Kentucky Housing Corporation (KHC) Down Payment Assistance

Kentucky Housing Corporation (KHC) Down Payment Assistance: A First-Time Buyer’s Roadmap

Dreaming of keys jingling in your hand but worried about the down payment? The Kentucky Housing Corporation (KHC) Down Payment Assistance program could be the bridge between “someday” and “day one.” Up to $6,000 in assistance is on the table for eligible Kentuckians—enough to cover or dramatically reduce that intimidating upfront cost.

What Exactly Is the KHC Down Payment Program?

The Kentucky Housing Corporation—established in 1972 to improve housing affordability statewide—offers a menu of resources for buyers. Its flagship perk for first-timers is a forgivable or repayable second mortgage that supplies cash toward:

• Down payments
• Closing costs
• Prepaid items such as homeowners insurance

Currently, qualified applicants can access up to $6,000. That figure isn’t plucked from thin air: KHC’s analysts match the amount to typical closing-cost ranges on an entry-level Kentucky home, aiming to neutralize the biggest hurdle in one swing.

How Much Money Can First-Time Buyers in Kentucky Get?

Short answer: Up to six grand. Long answer: KHC actually offers two flavors:

1. Regular DPA Loan – Up to $6,000, amortized over 10 years at 6% interest.
2. Affordable DPA Loan – Up to $6,000, amortized over 10 years at 1% interest (available to households ≤ 80% area median income).

For context, Realtor® data shows Kentucky’s median home price hovering near $209,000 in early 2024. A standard 3% down payment would be about $6,270—nearly a perfect match for KHC assistance. In many rural counties where prices are lower, the aid covers the down payment entirely.

Beyond the headline amount, KHC will also allow gift funds, local grants, or seller concessions to stack on top of its loan, so buyers can potentially walk into closing with minimal cash out of pocket.

Who Qualifies for the Kentucky Housing Corporation (KHC) Down Payment Assistance?

KHC keeps its eligibility net wide yet focused. You’ll generally need to clear these checkpoints:

• First-time buyer rule: No ownership of a primary residence in the past three years, unless purchasing in a targeted county.
• Credit score: 620+ for FHA/VA/RD loans; 660+ for conventional.
• Income limits: Vary by county and household size; for example, two-person households in Jefferson County cap at $97,800.
• Home price limits: Up to $481,176 for FHA/VA and $481,176 for conventional as of this writing.
• Completion of a HUD-approved homebuyer education course.

Micro-story: Consider Maya, a Lexington nurse earning $58,000. She rented for a decade, assuming ownership was out of reach. With a 654 score and a $195,000 starter condo in mind, she qualified for the Affordable DPA Loan at 1% interest and closed with just $1,122 from her own savings—less than one month’s rent deposit. Her story illustrates how the KHC assistance loan bends the math in favor of everyday Kentuckians.

How Do I Apply for KHC Down Payment Assistance?

1. Find a KHC-Approved Lender

Unlike grant programs that funnel money through a housing department, KHC relies on a network of KHC-approved lenders. Your chosen lender will bundle the down-payment loan with your main mortgage. You can locate participating institutions at KHC’s official site.

2. Gather Documentation

Expect the usual suspects:

• Recent pay stubs and W-2s
• Two months’ bank statements
• Tax returns (two years)
• Government-issued ID

3. Complete Homebuyer Education

Courses take about six hours and can be completed online or in person for roughly $75. Think of it as a crash course on mortgages, insurance, and budgeting—knowledge that can save thousands over the life of your loan.

4. Lock the Loan & Close

The lender submits your file to KHC for final approval, typically within 7-10 business days. On closing day, the KHC funds get wired in alongside your primary loan, reducing or erasing the cash you need to bring to the table.

Why This Program Matters in the Bluegrass State

Kentucky’s homeownership rate lingers near 67%, roughly two points above the national figure. Yet many renters say the same thing: “I could handle the monthly payment; it’s the down payment that hurts.” KHC down payment help flips that script. By transforming thousands of dollars of upfront cost into a tiny second-mortgage payment—often less than a streaming subscription—it removes the heaviest brick in the wall.

Furthermore, the program supports community stability. Neighborhood studies from the University of Louisville reveal that first-time buyers are 12% more likely to stay in their homes for five years when they receive structured assistance, fostering more rooted, resilient communities.

Hidden Benefits Most Buyers Overlook

• Rate discounts: Pairing KHC assistance with a KHC-backed first mortgage sometimes unlocks a lower interest rate than big-box lenders advertise.
• Reduced PMI: For conventional loans, a smaller first-mortgage balance can push loan-to-value below 95%, shaving private-mortgage-insurance costs.
• Cash-flow flexibility: The 10-year amortization means the second-mortgage payment ends long before the 30-year primary loan—freeing cash for renovations or college tuition.

Potential Drawbacks (and How to Neutralize Them)

No program is perfect. Here are the common speed bumps and strategies to coast over them:

FAQ About the Kentucky Housing Corporation Down Payment Assistance

Can I combine KHC assistance with USDA or VA loans?

Yes. KHC pairs seamlessly with VA, FHA, USDA, and conventional mortgages, provided the lender is KHC-approved.

Is the $6,000 forgivable?

No, it’s a repayable second mortgage. The only exceptions are periodic grant pilots, which your lender will flag if available.

What if I sell or refinance?

The remaining second-mortgage balance is due at sale or refinance, similar to any subordinate lien.

Can repeat buyers use the program?

Yes—if you haven’t owned a primary residence in three years or you’re buying in designated “target” counties.

How long does approval take?

Most files get KHC clearance within 10 business days once your lender submits a complete package.

Next Steps: Turn Knowledge into Keys

Picture your future-self grilling on a back patio or decorating a nursery. That vision can start today. Connect with a KHC-approved lender, ask for the KHC Down Payment Assistance option by name, and calculate how the extra $6,000 unlocks the front door.

Our brokerage specializes in guiding first-time buyers through the maze of Kentucky programs. Tap below, schedule a free 15-minute strategy call, and let’s swap “I wish” for “I closed.”

Claim Your Free Homebuyer Strategy Session

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