With its cost of living trailing far behind the national average and median home prices comfortably beneath typical U.S. levels, Kentucky stands out as a wallet-friendly place to settle down. Notably, a promising trend emerged in January 2025, when nearly 25% of homes saw price reductions — a welcoming sign for those eyeing a new front door.
Still, sky-high mortgage rates these days can make homebuying feel like an uphill climb. If crunching the numbers feels overwhelming, the Kentucky Housing Corporation (KHC) steps in with programs designed to ease the financial burden and pave your way to ownership.
Kentucky’s First-Time Buyer Programs From KHC
Conventional Preferred & Conventional Preferred Plus 80
At the heart of KHC’s offerings, the Conventional Preferred program delivers tailored mortgage options. Its close cousin, Conventional Preferred Plus 80, broadens eligibility, welcoming households earning up to $183,400 annually — though this ceiling shifts by county.
Key Criteria
- Primary residence must be within Kentucky’s borders, priced under $510,939
- Minimum down payment of 3%
- Income caps apply based on county location and specific loan product
Advantages & Drawbacks
- Advantages: Available to both fresh and experienced buyers; covers a variety of property types including condos, townhomes, planned unit developments (PUDs), manufactured homes, and classic single-family dwellings; no minimum borrower contribution required.
- Drawbacks: Credit score requirements are stricter than those found in federal loan programs.
KHC Mortgage Revenue Bonds
This program offers 30-year mortgages at interest rates below the market average, specifically geared toward those leveraging government-backed loans. If you’re purchasing in an area that’s not designated a target zone, this benefit requires being a first-time buyer — but in targeted areas, repeat buyers can also qualify.
Must-Haves
- Primary home in Kentucky with a purchase price below $510,939
- Down payment between 0% and 3.5%, depending on loan type
- Minimum credit score of 620
- Compliance with income thresholds
Pros & Cons
- Pros: Open to both newcomers and veterans of homeownership; supports condos, townhomes, PUDs, and more.
- Cons: Details on cons are less explicit here, but potential buyers should be mindful of applicable restrictions.
Additional Loan Program Details
Eligibility Requirements
- Must purchase a primary residence in Kentucky
- Down payment set at 3%
- Credit score minimum of 660
- Income limits enforced
- Acceptable property types include single-family homes, condos, and manufactured housing
Strengths and Weaknesses
- Strengths: Welcomes first-timers and repeat buyers alike; no cap on purchase price.
- Weaknesses: More limited in eligible property types compared to other KHC programs.
Grants and Down Payment Assistance in Kentucky
KHC Down Payment Assistance Program
Qualifying for any KHC loan can unlock up to $10,000 in down payment help, dispersed in $100 chunks. This aid arrives as a 10-year loan with a 3.75% fixed interest rate — a handy boost for buyers tightening their belts.
Perks & Pitfalls
- Perks: No cap on borrower savings reserves.
- Pitfalls: Requires prompt repayment; interest applies to the assisted funds.
Locally-Focused Assistance: Louisville’s Down Payment Aid
If your earnings fall at or below 80% of Louisville’s Area Median Income (AMI), this program may lend a hand — providing up to 20% of the home’s price or $40,000 maximum toward down payment and closing fees. The loan bears zero interest, with half forgiven after 15 years of homeownership, while the remainder becomes due only upon sale.
Eligibility Checklist
- Primary residence in Louisville metro area
- Income at or below 80% of AMI
- Pre-approval for a mortgage from a local lender
- No outstanding collections, overdue bills, or unresolved bankruptcies
- At least $2,000 saved
- Purchase price limits: $260,000-$340,000 for single-family homes, $300,000-$400,000 for duplexes
- Applicants can be repeat buyers but must not have owned a home in the last 12 months
Benefits and Limits
- Benefits: Welcomes both newbies and seasoned buyers; includes multi-family homes; loan forgiveness available; repayment deferred until resale; covers both down payment and closing costs.
- Limits: Application window relatively short-lived.
Supplemental National First-Time Homebuyer Options for Kentuckians
Besides state-level programs, Kentuckians can tap into federal loan options designed to ease first-time home purchases:
- USDA Loans: Zero down payment required but limited to eligible rural regions.
- HomeReady and Home Possible Loans: These government-sponsored enterprise products offer low down payment assistance and flexible underwriting.
Bear in mind, mortgage expenses vary per lender — rates, discount points, fees — so comparing multiple offers is key to nabbing the best deal.
Owning a home requires budgeting beyond the loan’s principal and interest. For instance, flood insurance might be mandatory, adding another layer of cost to your monthly outlay.
Boosting your credit score above KHC’s minimum thresholds could slash your interest rates significantly — potentially saving you thousands over the life of the loan.
See How Kentucky Measures Up: Homeownership by the Numbers
In Kentucky, as of recent data, approximately 68% of residents own their homes, slightly above the national average of 65%. The median home price in Kentucky sits near $220,000, much lower than the national median around $400,000, which reflects the state’s more affordable housing market.
Navigate Your Path: Other States’ First-Time Buyer Supports
If Kentucky’s programs don’t suit your needs, exploring similar initiatives in neighboring states might reveal fresh options better aligned with your situation.