Kentucky First-Time Homebuyers: 2022 Programs and Grants
Purchasing a home in Kentucky is a significant achievement, but the process can be lengthy. Several factors, such as your financial state, market conditions, and the local economy, might influence how long it takes you to find a home as well as how much it costs. According to Redfin, the average listing price for a home in Kentucky in March 2022 was $240,000.00. This was an 11.6% gain year over year.
First-time homebuyer loans in Kentucky
You can acquire a conventional loan with a low-interest rate if you’re a first-time homebuyer in Kentucky with a 20% down payment. Furthermore, you will never be required to pay for private mortgage insurance (PMI). Using one of these low-down-payment mortgage options, borrowers can often get into a new home with as little as 3% or even 0% down:
- Conventional 97: Backed by Freddie Mac or Fannie Mae. 3% down payment and 620 minimum credit score. After a few years, you should be able to stop paying mortgage insurance.
- FHA loan: Backed by the Federal Housing Administration. 3.5% down and a 580 minimum credit score. Until you refinance to a different type of mortgage, relocate, or pay off your debt, you’ll be responsible for mortgage insurance.
- VA loan: Only for veterans and service members. Zero down payment is required. The minimum credit score varies by lender, but it is often around 620. After the closing, no more mortgage insurance is required. If you have a history of military service, you should examine your eligibility for one of these mortgages.
- USDA loan: Buying in specified rural areas available to persons with low-to-moderate incomes. There is no deposit necessary. The minimum credit score required varies by lender, but it is often 640. Mortgage insurance rates are low.
- Kentucky Housing Corp. loans: Special mortgages, sometimes with down payment assistance. Also, mortgage credit certificates can reduce your annual, federal tax bill.
First-time homebuyer programs
The Kentucky Housing Corporation (KHC) offers a number of mortgage help services. Although these programs are based on normal lending programs, KHC has its own set of minimal requirements:
- Conforming (conventional) loans: 3% down payment, 660 minimum credit score
- FHA loans: 3.5% down, a minimum credit score of 620
- VA loans: Zero down payment, 620 min. score. Only for veterans, service members, and closely related groups
- USDA (Rural Housing Service) loans: Zero down payment, 620 min. score. Only for housing in designated rural locations
Kentucky Housing Corporation (KHC) also has two programs to assist low-income families in building, repairing, and rehabilitating their houses in order to increase the supply of habitable, safe, and affordable housing options across the state.
The Louisville Metro Down Payment Assistance Program assists low- to moderate-income homeowners in the Louisville Metro area with down payment and closing cost assistance. The funds are not limited to first-time homeowners and can be used to purchase an existing or newly constructed house. The Down Payment Assistance comes in the form of a partially repaid loan with no interest. Depending on the amount of help received, homebuyers must inhabit the purchased house as their principal residence for a period of 5 – 15 years. 50% of the debt must be forgiven by the end of the stated period. The remaining balance will not be due until the residence is sold. The maximum amount of help per homebuyer will be no more than 20% of the purchase price, however, this can vary depending on the buyer’s needs. Clients of Section 8 Homeownership are urged to apply.
Lexington-Fayette Urban County Government (LFUCG) provides non-repayable mortgage subsidies and 0% – 2% loans to lower to moderate-income Kentucky first-time homebuyers through REACH and Lexington Habitat for Humanity. Recipients must live in Lexington and be in the process of purchasing a property there.
Grants for first-time homebuyers
Unlike many other states’ housing agencies, the Kentucky Housing Corporation does not offer Kentucky First-Time Homebuyers grants or forgiving loans to those who apply for its down payment aid program. Instead, you get a 10-year second mortgage with interest that you must repay. You can take out a loan of up to $7,500.00. The majority of borrowers pay 3.75 percent interest. If you have a low income, you may qualify for a 1% rate.