There are many reasons to love the eastern south-central state of Kentucky. From its vast natural landscapes to its sporting event team rivalries, this state may suit many interests. This state is home to many safe cities, while also being close to many other large cities, such as Nashville, TN and St. Louis, MO, making weekend trips an easy and fun getaway – a great setup for those looking to retire in Kentucky. If you enjoy the benefits of living in the Bluegrass state, you may be looking at purchasing your first home in this wonderful place.
Any first-time homebuyer will tell you that finding the perfect house takes research, time, and energy. When you find the right one, the next challenge is financing. It can feel overwhelming to crunch the numbers and find that your dream home is just out of reach. Fortunately, in addition to optimal closing costs, there are many financial assistance programs available to first-time buyers who need some help closing the gap and purchasing their dream home.
Who qualifies as a first-time homebuyer in Kentucky?
In Kentucky, an individual may qualify as a first-time homebuyer if he or she has never owned a home, or at least has not owned a home in the past three years as a primary residence. When reviewing the guidelines for each program, check the specific requirements for exceptions.
Statewide First-Time Buyer Programs
The following programs are available statewide to Kentucky residents.
Home Buyer Tax Credit
The Kentucky Housing Corporation provides several financial assistance programs for first-time and repeat buyers. The first program specifically for first-time buyers is the KHC Home Buyer Tax Credit. This tax credit offers a dollar-for-dollar reduction of the borrower’s federal income taxes every year in which the owner occupies the home. This is equal up to 25 percent of the annual mortgage interest, up to $2,000. Income and credit restrictions apply, so be sure to check out the website for details.
New homebuyers might also seek help with down payments and closing costs through one of two down payment assistance programs. KHC’s Regular DAP provides new homeowners with assistance in the form of a loan of up to $6,000 in $100 increments. This program is available to all KHC first-mortgage loan recipients. See website for eligibility criteria and to apply.
Similar to the Regular DAP, KHC’s Affordable DAP offers loan assistance up to $6,000 to put toward a down payment or closing costs and fees. This loan has a lower interest rate than the Regular DAP, but borrowers must meet the required income limits. Be sure to visit the website for more information and eligibility details.
Statewide Non First-Time Buyer Programs
While the above programs are strictly available for first-time homebuyers, there are other statewide programs to assist individuals looking to move from one home they have owned into another.
Conventional Preferred Program
KHC also offers loan options for moth first-time and repeat buyers to help lower their down payment. The KHC Conventional Preferred Program offers a 3% down payment for eligible low-income borrowers with no minimum borrower contribution. Income limits and credit restrictions may apply, but visit the website to learn more about your potential eligibility.
Conventional Preferred Plus 80 Program
Similar to the KHC Conventional Preferred Program, the KHC Conventional Preferred Plus 80 program offers a 30-year fixed interest rate loan for both new and repeat buyers. The is no minimum borrower contribution and only a 3% down payment required. Other eligibility criteria may apply, so check out the website for current information.
Homebuyer Programs by Location
In addition to statewide programs, there are often homebuyer assistance programs based in different cities and regions of a state. The programs below are opportunities for first-time buyers in Kentucky based on the city of residence.
Residents who are considering settling in Covington may be interested to learn about the Covington Homebuyer Assistance Loan program. Households which meet specified income, credit, and other requirements may be eligible for a zero-interest, deferred/forgivable loan to put towards closing costs and/or a down payment on the applicants next Covington home. Other requirements and borrower restrictions may apply. Visit the website for more details and to learn how to apply.
Residents of Hopkinsville might be interested in learning more about the Hopkinsville Affordable Homeownership Program (HAHP). This program is for eligible, low-income, first-time borrowers seeking financial assistance in the form of a 30-year fixed rate mortgage. Applicants must graduate from a counseling homebuyer program and be able to provide a minimum of $500 toward a down payment and closing costs. Credit requirements and income levels are subject for eligibility, so visit the website for details.
The Lexington-Fayette Urban County Government provides non-repayable mortgage subsidies and 0 – 2% loans to low-moderate income first-time home buyers through grant programs such as REACH and the Lexington Habitat for Humanity. Eligible applicants must reside in Lexington and must be purchasing a home located in Lexington. To learn more about the application process and to find out if you are eligible, please visit the County’s website.
Residents of Louisville looking to purchase an existing or newly constructed home in the Louisville metro area may be eligible for financial assistance through the local government. The Louisville Down Payment Assistance Program provides qualified, low to moderate income homebuyers with down payment and closing cost assistance in the form of a partially forgivable loan. Both first-time and repeat homeowners are eligible to apply, but all homeowners must meet specific income and credit requirements. For details, visit the local government website.
Residents of the City of Owensboro may be eligible for down payment assistance through the Owensboro Homebuyer Assistance Program (HAP). This program aims to promote homeownership in communities by helping to bridge the affordability gap for low to moderate income borrowers in the form of a deferred loan agreement up to $5,000 which may be put towards closing costs and down payment assistance. Eligible borrowers must also meet specified income limits and credit requirements, so be sure to visit the website for details.
Purchase Your Dream Home
Whether you enjoy the Kentucky Derby or visiting a national park reserve on the weekends, you will certainly be able to find something unique and interesting in the Bluegrass state that may just call you home. Hopefully this list of programs will help you to close the affordability gap and settle into your new Kentucky community before you know it!
The links on this site were researched by NewHomeSource. This is as cohesive a list as possible. Individual homebuyers should contact entities to fully understand requirements and processes.
Other Kentucky Resources
Melanie Theriault is a writer, counselor, and lifelong learner. She holds a B.A. in Sociology from Southwestern University, where she discovered her passion for fostering human connection through storytelling.