Your first home can be one of the most important purchases you will ever make, and the process can be exciting and complicated. With the cost of living more than 10 percent below the national average – and housing costs up to 30 percent below that benchmark – Kentucky can be an affordable place to call home. It is the bourbon capital of the world, home of the Kentucky Derby, and has a thriving economy thanks to industries like global shipping centers and automakers.
Whether you are looking for a home in Bowling Green, Louisville, Lexington, or anywhere in the Bluegrass State, Kentucky Housing Corporation may be able to help. The organization aims to promote affordable housing for both first-time buyers and repeat buyers across the state.
Initial Home Buyer Loan Programs in Kentucky
KHC conventionally preferred
The Kentucky Housing Corporation (KHC) conventional Preferred Program offers a 30 year fixed rate mortgage. You may be a first-time buyer, but that is not required to take advantage of this program. There is no minimum borrower contribution or reserve requirement to be eligible, but you do need to pay for mortgage insurance, which is offered at a reduced rate to make your monthly mortgage payment more affordable. Depending on the lender you work with, you may also need to take a pre-completed training course.
- 3 percent deposit (deposit help available)
- Minimum score of 660
- Depending on the type of loan, the debt-to-income ratio (DTI) is a maximum of 40 to 50 percent
- Must meet KHC Income limits at or below 80 percent of the Area Median Income (AMI), which varies by state and ranges from $ 42,720 to $ 68,160; The upper income limit only applies to applicants, not households
- Must be a single family home, townhouse, condominium, or prefabricated home (as per agency guidelines and must be on a permanent foundation); Two-unit houses (maisonettes) are not eligible
- Must be in Kentucky
- Must be a primary residence
- Must meet the KHC purchase price limit of $ 327,334
KHC Conventional Preferred Plus 80
The conventional Preferred Plus 80 program through KHC also offers a 30 year fixed rate mortgage, but standard mortgage insurance coverage is required. As with the conventional preferred program, you can be a first time or repeat buyer to be eligible.
The down payment, credit score, and DTI ratio requirements for the Conventional Preferred Plus 80 program are the same as for the Conventional Preferred program, and the maximum purchase price is also $ 327,334. The Income limits are different, but are based on secondary market boundaries that vary depending on the federal state. These limits range from $ 114,450 to $ 151,025 and apply only to the applicant, not to the entire household.
FHA, VA and USDA loans
Home buyers can also get an FHA, VA, or USDA loan with the help of KHC. These types of loans require either a small or no down payment, which can be ideal especially for first-time buyers. VA loans are available only to military personnel and veterans, and USDA loans are available for real estate in certain rural areas. FHA loans are widespread.
The general requirements for an FHA, VA, or USDA loan include:
- 3.5 percent down payment for FHA loans (down payment assistance available); No down payment for VA loans or USDA loans in certain circumstances
- Minimum score of 620
Kentucky Down Payment Assistance
KHC Regular Down Payment Support (DAP) Program
KHC provides down payment assistance to borrowers through the Regular Down Payment Assistance Program (DAP), a loan of up to $ 6,000. The loan is repayable over a period of 10 years at an interest rate of 5.5 percent.
The program is open to all KHC first mortgage borrowers using the same application. You can be a first-time buyer, but that’s not a requirement. The purchase price of your home cannot exceed $ 327,334, but there is no limit to the amount of cash you can have and your cash will not be considered in determining your eligibility.
KHC Affordable DAP
For lower-income borrowers, KHC is also offering up to $ 6,000 for a 10-year down payment support loan, but at a rate of just 1 percent. This affordable DAP is available to both first-time and returning buyers, but you must meet certain requirements Income limits to qualify. These vary by state and range from $ 42,720 to $ 68,160.
Louisville Down Payment Assistance Program
For first time and repeat buyers, the City of Louisville also offers a forgivable loan to help you with your down payment. The amount of support depends on your individual situation and can be awarded between five and 15 years after the house has been occupied, provided that you stay in the house for this period.
You must buy a home in the Louisville metropolitan area to qualify for assistance and your income must be at or below 80 percent of the AMI, which is between $ 43,400 for a one-person household and $ 67,000 for a five-person household. You must also contribute $ 500 to purchase and take a homebuyer training course to be eligible.
In addition, there are purchase price restrictions that depend on the size of the home and whether the property is new or used. The limit for an existing one-unit home is $ 165,000 while the limit for a new one-unit home is $ 258,000.
Other Kentucky Homebuyer Aid Programs
Home Buyer Tax Credit
As a first-time Kentucky home buyer, you are eligible for a federal tax credit of up to 25 percent of your annual mortgage interest of up to $ 2,000 per year. This loan, known as Mortgage Loan Certificate (MCC) can help make home ownership more affordable. To be eligible, the house purchase price limit is $ 294,600, and there are income limits based on the size of the county and household.
Other first-time buyer loan programs
While you are considering your options as a first-time buyer in Kentucky, be sure to check out nationally available programs that can also help you get into a home earlier. Read Bankrate’s helpful guide too Loans and Programs for First Time Buyers.
For more Kentucky home ownership programs, visit HUD.gov.
Now that you know the details of Kentucky’s first-time homebuyer programs, you are ready for the next step. Kentucky Housing Corporation (KHC) has preferred relationships Mortgage lender Who can help you get the loan process started? While you cannot apply for a mortgage through the KHC website, the agency will make loans upon completion of the contract.
Remember it is important Look for the best mortgage rates and loan deals based on your unique situation and compare products to make sure you get the best deal.