Kentucky Down Payment Assistance (KHC) 2026 – Permanent $12,500 Program
Kentucky first-time and repeat homebuyers can now access up to $12,500 in permanent down payment and closing cost assistance through the Kentucky Housing Corporation (KHC). You can combine this with FHA, VA, USDA, or conventional KHC first mortgages to reduce or eliminate your upfront cash to close.
KHC Down Payment Assistance Snapshot (2026)
- Assistance up to $12,500 for down payment and/or closing costs.
- Structured as a 15-year fixed-rate second mortgage at approximately 4.75%.
- Now a permanent program — no more short-term allocation windows.
- Available statewide for eligible primary residences in Kentucky.
- Income, purchase-price, and debt-to-income limits apply (varies by county and household size).
You cannot apply directly with KHC. All applications are processed through KHC-approved lenders such as Joel Lobb, Mortgage Broker – FHA, VA, KHC, USDA.
FHA + KHC Down Payment Assistance
Combine an FHA loan with KHC down payment assistance to cover the 3.5% minimum down payment and a portion of your closing costs. This is one of the most popular options for Kentucky buyers with limited savings or past credit challenges.
Zero Down in Kentucky – VA, USDA & Grants
Through USDA, VA, and programs like the Welcome Home Grant, qualified Kentucky buyers may be able to buy with zero down payment. KHC DPA can sometimes be layered on top to help with closing costs and prepaid expenses.
How the $12,500 KHC Down Payment Assistance Program Works
The KHC Down Payment Assistance (DAP) program is a second mortgage that sits behind your main KHC first mortgage. It’s designed to cover the upfront costs that stop many Kentucky renters from becoming homeowners — down payment, closing costs, and prepaid items.
Key Program Highlights
- Assistance Amount: Up to $12,500 for qualified buyers.
- Form of Help: Fully amortizing loan, not a grant.
- Repayment: Paid back over 15 years at a fixed interest rate (currently about 4.75%).
- Use of Funds: Down payment, closing costs, and prepaid expenses (taxes, insurance, etc.).
- No asset cap: KHC does not have strict liquid-asset caps like some other assistance programs.
Am I Eligible for the $12,500 KHC DPA?
To qualify, you must:
- Use a KHC first mortgage (FHA, VA, USDA, or conventional via KHC).
- Stay under income limits that vary by county and household size.
- Purchase a home at or below the current purchase price limit (recently around $544,232; subject to change).
- Occupy the property as your primary residence in Kentucky.
- Meet credit score and debt-to-income requirements: in many cases a minimum 620–640 score and maximum total DTI around 50%, depending on AUS findings.
Popular Loan Types Paired With KHC DPA
FHA (Federal Housing Administration)
- Minimum ~620 credit score for most scenarios.
- Up to 96.5% financing on the first mortgage plus KHC DPA for the remainder.
- Mortgage insurance required; flexible credit and income guidelines.
USDA Rural Housing (RHS)
- Minimum ~620 credit score in most cases.
- Up to 100% financing in eligible rural areas, plus guarantee fee.
- Income and geographic limits apply.
VA (Veterans Affairs)
- Available to eligible veterans, active duty, and some surviving spouses.
- Up to 100% financing with no monthly mortgage insurance.
- Funding fee may apply; can be financed.
How the Second Mortgage Payment Works
At closing, KHC funds your DPA as a separate second mortgage. After closing you will have:
- Your primary 30-year mortgage (FHA, VA, USDA, or conventional).
- Your 15-year KHC DPA loan for up to $12,500 at a fixed rate.
You make a separate monthly payment on the DPA loan. Once the 15 years are up, that payment stops and only your main mortgage remains.
Kentucky Housing Corporation Makes $12,500 DPA a Permanent Offering
KHC has officially announced that its $12,500 Down Payment Assistance Program — originally rolled out as an increased, time-limited benefit — has now been made permanent for eligible Kentucky homebuyers.
This change eliminates the uncertainty around allocation windows and “while funds last” language. Lenders and real estate agents can confidently build this program into their long-term strategies, and buyers can plan knowing the assistance is part of KHC’s ongoing menu of options.
What This Means for You
- More predictable access to funds throughout the year.
- Ability to structure offers knowing DPA should be available at the time of contract.
- Stronger negotiating position when paired with solid pre-approval from a KHC-approved lender.
If you’d like a free Kentucky DPA eligibility review, I can run your full scenario — credit, income, assets, and target price range — and give you a payment breakdown before you start making offers.
Call/Text: 502-905-3708
Email: kentuckyloan@gmail.com
Kentucky Down Payment Assistance – Frequently Asked Questions
Is the $12,500 KHC Down Payment Assistance really permanent now?
Yes. KHC has officially made the $12,500 down payment assistance program a permanent offering, rather than a limited-time allocation. As with any mortgage program, terms can change in the future, but it is now part of their ongoing product line.
Is the $12,500 a grant or a loan?
It is a loan, not a grant. The assistance is structured as a 15-year, fixed-rate second mortgage, typically at about 4.75% interest, with its own monthly payment.
What can the KHC DPA funds be used for?
Funds can be used for down payment, closing costs (title, appraisal, lender fees, etc.), and prepaid items such as homeowner’s insurance and property taxes.
What credit score do I need to qualify?
Minimum scores depend on the underlying loan program and automated underwriting results. Many scenarios start around 620 for FHA, VA, and USDA, and around 660 or higher for some conventional options. I can review your credit and tell you exactly where you stand.
Can I combine KHC assistance with FHA, VA, or USDA loans?
Yes. KHC DPA is designed to be layered with KHC first mortgages — FHA, VA, USDA, or conventional. This is how most buyers cover both their down payment and closing costs.
Is this only for first-time homebuyers?
Many KHC programs target first-time buyers, but some allow repeat buyers, especially in targeted areas or when you haven’t owned a home in the last three years. We can review your situation and confirm.
How do I apply for the KHC Down Payment Assistance Program?
You can’t apply directly through KHC. You must work with a KHC-approved lender like Joel Lobb, who originates both your first mortgage and the DPA second. The process starts with a full pre-approval and review of your credit, income, assets, and target price range.