The best Kentucky first-time homebuyer programs in Kentucky

Top Loan Programs for First-Time Homebuyers in Kentucky FHA, VA, USDA and KHC Down Payment Grants

Provided By

Joel Lobb, Mortgage Broker FHA, VA, KHC, USDA

 Buying your first home in Kentucky can be both exciting and overwhelming. With the right loan programs and financial assistance, homeownership is more achievable than ever. Whether you need low down payment options, credit flexibility, or down payment assistance, there are Kentucky first-time home buyer programs designed to help.

In this guide, we’ll cover FHA, VA, USDA, Kentucky Housing Corporation (KHC), and down payment assistance programs to help you make the best decision.

Kentucky First-Time Home Buyer Loan Programs

1. FHA Loans – Low Down Payment, Credit-Friendly

Best for: Buyers with lower credit scores or limited savings

Minimum Credit Score: 580 (3.5% down), 500 (10% down)
Debt-to-Income (DTI) Ratio: Up to 57% with compensating factors
Mortgage Insurance: Required for the life of the loan
Down Payment Assistance Available: Yes
Why Choose an FHA Loan?
FHA loans are perfect for first-time home buyers in Kentucky who may not have a perfect credit history or large down payment. These loans are insured by the government, making them easier to qualify for.

2. VA Loans – No Down Payment for Military Buyers

Best for: Veterans, active-duty service members, and eligible spouses

Minimum Credit Score: 580-620 (varies by lender)
Down Payment: $0 down payment required
Mortgage Insurance: None (No PMI)
Debt-to-Income Ratio: Up to 50%+ with strong credit

Why Choose a VA Loan?

VA loans provide 100% financing, meaning no down payment is required. They also have lower interest rates and no private mortgage insurance (PMI), making them one of the best loan programs for Kentucky first-time homebuyers who qualify.

3. USDA Loans – 100% Financing for Rural Buyers

Best for: Buyers looking in USDA-eligible rural or suburban areas

Minimum Credit Score: 640 preferred
Down Payment: $0 down payment required
Income Limits: 115% of the area’s median income
Location Restrictions: Must be in a USDA-eligible area

Why Choose a USDA Loan?

If you’re looking to buy in a qualifying rural area, a USDA loan offers 100% financing, meaning no down payment is needed. It’s a great option for buyers with limited savings.

4. Kentucky Housing Corporation (KHC) Loans – Down Payment Assistance

Best for: First-time buyers needing down payment and closing cost help

Minimum Credit Score: 620+
Down Payment Assistance: Up to $10,000
Income Limits: Varies by county

Key Factors for Kentucky First-Time Home Buyers in 2025

1. Credit Scores: The Gateway to Mortgage Approval

Your credit score determines loan eligibility and interest rates. Here’s what you need:

Minimum Scores:

FHA Loans: 580+ (3.5% down) or 500–579 (10% down).

Conventional Loans: 620+.

Improving Your Score: Pay down debt, dispute errors, and avoid new credit lines. Learn how to boost your credit score here (internal link).

2. Down Payments: How Much Do You Really Need?

Kentucky Average Down Payment: 6–10% (

–
13,500–22,500 on a $225k home).

Low Down Payment Options:

FHA Loan: 3.5% down.

USDA Loan: 0% down (rural areas).

KHC Down Payment Assistance: Up to $10,000 for eligible buyers. Explore Kentucky Housing Corporation (KHC) programs (external link).

3. 2025 Interest Rate Trends in Kentucky

Average rates are projected at 6.2–7.5% (Freddie Mac, 2024). Lock in lower rates by improving your credit score and shopping lenders.

4. Income Ratios: What Lenders Look For

Most lenders use the 28/36 rule:

28% of gross income on housing costs.

36% on total debt.

5. Kentucky Home Prices: Where to Buy

Louisville: $250k median.

Lexington: $275k median.

Rural Areas: As low as $150k.

Joel Lobb, Kentucky Mortgage Expert on FHA, VA, USDA and KHC
Joel Lobb, Mortgage Broker FHA, VA, KHC, USDA

+1 502-905-3708
kentuckyloan@gmail.com

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How to Qualify For A Kentucky Mortgage Loan

Legal Disclaimer:

 

1 -  Email - kentuckyloan@gmail.com 

2.   Call/Text - 502-905-3708

Joel Lobb
Mortgage Loan Officer - Expert on Kentucky Mortgage Loans

 Website: www.mylouisvillekentuckymortgage.com
 Address: 911 Barret Ave., Louisville, KY 40204

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Evo Mortgage
Company NMLS# 1738461
Personal NMLS# 57916

For assistance with Kentucky mortgage loans, reach out via email, call, or text Joel Lobb directly.

Kentucky Local Home Loan Lender Services

 First-Time Home Buyers Welcome
 FHA, Rural Housing (USDA), VA, and Kentucky Housing Corporation (KHC) Loans
 Conventional Loan Options Available
 Fast Local Decision-Making
 Experienced Guidance Through the Home Buying Process

If you are an individual with disabilities who needs accommodation, or you are having difficulty using our website to apply for a loan, please contact us at 502-905-3708.

Disclaimer: No statement on this site is a commitment to make a loan. Loans are subject to borrower qualifications, including income, property evaluation, sufficient equity in the home to meet Loan-to-Value requirements, and final credit approval. Approvals are subject to underwriting guidelines, interest rates, and program guidelines and are subject to change without notice based on applicant's eligibility and market conditions. Refinancing an existing loan may result in total finance charges being higher over the life of a loan. Reduction in payments may reflect a longer loan term. Terms of any loan may be subject to payment of points and fees by the applicant  Equal Opportunity Lender. NMLS#57916http://www.nmlsconsumeraccess.org/

Ultimate Guide for Kentucky First-Time Homebuyers: Steps, Loan Programs & How to Apply

 

Introduction: How to Buy Your First Home in Kentucky

Are you a first-time homebuyer in Kentucky looking to purchase your dream home? Buying a house is one of the biggest financial decisions you'll ever make. Understanding the steps involved can help you feel confident throughout the process.

• In this guide, we'll cover:

•  How much house you can afford
•  Loan programs for first-time homebuyers in Kentucky
•  Credit score requirements
•  Down payment & closing costs
•  Mortgage pre-approval process
•  Required documents & how to apply

By the end of this article, you'll have a clear roadway to homeownership in Kentucky!

Step 1: Determine How Much House You Can Afford

One of the first steps to buying a home is understanding your budget. Mortgage lenders suggest you should consider a price range. It is recommended not to buy a home that exceeds 30% to 45% of your gross monthly income. For instance, if you earn $3000 gross a month, your maximum house payment should be about $1350 a month. This includes PITI.

Use a mortgage calculator to estimate your monthly payment, including property taxes, homeowners insurance, and mortgage insurance.

- Kentucky Mortgage Calculator

Kentucky Mortgage Calculator

Home Price ($): Down Payment ($): Interest Rate (%): Loan Term (years): Annual Property Taxes ($): Annual Homeowners Insurance ($): PMI Rate (%): Monthly HOA Fees ($):

Step 2: Check Your Credit Score

Your credit score plays a crucial role in determining your mortgage eligibility and interest rate. The mortgage scores used by lenders are different than the ones usually seen for borrowers. Be aware of this.

Here’s how you can improve your score before applying

Step 2: Check Your Credit Score

Your credit score plays a crucial role in determining your mortgage eligibility and interest rate. Here’s how you can improve your score before applying:

✔️ Pay down credit card balances
✔️ Make all payments on time
✔️ Avoid applying for new credit cards or loans
✔️ Don’t make big purchases before getting approved
✔️ If possible, avoid changing jobs before closing on your home

Pull your own credit report from www.annualcreditreport.com to see what is on your credit report from Experian, Equifax, and Transunion. You will not be able to get your mortgage fico scores but you can see what creditors are reporting before you apply to correct any errors

The credit scores used by mortgage lenders are different than what the consumers see, so be aware of that.

We can pull your fico mortgage scores for free, no costs to you, as far as the application process. If you want to obtain your own mortgage fico scores

While the FICO^® 8 model is the most widely used scoring model for general lending decisions, banks use the following FICO scores when you apply for a mortgage:

• FICO^® Score 2 (Experian)
• FICO^® Score 5 (Equifax)
• FICO^® Score 4 (TransUnion)

FICO Scores used for mortgages

Credit Score Requirements for Kentucky First-Time Homebuyers

Step 3: Save for a Down Payment & Closing Costs

How Much Do You Need for a Down Payment?

💰 FHA Loan: 3.5% of the purchase price
💰 Conventional Loan: 3-20% (Varies)
💰 VA & USDA Loans and KHC Down payment Assistance Loans : No down payment required

Other Expenses to Consider

1. Earnest Money Deposit: Shows sellers you’re serious. This is known as a good faith deposit. Typically, it's $500 at the minimum. However, more serious buyers show a bigger commitment by putting down $1000 or more.
2. Closing Costs: Typically 2-5% of the loan amount
3. Home Inspection Costs: $300-$500
4. Appraisal Costs: $550 to $700 range

Step 4: Get Pre-Approved for a Mortgage in Kentucky

🔹 What is Mortgage Pre-Approval?

Being pre-approved means a lender has reviewed your financial information and determined how much you can borrow. This makes you a stronger buyer in the eyes of sellers.

✅ To Get Pre-Approved, You’ll Need the following documents plus more:

• W2’s from the past 2 years for 2023 and 2024
• Last months of pay stubs
• Bank statements (Last 2 months)
• 2 years of tax returns and all schedules
• Divorce decree (if applicable)
• Additional income documents for other income possible
• Looking for stability in the income. Waited over the last two years and the next 3 years.
• Two forms of ID> Driver's License and card

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Step 5: Choose the Right Mortgage Loan in Kentucky

Types of Mortgage Loans Available

Loan Type	Who Qualifies?	Down Payment	Upfront Mortgage Insurance	Monthly Mortgage Insurance	Min. Credit Score
VA Loan	Veterans & eligible service members	None	None	None	580
USDA Loan	Rural homebuyers	None	2% of loan amount (can roll in)	Required	640
FHA Loan	Buyers meeting income/credit limits	3.5%	1.75% of loan amount	Required	580-640
203K Loan	Buyers renovating a home	3.5%	1.75% of loan amount	Required	580-640
Conventional 97	First-time homebuyers	3%	None	Required	620
Select Smart Plus	Buyers meeting lender’s requirements	3-20%	None	Required	620

Step 6: Submit Your Mortgage Application

• Once you’ve chosen the right loan and been pre-approved, you’ll submit a formal mortgage application with your lender.

• The Lender Will Verify:
  ✅ Your credit score and credit bureau-Three scores are pulled from Experian, Equifax and Experian
  ✅ Income & employment history for last two years
  ✅ Bank statements for last two months & tax returns for last two years
  ✅ Property appraisal
• Title search

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Step 7: Close on Your New Home! 🎉

Your loan is approved. All final paperwork is completed. You’ll attend the closing meeting to sign documents and get the keys to your new home!

🏡 Congratulations! You’re now a Kentucky homeowner!

Ready to Buy a Home in Kentucky? Get Expert Help Today!

Buying your first home is a big step, but you don’t have to do it alone. Work with a trusted mortgage broker like Joel Lobb to get expert guidance, personalized loan options, and fast approvals.

📩 Contact Joel Lobb Today for a Free Consultation!

📞 Call or Text: (502) 905-3708
📧 Email: kentuckyloan@gmail.com

🔹 Get Pre-Approved Now & Start House Hunting!

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Final Thoughts

If you're a first-time homebuyer in Kentucky, understanding the steps involved is crucial. Being aware of the loan programs available will help you make a smart financial decision.

1 -  Email - kentuckyloan@gmail.com 2.   Call/Text - 502-905-3708

Joel Lobb
Mortgage Loan Officer - Expert on Kentucky Mortgage Loans

 Website: www.mylouisvillekentuckymortgage.com
 Address: 911 Barret Ave., Louisville, KY 40204

---

Evo Mortgage
Company NMLS# 1738461
Personal NMLS# 57916

For assistance with Kentucky mortgage loans, reach out via email, call, or text Joel Lobb directly.

Kentucky Local Home Loan Lender Services

 First-Time Home Buyers Welcome
 FHA, Rural Housing (USDA), VA, and Kentucky Housing Corporation (KHC) Loans
 Conventional Loan Options Available
 Fast Local Decision-Making
 Experienced Guidance Through the Home Buying Process