Louisville Kentucky First Time Home Buyer Programs: Down Payment Assistance 2026

Louisville, Kentucky first-time home buyers have two separate down payment assistance programs available right now — the Kentucky Housing Corporation (KHC) Regular DAP, worth up to $12,500 statewide, and the Louisville Metro Down Payment Assistance Program, worth up to $25,000 for buyers inside Jefferson County. Most buyers I talk to have never heard of the second one, and a good number may qualify for both.

I’m Joel Lobb, a Kentucky mortgage broker. I’ve spent more than 20 years helping over 1,300 Kentucky families buy their first home, and the majority of those closings have been right here in the Louisville metro — Jefferson, Oldham, Bullitt, Shelby, Spencer and Nelson counties. This page walks through exactly what Louisville first-time home buyer programs exist in 2026, what the income and purchase price limits are, and how to tell which one fits your situation. No fluff, no overpromising.

Last reviewed and updated: July 2026

Louisville down payment assistance at a glance

Here is a side-by-side of the two down payment assistance programs most Louisville first-time home buyers ask me about. The numbers below come directly from Kentucky Housing Corporation and Louisville Metro Office of Housing.

Program terms change. These figures reflect what KHC and Louisville Metro published as of July 2026. Call or text me at 502-905-3708 and I’ll confirm what’s actually available the week you’re shopping.

KHC Regular DAP — up to $12,500 for Kentucky first-time home buyers

The Kentucky Housing Corporation Regular Down Payment Assistance Program is the workhorse of Kentucky first-time home buyer assistance. It is available statewide, it is not limited to Louisville, and it pairs with a KHC first mortgage.

What you get

• Up to $12,500, issued in $100 increments — you take only what you need
• Fixed 4.75% interest rate on the assistance
• Repaid as a second mortgage over 15 years
• Funds can go toward down payment and closing costs
• No liquid asset review and no cap on borrower reserves

Who it’s for

KHC DAP is designed for the buyer who has steady income and decent credit but hasn’t been able to save a down payment. That describes a large share of the Louisville buyers I work with — renters paying $1,400 a month who can clearly carry a mortgage payment but don’t have $10,000 sitting in savings.

The honest tradeoff

KHC DAP is a loan, not a grant. At 4.75% over 15 years, $12,500 of assistance adds roughly $97 a month to your total housing payment. That is real money and it counts against your debt-to-income ratio when we qualify you. It is still usually a far better deal than waiting three more years to save while Louisville home prices move, but you should go in knowing it’s a second payment, not free money.

Requirements

• Purchase price at or below $544,232
• Household income at or below KHC MRB or Secondary Market limits for your county
• Property must be your principal residence
• 30-year fixed first mortgage through KHC
• First-time buyer statewide in non-targeted areas; first-time and repeat buyers in targeted areas
• Homebuyer education is required on most KHC first mortgage products

Louisville Metro DPA — up to $25,000 in Jefferson County

This is the program Louisville first-time home buyers most often miss, and it’s the larger of the two. Louisville Metro Government’s Office of Housing runs its own down payment assistance program funded through federal HOME and related dollars.

What you get

• Up to 15% of the purchase price, capped at $25,000
• 0% interest — no monthly payment on the assistance
• 50% of the loan is forgiven once you’ve occupied the home as your primary residence for the required period (5 to 10 years, depending on how much assistance you took)
• The unforgiven balance is due when you sell

Income limits — 80% of area median income

Other requirements

• Home must be located within Louisville Metro
• Home value limits: $235,000 for an existing single-unit home, $331,000 for new construction
• You do not have to be a first-time buyer, but you cannot currently own a home
• Both applicants must complete 6 hours minimum of homebuyer counseling from a HUD-approved agency

The catch: application windows

Louisville Metro DPA is not always open. It runs in limited application windows, and the funding is finite — when a round closes, it stays closed until Metro opens the next one. Windows have historically run for roughly two months at a time, and they are announced with little lead time.

Before you plan around this program, confirm the current window status. Call Louisville Metro Office of Housing at 502-574-5850, or call me at 502-905-3708 and I’ll check where it stands for you.

My practical advice: get your homebuyer counseling done before a window opens. It’s a 6-hour class, it’s the step that slows people down, and having the certificate in hand is the difference between submitting on day one and missing the round.

2026 KHC income limits for Louisville-area counties

KHC income limits are set by county and household size. These are the MRB gross annual household income limits effective June 23, 2025 for the counties that make up the Louisville metro and a few nearby markets I work in often.

Two things worth knowing. First, Jefferson and Fayette counties contain targeted census tracts where the income limits are higher and the first-time buyer requirement is waived — several Louisville neighborhoods fall inside them, so don’t assume you’re over the limit until we check the specific address. Second, KHC also has Secondary Market income limits that differ from MRB; depending on which KHC first mortgage product fits you, the applicable limit may be different.

First-time home buyer loan programs in Louisville, Kentucky

Down payment assistance sits on top of a first mortgage. Here are the loan programs I write for Louisville first-time home buyers, and who each one actually fits.

FHA loans

3.5% down, credit scores commonly accepted starting around 580, and the most forgiving underwriting of the four on past credit problems. This is the most common first mortgage under KHC DAP in Jefferson County. The tradeoff is mortgage insurance that stays for the life of the loan in most cases.

VA loans

If you’re an eligible veteran, active duty service member, or surviving spouse: zero down, no monthly mortgage insurance, and competitive rates. There is no better mortgage product in America. If you qualify for VA, we start there.

USDA Rural Housing loans

100% financing with no down payment in USDA-eligible areas. Louisville proper is not eligible, but much of the surrounding metro is — parts of Bullitt, Oldham, Shelby, Spencer and Nelson counties, plus towns like Shepherdsville, Mount Washington, Taylorsville and Shelbyville. Buyers are frequently surprised how close to Louisville the eligible line runs. Income limits apply by household size and county.

Fannie Mae conventional

As little as 3% down for qualified first-time buyers. Where conventional beats FHA is mortgage insurance — it can be cancelled once you reach 20% equity, and if your credit score is strong the MI is cheaper. If your score is above roughly 700, we should run conventional against FHA side by side before deciding.

KHC first mortgages

KHC offers 30-year fixed first mortgages in both government and conventional flavors, and these are what unlock the DAP second mortgage. The rate is set by KHC rather than the open market, so it may be slightly above or below what you’d get on a standard loan — worth comparing, because sometimes the assistance is worth a marginally higher rate and sometimes it isn’t.

Do I qualify as a first-time home buyer in Kentucky?

Under KHC and most federal programs, “first-time home buyer” means you have not owned and occupied a principal residence in the past three years. That’s a wider door than most people assume:

• If you owned a home four years ago and have rented since, you likely qualify again
• If you owned a rental property but never lived in it, you may still qualify
• If you’re recently divorced and the home was in your ex-spouse’s name, you may qualify
• If you’re buying in a targeted census tract, the three-year rule is waived entirely

On credit: there’s no single magic score. FHA with KHC assistance is generally accessible to buyers in the low-to-mid 600s, and sometimes lower depending on the rest of the file. If your score isn’t there yet, that’s a conversation worth having early — I’d rather spend 60 days helping you get positioned than have you get declined.

Can you use KHC and Louisville Metro assistance together?

Sometimes, and it depends on the details of both programs at the time you apply. The two programs have different income limits — Louisville Metro’s 80% AMI limits are considerably tighter than KHC’s MRB limits — so a household that qualifies for KHC DAP may be over income for Louisville Metro. The purchase price ceilings differ sharply too: $544,232 for KHC versus $235,000 for an existing home under Louisville Metro.

The practical result is that most Louisville buyers end up using one or the other rather than both. Which one is better for you comes down to your income, the price point you’re shopping, and whether a window is open. That’s a case-by-case analysis, and it’s the kind of thing worth twenty minutes on the phone rather than guessing from a website.

How to apply for Louisville first-time home buyer assistance

1. Get pre-approved first. Not pre-qualified — pre-approved, with income and assets actually reviewed. This tells you your real price range and which assistance programs you fit. I do free applications with same-day approvals.
2. Complete homebuyer education early. Required for most KHC products and mandatory (6 hours, HUD-approved agency) for Louisville Metro DPA. Do it before you need it.
3. Confirm which assistance program fits. We compare KHC DAP against Louisville Metro DPA against simply going FHA or conventional with a gift or your own funds. Sometimes assistance isn’t the right answer.
4. Find the home. Your agent needs to know your program constraints — especially the Louisville Metro value limits and the USDA eligible boundary — before you write an offer.
5. Lock, underwrite, close. Kentucky closings typically run 30 to 45 days once you’re under contract.

Louisville, Kentucky first-time home buyer FAQ

How much down payment assistance can a Louisville first-time home buyer get in 2026?

Up to $12,500 through Kentucky Housing Corporation’s Regular DAP statewide, or up to 15% of the purchase price capped at $25,000 through the Louisville Metro Down Payment Assistance Program for homes inside Jefferson County. Both are subject to income limits, purchase price limits and available funding.

Is Kentucky down payment assistance a grant or a loan?

KHC Regular DAP is a loan — a second mortgage at 4.75% repaid over 15 years. Louisville Metro DPA is a 0% interest loan of which 50% is forgiven after the required occupancy period, with the remainder due at sale. Neither is a pure grant, though the Louisville Metro program is closer to one.

What credit score do I need for a first-time home buyer loan in Kentucky?

It depends on the program. FHA loans are commonly available starting around a 580 score, and KHC first mortgages generally look for higher. Conventional and USDA typically want stronger credit. There is no universal cutoff — the score interacts with your income, debts and down payment. Let’s review your actual file rather than guessing.

Can I buy a house in Louisville with no money down?

Yes, in some situations. VA loans offer 100% financing for eligible veterans and service members. USDA Rural Housing offers 100% financing in eligible areas around — though not inside — Louisville. And FHA’s 3.5% down can sometimes be covered entirely by KHC DAP or Louisville Metro assistance. You should still plan for closing costs and an inspection.

What is the income limit for KHC down payment assistance in Jefferson County?

Under the MRB limits effective June 23, 2025, Jefferson County is $97,214 for a 1–2 person household and $111,796 for a household of three or more. Targeted census tracts within Jefferson County allow higher limits. KHC Secondary Market limits differ, so the applicable number depends on which KHC product you use.

How long does it take to close a mortgage in Louisville, Kentucky?

Typically 30 to 45 days from contract to closing. Loans using down payment assistance can run slightly longer because the second mortgage has to be approved alongside the first. Getting your documents in quickly is the single biggest factor you control.

Do I have to be a first-time buyer to get KHC assistance?

In non-targeted areas, yes — meaning you haven’t owned and occupied a principal residence in the past three years. In KHC targeted areas, both first-time and repeat buyers are eligible. Louisville Metro DPA does not require first-time buyer status, but you cannot currently own a home.

Can I use down payment assistance on a condo or multi-unit property?

Program-dependent. KHC requires the property be your principal residence, and condos must be on an approved project list for most loan types. Louisville Metro’s value limits are written around single-unit homes. Bring me the specific address and I’ll tell you straight whether it works.

Let’s find out what you actually qualify for

Most people I talk to are closer to buying than they thought — they just didn’t know the assistance existed, or they assumed their credit or income disqualified them without ever checking. The application is free, it takes about fifteen minutes, and I can usually give you an answer the same day.

Joel Lobb — Mortgage Broker
Call or text: 502-905-3708
Email: kentuckyloan@gmail.com

Joel Lobb, Mortgage Broker – FHA, VA, USDA, KHC, Fannie Mae | EVO Mortgage • Helping Kentucky Homebuyers Since 2001 | Call/Text 502-905-3708 | kentuckyloan@gmail.com | 911 Barret Ave, Louisville, KY 40204 | NMLS #57916 | Company NMLS #1738461. Licensed in Kentucky only. Verify licensing at www.nmlsconsumeraccess.org. Equal Housing Lender. All loans subject to credit approval and program requirements. Program terms, rates, income limits and funding availability are set by Kentucky Housing Corporation and Louisville Metro Government and are subject to change without notice. This website is not endorsed by or affiliated with FHA, VA, USDA, HUD, Kentucky Housing Corporation, Louisville Metro Government, or any other government agency. Rates and terms quoted are for illustration and are not a commitment to lend.