Kentucky First-Time Home Buyer Programs 2026: KHC Guide

KHC Programs Overview

The Kentucky Housing Corporation (KHC) is the state housing finance agency, offering first mortgages and down payment assistance through approved lenders statewide.

KHC's first mortgage is available to all buyers within income limits — no first-time requirement. Two DPA options pair with it: the Regular DAP (repayable) and HOME-DPA (forgivable, for lower incomes).

KHC First Mortgage: Competitive Rates for All Buyers

The KHC first mortgage offers 30-year fixed-rate FHA, VA, USDA, and conventional loans at competitive rates through approved lenders. A major advantage: KHC does NOT require first-time buyer status for its standard programs — repeat buyers within income limits can use it.

Minimum credit score is 620-640 depending on loan type. Income limits are approximately $130,000-$160,000 depending on county and household size — among the most generous in the Southeast relative to home prices.

The purchase price limit is around $510,000 statewide — covering virtually every home in Kentucky. See our FHA vs conventional guide for loan-type help.

• 30-year fixed-rate FHA, VA, USDA, or conventional loans
• Competitive interest rates
• No first-time buyer requirement for standard programs
• Minimum 620-640 credit score by loan type
• Income limits ~$130,000-$160,000 by county
• Purchase price limit ~$510,000 statewide

Regular DAP: Up to $10,000 Repayable

The Regular Down-payment Assistance Program (DAP) provides up to $10,000 for down payment and closing costs as a second mortgage repaid in monthly installments over 10 years at a low interest rate (typically 1-3.75%).

On a $220,000 Kentucky home with an FHA loan, $10,000 covers the entire 3.5% down payment ($7,700) plus $2,300 toward closing costs. The monthly payment on the full $10,000 is roughly $90-100.

Because it is a loan, there is no forgiveness period — you simply pay off whatever remains if you sell or refinance early. Best for buyers who need maximum assistance and can handle the small added payment.

• Up to $10,000 for down payment and closing costs
• Repaid monthly over 10 years at ~1-3.75% interest
• About $90-100/month on the maximum amount
• Covers full FHA down payment on most Kentucky homes
• Pairs with KHC first mortgage
• No first-time buyer requirement

HOME-DPA: Forgivable Assistance for Lower Incomes

HOME-DPA provides up to $10,000 as a forgivable second mortgage for households at lower income tiers — typically those earning below 80% of area median income.

The loan is forgiven over a set period of occupancy (typically 5-15 years depending on the amount). Stay through the forgiveness period and you owe nothing — it becomes a true grant.

If your income qualifies for HOME-DPA, always take it over Regular DAP — same amount, but forgivable instead of repayable. Ask your KHC lender to check your eligibility.

• Up to $10,000 as a forgivable second mortgage
• For households below ~80% area median income
• Forgiven over 5-15 years of occupancy
• Stay through forgiveness period = owe nothing
• Same amount as Regular DAP but forgivable
• Ask your lender to check 80% AMI eligibility

KHC Income and Purchase Price Limits 2026

KHC income limits vary by county and household size. Here are the approximate 2026 limits for major Kentucky counties — verify at KYHousing.com.

• Louisville, Lexington, and NKY have the highest limits
• Income limits based on total household income
• Purchase price limit ~$510,000 statewide
• KHC limits are generous relative to Kentucky home prices
• Verify current limits at KYHousing.com

KHC Eligibility Requirements

KHC's standard programs do not require first-time buyer status — any buyer within income limits qualifies. The MCC does require first-time buyer status (no ownership in past 3 years).

Credit score: minimum 620-640 depending on loan type. DTI: maximum 45% for conventional, up to 50% for FHA with automated approval. See our DTI ratio guide for strategies.

Occupancy: primary residence only. Homebuyer education: required for first-time buyers — KHC-approved courses are available online.

• No first-time buyer requirement for standard programs
• MCC requires first-time buyer status
• Credit score: 620-640+ by loan type
• DTI: 45% conventional, up to 50% FHA
• Primary residence only
• Complete KHC-approved homebuyer education
• Must use a KHC-approved lender

How to Apply for KHC Programs

KHC programs are accessed through approved lenders — you cannot apply directly to KHC.

Step 1: Find a KHC-approved lender at KYHousing.com. Step 2: Get pre-approved — the lender verifies credit, income, and program eligibility including HOME-DPA. Step 3: Complete homebuyer education if required. Step 4: Find a home within the purchase price limit. Step 5: Close — DPA funds are delivered at settlement.

• Step 1: Find a KHC-approved lender at KYHousing.com
• Step 2: Get pre-approved and check HOME-DPA eligibility
• Step 3: Complete homebuyer education if required
• Step 4: Shop within the ~$510K purchase price limit
• Step 5: Close — DPA funds delivered at settlement
• Tip: Ask about HOME-DPA if your income is below 80% AMI — it is forgivable

Local Kentucky DPA Programs

Several Kentucky cities offer additional assistance.

• Louisville Metro has the largest local program
• Local programs may stack with KHC — ask your lender
• City programs typically have lower income limits
• Funding cycles open and close — check availability early