Are you thinking of buying your first home in Kentucky? Would you like information on various programs, including free grant money, to help you purchase that first home? If you answered yes to these two questions, there is great news for you. The state of Kentucky provides multiple programs for its residents who are first time home buyers and need help with the down payment and closing costs. This money comes in the form of state grants. This is free money that shouldn’t be passed up! The grant awards can be in the thousands of dollars. There are several programs available, as well as local programs throughout the state. It will be well worth your time to educate yourself about the programs that the State, Cities and Counties provide.
Kentucky First Time Home Buyer Grants
The agency in Kentucky that provides assistance is The Kentucky Housing Corporation. There are several programs available, depending upon your income. These programs are loans to help with the down payment and closing costs. Some of these loans are “forgiven” after five years, meaning the amount borrowed becomes a gift to you. You can receive up to $10,000 in down payment and closing cost assistance depending upon which program you qualify for. To find out about these programs, please visit the Kentucky Housing Corporation website page specifically describing what is available. Simply go to this page.
Kentucky Housing recognizes that down payments, closing costs and prepaids are stumbling blocks for many potential home buyers. Here are several loan programs for home buyers to help. Your KHC-approved lender can help you apply for the program that meets your needs.
Neighborhood Down payment Assistance Program (DAP)
Kentucky Housing Corporation (KHC) received $3 million from the National Mortgage Foreclosure Settlement Fund to offer a new mortgage program for down payment and closing costs assistance. This program is only available until all funds are gone.
Repayable second mortgage up to $10,000
1 percent interest rate for 30 years.
Income must be less than $124,775 (terms and conditions apply).
To be eligible for the Neighborhood DAP, either:
The property must be in the process of disposition option (i.e., deed-in-lieu, short sale) or foreclosed upon.
The newly-constructed or existing property has been for sale for at least six months.
The home buyer has experienced a foreclosure and credit qualifies to purchase another home.
Purchase price up to $243,000.
Assistance in the form of a loan up to $6,000 in $100 increments.
Repayable over a ten-year term at 6 percent. A DAP of $6,000 over ten years at 6 percent interest would equal a payment of $66.61.
Available to all KHC first-mortgage loan recipients.
Purchase price up to $195,700.
Assistance up to $4,500
No monthly repayment; forgiven over five years.
Existing homes only.
Borrowers must meet HOME-income guidelines.
Home Buyer Tax Credit
“KHC’s Home Buyer Tax Credit is available through Mortgage Credit Certificates (MCC), which reduce the amount of federal income tax you pay, giving you more available income to qualify for a mortgage loan. MCCs are NOT mortgages. They are tax credits that put extra cash in your pocket each month, so you can more easily afford a house payment. That means fewer tax dollars will be withheld from your regular paycheck, increasing your take-home pay. The federal government allows every homeowner an income tax deduction for all the interest paid each year on a mortgage loan. But an MCC gives you a tax credit of 25 percent (not to exceed $2,000). You can still deduct the remaining 75 percent interest on your income taxes.”
The contact information for Kentucky Housing is:
Kentucky Housing Corporation
1231 Louisville Road
Frankfort, Kentucky 40601-6191
Phone: (800) 633-8896 (in-state only)
Phone: (502) 564-7630 (TTY/Voice 711)
Fax: (502) 564-5708
Local Programs Throughout Kentucky
In addition to the grant programs described above, the U.S. Department of Housing and Urban Development provides home buyer assistance and grants in every state. There are multiple grant programs designed specifically for people that meet certain requirements, such as grants for people with disabilities so they can continue to live independently at home. It is worth visiting HUD’s website to see what assistance is currently available.
Here is the contact information for the HUD office in Kentucky:
Louisville Field Office
Gene Snyder Courthouse
601 West Broadway
Louisville, KY 40202
Phone: (502) 582-5251
Fax: (502) 582-6074
There are also these local programs:
Ashland Department of Planning and Community Development (606) 327-2001
“The Community Development Division administers funding received from the U.S. Department of Housing and Urban Development (HUD) in the form of Community Development Block Grant (CDBG) funds. The two main areas of need that are addressed are housing assistance to homeowners and neighborhood development.”
Bowling Green Live the Dream Homeownership Program (270) 843-6071
“The mission of Housing Authority of Bowling Green’s Live the Dream Development Inc, non-profit is to offer the most effective techniques for achieving homeownership and financial stability among low-income to moderate-income individuals and families and to avoid predatory lending practices. This mission is realized through providing Homeownership Education Classes and one-on-one counseling to potential homebuyers to move them from rental to homeownership. Homeownership is sustained through post purchase and foreclosure prevention counseling.”
Bowling Green HANDS Inc. Homeownership Program (270) 796-4176
HANDS has a homeownership program for low to moderate income families. In this program HANDS builds houses in the city and county, which are sold for the appraised value. HANDS offers downpayment, closing cost, and principal reduction, when needed, in the form of a Forgivable Second Mortgage for the difference. For example, if the house appraises for $60,000 and the family can only qualify for a loan of $50,000 then HANDS can have a second mortgage for $10,000 plus legal fees. As long as the family is living in the house they never have to pay on the second mortgage.
Covington Homebuyer Assistance Program (HAP) (859) 292-2188
“The Homebuyer Assistance Program is administered by the City of Covington’s Housing
Development Department. The purpose of the program is to increase the number of
homeowners in the City of Covington. Under this program, households which meet income,
credit, and other requirements may obtain loans to assist with purchasing a home to live in
as an owner occupant. The deferred payment, zero interest loans can be used for
downpayment and closing costs related to the purchase of an owner occupied home. The
loan will become a grant if the owner occupies the home as their principal residence for 15
years from the date of purchase.”
Elizabethtown Department of Planning and Development Housing Programs (270) 765-6121 ext. 4247
The department also oversees special projects that help implement the plan and goals of the City through grants administration under various federal and state programs. Examples of some of the programs are Community Development Block Grant (CDBG), Kentucky Housing Corporation HOME, KY Transportation Cabinet Transportation Efficiency Act for the 21st Century (TEA-21), Renaissance Kentucky and the Community Rivers and Streams program.
Fayette County Local Development Corporation Homeowners Assistance Program (FTHAP) (606) 254-6212
Henderson World Changers Housing Program (270) 831-1200
“By checking “yes” below, you are stating you understand that submission of this information places you on a waiting list and does not automatically qualify you for assistance under this program.”
“The Community Development Department implements or assists the City in administering the Community Development Block Grant (CDBG) which funds several programs to ensure that low-to-moderate income families, persons, and areas receive benefits and opportunities that could not otherwise be made available.”
Jefferson County Home Ownership Assistance Program (HOAP) (502) 574-5144
“Purchasing a home may be the greatest investment you will ever make! The home buying process involves many considerations and challenges that we can assist you with.
Currently in Jefferson County qualified homeowners can receive up to $13,000 in forgivable grants to help them purchase a home
Jefferson County Economic Development Consortium offers a two part seminar on a monthly basis. These seminars offer potential owners with education on the purchasing process and the many requirements associated with home ownership. The seminars allow qualified individuals to fulfill a requirement for the grants that are available for down payment and closing costs assistance.”
Lexington Home Housing Investment Partnership (859) 514-4270
The HOME program is the U.S. Department of Housing and Urban Development’s newest effort to develop affordable housing. The Lexington-Fayette Urban County Government uses its HOME funds to assist in the development of both affordable rental and owner-occupied projects. Through REACH, Lexington Habitat and Community Ventures Corporation, the Urban County Government provides non-repayable mortgage subsidies and 0 – 2% loans to lower-income first-time homebuyers. HOME funds are also used to financially assist non-profit groups in providing affordable rental and owner-occupied housing opportunities.
Louisville New Construction Home Ownership Program (502) 574-3107
“This program makes home loans at 1 percent to 6 percent interest to individuals with disabilities, based on family income. You must apply through a local participating lender. Applications are submitted by lenders to KHC on an ongoing basis until funds run out. You may contact KHC at (800) 633-8896 or (502) 564-7630, ext. 272 for information”
Multi Counties REACH Inc First Key Down payment Assistance Program (DAP) (859) 258-3535
Louisville Affordable Housing Trust Fund (502) 637-5372
“The city has not yet established dedicated ongoing public revenue for the Louisville Affordable Housing Trust Fund.
Establishing dedicated ongoing public revenue is the LAHTF’s top priority. Without this revenue source, the LAHTF cannot succeed, and Louisville will not be able to meet the need for affordable housing.”
“In partnership with the Kentucky Housing
Corporation, The Center provides counseling
sessions for homeowners.
The Center partners with Louisville Metro
Housing Authority to accept referrals for our
Individual Development Account (IDA) program
from its Housing Self-Sufficiency Program.”
Owensboro Community Development Department Housing Programs (270) 687-8657
Housing Programs – rehabilitation and new home construction
How do I become a potential buyer for a city-built home?
1. Contact Keith Free
2. Obtain your own financing from a bank or mortgage company.
3. Meet income guidelines.
4. Provide documents for proof of income and household status.