Down Payment Assistance Programs for First-Time Homebuyers in Kentucky

Kentucky, known as the “Bluegrass State,” provides a captivating blend of scenic beauty, such as horse farms, bourbon distilleries, and the historic Kentucky Derby. Countless visitors flock to attractions like the Mammoth Cave National Park and vibrant cultural events.

However, it can be a daunting prospect for the citizens of Kentucky to purchase a home especially

when the state is facing an affordable home crisis. There is a shortage of around 206,000 housing units which makes it challenging especially for first-time homebuyers.

The state of Kentucky has launched down payment assistance programs, which bridge the gap and make homeownership more accessible by covering down payment and closing costs, alleviating the financial burdens for new homeowners.

Looking for Assistance in a Specific Part of Kentucky?

Do you want to buy a home or property in Kentucky but are worried about the down payment and closing costs? Well, you are not alone as many people are finding it difficult to afford. Here is an in-depth look into some payment assistance programs available throughout the state.

Down Payment Assistance in Kentucky

The housing sector in Kentucky is facing challenges with approximately 44% of Kentucky renters being considered cost-burdened, meaning they spend over 30% of their income on housing, which limits their ability to afford other essentials. You can get the financial burden reduced by getting the down payment, closing costs, or the expenses of prepaid items covered through the following programs. 

Kentucky Housing Corporation Regular Down Payment Assistance Program

The Kentucky Housing Corporation Regular Down Payment Assistance Program helps homebuyers cover the upfront costs by providing repayable loans over a 10-year term at a fixed interest rate of 3.75%

Fundamentals

• Assistance Type: Repayable second mortgage
• Sponsor: Kentucky Housing Corporation (KHC)
• Assistance Amount: $10,000 (at maximum)

Eligibility Requirements

• All KHC first mortgage borrowers, regardless of whether they are first-time homebuyers, are eligible for the programs.
• The purchase price of the home should not be higher than $481,176.
• There are no limits on the borrower’s cash reserves or liquid assets.
• Specific credit underwriting standards may apply

Kentucky Housing Corporation Conventional Preferred Program

The Kentucky Housing Corporation Conventional Preferred Program is designed to assist homebuyers in Kentucky with a flexible mortgage option.

Fundamentals

• Assistance Type: 30-year fixed-rate mortgage
• Sponsor: Kentucky Housing Corporation
• Assistance Amount: $10,000 (at maximum)

Requirements

• Applications with an applicant’s minimum credit score of lower than 660 will not be entertained.
• Borrowers have to maintain a debt-to-income (DTI) ratio of 40% to 50% (depending on the loan type).
• Applicants should have an annual income at or below 80% of the area median income (AMI).
• The value of the purchased property should not be higher than $481,176.
• The program is only applicable to single-family homes, townhomes, condominiums, and manufactured homes on a permanent foundation.

Kentucky Down Payment Assistance Program FAQs

Are there any restrictions on how I use the assistance?

Yes, there are typically some restrictions as the assistance should only be used for down payment and/or closing costs, and may need to repay the assistance if you sell or refinance before a certain time period.

What are the eligibility requirements for KHC down payment assistance programs?

Eligibility requirements vary by program but generally include a maximum purchase price of $481,176, a minimum credit score of 660, and income limits based on household size and county.

Disclaimer: This article is for informational purposes only and should not be considered as legal or financial advice. Please consult an attorney, mortgage lender, or CPA for guidance on your specific situation.