First-time home buyer programs in Kentucky: assistance, loans and real costs
Kentucky’s KHC DAP is a repayable loan rather than a grant, so the monthly cost of the assistance (roughly $100 a month on $10,000) should be included in the affordability math from the start. That is the one sentence to keep in mind while reading the programs below.
| State housing agency | Kentucky Housing Corporation (KHC) |
|---|---|
| Median home price (approx.) | $210,000 — statewide order of magnitude; metros differ |
| 3.5% / 5% / 20% down | $7,350 / $10,500 / $42,000 on the median |
| Property tax (effective) | about 0.83% — roughly $1,743 a year on the median |
| Mortgage credit certificate | Yes — mortgage credit certificate offered |
| Transfer tax | Kentucky’s real estate transfer tax is $0.50 per $500 of value (0.1%), paid by the seller. |
State programs for first-time buyers in Kentucky
Kentucky Housing Corporation offers 30-year fixed first mortgages (FHA, VA, USDA, conventional) with two down payment assistance options — the Regular DAP and the Affordable DAP — and a Mortgage Credit Certificate. KHC loans are available to repeat buyers within limits.
Down payment and closing cost assistance
The Regular DAP provides up to $10,000 as a second mortgage repaid over ten years at a low fixed rate; the Affordable DAP, for lower-income buyers, provides up to $10,000 at 1% over ten years. Both can cover down payment and closing costs.
Every assistance dollar comes in one of four shapes — grant, forgivable, deferred or repayable — and the shape decides what it costs you over ten years. Get it in writing before you apply. See how down payment assistance programs work.
The MCC: a federal tax credit for the life of the loan
KHC’s Mortgage Credit Certificate provides a federal tax credit on a portion of annual mortgage interest for the life of the loan, subject to income and purchase price limits and a fee.
Who qualifies: income, price and credit limits
KHC income limits vary by county and program, and a purchase price limit applies statewide; a 620 minimum credit score is typical, and homebuyer education is required for the Affordable DAP.
Transfer taxes and closing costs in Kentucky
Kentucky’s real estate transfer tax is $0.50 per $500 of value (0.1%), paid by the seller.
Kentucky buyer closing costs typically total 2% to 3% of the price; the transfer tax is on the seller, and closings are handled by attorneys or title agencies depending on the region. Our guide to closing costs explains each line of the Loan Estimate and which fees you can shop.
What the payment looks like on a $210,000 home
Take a $210,000 home — roughly the statewide median, though Kentucky’s metros vary widely — and an illustrative 6.5% rate. The table shows the cash down and the monthly principal and interest for the three structures first-time buyers use most, plus the property tax at Kentucky’s approximate 0.83% effective rate ($1,743 a year). Insurance and mortgage insurance come on top.
| Structure | Down payment | Loan amount | P&I at 6.5% (30 yr) | Property tax / mo (est.) |
|---|---|---|---|---|
| FHA, 3.5% down | $7,350 | $202,650 | $1,281 | $145 |
| Conventional, 5% down | $10,500 | $199,500 | $1,261 | $145 |
| Conventional, 20% down (no PMI) | $42,000 | $168,000 | $1,062 | $145 |
Illustrative rate and approximate state figures — not an offer or a quote. Full payment tables cover $150,000 to $800,000 at 5% to 8%; the affordability guide explains how lenders size the loan.
Frequently asked questions
Does Kentucky have down payment assistance for first-time buyers?
The Regular DAP provides up to $10,000 as a second mortgage repaid over ten years at a low fixed rate; the Affordable DAP, for lower-income buyers, provides up to $10,000 at 1% over ten years. The agency publishes the current limits and amounts; a lender approved for the program will know them.
Is there a first-time home buyer tax credit in Kentucky?
KHC’s Mortgage Credit Certificate provides a federal tax credit on a portion of annual mortgage interest for the life of the loan, subject to income and purchase price limits and a fee. MCCs reduce federal income tax owed each year for as long as you keep the loan and live in the home; they are applied for through the lender at purchase.
What are typical closing costs when buying a house in Kentucky?
Kentucky buyer closing costs typically total 2% to 3% of the price; the transfer tax is on the seller, and closings are handled by attorneys or title agencies depending on the region. Kentucky’s real estate transfer tax is $0.50 per $500 of value (0.1%), paid by the seller.
Related guides
- Pre-approval vs pre-qualification: what sellers actually respect
- Closing costs explained: what is negotiable, what is not
- PMI for first-time buyers: what it costs and how to get rid of it
- Gift funds for a down payment: the rules, the letter, the paper trail
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