The state of Kentucky administers down payment and closing cost assistance programs through their own Kentucky Housing Corporation (KHC). The Corporation recognizes that down payment and closing costs are a major impediment to the dream of many people to owning their own home. For this reason, the programs are set up as follows:
There are two Kentucky down payment assistance programs, Regular DAP and Affordable DAP. Both of these programs may be applied for through a KHC-approved lender.
Regular DAP is for those KHC first-mortgage loan recipients for a home with a purchase price of up to $ 243,000. DAP loans are paid in incriments of $100 up to a total of $6,000. These loans are repaid over a 10-year period at 5.50 percent.
The other program is the Affordable DAP, which is also for homes up to a $ 243,000 purchase price. Assistance provided in this program is up to $ 4,500. These loans are repaid over a 10-year period at 1.00 percent. Borrowers who are seeking assistance under the affordable DAP program must meet income limits as defined by the KHC.
It is important to understand prior to applying for these programs that there is no liquid asset review and no limit on reserves to qualify for this program. This program also requires that credit reporting rules apply and down payment rules apply.
The KHC also administers programs developed for homeowners with special housing needs such as the homeless and the handicapped. These so-called SHR programs are offered to encourage these special needs populations to apply for homes of their own. These programs began in 1972 in order to meet the needs of these growing populations. These “hardest to serve” populations can apply for these programs in a similar manner as other KHC programs. Other qualification standards apply.
Below is a list of Kentucky Down Payment Assistance Programs:
No Down Payment Mortgages – mortgages that require no down payment
USDA Rural Loan – the purpose of the Single Family Housing Direct Home Loan is to assist low- and very-low-income applicants obtain decent, safe and sanitary housing in eligible rural areas by providing payment assistance to increase an applicant’s repayment ability. There is no down payment. Payment assistance is a type of subsidy that reduces the mortgage payment for a short time. The amount of assistance is determined by the adjusted family income.
VA Home Loan – VA helps Service members, Veterans, and eligible surviving spouses become homeowners. As part of our mission to serve you, we provide a home loan guaranty benefit and other housing-related programs to help you buy, build, repair, retain, or adapt a home for your own personal occupancy. There is no down payment as long as the sales price doesn’t exceed the appraised value.
Low Down Payment Mortgages – mortgages that require up to 3.5% down payment
FHA Mortgage Loan – the purpose of the FHA Home Mortgage Loan is to provide mortgage insurance for a person to purchase or refinance a principal residence. The mortgage loan is funded by a lending institution, such as a mortgage company, bank, savings and loan association and the mortgage is insured by HUD. A down payment of just 3.5 percent is required and may consist entirely from “gift funds.” The credit score requirement is 580.
Home Possible® Advantage Mortgage – the purpose of the Home Possible® Advantage mortgage by Freddie Mac is to offer low down payments for low- to moderate-income homebuyers or buyers in high-cost or underserved communities. Down Payment can come from a variety of sources, including friends and family, employer-assistance programs and secondary financing.
The HomeReady™ Mortgage – the purpose of the HomeReady™ mortgage by Fannie Mae is to provide flexibility for applicants buy home with down payments as low as 3%, below market mortgage rates, co-borrower flexibility, additional income sources and reduced mortgage insurance costs.
Kentucky Down Payment Assistance Programs
MRB Loan Program This Kentucky down payment program is for first time home buyers who meet annual income guidelines for their county and family size and purchase a principal residences for less than $265,000 are eligible for a 30 year, fixed rate mortgage. Under the MRB umbrella, Kentucky offers several loan options: the Conventional No Mortgage Insurance Program (minimum credit score of 680, 3 percent Kentucky down and no MI, no Kentucky borrower contribution necessary, and can be paired with Kentucky down payment assistance), Conventional with MI (only difference is MI is required), and FHA, VA and RHS loans (minimum credit score of 640 and can be paired with Kentucky down payment assistance).
The US Department of Housing and Urban Development (HUD) offers the following programs:
The Good Neighbor Next Door Program was created by U.S. Department of Housing and Urban Development (HUD) to help law enforcement officers, pre-Kindergarten through 12th grade teachers, firefighters and emergency medical technicians buy homes. The biggest benefit of the Good Neighbor Next Door Program is the 50% discount of the home’s list price. The only catch is that the home owner must commit to live in the property for 36 months as their sole residence.
To learn more about the Good Neighbor Next Door Program, click here.
The Section 184 Indian Home Loan Guarantee Program is a mortgage for American Indian and Alaska Native families, Alaska villages, tribes, or tribally designated housing entities. In 1992 Congress created this program to help Native American Communities with homeownership.
Section 184 loans helps borrowers buy homes with a low down payment and flexible underwriting. Moreover, the loan does not need to be used only on properties on native lands. Purchase of an existing home for single-family residences. Also allowed are new construction, rehabilitation, and refinance.
To learn more about Section 184, click here.
Kentucky Housing Agencies
Kentucky housing agencies are your best resource for down payment assistance programs. Through funding from HUD, the purpose of these agencies is to ensure that affordable housing is available for everyone.
- Cynthiana Housing Authority
- Housing Authority of Danville
- Floyd County Housing Authority
- Housing Authority of Covington
- Glasgow Community Housing Authority
- Housing Authority of Louisville
- Housing Authority of Pikeville
- Kentucky Housing Authority
- Kentucky Housing Association
- Lyon County Housing Authority
- Newport Housing Authority
- Housing Authority of Murray
- Kentucky Housing Corporation