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Kentucky First-Time Homebuyer Programs

The state of Kentucky has a history of more people leaving than moving to it, but the Bluegrass State is working to reverse the trend.

Kentucky has two major statewide programs to help first-time homebuyers. One offers a refundable tax credit, and the other helps people afford a down payment.

In January 2019, we reviewed first-time homebuyer programs in the state of Kentucky. This included a review of the Kentucky Housing Corporation website and analyzing other state resources.

In this guide, we will cover:

Kentucky first-time homebuyer programs

The Kentucky Housing Corporation administers the state government’s homeownership programs. These include both a tax credit program for first-time homebuyers and loan programs that help first-time homebuyers access down payments or closing cost assistance, easing the upfront costs of getting into a home.

Kentucky Homebuyer Tax Credit

Features

  • Tax credit provides a 25% dollar-for-dollar refund on mortgage interest, up to $2,000.

Eligibility

To qualify, taxpayers must:

  • Be first-time homebuyers (meaning, the buyer has not owned a home over the past three years)
  • Purchase a house for $271,164 or less
  • Meet income limits that vary by county
  • Use a 30-year, fixed-rate conventional, FHA, VA, USDA Rural Housing Service (RHS), Fannie Mae or Freddie Mac loan product
  • Work with an approved lender

How it works

First-time buyers work directly with an approved lender to buy a home with a 30-year, fixed-rate mortgage. The lender will check to see if you qualify for the tax credit program.

When you pay your federal taxes, you can receive a refundable credit for 25% of the mortgage interest you paid for the year, up to $2,000. You may still deduct the remaining 75% of your mortgage interest on your federal tax return. You will qualify for the tax credit each year you own the home and pay your mortgage.

Kentucky Down Payment Closing Cost Assistance

Features

  • This program offers a loan of up to $6,000, repayable over 10 years, toward the down payment or closing costs to purchase a home.

Eligibility

Homebuyers must:

  • Purchase a home worth $301,294 or less
  • If pursuing down payment assistance, earn less than income thresholds that vary by county
  • If pursuing affordable down payment assistance terms, earn less than these income thresholds
  • Maintain a credit score of 620 or better
  • Move into their home within 60 days of purchase

How it works

First-time buyers work with an approved lender to buy a home that meets the program criteria. Your lender will make sure you’re eligible. If you are, you will receive a $6,000 loan to help with down payment or closing costs that is paid back over a 10-year period. Buyers who meet low-income criteria repay their loans at a 1% interest rate. Other buyers repay their loans at a 5.5% interest rate.

National first-time homebuyer programs

First-time homebuyers can tap several special loan programs that help them buy a home with a low down payment. These include loans through agencies such as the FHA, Freddie Mac, Fannie Mae and the VA. These loan programs require minimum credit scores, carry purchase price maximums and generally require that the buyer’s choice of home is ready for immediate occupancy. Check out LendingTrees guide for more details about the benefits and the variety of national programs for first-time buyers.

 

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