Down Payment Assistance
Down Payment Assistance in Kentucky (2026)
Kentucky homebuyers can access up to $12,500 in down payment assistance through the Kentucky Housing Corporation (KHC). On the state's $216,500 median home price, that covers roughly 29% of a standard 20% down payment. Kentucky has 2 state DPA programs total.
New to this? Quick definitions
- DPA —
- down payment assistance. Money — as a grant or loan — that helps cover the upfront cash you'd otherwise need to buy a home.
- Grant vs. loan —
- a grant is money you never repay. A loan (forgivable, deferred, or repayable) can come with strings attached, even at 0% interest.
- Forgivable loan —
- the balance is wiped out over time if you stay in the home — but it's still a real loan until then, and selling or refinancing early can trigger repayment.
- Deferred loan (silent second) —
- a second loan on your home with no monthly payments, often called a "silent second" because you won't notice it until you sell, refinance, or pay off your first mortgage — that's when it comes due.
- AMI —
- Area Median Income. The midpoint household income for your county, used to set eligibility — programs list limits as a percentage of AMI (e.g. 80% of AMI).
- Income limit —
- the maximum household income you can earn and still qualify, based on where you live and how many people are in your household.
- Purchase price cap —
- the maximum home price a program will help you buy — homes priced above the cap don't qualify, even if your income does.
Do you likely qualify?
The KHC Down Payment Assistance caps the home purchase price at $566,354 — check that cap against homes you're considering, and the county income limit below.
Primary Program: KHC Down Payment Assistance
maximum assistance
A low-interest second loan on your home (on top of your main mortgage) with its own monthly payments over a set term.
- Administering Agency
- Kentucky Housing Corporation (KHC)
- Purchase Price Cap
- $566,354
Additional Kentucky DPA Programs
KHC Shared Appreciation Mortgage (SAM)
Shared Appreciation LoanShared appreciation loan — the state receives a proportional share of your home's appreciation when you sell or refinance, in exchange for no monthly payments now.
Apply / Learn MoreHow Down Payment Assistance Works
Most state DPA programs are layered on top of a first mortgage — you apply through an approved lender who originates both the primary loan and the DPA second lien at the same closing. The DPA funds reduce the cash you need upfront.
Grants
Free money — no repayment ever. Typically the smallest amounts but highest value.
Forgivable Loans
Balance forgiven after a set period (usually 3–15 years) if you stay in the home. Selling early triggers repayment.
Deferred Loans
No monthly payments. Balance due when you sell, refinance, or pay off your mortgage.
Mistakes first-time buyers make
- Assuming you don't qualify without actually checking the income limit for your county and household size.
- Treating a "forgivable" loan as free money — it can still come due in full if you sell or refinance before the forgiveness term ends.
- Stacking programs incorrectly, or assuming state and local programs combine automatically without confirming with your lender.
- Skipping the required homebuyer education course, which can delay or disqualify your application at closing.
Pro tips
- Talk to a HUD-approved housing counselor first — it's free and they know every program you may qualify for, not just the state's.
- Apply for mortgage pre-approval alongside your DPA program application; most DPA funds are disbursed through an approved lender at the same closing.
- Check local city and county programs in addition to the state program above — many are stackable and cover different costs.
- Ask exactly what triggers repayment on any loan-based assistance before you sign, not after.
Down Payment Calculator
Down Payment Planner
Kentucky median pre-loaded
Your Savings Plan
Timeline
7.3 yrs
saving $500/mo
No PMI at 20% down
20% or more avoids private mortgage insurance entirely.
Estimate only — does not include investment returns on savings.
Full Calculator →Kentucky Assistance Programs, Term by Term
Kentucky Housing Corporation (KHC)
KHC Down Payment Assistance (DPA / Regular DAP)
amortizing second (Kentucky Housing Corporation, retrieved 2026-09-14)
- Assistance
- up to $12,500 toward down payment and closing costs, in $100 increments (minimum $1,000 per the June 13, 2026 program guide); KHC FAQ describes the $12,500 as 'temporarily increased'
- Repayment
- Repayable at 4.75% fixed interest rate amortized over a 15-year term (monthly second-mortgage payment); may be paid off at any time without penalty; not assumable
- Income limit
- Follows the first-mortgage program's limits (Secondary Market or MRB/MCC). KHC's most common program (Secondary Market) limits range from $152,775 to $192,325 by county (Secondary Market grid effective September 1, 2026); MRB limits vary by county and household size (1-2 / 3+ persons)
- Purchase price limit
- $566,354 (Secondary Market and MRB, effective May 18, 2026)
- First-time buyer rule
- No — DPA available to first-time and repeat buyers (MRB first mortgages require first-time buyer status outside targeted areas)
- Minimum credit score
- 620 for FHA, VA and USDA/RHS first mortgages; 660 for Fannie Mae / Freddie Mac conventional
- Homebuyer education
- Not required by KHC for DAP (KHC has no homebuyer-education overlay; follow agency guidelines per loan type)
- First mortgage it pairs with
- KHC first mortgages only: FHA, RHS (USDA), VA, Fannie Mae HFA Preferred, HFA Preferred Plus 80, and Freddie Mac HFA Advantage
KHC Shared Appreciation Mortgage (SAM)
deferred second (Kentucky Housing Corporation, retrieved 2026-09-14)
- Assistance
- up to 25% of the home's purchase price or appraised value
- Repayment
- Zero interest, deferred-payment second mortgage; on sale, refinance, first-mortgage payoff or another maturity event the borrower repays the original SAM amount plus a share of appreciation equal to the SAM percentage; if no appreciation, only the principal is repaid
- Income limit
- Income limits apply (amounts not stated on the SAM page; KHC guides housed in AllRegs)
- First-time buyer rule
- Yes — first-time homebuyers and new construction only
- Homebuyer education
- Required homebuyer education course (eHome America, $35 cost to the homebuyer)
- First mortgage it pairs with
- KHC first mortgage through a SAM-approved lender; cannot be combined with KHC DPA
What the Assistance Does on a $216,500 Kentucky Home
A worked example at Kentucky's median home price (Zillow Home Value Index, April 2026), using the same payment model as the Kentucky salary page: a 7.03% 30-year fixed rate (Freddie Mac PMMS, week of September 24, 2026), PMI from the National MI rate card on the 10%-down case, the state's effective property-tax rate and homeowners premium, and principal, interest, tax and insurance held to 28% of gross income.
How much of the down payment it covers
A 10% down payment on a $216,500 home is $21,650, and 20% is $43,300. The $12,500 KHC Down Payment Assistance maximum covers 58% of the first and 29% of the second, leaving $9,150 of a 10% down payment to come from savings, before any closing costs.
What repaying it adds to the payment
Repaid at 4.75% over 15 years, the full $12,500 costs $97 a month and $5,001 in interest over the term. (Kentucky Housing Corporation, retrieved 2026-09-14) The lender counts that payment alongside the first mortgage, so at a 28% housing ratio it raises the income needed by about $4,167 a year.
Whether a household under the income limit can carry it
Carrying the median home takes $62,486 a year with 20% down, or $71,914 with 10% down and PMI. The first-mortgage income limit at Kentucky Housing Corporation (KHC) varies; the tightest case is $152,775 — the lowest county limit in KHC's most common program. (Kentucky Housing Corporation, retrieved 2026-09-21) A household at that limit clears both figures, so the median home sits inside the programme's range: incomes from $71,914 up to $152,775 can carry it with 10% down. At exactly $152,775, the same model supports a price of about $567,243, but the $566,354 purchase-price limit stops the programme first, so for a household near the income limit the price limit, not income, is what binds.
The First Mortgage and Closing Taxes This Assistance Has to Cover in Kentucky
Real Estate Transfer Tax
Kentucky imposes a transfer tax on the grantor (seller) of $0.50 per $500 of value (0.1%), collected by the county clerk when the deed is recorded. A separate flat $4 state tax also applies to each conveyance of real property (KRS 142.010). (KRS 142.050). (Kentucky Legislative Research Commission, retrieved 2026-09-14) Under that schedule a $216,500 sale owes $217, which the statute puts on the seller.
State tax on legal processes and instruments (mortgage)
Kentucky charges a flat $4 state tax on each recorded mortgage (not based on loan amount), collected by the county clerk along with recording fees. (KRS 142.010(1)(c)). (Kentucky Legislative Research Commission, retrieved 2026-09-14)
Recording fees
Statewide county clerk fees (KRS 64.012): deed and similar instruments $33.00 if not exceeding 5 pages, plus $3.00 each additional page; real estate mortgage $63.00 if not exceeding 30 pages, plus $3.00 each additional page. The $4 state tax under KRS 142.010 is charged in addition. (Kentucky Legislative Research Commission, retrieved 2026-09-14)
Kentucky Housing Corporation (KHC): KHC 30-year fixed-rate first mortgages (Conventional, FHA, VA, RHS; FHA/VA/RHS available as Mortgage Revenue Bond loans)
KHC 30-year fixed-rate first mortgages (Conventional, FHA, VA, RHS; FHA/VA/RHS available as Mortgage Revenue Bond loans) is the first-mortgage programme run by Kentucky Housing Corporation (KHC). (Kentucky Housing Corporation, retrieved 2026-09-14) Its purchase-price limit is $566,354 (all KHC loan programs), so a $216,500 home is within it. (Kentucky Housing Corporation, retrieved 2026-09-21) Income limits: KHC's most common program (Secondary Market): $152,775 to $192,325 depending on county; other programs vary by program and county. (Kentucky Housing Corporation, retrieved 2026-09-21) Down payment help comes through KHC Down Payment Assistance (DPA): Loan up to $12,500 (in $100 increments), repayable over a 15-year term as a secondary loan; available to all KHC first-mortgage recipients. (Kentucky Housing Corporation, retrieved 2026-09-14) Minimum credit score: 620. (Kentucky Housing Corporation, retrieved 2026-09-14)
Frequently Asked Questions
What down payment assistance is available in Kentucky?
Kentucky's primary DPA program is the KHC Down Payment Assistance, administered by the Kentucky Housing Corporation (KHC). It provides up to $12,500 as a repayable loan. A low-interest second loan on your home (on top of your main mortgage) with its own monthly payments over a set term. Additional programs include KHC Shared Appreciation Mortgage (SAM).
How much down payment do I need in Kentucky after using DPA?
On a $216,500 home (Kentucky median), a 20% down payment is $43,300. With the KHC Down Payment Assistance covering $12,500, your remaining gap would be $30,800. Many buyers combine DPA with a 3–5% conventional or FHA loan to reduce their cash needed further.
Do I have to repay Kentucky down payment assistance?
A low-interest second loan on your home (on top of your main mortgage) with its own monthly payments over a set term.
Can I combine Kentucky DPA with other assistance programs?
Kentucky's state DPA may have restrictions on combining with other assistance programs. Verify stacking rules with an approved lender before applying.
What are the income limits for Kentucky down payment assistance?
The KHC Down Payment Assistance does not publish its income limit as a single percentage of AMI; limits are set in dollars by county and household size. Check the Kentucky Housing Corporation (KHC) website for current limits in your area.
Related Calculators
Home Affordability Calculator
See how much home you can afford in Kentucky
PMI Calculator
Estimate private mortgage insurance on lower down payments
Kentucky First-Time Buyer Programs
State mortgage programs with low rates and low down payments
Mortgage Payments by Price
See full PITI costs for 8 home prices in Kentucky, from $200K to $750K
What to do next
Down payment assistance is one piece of the puzzle. Here's where to go depending on where you are in the process.
Not sure if you qualify?
Check the Kentucky Housing Corporation (KHC) income limits above before ruling yourself out — many buyers qualify without realizing it.
Want the full true cost picture?
DPA covers the down payment, not your ongoing costs. See the true cost of owning a home in Kentucky for the full monthly picture.
Ready to apply?
Most DPA funds are disbursed through an approved lender at closing — get pre-approved and ask specifically about KHC Down Payment Assistance when you apply.