2026 Kentucky Home Loan Programs
Loan Limits, Income Limits & Eligibility Guidelines
Kentucky Housing Loan (KHC) with Down Payment Assistance
The Kentucky Housing loan administered through the Kentucky Housing Corporation remains one of the most popular options for Kentucky first-time and repeat homebuyers who need help with upfront costs.
2026 Highlights
- Down Payment Assistance: Up to $10,000–$12,500 (subject to program cycle and funding availability)
- Purchase Price Limit: $544,232 statewide (changes annually)
- Interest Rate: 30-year fixed-rate mortgage
- Minimum Credit Score: 620
- Available: Statewide across Kentucky
- Household Income Limits: Vary by county and household size; generally up to approximately $157,000 based on family composition
- Down Payment Assistance Structure: 10-year or 15-year repayable second mortgage at 3.75% to 4.75% APR (rates subject to change)
Required Waiting Periods
Chapter 7 Bankruptcy: 2 years from discharge
Foreclosure: 3 years from discharge
Foreclosure: 3 years from discharge
Best For: Buyers who have stable income, moderate credit scores, and limited savings but don't qualify for zero-down programs.
Welcome Home Grant Update: The Federal Home Loan Bank of Cincinnati's Welcome Home Grant program is expected to return in March 2026. Official details will be announced early in 2026. These grants fund quickly on a first-come, first-served basis.
USDA Rural Housing Loan (100% Financing)
The USDA loan is backed by the United States Department of Agriculture and allows qualified buyers to purchase homes with no down payment in eligible rural and suburban areas of Kentucky.
2026 Highlights
- Down Payment: No down payment required (100% financing available)
- Interest Rate: 30-year fixed-rate mortgage
- Property Location: Must be in an eligible USDA-designated rural area
- Income Limits: Household income must not exceed 115% of the area median income; limits vary by county and household size
- General Range: Approximately $115,000–$160,000 depending on county and family size
- Example: 1-4 person household: ~$115,000–$120,000; 5+ person household: ~$152,000–$160,000
- Loan Limits: No maximum loan amount; qualification based on debt-to-income ratios and ability to repay
- Minimum Credit Score: Most lenders require 620–640; USDA has no official minimum
- Mortgage Insurance: Annual fee (approximately 0.35%) included in monthly payment
Required Waiting Periods
Chapter 7 Bankruptcy: 3 years from discharge
Chapter 13 Bankruptcy: May qualify if 12+ months of on-time payments made and court permission obtained
Foreclosure: 3 years from discharge
Chapter 13 Bankruptcy: May qualify if 12+ months of on-time payments made and court permission obtained
Foreclosure: 3 years from discharge
Best For: Buyers outside major metro areas with low-to-moderate income who meet eligibility requirements and want zero-down financing.
Important Note: Many areas throughout Kentucky qualify for USDA loans, including suburban locations just outside Louisville and Lexington. Use the USDA's interactive eligibility map to verify property qualification.
FHA Loan in Kentucky
FHA loans are insured by the Federal Housing Administration and are known for flexible credit guidelines and broad eligibility across the state.
2026 Highlights
- Down Payment: Minimum 3.5% with a credit score of 580 or higher
- Credit scores below 580 may require 10% down (lender availability limited)
- Household Income Limits: No income limits (millionaires can apply if they meet other qualification criteria)
- No Geographic Restrictions: Available statewide in Kentucky
- 2026 Loan Limit (Most Counties): Approximately $541,287 baseline for single-family homes
- Jefferson County (Louisville): $472,030 for single-family
- County-Specific Limits: Vary based on median home prices; confirm with lender for your county
- 30-Year Fixed-Rate Mortgage: Standard loan term
- Mortgage Insurance: Upfront premium (1.75% of loan amount) and annual premium required (0.45%–1.05%)
- Minimum Credit Score: 500 with 10% down; 580 with 3.5% down
Required Waiting Periods
Chapter 7 Bankruptcy: 2 years from discharge
Chapter 13 Bankruptcy: May qualify with court approval after 12 months of on-time payments
Foreclosure: 3 years from discharge
Chapter 13 Bankruptcy: May qualify with court approval after 12 months of on-time payments
Foreclosure: 3 years from discharge
Best For: Buyers rebuilding credit, transitioning from renting, or with limited savings who want flexible qualification standards.
Conventional Loan (Fannie Mae / Freddie Mac)
Conventional loans are not government-insured and generally offer the best long-term flexibility for borrowers with stronger credit profiles.
2026 Highlights
- Down Payment: Typically 3%–5%; can be as low as 3% with lender approval
- 2026 Conforming Loan Limit (Baseline): $832,750 for one-unit properties nationwide (3.26% increase from 2025)
- Kentucky-Specific Limits: Vary by county based on median home prices
- Jefferson County (Louisville): $726,200
- High-cost areas may have higher limits; check your county
- Credit Score: Best pricing with scores above 700; 620+ may qualify with adjusted pricing
- Household Income Limits: No income limits
- Interest Rate: 30-year fixed-rate mortgage (standard)
- Private Mortgage Insurance (PMI): Required with less than 20% down; removable once equity reaches 20%
- Available: Statewide, no geographic restrictions
Required Waiting Periods
Chapter 7 Bankruptcy: 4 years from discharge
Chapter 13 Bankruptcy: 4 years from discharge
Foreclosure: 3 years from discharge (varies by lender)
Chapter 13 Bankruptcy: 4 years from discharge
Foreclosure: 3 years from discharge (varies by lender)
Best For: Buyers with higher credit scores and stronger finances who want lower long-term costs and greater flexibility.
VA Loan for Kentucky Veterans
VA loans are guaranteed by the U.S. Department of Veterans Affairs and are among the strongest mortgage options available for eligible borrowers.
2026 Highlights
- Down Payment: No down payment required
- Monthly Mortgage Insurance: None (VA guarantee eliminates need for mortgage insurance)
- Interest Rate: Competitive 30-year fixed-rate mortgages
- Household Income Limits: None; veterans with sufficient entitlement can borrow regardless of income
- Purchase Price Limits: No limits (subject to VA entitlement and lender approval)
- Available: No geographic restrictions; available statewide
- Certificate of Eligibility: Required to apply; obtained from VA website or through lender
- Minimum Credit Score: No official minimum; most lenders prefer 580–620
- VA Funding Fee: One-time upfront fee (typically 1.25%–3.3% depending on military status); can be rolled into loan amount
Required Waiting Periods
Chapter 7 Bankruptcy: 2 years from discharge
Foreclosure: 2 years from discharge
Foreclosure: 2 years from discharge
Best For: Veterans, active-duty service members, and eligible family members seeking zero-down financing with the lowest long-term costs and no mortgage insurance.
Summary Comparison: 2026 Loan Limits & Income Maximums
| Program | Down Payment | Loan Limit | Income Limit | Credit Score | Mortgage Insurance |
|---|---|---|---|---|---|
| KHC | $0–5% | $544,232 | (varies by county) | 620 | Included in loan |
| USDA | 0% | No maximum | 115% area median (~$115,000–$160,000) | None official (620–640 typical) | Annual fee included |
| FHA | 3.5%–10% | ~$541,287 (varies by state) | No limit | 500–580 | Required (1.75% + annual) |
| Conventional | 3%–5% | $832,750 (baseline) | No limit | 620+ (760+ for best rates) | Required if <20% down |
| VA | 0% | No limit | No limit | None official (580–620 typical) | None |
2026 Important Updates
- FHA Loan Limits: Increased 3.26% due to continued home price appreciation
- Conventional/Fannie Mae Limits: Increased $26,250 to baseline $832,750
- KHC Purchase Price Limit: Remains at $544,232; down payment assistance up to $12,500 in some cycles
- USDA Income Limits: Updated annually; verify current limits by county on USDA website
- Welcome Home Grant: Expected return in March 2026 (details TBA)
Next Steps: Get Pre-Approved Today
Every borrower's situation is unique. Program rules change, rates fluctuate daily, and the best loan depends on your exact credit, income, property location, and goals.
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