Kentucky first-time homebuyer assistance programs
With a cost of living much lower than the national average — and a median home price well below that benchmark — Kentucky can be an affordable place to call home. Plus, nearly one in four homes in the state had a price drop in January 2025, according to Redfin — a promising sign for any prospective buyer.
However, today’s mortgage rates can still make purchasing a home seem really tough. If you’re struggling to make the numbers work as a first-time buyer in Kentucky, the Kentucky Housing Corporation (KHC) offers programs that can make the process more affordable.
Kentucky first-time homebuyer programs
KHC Conventional Preferred and Conventional Preferred Plus 80
The KHC’s Conventional Preferred program offers a 30-year mortgage with a fixed interest rate for applicants earning no more than 80 percent of their local area median income (AMI). The Conventional Preferred Plus 80 program is similar, but it’s open to households with incomes of up to $183,400, depending on the county.
First-time homebuyers, as well as repeat buyers, are eligible. You’ll need to pay mortgage insurance, and you may also be required to take a homebuyer education course.
KHC Mortgage Revenue Bonds
KHC’s Mortgage Revenue Bond program offers a 30-year mortgage with below-market rates for homebuyers using government-backed loans. If you’re buying in a non-targeted area, you must be a first-time buyer. If you’re purchasing in a targeted area, this doesn’t have to be your first home purchase.
KHC Freddie HFA Advantage
KHC’s new program, in partnership with Freddie Mac, lets homebuyers access a mortgage with more lenient underwriting standards than most conventional loans, available only through state housing finance agencies. Private mortgage insurance (PMI) is required.
Kentucky down payment assistance and grants
KHC Down Payment Assistance Program
Anyone who qualifies for a KHC loan program can also receive down payment assistance of up to $10,000 in increments of $100. The assistance comes in the form of a 10-year loan with a 3.75 percent interest rate.
City-specific homebuyer assistance programs
Louisville: Down Payment Assistance Program
If you make 80 percent or less of Louisville’s AMI, you might qualify for this program, which offers up to 20 percent of a home’s purchase price — or up to $40,000 — in down payment and closing cost assistance. The assistance is a zero-percent interest loan, and half is forgiven after 15 years in the home; the balance is due only if the home is sold.
Other Kentucky first-time homebuyer loans
Kentuckians can also take advantage of national loan programs geared toward first-time homebuyers. These include:
- FHA loans: Loans insured by the Federal Housing Administration (FHA) have more lenient financial requirements than other loans. You can get an FHA loan with 3.5 percent down if you have a credit score of at least 580.
- VA loans: For qualifying active-duty military, veterans and surviving spouses, a loan guaranteed by the U.S. Department of Veterans Affairs (VA) is a great option. These loans typically come with lower interest rates and don’t require a down payment.
- USDA loans: Loans guaranteed by the U.S. Department of Agriculture (USDA) also require no down payment, but you’ll need to buy in a designated rural area.
- HomeReady and Home Possible loans: HomeReady and Home Possible are loan programs created by government-sponsored enterprises Fannie Mae and Freddie Mac. They’re specifically for first-time homebuyers, with only a 3 percent down payment requirement and more flexible income requirements.
Homebuyers can obtain an FHA, VA or USDA loan with the help of KHC and use program assistance for the down payment — if one is required.
Get started
Ready to join the first-time homebuyer club in Kentucky? Follow these steps to make the process smoother and cheaper.
- Compare Kentucky mortgage rates: Rates, discount points, fees – every lender is going to offer you a slightly different cost for buying a home in Kentucky. Review multiple offers to see where you’ll score the biggest savings.
- Read Kentucky mortgage lender reviews: Will your lender be able to help you navigate homebuyer assistance programs? Will your loan officer respond promptly to your questions? Reading other borrowers’ perspectives can help you assess these, and other, factors.
- Estimate your homeowners insurance costs: You won’t just be paying the principal and interest on a loan; you’ll also need to budget to protect the property. Make sure you know whether you’ll need to add flood insurance to the policy, which is an additional cost.
- Study the Kentucky housing market: How quickly are homes selling? Are sellers regularly getting above-list offers? Research the local market, and keep in mind that buying a home in Bowling Green may look quite different from buying a home in Lexington.
- Get your credit in the best shape possible: Don’t just meet the Kentucky Housing Corporation’s bare minimum for credit score. If you can boost your score, you’ll be able to qualify for a lower rate from a lender, which can save you a big chunk of money in interest over the life of a loan.
