ZERO DOWN HOME LOANS IN KENTUCKY
I’ve included some info on each for you on your home journey to buy a home in Kentucky!
Kentucky USDA Loans
Kentucky VA Loans
- 100% financing/No down payment
- No monthly mortgage insurance (PMI)
- Gift funds acceptable for closing costs
- No cash reserve requirements
- A variety of terms or loan types available
- Available for purchase and refinance
- Reduced costs for disabled veterans
- Seller can pay for closing costs
- Seller pays for any required repairs
- No pre-payment penalty
- No minimum credit score 2 years removed from bankruptcy or foreclosures
Kentucky Down Payment Assistance Programs
KHC recognizes that down payments, closing costs, and prepaids are stumbling blocks for many potential home buyers. Here are several loan programs to help. Your KHC-approved lender can help you apply for the program that meets your need.
ATTENTION: KHC has announced changes to the Down Payment Assistance Programs! This is great news for buyers in Kentucky!
1. KHC is increasing the down payment assistance program amount from $6,000 to $7,500. This is for both Regular Down Payment and for Affordable Down Payment assistance programs
2. The interest rate on the repayment of the down payment assistance will go from 5.5% to 3.75%. (Affordable Down Payment assistance will remain at 1%)
Realtors: We are here to help you and your clients take advantage of these great opportunities.
Buyers: We are here to answer questions you have regarding this program and qualification requirements.
KHC is used for mostly applicants in Kentucky that don’t have access to money for a down payment on their home.
Regular DAP
- Purchase price up to $346,644 with Secondary Market.
- Assistance in the form of a loan up to $7,500 in $100 increments.
- Repayable over a 10-year term at 3.75 percent.
- Available to all KHC first-mortgage loan recipients.
Affordable DAP
- Purchase price up to $346,644 with Secondary Market.
- Assistance up to $7,500.
- Repayable over a 10-year term at 1.00 percent.
- Borrowers must meet Affordable DAP income limits.
SeCONDARY MARKET FUNDING SOURCE
- First-time and repeat homebuyers statewide
- 30-year fixed interest rate
- Principal residence ONLY
- Purchase Price Limit: $346,644
- Borrower must meet KHC’s Secondary Market Income Limits
- Minimum credit score of 660
- 3 percent down payment
- Monthly mortgage insurance (charter coverage)
- All KHC DAPs applicable
- No minimum borrower contribution
- No reserves required
- 80 percent AMI income
- Minimum credit score of 660
- 3 percent down payment
- Monthly mortgage insurance (standard coverage)
- All KHC DAPs applicable
- No minimum borrower contribution
- No reserves required
- Secondary Market Income limits apply
- Insured by the Federal Housing Administration
- 3.5 percent down payment
- All KHC DAPs applicable
- Upfront and monthly mortgage insurance
- Minimum credit score of 620
Refinance Options (Available only through Secondary Market)
- Credit qualifying Streamline Refinance and Rate/Term Refinance
- Insured by the Federal Housing Administration
- Cash back to borrower not to exceed $500
- Upfront and monthly mortgage insurance
- Minimum credit score of 620
- Guaranteed by the Veterans Administration for qualified military veterans
- No down payment if the property appraises for the sales price or greater
- All KHC DAPs applicable
- Minimum credit score of 620
- No monthly mortgage insurance payments
Refinance Options (Available only through Secondary Market)
- VA IRRRL
- 620 minimum credit score
- No appraisal required
- 30-year term
- VA existing loan
- Guaranteed by Rural Housing Services (RHS)
- Home must be located in a rural area as defined by RHS
- No down payment if the property appraises for the sales price or greater
- All KHC DAPs applicable
- Upfront and monthly mortgage insurance
- Minimum credit score of 620
Refinance Options (Available only through Secondary Market)
- RHS Streamlined-Assist Refinance Program
- 620 minimum credit score
- No appraisal required
- Must have made timely mortgage payments for the last 12 months
- 30-year term
- RHS existing 502 guaranteed loan
KENTUCKY HOUSING CORPORATION
2021 SECONDARY MARKET
GROSS ANNUAL APPLICANT’S INCOME LIMITATIONS
Effective May 1, 2021
Secondary Market Purchase Price Limit — $346,644
Kentucky Welcome Home Grant $5,000
Eligibility RequirementsHomebuyer Eligibility
• Homebuyers must contribute at least $500 of their own funds toward down payment and closing costs (60% of these
funds may be received as a gift).
• Applicants do not have to be first-time homebuyers. However, all first-time homebuyers must complete a homebuyer
counseling program.
Eligible Property
• Funds must be subject to a legally enforceable restriction in the warranty deed
• Only in transactions which convey full title
• May be used for new home construction
Eligible Uses of Funds
• May not exceed $5,000 per homebuyer
• May be used in conjunction with other local, state, and federal funding sources
• May be used to pay for the reasonable costs of counseling
• Is not intended for any purchases requiring any significant repair or rehabilitation
Ineligible Uses of Funds
residence and their incomes are included in determining eligibility
• May not be used for any loan with collateral other than the subject property
• May not be used in transactions involving a second mortgage provided by an individual seller
Retention Requirements
Items Included in Household Income
• Net income from operation of a business or profession
• Interest, dividends, and other net income
• Periodic amounts
• Payments in lieu of earnings
• Welfare Assistance
• Periodic and determinable allowances
• All regular pay, special pay, and allowances of a member of the Armed Forces
For More information, please visit the Federal Home Loan Bank of Cincinnati website at www.fhlbcin.com.
Kentucky First time home buyers can do a conventional loan with just 3% down. If you are not a first-time home buyer, you still may be able to qualify for the 3% down if you are within income limits for the area you are purchasing. 620 minimum credit score required.
The Kentucky USDA loan is a program designed to finance properties located in rural areas. One of the goals with this United States Department of Agriculture program is to secure a home loan in areas where conventional loans might not approve the area simply due to a lack of comparable sales in the area. Every 10 years the United States performs its census, these areas are identified by the USDA. This is a zero-down program. The last census was taken in 2010, more than eight years ago so many areas that were deemed rural in 2010 still qualify even though the area where the property is located looks anything but a rural setting. Household income is limited to 115% of the median income for the area. 581 Minimum Credit Score Required.
Kentucky VA loans are the most common of zero down programs and are not restricted by location. They are however restricted to veterans, active-duty personnel with at least 181 days of service, National Guard and Armed Forces Reserve members with at least six years of service and unmarried surviving spouses of those who died while serving or as a result of a service-related injury. In addition, this program requires no monthly mortgage insurance payment like other government-backed loans do. No minimum credit score required.
Senior Loan Officer