How to buy a house in Kentucky with Zero Down Payment Mortgage Loan

Kentucky offers several grant programs

Kentucky offers several grant programs to help residents achieve their dream of homeownership. These programs provide financial assistance to eligible buyers, making the purchase of a home more affordable. Here’s an overview of the current grant options available to Kentucky homebuyers:

1. Kentucky Housing Corporation (KHC) Down Payment Assistance Program

The KHC offers up to $12,500 in down payment assistance to eligible first-time homebuyers. This program can be used in conjunction with KHC’s first mortgage loans.

Eligibility:

• Must be a first-time homebuyer or not have owned a home in the past three years
• Meet income and purchase price limits, which vary by county
• Complete a homebuyer education course

2. Kentucky Affordable Housing Trust Fund

This program provides funds to create or preserve affordable housing for low-income households. While not a direct grant to homebuyers, it can help create affordable housing opportunities.

3. USDA Rural Development Grant

Although not specific to Kentucky, this federal program is available in many rural areas of the state.

Key features:

• Provides loans and grants for low-income individuals in rural areas
• Can be used for home purchases or repairs
• Income limits and location restrictions apply

4. Louisville Metro Down Payment Assistance Program

Specific to Louisville, this program offers forgivable loans of up to $25,000 to help with down payment and closing costs.

Eligibility:

• Must be a first-time homebuyer
• Income must be at or below 80% of the area median income
• Property must be located within Louisville Metro

5. Lexington Homeownership Assistance Program

This program, specific to Lexington, provides up to $15,000 in down payment and closing cost assistance.

Eligibility:

• Must be a first-time homebuyer
• Income must be at or below 80% of the area median income
• Property must be located within Lexington-Fayette Urban County

6. Individual Development Account (IDA) Program

While not exclusive to homebuying, this program can help prospective homeowners save for a down payment.

Key features:

• Provides matching funds for savings (typically $2 for every $1 saved)
• Can be used for homeownership, education, or starting a small business
• Income and asset limits apply

7. Welcome Home Grant

Feature	Welcome Home Grant	KHC DPA
Type	Grant (no repayment if retained)	Repayable loan (second mortgage)
Amount Typical	Up to ~$20,000*	Up to $12,500
Payback	None if stays 5+ years*	Monthly payments over 15 yrs
Retention/Terms	5-year deed restriction	Standard mortgage second lien
Income Limits	≤80% MRB household	MRB or Secondary Market
Qualifying Income	Household inclusive	Dependent on mortgage product underwriter
First-Time Buyer	Optional	Depends on mortgage product
Access	Through FHLB member lenders	Through KHC-approved lenders
Availability	Seasonal, limited	Ongoing

How to Apply

To apply for these grants, contact the respective program administrators:

1. For KHC programs: Visit www.kyhousing.org
2. For USDA Rural Development: Visit www.rd.usda.gov/ky
3. For city-specific programs: Contact your local housing authority or visit the city’s official website
4. Welcome Home Grant
5. Program is administered through participating FHLB Cincinnati member lenders (banks and credit unions that belong to the FHLB system).
6. Buyers must contact a participating mortgage lender early and reserve funds once the program opens (often first-come, first-served).
7. A fully executed purchase contract and signed mortgage application are typically required to reserve funds.
8. KHC DPA
9. Must work with a KHC-approved lender; you cannot apply directly to KHC.
10. The KHC-approved lender will bundle the first mortgage and the DPA second mortgage into one closing transaction.
11. Implication:
12. Both programs require lender participation. The Welcome Home Grant is tied to a different funding source (FHLB) than KHC’s internal DPA loan.

Remember that grant availability and terms may change, so it’s essential to check with the program administrators for the most up-to-date information. Additionally, many of these programs require participants to complete homebuyer education courses. These courses can provide valuable information about the homebuying process.

By taking advantage of these grant programs, Kentucky residents can make their dream of homeownership more attainable. Be sure to explore all options and consult with housing counselors or financial advisors to determine the best path to homeownership for your specific situation.