Kentucky’s KHC pairs its mortgages with a down payment assistance program worth up to $12,500 — and lets you stack a Mortgage Credit Certificate on top for annual tax savings that last the life of the loan.
This guide covers what is actually available to first-time buyers in Kentucky in 2026 — the agency behind these programs, the loans and down payment help on offer, who qualifies, and how to apply. For the wider local picture, see our Kentucky first-time home buyer guide.
The KHC and its home loan programs
Kentucky’s first-time buyer programs are run by the Kentucky Housing Corporation (KHC). Like most housing finance agencies, it does not lend directly — instead it offers below-market first mortgages, bundled with down payment help, through a network of approved local lenders. Its main first-mortgage options are:
- Secondary Market first mortgages — including KHC Conventional Preferred plus FHA, VA, and USDA options
- Mortgage Revenue Bond (MRB) first mortgage — a 30-year fixed loan for primary residences, with a purchase cap around $544,000
Most of these can be built on top of an FHA, VA, or USDA loan, or a conventional loan, depending on the product you pick — and the real value comes when you pair one with the down payment assistance below.
Down payment assistance in Kentucky
Down payment assistance is the heart of what KHC offers, and Kentucky gives buyers more than one way to get it. KHC offers two down payment options, a larger repayable one and a lower-cost income-restricted one.
- Regular DAP — repayable second (15-year term), up to $12,500, in $100 increments, available to KHC first-mortgage borrowers within limits.
- Affordable DAP — deferred second (income-restricted), a lower-cost option for lower-income buyers (amount varies — verify with KHC).
If those terms are unfamiliar, our national guide to down payment assistance explains exactly how grants, forgivable second mortgages, and deferred loans differ — and what each one means when you eventually sell or refinance.
How much help could you get?
On a $260,000 home in Kentucky, KHC’s Regular DAP can provide up to $12,500 toward your down payment and closing costs, repaid over a 15-year second-mortgage term. Lower-income buyers may qualify for the reduced-cost Affordable DAP instead. Stack either with KHC’s Mortgage Credit Certificate — worth up to 20% of your annual mortgage interest, capped at $2,000 — for savings every year you own. Confirm current terms with KHC.
Who qualifies in Kentucky?
Every program sets its own rules, and they change periodically, but the common requirements in Kentucky look like this:
- Income limits. KHC sets income limits by program and county.
- First-time status. First-time status is not required for all first mortgages, though the MCC and some products favor first-time buyers.
- Credit score. Minimums vary by product, commonly around 620 to 660. Our guide to credit score requirements covers what moves the needle.
- Homebuyer education. Homebuyer education is generally required for down payment assistance.
- Purchase price limits. Price limits apply by program; the MRB cap is around $544,000.
Kentucky programs worth knowing about
Beyond the standard offerings, Kentucky aims extra help at specific buyers and places. Watch for:
- MCC + DAP stacking — combine the tax credit with down payment assistance
- Affordable DAP — a lower-cost option for lower-income buyers
Mortgage Credit Certificates in Kentucky
KHC offers a Mortgage Credit Certificate worth up to 20% of your annual mortgage interest (capped at $2,000 a year), and it can be combined with DAP. A Mortgage Credit Certificate is a federal tax credit worth a percentage of the mortgage interest you pay every year for the life of the loan, and where it is available it can usually be combined with the assistance above — putting money back in your pocket each tax season.
How to apply for Kentucky assistance
- Set your budget first. Our home affordability guide helps you land on a realistic price range before you start shopping.
- Complete a homebuyer education course. Nearly every Kentucky program requires one, and it is usually free and available online.
- Find a participating lender. Not every lender originates KHC loans, so ask directly which KHC programs a lender offers and have them run your numbers against a few.
- Get pre-approved and lock in the right program for your income, credit, and target home before you make an offer.
One important note: KHC program funding and terms change from year to year, and some assistance rounds close when the money runs out. Always confirm current amounts and availability directly with KHC before you count on a specific figure. Our first-time home buyer checklist keeps the rest of your process on track.
Kentucky first-time buyer programs FAQ
Do I have to be a first-time buyer to get assistance in Kentucky?
First-time status is not required for all first mortgages, though the MCC and some products favor first-time buyers.
What credit score do I need for KHC programs?
Minimums vary by product, commonly around 620 to 660. Keep in mind a program’s own minimum can sit above the loan’s floor, so confirm the exact number with your lender.
Can I use Kentucky assistance with an FHA, VA, or USDA loan?
Yes. KHC assistance is built to layer on top of a first mortgage, and FHA, VA, and USDA loans are common partners because their own down payment requirements are already low. Your lender structures both pieces so they close together.
What is the difference between Regular DAP and Affordable DAP in Kentucky?
Regular DAP provides up to $12,500 as a repayable second over 15 years and is available to KHC first-mortgage borrowers within the income and price limits. Affordable DAP is a lower-cost, income-restricted option aimed at lower-income buyers, often with more favorable deferred terms. Both can be paired with KHC’s Mortgage Credit Certificate. A KHC lender can confirm which you qualify for and the current Affordable DAP terms.
More Kentucky city guides
Buying in a specific Kentucky metro? See our first-time buyer guides for Louisville, each covering the city’s own local down payment programs.
First-time home buyer grants in Kentucky
Looking specifically for grant money? Our guide to first-time home buyer grants in Kentucky covers which programs are true grants, which are forgivable, and the truth about the widely advertised federal grant.