Updated August 8, 2026
Kentucky first-time home buyers have several ways to reduce the cash needed at closing, but it is important to separate true grants from repayable down-payment assistance and ordinary low-down-payment mortgages. Program funding, income limits, rates, and eligibility can change, so confirm the current terms before making an offer.
KENTUCKY HOUSING CORPORATION DOWN-PAYMENT ASSISTANCE
Kentucky Housing Corporation (KHC) currently offers up to $12,500 toward down payment and closing costs. This assistance is a secondary loan, not free grant money. It is generally repaid over 15 years and must be paired with an eligible KHC first mortgage. KHC states that its down-payment assistance can be used by eligible first-time and repeat buyers receiving a KHC first mortgage.
Official KHC details: https://www.kyhousing.org/page/down-payment-assistance
KHC FIRST-MORTGAGE OPTIONS
KHC offers 30-year fixed-rate conventional, FHA, VA, and Rural Housing Service loan options. According to KHC’s current program grid:
• Conventional financing generally requires at least 3% down and a 660 credit score.
• FHA financing generally requires at least 3.5% down and a 620 credit score for KHC programs.
• VA financing may require no down payment for eligible veterans and service members, with a 620 minimum score for KHC programs.
• USDA/RHS financing may require no down payment for eligible properties and borrowers, with a 620 minimum score for KHC programs.
KHC currently lists a maximum mortgage amount of $566,354. Income limits, purchase-price limits, property requirements, and underwriting rules apply.
Official KHC loan comparison: https://www.kyhousing.org/page/loan-programs
DO YOU HAVE TO BE A FIRST-TIME BUYER?
Not for every program. KHC’s regular secondary-market products and standard down-payment assistance may be available to qualifying repeat buyers. Mortgage Revenue Bond loans generally require first-time-buyer status in non-targeted areas, while targeted areas can have different rules. A first-time buyer usually means someone who has not owned a principal residence during the previous three years, but the program and household circumstances control the final answer.
Check current eligibility: https://www.kyhousing.org/page/eligibility
KHC SHARED APPRECIATION MORTGAGE
KHC launched a Shared Appreciation Mortgage program in July 2026. It is a zero-interest, deferred-payment second mortgage intended to help eligible first-time buyers purchase qualifying newly constructed homes. Assistance may reach up to 25% of the purchase price. Because repayment includes the original assistance plus a proportional share of future appreciation, this is not a grant. Repayment can be triggered by a sale, transfer, payoff, or most refinances.
Review the current KHC rules and participating-lender requirements before relying on this option: https://www.kyhousing.org/page/mortgage-faqs
WHAT ABOUT GRANTS?
True grants do not normally require monthly repayment, but they are often limited by funding windows, location, employer, occupation, income, or participating-lender rules. Some programs advertised as grants are actually forgivable loans, deferred second mortgages, or repayable assistance. Always ask these questions:
1. Is the assistance a grant, forgivable loan, deferred loan, or monthly-payment second mortgage?
2. Does it have to be repaid when the home is sold or refinanced?
3. Is there a first-time-buyer requirement?
4. What household income and purchase-price limits apply?
5. Must the buyer use a particular lender, first mortgage, property type, or location?
6. Are funds still available and reserved for the transaction?
CHOOSING THE RIGHT KENTUCKY HOME-BUYER PROGRAM
Start with a full mortgage pre-approval, not a property search. A lender should compare the total monthly payment, cash required at closing, mortgage insurance, second-mortgage payment, and long-term cost of each option. The largest assistance amount is not automatically the least expensive loan.
For a broader comparison of FHA, VA, USDA, conventional, and KHC programs, see:
Kentucky First-Time Home Buyer Programs in 2026: FHA, VA, USDA, Conventional, and KHC Loans
For a focused review of Kentucky grant and assistance opportunities, see:
ABOUT THE AUTHOR
Reviewed by Joel Lobb, Kentucky mortgage professional, NMLS #57916. Joel helps Kentucky buyers compare FHA, VA, USDA, conventional, and KHC financing. Program descriptions are educational and are not a commitment to lend. Loan approval depends on borrower qualifications, property eligibility, underwriting, and current program availability.
To request a Kentucky mortgage pre-approval:
