Kentucky First Time Home Buyer Grants and Loan Programs

Kentucky first time home buyer grants and loan programs – The Kentucky Housing Corporation (KHC) offers programs for first time home buyers.

The KHC offers home ownership education classes as well as low interest rate, 30 year home loans/mortgages through participating lenders. Many of the programs are offered to and non-first time buyers as well.

The KHC also offers downpayment and closing cost assistance to qualified buyers. The closing costs assistance ranges from $4,500 to $10,000, depending on the qualifications of the buyer(s).

To qualify for these programs, the KHC has buyer income limits as well as limits to the purchase price of the home.

Check out the KHC website to obtain more information about these programs.

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KENTUCKY HOUSING CORPORATION.

New Kentucky Law = New Bucks For Buyers

How about a little more home sale re-stimulus?

       Kentucky’s new second-time homebuyer, and affordable mortgage, law was signed by Gov. Beshear today (Monday, March 28).
       It’s effective April 30.
       Until now, many two-income families had incomes over the limit for Kentucky Housing Corporation (KHC) support.  That disqualified them not just from more economical KHC mortgage loans, but also down payment and closing costs assistance.  Down payment and closing aid has been available only through KHC.

       Those home buyers will be eligible now in 33 days. There are lots of them.

       It will make homeownership possible for many middle-income families.  It also can be expected to end fence-sitting for many more.

       The new law, HB 256, covers homeowners with incomes as high as 175% of the area median income.  The program works through KHC, the state housing finance agency.

       KHC’s guidelines have not been redone yet, to turn that 175% into a dollar figure.  The guidelines now on the KHC website do not apply to the HB 256 programs.

       But expect the median income cap for Jefferson County to be $108,150.  That’s a household income limit.  The current guidelines are much lower – $74,160 in Jefferson County for one to two people, and $86,250 for three or more people in the household.

       Its not clear yet whether any adjustments to income will be allowed, such as counting Social Security Disability Income checks for a third person.  Think in-law quarters for families taking care of parents.  We’ll keep you posted on that one (we’ve already put in the suggestion).
       However, it is clear that the income limit counts the income of everybody in the household, whether they are going on the loan or not.  That may mean decisions about the number of household members may turn into a timing issue.  Some will buy the house singly or as a couple, and move a parent in later, possibly.

       Down payment assistance and closing cost assistance can be set up 4 different ways.  One plan lets home buyers repay monthly.  Three plans are forgivable loans, depending on household type.  The three basic categories are (1) single or 2-parent households, (2) disabled and receiving disability, and (3) other households meeting income guidelines.  The three forgivable plans provide up to $4,500, which is forgiven after the buyer stays in the home 5 years.  No monthly payments are required.  The amount forgiven goes down every month on a pro-rated basis if the borrower has to move in less than five years. That’s been the basic program for a while.

       KHC also will be able to refinance mortgages with affordable, fixed-interest rates for 15-year and 30-year terms and offer mortgages for second-time home buyers.
       KHC loans are pre-qualified and financed through one of 105 lending partner banks and mortgage companies located in communities throughout the state.  They also are serviced in Frankfort, KY, an added safety cushion for home buyers worried about having their loans sold to anonymous strangers.  They know exactly where their payments go every month.  The existing Mortgage Credit Certificate (MCC) we first reported in the May, 2009 news flash are still available.

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Conventional

• Insured by approved mortgage insurance company.
• Minimum credit score of 660 or better.
• Quick turnaround time, 20 percent down payment and no up-front or monthly mortgage insurance.

FHA

• Insured by the Federal Housing Administration.
• Down payments as little as 3.5 percent.
• Can use DAP for 3.5 percent down payment requirement.
• Upfront and monthly mortgage insurance.
• Minimum credit score of 640.

VA

• Guaranteed by the Veterans Administration for qualified military veterans.
• No down payment if the property appraises for the sale price or greater.
• Credit underwriting is flexible.
• Minimum credit score of 640.
• No monthly mortgage insurance payments.

RHS

• Guaranteed by Rural Housing Services (RHS).
• Home must be located in a rural area as defined by RHS.
• No down payment if the property appraises for the sale price or greater.
• Minimum credit score of 640.
• No monthly mortgage insurance payments. 

Mortgage Credit Certificates (MCC)

A Mortgage Credit Certificates (MCC) reduces the amount of federal income tax you pay, giving you more available income to qualify for a mortgage loan.  MCCs are NOT mortgages.  They are tax credits that put extra cash in your pocket each month, so you can more easily afford a house payment.  That means fewer tax dollars will be withheld from your regular paycheck, increasing your take-home pay.  The federal government allows every homeowner an income tax deduction for all the interest paid each year on a mortgage loan.  But an MCC gives you a tax credit of 25 percent (not to exceed $2,000).  You can still deduct the remaining 75 percent interest on your income taxes.  A tax credit is not the same as a tax deduction.  A tax deduction reduces the portion of your income that is taxed, so you pay less.  A tax credit is a direct, dollar for dollar reduction in the total tax you owe.  The MCC is effective for the life of the loan as long as you live in the home.  If you sell your home in the first nine years of ownership, you may be subject to Federal Recapture Tax.

Special First Mortgage Loan Programs

New Construction Program for Single-Parent, Disabled and Elderly Households offers loans for newly constructed houses at interest rates from 1 to 6 percent. These limited funds are available, usually in July, on a first-come, first-served basis.

Guidelines

• Interest rate determined by the families’ ability to repay the loan.
• For new homes with a purchase price of $115,000 or less.
• Eligible borrowers:
  • Single parents (at least one dependent under the age of 18 must live in the home.)
  • Households with a person who has a permanent disability and who receives some form of disability income (SSI, SSDI, Veterans Disability etc.).
  • Households where at least one of the home buyers is age 62 or older.
• Income guidelines:
  • $28,000 for a household of 1 or 2 people; or
  • $33,000 for a household of 3 or more people.
• Kentucky Housing’s DAP loan program may be used for down payment and closing cost assistance. 

Down Payment and Closing Costs Assistance

Applying for a Kentucky Housing loan is easy. Just contact one of our approved lenders near you and ask for a Kentucky Housing loan.

502-905-3708 or email us for a free application kentuckyloan@gmail.com

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