Kentucky Down Payment Assistance (KHC) 2025 – How to Qualify and Apply
Kentucky first-time homebuyers can access up to $10,000 in down payment and closing cost assistance through the Kentucky Housing Corporation (KHC). Whether your credit is strong or rebuilding, FHA, VA, USDA, and conventional programs may help you buy with little or no money down.
FHA + Down Payment Assistance (DAP)
Combine an FHA loan with a Kentucky Housing Corporation down-payment assistance loan (DAP) to cover your 3.5% minimum down payment and part of your closing costs. Even with fair or limited credit, KHC programs help open the door to homeownership for many Kentucky families.
Zero Down in Kentucky – How It Works
Through USDA, VA, and Welcome Home Grant programs, qualified Kentucky buyers can achieve zero down payment homeownership. These options can also be paired with KHC DPA for additional closing-cost coverage.
KHC Down Payment Assistance Snapshot
- Assistance up to $10,000–$12,500 depending on program cycle.
- Structured as a 15-year fixed-rate second mortgage.
- Available statewide for eligible primary residences.
- Income and purchase-price limits apply (varies by county and household size).
Kentucky Down Payment Assistance – Frequently Asked Questions
Who qualifies for Kentucky Down Payment Assistance?
To qualify, you must purchase a primary residence in Kentucky and meet KHC income and purchase price limits. Most programs are for first-time buyers, though some repeat buyers may qualify. Apply through a KHC-approved lender such as Joel Lobb, Mortgage Broker FHA, VA, KHC, USDA.
Can I get Kentucky down payment assistance with bad credit?
Yes. KHC allows down payment assistance with credit scores as low as 620 for FHA, VA, or USDA loans. Even with past credit issues, stable income and on-time payments can make approval possible.
How much down payment assistance can I get in Kentucky?
KHC typically offers up to $10,000–$12,500 in down payment and closing cost assistance through a fixed-rate second mortgage. Amounts vary by program and availability.
How do I apply for the KHC Down Payment Assistance Program?
You apply through a KHC-approved lender — Joel Lobb, Mortgage Broker FHA, VA, KHC, USDA. The lender originates both your primary mortgage and the DPA second loan.
Is homebuyer education required?
Yes, for certain loan types. It’s mandatory for conventional KHC loans and recommended for all buyers to understand long-term homeownership responsibilities.
Can I combine KHC assistance with FHA, VA, or USDA loans?
Absolutely. KHC DPA can be paired with FHA, VA, USDA, or conventional loans to minimize upfront costs.
Is it only for first-time buyers?
Not always. Repeat buyers may qualify if they haven’t owned a home in the last three years or purchase in a targeted county.
Kentucky Housing Corporation (KHC) offers a down payment assistance program to help Kentucky First Time Home buyers buy a house with no down payment.
Guidelines for the $10,000 Down Payment Assistance Program for Kentucky Homebuyers:
Provides up to $10,000 in down payment assistance.
This assistance is offered as a second mortgage with a fixed interest rate.
Typically, the second mortgage is repaid over a 10-year term, but terms can vary.
Income Limits: Borrowers must meet certain income limits, which vary by county and household size. see link here 👉 limits https://www.kyhousing.org/Homeownership/Future-Homebuyers/Documents/SMP%20Income%20Limitations.pdf
Credit Score: Minimum credit score requirements apply, generally starting at 620 for government loans VA, USDA and FHA while Conventional loans require a 660 score
First-Time Homebuyer Status: While KHC primarily targets first-time homebuyers, some programs may allow repeat buyers in certain circumstances.
Homebuyer Education: Completion of a homebuyer education course may be required for conventional loan programs. Government-backed programs do not require homebuyer education courses.
Property Requirements: Must be primary residence and no second home homes or rental properties. The home must meet certain criteria, such as being a primary residence and meeting property condition standards. No subject to properties or fixer uppers or rehab houses. Kentucky properties only
Debt to Income Requirements. Front end and back end debt ratio cannot be more than 50%
Purchase price Limits $544,232 is the current purchase price limit. Changes yearly.
Kentucky Down Payment Assistance: Get $12,500 Toward Your New Home (2025)
Tired of hearing you need a huge down payment to buy a home in Kentucky? What if we told you you could get $12,500 in assistance to cover your down payment, closing costs, and prepaid expenses? For many potential buyers, these initial costs are the biggest hurdle. That's why the Kentucky Housing Corporation (KHC) offers a powerful loan program to help you clear it. And for a limited time, that assistance has been increased.
This guide will break down everything you need to know about KHC's Down Payment Assistance (DAP) program and how to connect with a approved Kentucky down payment assistance lender to claim your $12,500.
What is the KHC $12,500 Down Payment Assistance (DAP) Program?
The KHC Down Payment Assistance (DAP) program is a second loan designed to work alongside your main KHC first mortgage. It provides funds specifically to cover the upfront costs of buying a home that often stall the dream of homeownership.
Key Program Highlights:
Assistance Amount: Up to $12,500 (temporarily increased from $10,000).
Form of Help: A fully amortizing loan, not a grant. It is repaid over 15 years.
Interest Rate: Fixed at 4.75%.
Limited Time Offer: This increased amount of $12,500 is only available until November 30, 2025. After this date, it is expected to revert to $10,000.
Am I Eligible for the $12,500 Kentucky Down Payment Assistance?
Qualifying for this program is straightforward, but you must work with a KHC-approved lender to confirm your eligibility.
Eligibility Requirements
To qualify for the DAP program, you must:
Use a KHC First Mortgage: You must be approved for your primary home loan through one of KHC's first-mortgage programs (like your standard FHA, VA, or USDA loan through KHC).
Meet Income Limits: Your household income must fall within KHC's Secondary Market or Mortgage Revenue Bond (MRB) limits. These limits vary by county and household size.
Meet Purchase Price Limits: The sales price of the home you wish to buy cannot exceed $544,232.
Major Benefits: Why This Program is So Popular
Effectively $0 Down: By covering your down payment and closing costs, this program can create a true no-money-down scenario for eligible buyers.
No Asset Limits: KHC does NOT review your liquid assets (savings, checking accounts) or place a limit on how much money you can have in reserves after closing. This is a huge advantage over other programs.
Available to All: The DAP program is available to all recipients of a KHC first-mortgage loan who meet the income and price limits.
How Does the KHC DAP Loan Work?
It's important to understand that this is a loan, not free money. Here’s how it functions:
You apply for your main mortgage through a KHC-approved lender.
If you qualify, you can also apply for the DAP loan of up to $12,500.
At closing, the DAP loan funds are used to pay your required down payment and other closing costs.
You will then have two loans:
Your primary 30-year mortgage (e.g., FHA loan at 6.5%).
Your secondary 15-year DAP loan for $12,500 at 4.75%.
You will make a separate, monthly payment on the DAP loan for 15 years, after which it will be paid in full.
How to Apply: Your Next Steps to $12,500
You cannot apply for this program directly through KHC. You must work with a participating KHC-approved Kentucky down payment assistance lender.
Ready to stop renting and see if you qualify for $12,500?
The clock is ticking on this increased amount! Connect with a top-rated KHC-approved lender today for a free eligibility check and personalized quote. They can answer all your questions and guide you through the entire process before the November 30, 2025 deadline.
Frequently Asked Questions (FAQ) (H2)
Q: Is the $12,500 a grant or a loan?
A: It is a loan that must be repaid over 15 years at a 4.75% fixed interest rate.
Q: What can the DAP funds be used for?
A: The funds are used to cover your down payment, closing costs (like appraisal, title insurance, origination fees), and prepaid expenses (like homeowner's insurance and property taxes).
Q: What are the credit score requirements?
A: Credit requirements are set by the specific KHC first-mortgage program you use (FHA, VA, etc.) and the lender's own underwriting. Your lender will advise you on the specific credit standards for the down payment assistance program.
Q: Can I use this on any home in Kentucky?
A: The home must be located in Kentucky and the purchase price must be at or below $544,232. It must also be your primary residence.
