First Home Advantage First-Time Homebuyer Assistance Programs

First Home Advantage: Kentucky’s Shortcut to First-Time Homeownership

Hunting for your first set of house keys can feel like chasing fireflies at dusk—exciting, yet slippery to catch. First Home Advantage, a mortgage option backed by Kentucky Housing Corporation (KHC), hands you the net. The program is designed to lower the biggest hurdles for first-time buyers: down payments and closing costs. Whether you dream of a craftsman bungalow in Bowling Green or a downtown Lexington condo, understanding this assistance can shave months—or even years—off your timeline.

How the First Home Advantage Program Works

Kentucky Housing Corporation issues tax-exempt bonds and channels the proceeds into affordable mortgages. Those dollars become the Kentucky First Home Advantage mortgage program, which does two things at once:

• Offers a below-market, 30-year fixed-rate mortgage.
• Pairs the loan with forgivable down-payment assistance—up to 5% of the purchase price in many cases.

The assistance comes as a subordinate lien, but after you meet residency requirements (typically 10 years), it quietly disappears like mist off Lake Cumberland. If you sell or refinance early, a prorated portion may be due. Because the aid is built into the loan package, you won’t juggle multiple applications or closing dates.

Why KHC Created First Home Advantage

State housing officials noticed a trend: although Kentucky’s median home price hovered around $200,000 in 2023 (Kentucky REALTORS® data, paraphrased), cash-to-close demands climbed faster than wages. An extra 5% upfront could mean $10,000—money many renters don’t have. First Home Advantage bridges that gap and keeps local ownership rates strong.

What Are the Eligibility Requirements for First Home Advantage?

Not every borrower will qualify, but the door is wider than you may think. The essential criteria include:

• First-time buyer status—defined as no ownership interest in a primary residence during the past three years. Veterans are exempt from this rule.
• Income limits that vary by county and household size. In Jefferson County, for instance, a two-person household can earn up to roughly $85,000 (consult current KHC charts for accuracy).
• Purchase-price caps that typically top out near $436,000 for most counties.
• Credit score of at least 640 for conventional loans; FHA-backed versions may allow a 620 minimum.
• Completion of an approved home-buyer education course, which costs about the same as a Friday-night takeout order and can save thousands in missteps.

Remember, lenders apply their own overlays, so an extra buffer on credit or debt-to-income (DTI) ratios may help you glide through underwriting.

Five Stand-Out Benefits That Make First Home Advantage Shine

1. No separate DPA payment. Because the assistance is a silent second, your monthly cash outflow stays lean.
2. Fixed-rate stability. Predictable payments fend off budget surprises.
3. Forgiveness clock starts Day 1. Live in the home long enough, and the down-payment loan vanishes.
4. Layering allowed. You can combine the program with rural-development loans, employer grants, or energy-efficiency rebates.
5. Local expertise. Participating lenders know Kentucky ordinances, saving you from red-tape rabbit holes.

A Micro-Story: Maria’s Path from Rent to Keys

Maria, a middle-school teacher in Paducah, earned $44,000 a year and paid $975 in rent. She set aside $150 monthly, but at that rate her 3% down payment target stayed 38 months away. After hearing about First Home Advantage at a faculty meeting, she applied. The program covered her $8,200 down payment and $3,500 in closing costs. With just $1,000 out of pocket—money already in her savings jar—Maria closed on a brick ranch before the school year ended. Two months later she started a garden where her landlord’s parking lot had once been.

How Do I Apply for Kentucky’s First Home Advantage?

The application path is refreshingly direct. Follow these four steps and you’ll move faster than a Derby contender down the final stretch:

1. Choose a KHC-approved lender. Over 100 institutions statewide—banks, credit unions, mortgage brokers—have the badge.
2. Gather your documents. Two years of W-2s, recent pay stubs, last two bank statements, and any asset or debt statements.
3. Complete the Home Buyer Education. KHC’s e-class or HUD-approved in-person sessions both satisfy the rule.
4. Submit the loan application. Your lender packages the whole deal, including the DPA component, and sends it to KHC for approval.

Processing times often mirror regular mortgage files—roughly 30–45 days. Using a lender accustomed to First Home Advantage loans can shave a week off that timeline, according to anecdotal reports from Kentucky REALTORS® forums.

Is First Home Advantage the Best Fit for You?

Programs are tools, not one-size wool sweaters. Compare First Home Advantage to USDA Rural Development (zero down), VA loans (for eligible service members), and conventional 97% LTV products. If your household income sits just under KHC limits and you plan to stay in the home, the forgivable second can outperform alternatives when you crunch a 10-year cost-of-ownership spreadsheet.

On the flip side, if you’ll likely refinance within three years to remove mortgage insurance, a non-forgivable grant might beat a silent second. Running the numbers with a licensed loan officer is crucial—you wouldn’t pick a horse solely by the color of its silks.

Does First Home Advantage Require Perfect Credit?

No. The minimum credit score lands near the low- to mid-600s, lower than many private lenders request. Still, higher scores unlock better rates and cheaper mortgage insurance. One credit-bureau simulation estimates that improving your FICO from 640 to 680 on a $200,000 loan can cut monthly payments by about $120, including MI savings. A temporary scrimp on streaming services may buy you decades of budget space.

Five Insider Tips to Strengthen Your Application

• Pre-empt verification calls. Alert your HR or payroll department so employment verifications don’t stall underwriting.
• Set up a dedicated savings account. Underwriters love clean paper trails; a single-purpose account avoids “large deposit” questions.
• Lock during market dips. A 0.25% rate drop on a $180,000 mortgage saves roughly $13,000 over 30 years.
• Consider an Energy Efficient Mortgage add-on. You may roll in HVAC upgrades and still stay under KHC price caps.
• Keep credit cards under 30% utilization. Small balance pay-downs can nudge your score into the next tier within weeks.

The First Home Advantage assistance package is only one color in Kentucky’s housing palette. Other shades include the True Home Advantage conventional offering and the Mortgage Credit Certificate program. Yet for many borrowers, the synergy of down-payment help plus a competitive rate tilts the math decisively toward this flagship option.

FAQ: Quick Answers for Curious Buyers

Ready to Turn Your Kentucky Dream Home into an Address?

Thousands of Bluegrass residents have stepped over the threshold into ownership with First Home Advantage. If you’re picturing a porch swing, a backyard barbecue, or simply an end to rising rent, let’s talk. Our team partners with KHC-approved lenders statewide and provides no-cost eligibility checks—often in less than ten minutes.

Check Your Eligibility Today

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