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:
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:
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
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.
