Kentucky First-Time Homebuyer Loan Programs

Over 1,300 Kentucky families helped to buy their first home! As a mortgage loan officer with over 20 years of experience, I specialize in helping Kentucky residents achieve homeownership through FHA, VA, USDA, KHC, and conventional loan programs.

Kentucky Down Payment Assistance Programs

Kentucky Housing Corporation (KHC) Programs

Kentucky down payment assistance loans are available up to $10,000 for eligible homebuyers. These programs work with local lenders to ensure all Kentucky home buyers have access to safe and affordable housing.

Key Benefits:

  • Up to $10,000 in down payment assistance
  • Available statewide
  • Can be combined with other loan programs
  • Both first-time and repeat buyers may qualify in targeted areas

Important Details:

  • Loan Processing Time: Typically 30 to 45 days to close
  • Usage Restrictions: Down payment assistance can only be used for down payment, closing costs, and prepaids – not for repairs or furnishings
  • Program Requirement: Must do the first mortgage loan with KHC to access down payment assistance

Popular Kentucky Loan Programs

FHA Loans

  • Credit Score: 580+ for 3.5% down payment
  • Down Payment: 3.5% minimum
  • Employment: 2 years consistent work history
  • Property Types: Single-family, condos, 2-4 units, PUDs

Waiting Periods After Credit Events:

  • Bankruptcy (Chapter 7): 2 years from discharge
  • Bankruptcy (Chapter 13): 1 year with satisfactory payments
  • Foreclosure: 3 years from completion

VA Loans

  • Eligibility: Veterans and active-duty military
  • Down Payment: $0 (100% financing)
  • Credit Score: No minimum (580+ preferred)
  • Mortgage Insurance: None

Key Advantages:

  • No monthly mortgage insurance premiums
  • Competitive interest rates
  • Can be used multiple times
  • Available anywhere in Kentucky

Funding Fee: 2.3% for first-time use, 3.6% for subsequent use (can be financed into the loan)

Waiting Periods: 2 years removed from bankruptcy or foreclosure

USDA Rural Housing Loans

Eligibility Requirements:

  • Credit Score: 640 preferred for automated approval (580 possible with manual underwriting)
  • Down Payment: $0 (100% financing)
  • Income Limits: Low to moderate income (varies by county)
  • Property Location: Must be in USDA-designated rural area
  • Employment: 2-year stable work history

Waiting Periods:

  • Bankruptcy (Chapter 7): 3 years from discharge
  • Bankruptcy (Chapter 13): 1 year with satisfactory payments
  • Foreclosure: 3 years from completion

Debt-to-Income Ratio: Maximum 41-45.99% (higher with compensating factors)

Conventional Loans (Fannie Mae)

Standard Requirements:

  • Credit Score: 620 minimum (720+ for best rates)
  • Down Payment: 3-5% minimum
  • Employment: 2-year work history
  • Debt-to-Income: Typically 43% maximum

Advantages of Conventional Loans:

  • Private Mortgage Insurance (PMI) can be removed at 80% equity
  • Higher loan limits available
  • More flexible property types
  • No upfront funding fees

Waiting Periods After Credit Events: 4 years for bankruptcy, 7 years for foreclosure

Required Documentation for All Programs

Income Documentation:

  • Recent pay stubs (last 30 days)
  • W-2 forms (last 2 years)
  • Tax returns (last 2 years)
  • Proof of employment letter

Asset Documentation:

  • Bank statements (last 2 months)
  • 401(k) or retirement account statements
  • Investment account statements
  • Gift letters (if applicable)

Credit Documentation:

  • Credit report from all three bureaus (Experian, Equifax, TransUnion)
  • Explanation letters for any credit issues

Special Considerations for Kentucky Homebuyers

Collections and Medical Bills:

  • Collections must be counted in debt-to-income ratio if aggregate total exceeds $1,000
  • Medical bills typically don’t count unless there’s a judgment or garnishment
  • Non-medical collections may need to be addressed

Cash Deposits:

Important: Cash deposits are NOT allowed for down payments on FHA loans. This is one of the most common underwriting issues. All funds must be sourced and documented.

Ready to Start Your Kentucky Homebuying Journey?

With over 20 years of experience and more than 1,300 Kentucky families helped, I’m here to guide you through every step of the process.

Joel Lobb – Kentucky Mortgage Loan Officer
📱 Call/Text: 502-905-3708
📧 Email: kentuckyloan@gmail.com
NMLS ID: 57916 | Company NMLS: 1738461

Licensed for Kentucky mortgage loans in all 120 counties

Important Disclosures:

We follow standards established by the Web Content Accessibility Guidelines (WCAG) 2.0. If you experience difficulty using our site, please contact us at 502-905-3708 or kentuckyloan@gmail.com.

Some products and services may not be available in all states. Credit and collateral are subject to approval. Terms and conditions apply. This is not a commitment to lend. Programs, rates, terms and conditions are subject to change without notice.

Equal Housing Lender. The content in this marketing advertisement has not been approved, reviewed, sponsored or endorsed by any department or government agency.