There are several programs in Kentucky to help homebuyers purchase a house with zero down payment. The various Kentucky down payment assistance programs in Kentucky, including KHC, FHA, VA, USDA, UWM’s $15,000 Welcome Home Grant, the $25,000 Kentucky Welcome Home Grant, and the 5% grant. We will also detail the qualifying criteria, such as credit score, income, work history, and assets.
Kentucky Housing Corporation (KHC) Programs
KHC FHA Loan
The Kentucky Housing Corporation offers down payment assistance programs that work in conjunction with Kentucky FHA loans. These programs aim to help first-time homebuyers achieve homeownership with minimal upfront costs.
Qualifying Criteria:
- Credit Score: Minimum 620
- KHC Income Limits: Varies by county and household size
- Work History: Steady employment for at least two years
- Assets: Limited to ensure assistance goes to those in need
- Minimum down payment of 3.5% and 6% seller concessions
- Max debt to income ratios of 40 and 50% respectively
KHC Down Payment Assistance Programs
KHC offers several down payment assistance options, including a regular DPA loan of up to $10,000. These loans are repayable over ten years at 3.75% over 10 years and cannot be subordinated and paid off if you refinance or sell the home before they are paid off. No prepay penalty
Qualifying Criteria:
- KHC Credit Score: Minimum 620
- Income Limits: Varies by county and household size
- Work History: Stable employment history required
- Assets: Applicants must meet asset limitations
- Loan limits changes every year.
Kentucky FHA Loans
Kentucky FHA loans are insured by the Federal Housing Administration and require a lower down payment of 3.5, but when paired with down payment assistance programs, Kentucky homebuyers can potentially buy a home with zero down payment.
Qualifying Criteria:
- Credit Score: Minimum 580 (with 3.5% down payment), 500-579 (with 10% down payment)
- Income Limits: None, but debt-to-income ratio must be manageable
- Work History: Steady employment for at least two years
- Assets: Must demonstrate sufficient assets to cover closing costs and reserves
- Loan limits for FHA loans. Changes every year
Kentucky VA Loans
Kentucky VA loans are guaranteed by the Department of Veterans Affairs and are available to eligible veterans, active-duty service members, and certain members of the National Guard and Reserves. These loans often come with zero down payment requirements.
Qualifying Criteria:
- Credit Score: No minimum, but most lenders prefer at least 580 to 620
- Income Limits: None, but borrowers must have stable income
- Work History: Typically, two years of consistent employment
- Assets: Sufficient to cover closing costs; no down payment required
- Residual Income Requirements
- Debt ratio set by VA...No max debt ratio, but most like to see a 43% backend ratio on a manual underwrite but can go higher on an AUS automated underwriting approval through DO or LP
- Max VA loan limits changes every year.
Kentucky USDA Loans
Kentucky USDA loans are backed by the U.S. Department of Agriculture and are available to Kentucky homebuyers in eligible rural areas of Kentucky. These loans offer 100% financing. $0 down payment
Qualifying Criteria:
- Credit Score: No minimum score but most KY Rural Housing Lenders will a 620 to 640 minimum credit score
- Income Limits: Varies by county and household size-–
- Work History: Stable employment for at least two years
- Assets: Limited to ensure assistance goes to those in need-
- No purchase price or loan limits, just income limits for each Kentucky County.
- Max income limits changes every year
- Debt to income rate usually around 31% on front end and 45% max on back-end ratio …
- Has to be run through GUS, the Guarantee Underwriting system for initial pre-approval
$15,000 Welcome Home Grant
United Wholesale Mortgage (UWM) offers a $15,000 Welcome Home Grant to help eligible homebuyers with down payment and closing costs.
Qualifying Criteria:
- How does the $15,000 Down Payment Assistance work in Kentucky for Homebuyers
- First mortgage meets Loan to Value requirements for Fannie Mae or Freddie Mac ltv
- Mortgage lenders in Kentucky provides a second lien mortgage for 3% of the purchase price, up to $15,000
- Second lien has no monthly payment requirement and no interest-no payments to lender
- Second lien balance is due when the first lien loan is refinanced or paid off, whichever comes first
- Payments on the second lien can be made throughout the loan term, but are not required
How Kentucky borrowers can qualify for the $15,000 Down Payment Assistance:
- Kentucky Borrowers must be at or below 80% of the Area Median Income (AMI) for the Kentucky mortgage property address they are buying and meet Home Possible® guideline requirements
- For very-low income borrowers whose qualifying income is at or below 50% AMI (VLIP borrowers), they will receive a $2,500 credit as part of the 3% assistance
- This credit does not need to be repaid by the borrower and lowers their debt obligation from the second lien
- 620+ FICO and LTV must be equal to or greater than 95% LTV, up to 97%
- For very-low income borrowers whose qualifying income is at or below 50% AMI (VLIP borrowers), they will receive a $2,500 credit as part of the 3% assistance
—OR—
- At least one Kentucky home mortgage borrower must be a first-time homebuyer and meet HomeOne® and lender’s guideline requirements
$25,000 Kentucky Welcome Home Grant
The $25,000 Kentucky Welcome Home Grant is designed to provide substantial assistance to homebuyers for down payment and closing costs.
Qualifying Criteria:
- All Kentucky first-time homebuyers must complete a homebuyer counseling program (but you don’t have to be a first-time homebuyer to participate).
- Homebuyers must contribute at least $500 of their own funds toward down payment and closing costs (60% of these funds may be received as a gift).
- All funds are reserved for specific homebuyers purchasing specific homes and can not be transferred to other homebuyers or to other homes.
- Kentucky Welcome Home Grant Funds can be used with Kentucky FHA, USDA, VA, Home Ready, and other Conventional products.
- Homebuyers must remain in the home for 5 years or prorated repayment of the grant may be required.
- More information from the Federal Home Loan Bank of Cincinnati can be found at https://www.fhlbcin.com/housing-programs/welcome-home-program/.
- Kentucky Welcome Home Grant program, providing eligible homebuyers with grants of up to $25,000. The program, offered by the Federal Home Loan Bank of Cincinnati (FHLB Cincinnati), aims to support honorably discharged veterans, surviving spouses, and active-duty military personnel, along with other qualified home seekers.
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Funds are available starting March 1 at 8am ET, and are available until all funds have been reserved. The FHLB Cincinnati not only assists service personnel with up to $25,000 grants but also extends up to $20,000 grants to other qualified homebuyers.
To learn more about the application process and eligibility criteria, visit www.fhlbcin.com.
Don’t miss out on this incredible opportunity! Contact us at phone or text at 502-905-3708
Act fast, as funds are limited!—As of 5/22/2024 Funds for Welcome Home Grant in Kentucky has been depleted. ☹
5% Kentucky Home Buyer Grant
Some lenders in Kentucky offer a 5% grant program that provides assistance based on the purchase price of the home. This grant can be used for down payment and closing costs.
Qualifying Criteria:
- Down payment assistance products to help Kentucky home buyers purchase the home of their dreams!
Key Benefits
- Utilize with either Kentucky FHA or Kentucky USDA loan to purchase a home
- Up to 5% of purchase price can be used towards borrower’s down payment, closing costs, or to lower rate on the underlying mortgage.
- Fully forgivable or repayable options
- No income or first-time homebuyer restrictions
- SmartBuy Down Payment Assistance
5 Year Forgivable DPA 30/10 Repayable DPA Closing Cost Assistance – RepayableDown payment assistance (DPA) program
requiring the delivery of the underlying
30 year FHA or USDA loan with the
subordinated second lien. The second
lien is fully forgiven after 5 years if the
borrower meets criteria. - Down payment assistance (DPA)
program with a repayable second
lien. The second is not forgivable
and is originated with a 30 year
term due in 10 year balloon. - Closing cost assistance (CCA) program
with a repayable second lien. The second
is not forgivable and is originated with a
30 year term due in 10 year balloon. - Borrower Eligibility Based on FHA or USDA program guidelines (USDA
Not required to be first-time homebuyers
No income restrictors beyond USDA guidelinesCredit Score Minimum Representative Score of 620
All Borrowers must have at least one
score
Navigating the various down payment assistance programs available to Kentucky homebuyers can be complex, but with the right information, you can find the program that best fits your needs.
Whether you are a Kentucky first-time homebuyer or a veteran, these programs can help you achieve the dream of homeownership with little to no down payment. Be sure to review the specific qualifying criteria for each program and consult with a knowledgeable mortgage broker, such as Joel Lobb, to guide you through the process and help you secure the best assistance available.
If you have any questions or need further assistance, feel free to contact Joel Lobb at email or visit his website for more information.
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Hope your day is full of sunshine
Joel Lobb Mortgage Loan Officer
American Mortgage Solutions, Inc.
10602 Timberwood Circle
Louisville, KY 40223
Company NMLS ID #1364
Text/call: 502-905-3708
fax: 502-327-9119
email: kentuckyloan@gmail.com
http://www.mylouisvillekentuckymortgage.com/
The view and opinions stated on this website belong solely to the authors, and are intended for informational purposes only. The posted information does not guarantee approval, nor does it comprise full underwriting guidelines. This does not represent being part of a government agency. The views expressed on this post are mine and do not necessarily reflect the view of my employer. Not all products or services mentioned on this site may fit all people.
NMLS ID# 57916, (www.nmlsconsumeraccess.org).
Kentucky First-Time Homebuyer Loan Programs for FHA, VA, KHC and USDA Mortgage Loans in Kentucky 