Kentucky First-Time Home-Buyer Programs

Kentucky First-Time Home Buyer Programs 2025: Your Complete Guide to Homeownership

New for 2025: Kentucky Housing Corporation (KHC) has increased their purchase price limit to $544,232 effective June 23, 2025, opening doors for more first-time home buyers across Kentucky. Whether you're looking in Louisville, Lexington, or rural Kentucky communities, we'll help you find the right program with down payment assistance up to $10,000.

Quick Navigation

• • Program Comparison
• • FHA Loans in Kentucky
• • USDA Rural Development
• • VA Loans for Veterans
• • KHC Down Payment Assistance
• • How to Qualify
• • Step-by-Step Process
• • Payment Calculator

Kentucky First-Time Home Buyer Programs: What's Available in 2025?

Kentucky offers some of the most comprehensive first-time home buyer assistance programs in the nation. From zero-down payment options to substantial down payment assistance, first-time buyers in Kentucky have multiple pathways to homeownership. Here's what makes Kentucky special for new home buyers:

• Kentucky Housing Corporation (KHC) provides up to $10,000 in down payment assistance
• USDA Rural Development loans offer 0% down for eligible areas in Kentucky
• FHA loans require as little as 3.5% down with credit scores as low as 580 or 10% down with a 500 credit score
• VA loans provide 0% down for eligible veterans and active military
• Conventional loans with as little as 3% down for qualified borrowers

The best part? Many of these programs can be combined to maximize your buying power and minimize out-of-pocket costs.

Kentucky Home Buyer Programs: Side-by-Side Comparison

Program	Minimum Credit Score	Down Payment	Income/Price Limits	Best For
FHA Loan	580 (3.5% down) 500-579 (10% down)	3.5% minimum	Up to $524,225 in high-cost KY counties	Lower credit scores, flexible qualification
USDA Rural Development	640+ (preferred) but no minimum score	0% down payment	115% of area median income; rural/$119,850 to $158,250 typically based on household size family	Rural buyers, zero down payment
VA Loan	No minimum (lender overlay 620 or higher preferred)	0% down payment	No income limits; must meet VA eligibility for residual income limits	Veterans, active military, eligible spouses
KHC Down Payment Assistance	620-660 (varies by loan type)	0% with assistance	Income limits vary by county; $544,232 max price	First-time buyers needing down payment help
Conventional 95-97% LTV	620+ but 720 or higher is usually needed with at least 5% down with mi gets approved	3% minimum max debt to income ratio of 45% and 50% on front end and back end ratios	$806,500 Kentucky limit	Good credit, ability to cancel PMI

FHA Loans for First-Time Buyers in Kentucky

FHA loans are the most popular choice for Kentucky first-time home buyers, and for good reason. The Federal Housing Administration backs these loans, making them less risky for lenders and more accessible for borrowers.

Kentucky FHA Loan Benefits:

• Low down payment: Just 3.5% with a 580+ credit score
• Flexible credit requirements: Scores as low as 500 accepted (with 10% down)
• Gift funds allowed: Down payment can come from family gifts
• Seller concessions: Sellers can contribute up to 6% toward closing costs
• Assumable loans: Future buyers can take over your FHA loan

2025 FHA Loan Limits in Kentucky:

Most Kentucky counties have an FHA loan limit of $524,225

FHA Mortgage Insurance in Kentucky:

FHA loans require both upfront mortgage insurance (1.75% of loan amount) and annual mortgage insurance. For 2025, annual rates range from 0.15% to 0.75% depending on loan-to-value ratio and loan term and loan amount Everyone pays the same with FHA.

USDA Rural Development Loans in Kentucky

Kentucky's rural and suburban communities are perfect for USDA loans, which offer 100% financing (no down payment) for eligible properties and borrowers.

USDA Loan Advantages:

• Zero down payment required
• Competitive interest rates
• No prepayment penalties
• Flexible credit guidelines
• Lower mortgage insurance than FHA loans

USDA Eligibility in Kentucky:

Contrary to popular belief, "rural" doesn't mean farmland. Many suburban areas around Louisville, Lexington, and other Kentucky cities qualify for USDA financing. Key requirements include:

• Property must be in a USDA-eligible area see link below (we can check any address)
• Household income cannot exceed 115% of area median income see link below
• Must be primary residence, not investment or second homes
• Credit score of 640+ for automated approval, but can do a manual underwrite with scores below 640 with a maxiumum debt to income ratio of 29% and 41% respeivrtly on front end and back end ratios

Popular USDA-Eligible Areas in Kentucky:

Many communities around major cities qualify, including parts of Oldham, Shelby, Spencer, Bullitt, and other counties near Louisville, plus numerous areas around Lexington, Bowling Green, and other Kentucky metros.

VA Loans for Kentucky Veterans and Military

Kentucky's strong military presence means many first-time buyers can take advantage of VA loan benefits, which are among the best available.

VA Loan Benefits:

• No down payment required
• No private mortgage insurance
• Competitive interest rates
• No prepayment penalties
• Assumable loans
• Reusable benefit

VA Loan Eligibility:

Veterans, active-duty service members, National Guard, Reserves, and eligible surviving spouses may qualify. You'll need a Certificate of Eligibility (COE) from the VA.

VA Funding Fee:

While VA loans don't require montlhy mortgage insurance, there is a upfront funding fee, varies click here for more info Veterans with service-connected disabilities are exempt from this fee.

Kentucky Housing Corporation (KHC) Down Payment Assistance

The Kentucky Housing Corporation offers the most significant down payment assistance in the state, helping qualified first-time buyers overcome the biggest barrier to homeownership.

KHC Program Highlights:

• Up to $10,000 in down payment assistance
• Forgivable loans in many cases
• Can be combined with FHA, VA, USDA, or conventional loans
• Below-market interest rates
• $544,232 maximum purchase price (effective June 23, 2025)

KHC Income Limits by County (2025):

Income limits vary by county and household size. For example:

• Jefferson County (Louisville): Up to $99,700 for 1-2 person household
• Fayette County (Lexington): Up to $92,400 for 1-2 person household
• Most other counties: $73,500-$89,100 for 1-2 person household

How KHC Down Payment Assistance Works:

KHC provides a second mortgage for down payment and closing cost assistance. In many cases, this loan is forgiven after 5-10 years of occupancy, making it essentially a grant.

How to Qualify for Kentucky First-Time Home Buyer Programs

First-Time Buyer Definition:

Most programs define "first-time buyer" as someone who hasn't owned a home in the past 3 years. Some exceptions apply for single parents, divorced individuals, and displaced homemakers.

General Qualification Requirements:

• Credit Score: Minimum varies by program 620 for government loans and 660 for conventinonal loans
• Income: Must be within program limits for your area
• Employment: Stable 2-year work history
• Debt-to-Income: Typically 50% or lower
• Assets: Enough for down payment and closing costs (unless using assistance)
• Primary residence: Must be your main home

Required Documentation:

• Recent pay stubs or monthly statements if on fixed income (30 days)
• Tax returns and w-2's(2 years)
• Bank statements (2 months)
• Credit report
• Employment verification for last two years
• ID and Social Security card

Kentucky First-Time Home Buyer Process: Step-by-Step Guide

Step 1: Check Your Credit and Finances

Pull your free credit report from annualcreditreport.com and review your finances. Calculate how much you can afford for a monthly payment including principal, interest, taxes, and insurance.

Step 2: Get Pre-Qualified

Contact a Kentucky-licensed loan officer for a free pre-qualification. This will help you understand your buying power and which programs you qualify for.

Step 3: Choose Your Home Loan Program

Based on your location, credit, and financial situation, select the best program or combination of programs for your needs.

Step 4: Find a Kentucky Realtor

Work with a buyer's agent who understands first-time buyer programs and can help you find homes within your budget and program requirements.

Step 5: Apply for Your Mortgage

Submit your complete application with all required documentation. Your loan officer will guide you through underwriting and closing.

Step 6: Close on Your New Home

Attend your closing, sign the paperwork, and get your keys! Welcome to homeownership in Kentucky!

Kentucky Home Buying Timeline: What to Expect

Understanding the timeline helps you plan your home purchase:

• Pre-qualification: Same day to 24 hours
• House hunting: 2-8 weeks (varies by market and preferences)
• Loan processing: 30-45 days from application to closing
• USDA loans: May take 35-45 days due to rural development review
• KHC loans: Allow extra time for down payment assistance processing

Frequently Asked Questions About Kentucky First-Time Home Buyer Programs

What credit score do I need to buy a house in Kentucky?

Credit score requirements vary by program: FHA loans accept scores as low as 580 (or 500 with 10% down), USDA prefers 640+ but can go lower on a manual undewrite, VA loans have no official minimum but lenders typically want 620+, and conventional loans usually require 620+ but usually need 700 or highere. KHC programs follow the underlying loan type requirements.

Can I get down payment assistance in Kentucky?

Yes! Kentucky Housing Corporation provides up to $10,000 in down payment assistance for qualified first-time buyers. Many of these loans are forgivable after 5-10 years. Additionally, FHA, VA, and USDA loans allow seller contributions toward closing costs.

What areas of Kentucky qualify for USDA loans?

Much of Kentucky outside major metro centers qualifies for USDA financing. This includes many suburban areas around Louisville, Lexington, and other cities. We can check any specific address for USDA eligibility at no cost.

How much can I borrow with Kentucky first-time buyer programs?

Loan limits vary by program and location. FHA limits go up to $524,225 in high-cost Kentucky areas, USDA has no set limit but income restrictions apply, VA loans have no limit with full entitlement, and KHC programs have a $544,232 maximum purchase price as of June 2025. House payment should not be more than 45 to 50% of your gross income, lower on bad credit files and no money down programs in Kentucky

Can I combine multiple Kentucky home buyer programs?

Yes! Many programs can be combined. For example, you can use KHC down payment assistance with an FHA loan, or combine seller concessions with various loan programs to minimize your out-of-pocket costs.

How long does it take to close on a home in Kentucky?

Average closing times are 30 days for FHA and conventional loans, 25-30 days for VA loans, and 35-45 days for USDA loans. KHC programs may add a few extra days for down payment assistance processing.

Kentucky Home Loan Payment Calculator

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EVO Mortgage NMLS #1738461 • Joel Lobb NMLS #57916

Ready to Start Your Kentucky Home Buying Journey?

Get your free pre-qualification in 24 hours and discover which Kentucky first-time buyer programs you qualify for. No hard credit check required.

📞 Call (502) 905-3708 ✉️ Email Us

Joel Lobb - Senior Loan Officer
EVO Mortgage • NMLS #1738461 • Personal NMLS #57916
Equal Housing Lender • Licensed in Kentucky

Kentucky First-Time Home Buyer Programs by Region

Louisville Metro Area First-Time Buyers

1% Down Mortgage Loans in Kentucky for First-Time Homebuyer

🏡 1% Down Payment Kentucky Mortgage Program

First-Time Homebuyers: Get Up to $7,000 in Lender Assistance (2025 Guide)

💸 Example: Buy a $250,000 home with only $2,500 down!

The lender covers $5,000, reducing your out-of-pocket expenses significantly.

Get Pre-Approved Today

💡 What Is the 1% Down Mortgage Program?

If you're a first-time homebuyer in Kentucky, there's great news—you may be eligible to purchase a home with just 1% down and receive up to 2% or $7,000 in down payment assistance toward your purchase.

This program is specifically designed to reduce upfront costs and help moderate-income families make the leap into homeownership faster and more affordably.

Component	Details
Buyer Contribution	1% of Purchase Price
Program Assistance	Up to 2% or $7,000
Loan Type	Conventional (Fixed Rate)
PMI	May apply if under 20% down
Use of Funds	Down payment, closing cost offset

✅ Who Qualifies?

To qualify for this low down payment option in Kentucky, here are the typical requirements:

📊 Minimum Credit Score

• 620+ FICO Score required (680+ preferred for better pricing)
• No recent bankruptcies or foreclosures in past 2–3 years

💼 Income Limits

• Moderate-income households (usually ≤ 80–100% of the area median income)
• Income caps vary by county and household size
• W2, salaried, and hourly income acceptable
• Self-employed allowed with documentation

🏡 Occupancy & Property

• Primary residence only
• Single-family homes, townhomes, select condos
• Must be located in Kentucky
• Property must meet standard appraisal requirements

📄 Other Requirements

• First-time buyer status (or not owning in past 3 years)
• Completion of homebuyer education course may be required
• Not available for second homes or investment properties

❓ Frequently Asked Questions

🏠 What if I have student loans or other debt?

Yes, you can still qualify. We look at your debt-to-income (DTI) ratio, which includes student loans, car payments, credit cards, and other obligations. Some loan programs allow income-driven repayment plans (IDR) or deferred student loans to be excluded or calculated favorably. Every file is unique — we’ll assess your full financial picture, not just one number.

💝 Can I use gift funds for the 1% down payment?

Absolutely. Gift funds from a family member or qualified donor can be used for the 1% down payment, closing costs, or even reserves if needed. We’ll just need a gift letter and proof of transfer — we’ll walk you through it step by step.

⏰ How long does the approval process take?

You can get pre-approved the same day once your documents are in. From contract to closing, the typical purchase takes 21–30 days, depending on the program, appraisal, and underwriting. We move fast and keep you updated at every milestone.

🗺️ What areas of Kentucky are eligible?

The 1% down program is available statewide in Kentucky — from Louisville to Lexington, and everywhere in between. Whether you're buying in a metro area or rural county, we’ll match the right loan program to your location and eligibility.

📊 What credit score do I really need?

Most 1% down programs require a minimum credit score of 620. However, higher scores (680+) may help you qualify for better terms. We offer free credit evaluations and advice on how to boost your score if needed.

🏦 How does the 1% down program compare to FHA loans?

The 1% down loan is often more competitive for buyers with good credit but limited savings. Here's a quick comparison:

Feature	1% Down Program	FHA Loan
Down Payment	1% (with 2% lender grant)	3.5%
Credit Flexibility	620+ preferred	580+ allowed
Mortgage Insurance (PMI)	May fall off sooner	Required for life (if <10% down)
Income Limits	Yes (in some cases)	No general limits

📑 What documents do I need to get started?

To issue a solid pre-approval, we typically need:

• Last 30 days of pay stubs
• Most recent 2 years W-2s
• Most recent 2 months of bank statements
• Valid photo ID
• Credit authorization (we’ll send the secure link)

Self-employed or have unique income? We’ll guide you through additional requirements.

💳 How does PMI work and when can I remove it?

Private Mortgage Insurance (PMI) protects the lender when you put down less than 20%. In the 1% down program:

• PMI is built into your monthly payment
• You can remove it once you reach 20% equity (usually via refinance or automatic removal around year 7–11)
• Compared to FHA, this PMI can be removed — a major advantage for long-term savings

Joel Lobb, Senior Loan Officer | EVO Mortgage, NMLS #57916 | Company NMLS #1738461 | Equal Housing Lender Example terms for illustrative purposes only: A 30-year fixed-rate mortgage of $200,000 with 1% down ($2,000) and a 6.750% interest rate (7.024% APR) results in a monthly principal and interest payment of $1,297.20. This does not include taxes, insurance, mortgage insurance, or HOA fees, which will result in a higher actual payment. Offer assumes borrower has a minimum credit score of 680 and meets income and program eligibility. Available on primary residences in Kentucky only. Loan-to-value (LTV) not to exceed 99%. All loan approvals are subject to underwriting guidelines, credit approval, and property appraisal. Rates and terms are subject to change without notice. Not all applicants will qualify. This is not a commitment to lend or extend credit. For full terms and disclosures, please contact Joel Lobb directly at (502) 905-3708 or kentuckyloan@gmail.com.

🔗 Related Programs You May Qualify For

🏠 Kentucky Housing Corporation (KHC) DAP Program – $10,000 in Assistance 🌾 USDA Loans in Rural Kentucky – No Down Payment 🏦 FHA Loans in Kentucky – As Low as 3.5% Down 🇺🇸 VA Loans in Kentucky – Zero Down for Veterans

⭐ Success Stories from Kentucky Homebuyers

1,300+

Families Helped

$2.8M

Down Payment Savings

15

Years Experience

4.9⭐

Client Rating

"Joel made our dream of homeownership possible! We thought we'd need years to save for a down payment, but with the 1% program, we moved into our home in Lexington with just $2,200 down. The process was smooth and Joel explained everything clearly."

SM

Sarah & Mike Thompson

First-time Homebuyers, Lexington, KY

⭐⭐⭐⭐⭐

"As a teacher with student loans, I was worried about qualifying for a mortgage. Joel found the perfect program and we closed on our Louisville home in just 32 days. His knowledge of Kentucky programs is incredible!"

JR

Jennifer Rodriguez

Teacher, Louisville, KY

⭐⭐⭐⭐⭐

"The refinance savings Joel found us were amazing. We lowered our payment by $340/month and removed PMI. His local connections made the appraisal process seamless. Highly recommend!"

DL

David & Lisa Chen

Refinance Clients, Bowling Green, KY

⭐⭐⭐⭐⭐

"Joel's expertise with VA loans saved us thousands. Even though VA loans are 'zero down,' there are still costs. He found grants to cover our closing costs too. Outstanding service!"

RC

Robert & Carol Martinez

Veterans, Fort Knox Area, KY

⭐⭐⭐⭐⭐

"Working with Joel was like having a family member guide us through the process. His communication is excellent and he genuinely cares about finding the best solution for each client."

MJ

Marcus & Jessica Williams

Young Professionals, Frankfort, KY

⭐⭐⭐⭐⭐

"Self-employed income can be tricky, but Joel knows how to present it properly to underwriters. We got approved when two other lenders said no. His expertise made all the difference."

TK

Tom & Karen Anderson

Small Business Owners, Paducah, KY

⭐⭐⭐⭐⭐

📍 Why Work With Joel Lobb at EVO Mortgage?

As a seasoned Kentucky mortgage loan officer, I've helped over 1,300 families buy or refinance homes with tailored mortgage solutions like this 1% down loan program.

⚡ Same-Day Pre-Approvals

Get your pre-approval letter quickly to strengthen your offer in Kentucky's competitive market.

🔄 Flexible Underwriting Options

We work with unique situations and find creative solutions for complex scenarios.

🗺️ Deep Local Knowledge

15+ years of Kentucky real estate market expertise and relationships with local professionals.

📞 Direct Communication

No call centers or hand-offs – work directly with me throughout your entire loan process.

📝 Compliance & Licensing Disclosure

Joel Lobb, Senior Loan Officer
EVO Mortgage, NMLS #1738461
Personal NMLS #57916

EVO Mortgage is an Equal Housing Lender. All loans subject to credit approval. Income and property restrictions may apply. Not available in all areas. Rates and terms subject to change without notice. This is not a commitment to lend.

Kentucky Mortgage Calculator – Instantly Estimate Your New House Payment Online

 

Kentucky Mortgage Calculator – Instantly Estimate Your New House Payment Online Use our free Kentucky mortgage calculator to instantly calculate your new house payment, including principal, interest, and estimated taxes and insurance. Fast, accurate, and easy to use for first-time homebuyers and homeowners. author: Joel Lobb, Mortgage Loan Officer – EVO Mortgage Kentucky Mortgage Calculator – Calculate Your New House Payment Instantly Are you searching for a fast, easy-to-use **mortgage calculator** to help you estimate your new house payment in Kentucky? Whether you’re a first-time homebuyer or a homeowner looking to refinance, having an accurate idea of your monthly payment is critical for making smart decisions. That’s why I’ve created this simple, powerful mortgage calculator—built specifically for **Kentucky borrowers**—to help you calculate your home loan payment and plan your next move with confidence.

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Loan Term 30 Year Fixed 20 Year Fixed 15 Year Fixed

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30 Year Fixed, 6.93% Interest

Principal & Interest	$839.24
Number of Payments	360
Total Payments	$302,125.09
Total Interest	$175,085.09

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NMLS #57916 • Company NMLS #1738461
Equal Housing Lender

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