2025 Guide: How to Buy Your First Home in Louisville, Kentucky with Zero Down Payment

Are you dreaming of buying your first home in Louisville, Kentucky but worried about the down payment? You are not alone — and the great news is, in 2025, you have several powerful options that can get you into a home with little or even zero money out of pocket.

Let's dive into your updated 2025 roadmap to first-time homeownership!

Step 1: Understand Your Financial Picture

Before you even start browsing listings, you need to know your numbers.

• Credit Score: Most zero-down and low-down programs require a minimum 580-640 credit score.

  • Example: If your credit score is 620, you may qualify for both USDA and VA loans.

• Income Verification: Stable employment history (2 years preferred).

  • Example: Working at the same company for two years with steady income is ideal.

• Debt-to-Income Ratio: Ideally below 45%, though flexibility exists with strong compensating factors.

  • Example: If you earn $4,000 monthly gross income, your total monthly debts (including your new mortgage) should stay under $1,800.

Tip: Pull a full tri-merge mortgage credit report through your lender — consumer sites like Credit Karma aren't accurate for home loan approvals.

Step 2: Get Pre-Approved by a Kentucky Mortgage Specialist

Pre-approval is essential. It tells you what you can afford and positions you as a serious buyer when you find "the one."

Partner with a lender experienced in:

• USDA Rural Loans

• VA Home Loans

• FHA + Kentucky Housing Corporation (KHC) Down Payment Assistance (DAP)

Pre-Approval Includes:

• Hard pull credit review

  • Example: Lender checks your true mortgage scores, not your app scores. 

  • Fico versions 2,4,5  are used for Mortgage Loan Scores from Experian, Equifax, Transunion

• Verified income review

  • Example: Reviewing pay stubs, W-2s, and/or tax returns.

• Issued Pre-Approval Letter to submit with offers

  • Example: "Pre-Approved for up to $250,000 FHA Loan with KHC DAP assistance."

Step 3: Explore Zero-Down and Low-Down Payment Options

Here are the top first-time buyer options for Louisville and all of Kentucky in 2025:

 USDA Rural Development Loans

• 100% financing (zero down)

• Targeted for suburban and rural areas

• Income limits apply (based on county)

• Typically need 640+ credit

Example: Buying a home in Shelbyville or Mount Washington using USDA financing.

VA Loans (Veterans, Active Military, Some Spouses)

• 100% financing

• No mortgage insurance (PMI)

• Flexible credit requirements (typically 620+)

• Must obtain Certificate of Eligibility (COE)

Example: An Army veteran purchasing a Louisville home with zero down and no monthly PMI.

 FHA Loan + Kentucky Housing DAP

• FHA requires 3.5% down normally — but DAP can cover this entirely.

• Credit score as low as 580 with flexible underwriting.

• Combine DAP for little to zero out of pocket.

Example: Buyer with 600 credit score using FHA financing and $10,000 DAP to cover down payment and closing costs.

 Welcome Home Grant (Limited Funds!)

• 20,000 grants (amount varies) changes every year. This year 20k

• Offered through Federal Home Loan Bank

• Must apply early — funds often run out quickly in Spring!

Example: A first-time buyer securing a $20,000 grant toward their Louisville home purchase in March.

Step 4: Secure Down Payment and Closing Cost Help

Even if you have zero down payment, you still need to address closing costs. Here’s how:

Kentucky Housing Corporation (KHC) DAP

• Up to $10,000 assistance (subject to change)

• 10-year loan term

• Low fixed interest rate

• Can cover down payment and/or closing costs

Example: Borrower uses KHC DAP to cover both the 3.5% FHA down payment and $2,000 of closing costs.

Seller Concessions

• Negotiate seller to pay a portion of your closing costs (common with VA, USDA, and FHA offers).

Example: Seller agrees to pay $5,000 of buyer’s closing costs, reducing buyer’s cash to close.

Step 5: Find Your Home and Close the Deal

Work with an experienced realtor who understands:

• USDA property eligibility

• VA minimum property requirements (MPRs)

• FHA appraisal standards

Your lender will order the appraisal, finalize underwriting, and set your closing date!

Example: After inspections and appraisal, your lender clears you to close, and you get the keys to your new home within 30-45 days of contract acceptance.

Ready to Buy Your First Home in Kentucky?

Don't let the fear of a down payment hold you back. There are real, proven options to help you succeed.

Let's get you pre-approved and on the path to homeownership today!

📞 Call/Text: (502) 905-3708
📧 Email: kentuckyloan@gmail.com
📚 Visit: www.mylouisvillekentuckymortgage.com

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Disclaimer: Program guidelines, income limits, grant amounts, and availability are subject to change without notice. All loans subject to underwriting and credit approval. NMLS #57916 | Equal Housing Lender.

 

How to Buy a Home in Kentucky with No Money Down: A Step-by-Step Guide for First-Time Buyer

Dreaming of buying a home in Kentucky but worried about the down payment? You're not alone. Fortunately, several loan programs and grants are available that can help you purchase a home with zero money down. This guide walks you through the most effective ways to make that dream a reality in 2025.

✅ Zero Down Payment Options for Kentucky Buyers

🏡 USDA Loans

• No down payment required
• Must buy in eligible rural areas
• Income limits apply (115% of median income)
• Credit score typically 640+

🎖️ VA Loans

• 100% financing for veterans, service members, and eligible spouses
• No mortgage insurance
• Lenient credit requirements (often 620+)

🏠 FHA Loans + Down Payment Assistance (DAP)

• Minimum 3.5% down, often covered by assistance programs
• Minimum credit score: 580
• Accepted grants and gift funds to reduce upfront costs

🏦 Kentucky Housing Corporation (KHC) Assistance

💰 Down Payment Assistance Program (DAP)

• Up to $10,000 in assistance
• 10-year term at 3.75% interest
• Used with FHA, VA, USDA, and Conventional loans

🎉 Welcome Home Grant

• Available annually for qualified buyers
• Free grant money to cover closing and down payment costs

📝 Steps to Qualify for No Money Down Programs

1. Check Eligibility: Income, location, military status, credit score
2. Get Pre-Approved: Start with a trusted mortgage lender
3. Take a Homebuyer Education Course: Required for most grants
4. Apply for Assistance: Work with your lender to package loans + grants
5. Find a Home: Ensure the property qualifies for the loan program

📊 No Money Down Steps

❓ Frequently Asked Questions

Can I use multiple programs together?

Yes! You can layer KHC down payment assistance with FHA, VA, or USDA loans to cover costs.

What if I have bad credit?

FHA loans allow scores as low as 580 with 3.5% down. With a 620+ score, you can qualify for most no-money-down options.

Do I have to repay down payment assistance?

Some are forgivable if you stay in the home a certain number of years; others require repayment. Your lender will guide you.

📞 Call to Action

Ready to buy your Kentucky home with no money down? Contact Joel Lobb, Mortgage Loan Officer, for a free consultation and same-day pre-approval.

📧 kentuckyloan@gmail.com
📞 Call/Text: (502) 905-3708
🌐 www.mylouisvillekentuckymortgage.com

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NMLS #57916 | Equal Housing Lender | Subject to credit approval and program availability. Not a commitment to lend. Visit nmlsconsumeraccess.org for more information.

100% Financing Zero Down Payment Kentucky Mortgage Home Loans for Kentucky First time Home Buyers: Louisville Kentucky Mortgage Lender for FHA, VA, ...

100% Financing Zero Down Payment Kentucky Mortgage Home Loans for Kentucky First time Home Buyers: Louisville Kentucky Mortgage Lender for FHA, VA, ...: Louisville Kentucky Mortgage Lender for FHA, VA, KHC, USDA and Rural Housing Kentucky Mortgage: Kentucky First-time Home Buyer Programs : ...

Kentucky First-time Home Buyer Programs

Conventional Mortgage Loan in Kentucky.

620 credit score or higher needed for this loan program. 4 years removed from bankruptcy minimum sometime longer. Private mortgage insurance required for over 80% loan to value on a refinance or down payments less than 20%. Tighter debt to income requirements with max back-end-ratio usually not over 45% with less than 20% down payment. Easier on properties to qualify if they have deferred maintenance or need some fixing up to pass Government standards like FHA, VA, USDA loans.

Down payment requirements are as little as 3% down payment. Better rates and lower mortgage insurance with a larger down payment and pmi is not for life of loan.

This is for stronger borrowers with good credit (above 680 or 720) and at least 3-5% down payment with no foreclosures or bankruptcies in he last 4-7 years. Can go higher on the loan amount too versus FHA. Max loan in Kentucky for 2020 for conventional loans is $510,000.

Home Possible Advantage Product Highlights:

Up to 97% LTV for Purchase and for Rate Term Refinances of 1-unit properties

CLTV max 97% for purchase unless the second mortgage meets FHLMC Affordable Seconds Guidelines for a max of 105%

Minimum Credit Score of 620 Required

Accept/Eligible LP AUS Findings

Max DTI allowed per AUS Findings

Lower Mortgage Insurance coverage requirements for LTV's of 90.001% - 97% (25%) compared to standard Fannie product (30-35%)

Borrowers may not own any other real estate at closing

1 unit principal residences, including eligible condos and PUDs, 2-4 unit principal residences

Homeownership Education:

At least one Borrower must participate in a homeownership education program before the Note Date in each of the following instances:

For purchase transaction Home Possible® Mortgages when all Borrowers are First-Time Homebuyers

Homeownership education must not be provided by an interested party to the transaction, the originating lender or by the Seller.

Homeownership education programs may use different formats and require different lengths of time to complete. The following are acceptable:

Programs developed by HUD-approved counseling agencies, Housing Finance Agencies (HFAs) or Community Development Financial Institutions (CDFIs)

Programs developed by mortgage insurance companies

Programs that meet the standards of the National Industry Standards for Homeownership Education and Counseling (www.homeownershipstandards.com)

Income Eligibility:

Borrowers must meet income limits for program eligibility. Income limits will be checked by LP.

Link to check income and property eligibility:

http://www.freddiemac.com/homepossible/eligibility.html

Minimum Borrower Contribution:

1 unit - 0%

2-4 units - 3%

Acceptable Sources for Down Payment:

Gift funds and grants. Affordable Seconds are allowed.

Find additional information regarding Affordable Seconds in the Freddie Mac Seller guide section 4204.2

Non-Occupant Borrowers:

Not permitted. All borrowers must occupy the subject property as their primary residence.

Mortgage Insurance:

Monthly, borrower-paid or single premium LPMI are allowed. At this time, borrower paid singles, split premiums, lender paid monthly premiums and lowest cost/custom MI are not allowed.

25% MI coverage for LTVs 90.001 - 97%

Standard MI coverage for LTVs of 90% or less. (Reduced MI not permitted)

Other Income:

Border income (relatives or non-relatives): Up to 30% of qualifying income, must document at least 9 of the last 12 months of payment (will be averaged over 12 months and must document proof of shared residence for the 12 month period.

Accessory Unit - Rental income from an accessory unit may be used in qualifying income per rental income guidelines

2-Unit Rental income from the other units of the subject property may be used per rental income guidelines.

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Good Neighbor Next Door Program offered thru HUD officer next door program in Louisville Kentucky HUD Homes for $100 Down

The Good Neighbor Next Door Program offers HUD owned single family (one-unit) homes to eligible participants at a 50% discount. Law enforcement officers, teachers, firefighters and other emergency medical technicians who meet all other requirements of the program are all eligible to participate in this program.
Program Summary	•	Borrower is a full-time law enforcement officer, teacher or firefighter/emergency medical technician
	•	A 50 percent discount from the list price is provided in the form of a forgivable second lien
	•	The second mortgage is a mortgage and note payable to and provided by HUD in the amount of the difference between the list price of the home and discounted selling price
		- The term of the note is 36 months from the date of owner-occupancy - Refinance restrictions may apply
	•	One-unit residential properties
	•	Borrower cannot own any other residential property within 12 months of the offer date
	•	None of the borrowers could have ever utilized this program in the past
	•	The following must be detailed on the purchase contract with HUD
		- 50% discount - $100.00 downpayment required - Borrower may finance closing costs Qualifications 1. You must be able to qualify for an FHA mortgage.  If you don’t have a letter of prequalification and would prefer to check your credit score first yourself, you can get a free credit report by following the link that’s found on the Federal Trade Commission’s website. 2. You or your spouse cannot have owned a home in the previous year. Your name can’t be on a deed in the United States. 3. You must meet the occupational requirements below: Good Neighbor Next Door Qualifications Teachers, Counselors, and Administrators State certified to teach any grades pre-K through 12 Teach in a private school in the area where the home is located Teach in the public school district where the home is located You or your spouse have not had your name on a real estate deed for the past 12 months You can get a letter of mortgage prequalification or proof of funds before the submitting an intent to purchase You can provide a refundable earnest money check for 1% of the home’s listed price. It needs to been in the form of a cashier’s check or money order made out to the U.S. Department of HUD. You intend to teach for at least one more year Firefighter/Emergency Medical TechniciansYou may participate in the Good Neighbor Next Door program as a Firefighter/Emergency Medical Technician if you are employed full-time as a firefighter or emergency medical technician by a fire department or emergency medical services responder unit of the federal government, a state, unit of general local government, or an Indian tribal government serving the area where the home is located. You or your spouse have not had your name on a real estate deed for the past 12 months You can get a letter of mortgage prequalification or proof of funds before the submitting an intent to purchase You can provide a refundable earnest money check for 1% of the home’s listed price. It needs to been in the form of a cashier’s check or money order made out to the U.S. Department of HUD. Law EnforcementYou may participate in the Good Neighbor Next Door program as a law enforcement officer if you are employed full-time by a law enforcement agency of the federal government, a state, a unit of general local government, or an Indian tribal government; and, in carrying out such full-time employment, you are sworn to uphold, and make arrests for violations of, federal, state, tribal, county, township, or municipal laws. You or your spouse have not had your name on a real estate deed for the past 12 months You can get a letter of mortgage prequalification or proof of funds before the submitting an intent to purchase You can provide a refundable earnest money check for 1% of the home’s listed price. It needs to been in the form of a cashier’s check or money order made out to the U.S. Department of HUD. Is the Good Neighbor Next Door a legitimate program? Yes, this a United States Department of Housing and Urban Development program that has been created for the benefit of civil servants when purchasing a designated HUD home. If you want verification you can visit HUD’s website. The program has been created for teachers, firefighters, police officers, and EMT’s. What does it mean that these houses are 50% off? HUD has their homes appraised based on their current condition. The homes are discounted from this appraised price.   What is a HUD home? HUD acquires properties from insured lenders who have foreclosed FHA loans. Are HUD homes bad homes? Just because it’s a HUD home doesn’t mean it’s a bad home. The only reason it’s a HUD homes is because it has gone through foreclosure. Do all HUD homes qualify for the Good Neighbor Next Door program? No. Only the homes that are designated by HUD are eligible. How often do Good Neighbor Next Door homes become available? Every day homes are listed some where in the country. Sign-up on the notification list so that you will be notified when a home becomes available in your community. How long do these homes stay on the market? These homes are only listed for a seven day period. If they don’t sell through the Good Neighbor Next Door program then they will go to the general HUD list at full list price. Do I have to live in the Good Neighbor Next Door home that I purchase for a certain length of time? To receive the full 50% discount you agree to live in the home for three years. What if I move out of the house before three years? You will still receive a discount, but it will be prorated according to how long you live in the house. If I own the house, how can HUD enforce how long I own the home? HUD will require that you sign a silent second mortgage in the amount of the discount. There is no monthly payment or interest on the second mortgage. HUD uses the second to track your homeownership. If you sell your home before the three-year anniversary date then a prorated portion of the second mortgage will be due at closing. This second mortgage will automatically drop off after three years. My name has been on a deed in the past year, do I still qualify? No, neither your name nor your spouse’s name can have been listed on any real estate deed in the United States in the past year. Are there any other benefits associated with the Good Neighbor Next Door program? Yes. If you get an FHA loan HUD will allow you to finance in all of your closing costs, move-in for only a $100 down payment, and finance certain home repairs. How do I submit a bid? You can enter on this website. A qualified broker will call you and give you access to the home, assist you with locating a lender, and monitor inspections & the closing process. We will work with that broker to make sure the closing process goes smoothly. Who pays the real estate broker? For the Good Neighbor Next Door program, HUD requires that the buyer pay the real estate commission. If you get an FHA loan HUD will allow you to roll the commission into your mortgage. On each property that’s listed on this website there is an approximate mortgage payment. This payment includes the financed commission. Can I bid higher or lower than the list price? No. In this program HUD will only allow you to submit “an intent to purchase” for full list price. This list price will be discounted by 50% at closing. Everyone who bids will have identical bids. If there is more than one person bidding on a home, how does HUD determine who wins the house? A computer will randomly decide who wins. Can you bid on more than one home? You can purchase only one home, but to increase your chances of winning one of the houses you can submit bids on different houses. HUD limits people to only one Good Neighbor Next Door home in their lifetime. How much earnest money is required? HUD requires that you give your broker a cashier’s check or money order for 1% of the home’s list price. On a $100,000 home your earnest money will be $1,000. HUD has a minimum earnest money requirement of $500 and a maximum $2,000. I thought the down payment was only $100, what’s this 1% of list price? The 1% earnest money is refundable at closing or if you are not selected as the winner of a home. If you are selected as the winner of a Good Neighbor Next Door home and if you want to finance in all of your closing costs with only a $100 down payment, then you could receive back a check at closing. This check will be your earnest money minus the $100 down payment.   What if there are significant repairs required on a home and I don’t have the cash to fix it? You are able to get a specific type of FHA loan (203K) that will allow you to finance up to $35,000 worth of home repairs into your mortgage. Can I use a Good Neighbor Next Door homes as an investment? Yes, but only if you occupy the home and don’t own any other real estate. After three years you can sell the home, realize any increases in value, and pay off the discounted mortgage that you have. Since this is your principal residence you can claim a capital gains exemption and not be taxed on gains. Consult your CPA for details. What if my employment changes before the three years is up? After you close your discount will not be in jeopardy. What do I do next? What is the process?  1. Fill out the ”Entry Form” and we will contact you.  Everyone is required to have a letter of prequalification or proof of funds before submitting an “intent to purchase.” You may use any lender that offers FHA financing. If you would like us to help you through the process fill out this questionnaire and we will have a lender get in contact with you. Often, people can get a letter of prequalification within hours of contacting one of the lenders we recommend. 2. View the home. If you don’t have time to view the home you may still have the opportunity to submit your name in the lottery and if selected inspect the home then. 3. Get either a cashier’s check or money order for 1% of the home’s listed price. 4. Decide on one or more homes to submit your intent to purchase.
	Joel Lobb (NMLS#57916) Senior  Loan Officer 502-905-3708 cell KKentucky HUD Homes for $100 Down
To search for available HUD homes for sale, please click here To find out more about the Good Neighbor Next Door program, please click here.

Fill out my form for a free mortgage pre-approval same day!

100% Financing for Kentucky Home Buyers. VA, KHC, USDA,

Buy a home without draining your savings account. The following attractive Kentucky home loan programs below requires no down payment: Kentucky Housing Corp down payment assistance with 100% Financing Kentucky Rural Housing Mortgage Loans in eligible rural areas allow 100% Financing Kentucky VA Mortgage loans allow for 100% Financing for eligible veterans/active duty Credit scores as low as 640 for KHC and RHS loans and 600 score for FHA and VA Specific mortgage insurance requirements apply. Ask for details.

Joel Lobb
Senior  Loan Officer

(NMLS#57916)

 phone: (502) 905-3708

 Fax:     (502) 327-9119

kentuckyloan@gmail.com

 Company ID #1364 | MB73346

http://mylouisvillekentuckymortgage.com/

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Kentucky Rural Development Loans

Kentucky Rural Development

Guaranteed Housing

Home Financing Options for Kentucky Home Buyers Lenders

Think Guaranteed First!

Advantages Frequently Asked Questions Choose Rural Development Applicant Eligibility How to start Become an approved lender Checklists and web site links. Brochures and guides. Training  Find a Rural Development office  What is the Rural Development guarantee.

Do you have clients with no down payment?  Do you have clients with some cash but they do not wish to exhaust all of it to buy a home?   How many times have you pre-qualified an applicant only to realize that the mortgage insurance or higher interest rates keep them out of the price range needed to accommodate their family?    The Rural Development guarantee may be able to help!  Generous income limits  Flexible credit and qualifying ratios can help open up a new market of homebuyers.   Competitive 30 year fixed rates - no monthly mortgage insurance allows you to offer affordable payments to all homebuyers.  No down payment and no cash reserve requirements help you qualify more clients. No maximum purchase price or mortgage limit. Become an expert in Guaranteed Rural Housing financing to gain more clients and close more loans in small communities and rural areas. Rural Development assists thousands of clients annually to become homeowners.  This year we want you as our partner!

The advantages: 

• Loan up to appraised value plus the guarantee fee.
• Low monthly mortgage insurance (MI) .35% monthly on 30 years and universal for all credit scores. 
• Maximum loan amount is the appraised value plus a one time guarantee fee.
• No cash contribution or cash reserves required from applicant.
• Unrestricted gifts.
• Non-traditional credit acceptable.
• Streamlined credit documentation available - based upon credit.
• No minimum credit score.
• Repayment ratios are 29/41.  Ratio waivers are allowed with documented compensating factors.
• Not limited to first-time home buyers.
• Competitive market based fixed interest rates with 30 year term.
• Available secondary markets: wholesale lenders as well as Fannie Mae, Freddie Mac, and Ginnie Mae.
• Qualifies for Community Reinvestment Act (CRA)
• Agency approved lenders underwrite the loan.
• Any lender, or broker, may originate loans through an Agency approved lender.
• Agency guarantee commitments are issued within 1-2 business days of receipt of the complete package - based on volume of loan requests.
• Rural Development provides lender support for questions, training, and outreach assistance.

     Choose Rural Development as the first option

• A competitive fixed rate combined with no mortgage insurance provides long term savings for the customer. 
•  Home buyers are able to retain their savings since there is no down payment requirement and closing costs can be financed up to the appraised value.
• Lenders report an overwhelming preference for the Guaranteed Rural Housing loans for the great value it provides to their customers.  Choose the best program for your customers!

Applicant eligibility criteria: 

• Occupy the property as your primary residence.  
• Be able and willing to occupy the property. 
• Be a U.S. citizen, a U.S. non-citizen national or a qualified alien. 
• Demonstrate an ability and willingness to meet obligations and debts as they become due.
• Have a credit history that indicates a willingness to meet obligations as they become due.
• Have an adjusted household income that is within Rural Development guidelines based on the number of persons who will occupy the home.  
• Purchase a residential property that is within a Rural Development eligible area. 

 Checklists and web site links:

• Determine if the property is within the Rural Development eligible area. 
• Use the link "Single Family Housing" under "Property Eligibility". 
• Determine if your applicant's adjusted household income is within the Agency limits,
• Use the link "Single Family Housing" under "Income Eligibility"
•  What is adjusted household income? 
• Determine income limits by State or particular county
• Loan application package checklist 
•  Forms list
  • Form RD 1980-21, Request for SFH Conditional Commitment
• Useful web links

 Brochures and guides:

• Guaranteed Loan brochure
• A quick guide overview to Guaranteed Loans
•  For additional information contact your local Rural Development office. 

T

Find a Rural Development office. 

• The Rural Development Office Locator website is: http://offices.sc.egov.usda.gov/locator/app?state=us&agency=rd
• Look in the telephone directory blue pages under United States Department of Agriculture, and then look for Rural Development or Rural Housing Service.

 What is the Rural Development "guarantee"?

• Lenders have less risk with the Rural Development guaranteed loans than with conventional loans covered by private mortgage insurance. 

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