There are a few programs that feature zero down payment loans in Kentucky. Below I have summarized the different loan programs and the requirements.
Kentucky USDA Loans
USDA loans are backed through the Rural Housing Division of the U.S. Dept. of Agriculture. They are available to millions of eligible primary home buyers with low to moderate incomes or scarce funds for down payments.
Features, benefits and things you need to know:
Zero Down - No down payment is required for Kentucky USDA loans. Thirty-year, fixed-rate loans with no pre-payment penalty are the norm. Rates are very competitive with conventional loans.
Eligible Property - These loans are limited to "rural" areas, though you might be surprised by some of the suburbs of major metropolitan areas that qualify as rural.
Homes should be modest in size and cost and constructed per local codes and regulations.
Eligible Borrowers - Funds are available for qualified borrowers who earn up to 115% of the area median income.
Even candidates who have had past credit issues with late pays, bankruptcies or foreclosure may be eligible. Borrower's income must support the proposed payments and meet the program requirements for approval. Primary occupancy is required. This program is not for investment properties.
Benefits - Minimum cash is needed to close. The USDA Guarantee Fee and some eligible closing costs may be financed. Gift money, grant money and seller contributions are allowed.
Kentucky VA Loans
Veteran's Administration or "VA" loans are available for active, non-active and retired Army, Air Force, Marine, Navy, National Guard and Coast Guard vets who meet the established service requirements.
- 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
To determine your ability to participate in this program, just provide your Certificate of Eligibility (COE) or your Discharge/Separation form (DD214). If you do not have your COE, you can request one using form 26-1880.
Kentucky Down Payment Assistance Programs
From first-time buyers to current homeowners, many state, county and local housing agencies offer affordable loan programs with Down Payment Assistance (DPA), subject to availability of funds and credit qualifying.
Down payment assistance can vary with single products or sometimes can be a combination of products such as Mortgage Credit Certificates (MCC), Grants, DPA’s along with closing cost assistance and low interest rates and fees that can help individuals and families become successful homeowners.
All borrowers must qualify for an underlying mortgage product according to the Housing Finance Agency authority (FHA, VA, USDA or Conventional). Housing loan programs are then layered on top to provide additional benefits. If eligible, the borrower can also add a down payment and closing cost assistance to their loan according to individual program guidelines.
What state are you in? I assume Kentucky. I will help you gather more information if this is something you want to look into. The general terms are below:
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.
Kentucky Welcome Home Buyer Eligibility
A homebuyer would be eligible for the Kentucky Welcome Home grant if all of the following guidelines are met:
- The total income for all occupants who will reside in the home is at or below 80 percent of the Mortgage Revenue Bond (MRB) limit for the county and state where the property is located;
- A fully executed (signed by buyer and seller) purchase contract on an eligible property is in hand;
- The homebuyer has at least $500 of their own funds to contribute towards down payment and/or closing costs; and,
- If a first-time homebuyer (typically anyone who has not owned a home in the last three years), a satisfactory homebuyer counseling course is completed prior to the loan closing.
Note: Applicants do not have to be first-time homebuyers.
Kentucky Property Eligibility
- The property will be the homebuyer’s primary residence;
- The property is a single family, townhome, condominium, duplex, multi-unit (up to four family units) or a qualified manufactured home. (Manufactured homes may be eligible if they are taxed as real estate and affixed to a permanent foundation); and,
- The property is subject to a legally enforceable five-year retention mechanism, included in the Deed or as a Declaration of Restrictive Covenants to the Deed, requiring the FHLB Cincinnati be given notice of any refinancing, sale, foreclosure, deed in-lieu of foreclosure, or change in ownership during the five year retention period.
A homebuyer would be eligible for the Welcome Home grant if all of the following guidelines are met: The total income for all occupants who will reside in the home is at or below 80 percent of the Mortgage Revenue Bond limit for the county and state where the property is located –
In Jefferson County 1 or 2 person families can make up to $71,760. 3-4 persons in the household cap at $82,584. The limits are slightly higher or lower in the surrounding counties like Bullitt, Henry, Oldham, Spencer, Hardin, Meade, Nelson and Spencer Counties. see limits below
A homebuyer would be eligible for the Welcome Home grant if all of the following guidelines are met:
The total income for all occupants who will reside in the home is at or below 80 percent of the Mortgage Revenue Bond (MRB) limit for the county and state where the property is located;
A fully executed (signed by buyer and seller) purchase contract on an eligible property is in hand;
The homebuyer has at least $500 of their own funds to contribute towards down payment and/or closing costs; and,
If a first-time homebuyer (typically anyone who has not owned a home in the last three years), a satisfactory homebuyer counseling course is completed prior to the loan closing.
Note: Applicants do not have to be first-time homebuyers.
Property Eligibility
The Welcome Home grant is available for various property types:
The property will be the homebuyer’s primary residence;
The property is a single family, townhome, condominium, duplex, multi-unit (up to four family units) or a qualified manufactured home. (Manufactured homes may be eligible if they are taxed as real estate and affixed to a permanent foundation); and,
The property is subject to a legally enforceable five-year retention mechanism, included in the Deed or as a Declaration of Restrictive Covenants to the Deed, requiring the FHLB Cincinnati be given notice of any refinancing, sale, foreclosure, deed in-lieu of foreclosure, or change in ownership during the five year retention period.
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Joel Lobb (NMLS#57916)
Senior Loan Officer
Senior Loan Officer
Text/call 502-905-3708
