2026 round opened April 6, 2026 and has reached capacity. Funds are reserved first-come, first-served and this round is closed to new applications. Prepare now for the next round by getting pre-approved in advance.
Do you have to be a first-time home buyer for Kentucky down payment assistance?
Not for every program. Several KHC products are open to repeat buyers. Some local city programs and grants do carry a first-time-buyer requirement, usually defined as not having owned a home in the past three years.
What is the maximum purchase price for a KHC loan in Kentucky?
Around $566,354 statewide in 2026. KHC adjusts this periodically, so confirm the current cap before making an offer near the ceiling.
Is the $2,000 closing cost grant available everywhere in Kentucky?
No. It is a Louisville-area program. Buyers elsewhere in Kentucky should not count on it, and it should not be combined with KHC's $12,500 to describe a statewide total.
What credit score do you need for down payment assistance in Kentucky?
Generally a 620 middle score for KHC FHA, VA and USDA loans, and 660 for KHC Conventional. Local programs and grants set their own minimums.
Let's figure out which one fits your situation
Free application, no obligation, same-day approvals. I will check your county limits, confirm which programs you actually qualify for, and show you what each one costs over time — not just the headline number.
Call or text: 502-905-3708
Email: kentuckyloan@gmail.com
About the author
Joel Lobb specializes in Kentucky first-time homebuyer financing — FHA, VA, USDA and Rural Housing, KHC, and Fannie Mae loans. More than 20 years in the mortgage industry and over 1,300 Kentucky families helped into a home or into a lower payment.
Joel Lobb — Mortgage Loan Officer
EVO Mortgage
911 Barret Ave, Louisville, KY 40204
Call/Text: 502-905-3708
Email: kentuckyloan@gmail.com
NMLS #57916 · Company NMLS #1738461
Licensed in Kentucky only. Verify at nmlsconsumeraccess.org
This article is educational and is not a commitment to lend. Payment figures are estimates for illustration; your actual rate, payment and terms are disclosed on your Loan Estimate. Rates, program terms, income limits, purchase price limits and funding availability are set by Kentucky Housing Corporation, FHLB Cincinnati and local government agencies and are subject to change without notice. All loans subject to credit approval, income verification and property eligibility. Not endorsed by or affiliated with FHA, VA, USDA, HUD, Kentucky Housing Corporation, FHLB Cincinnati or any government agency. Equal Housing Lender.
