Kentucky First-Time Home Buyer Guide 2026
Kentucky Housing Corporation programs, how the down payment assistance and Shared Appreciation Mortgage actually work, and the income and purchase price limits that decide whether you qualify.
Kentucky first-time buyer programs
Kentucky Housing Corporation runs the state’s first-time buyer programs. KHC does not lend directly — you work with a KHC-approved lender, who originates a KHC first mortgage and layers assistance on top.
| KHC First Mortgage | Min Down Payment | Min Credit Score | Term |
|---|---|---|---|
| Conventional | 3% | 660 | 30-year fixed |
| FHA | 3.5% | 620 | 30-year fixed |
| VA | Often none | 620 | 30-year fixed |
| RHS | May be none | 620 | 30-year fixed |
You do not have to be a first-time buyer for every KHC product. The Shared Appreciation Mortgage is first-time-buyer only; the standard Down Payment Assistance is open to all KHC first-mortgage borrowers who meet the limits.
How KHC down payment assistance works
KHC Down Payment Assistance provides up to $12,500 toward down payment and closing costs, in $100 increments. It is a loan, not a grant: it is a second mortgage repayable over a 15-year term as a secondary monthly payment alongside your first mortgage.
It is available to all KHC first-mortgage recipients whose property meets KHC purchase price and income limits, and it can be combined with other lender incentives where those are offered.
KHC does not publish an interest rate for the assistance second on its program page. Ask your KHC-approved lender for the current rate in writing before you commit — the monthly second-mortgage payment is part of your qualifying ratios.
The Shared Appreciation Mortgage
The Shared Appreciation Mortgage (SAM) is a different instrument. It provides up to 25% of the purchase price or appraised value as a zero-interest, deferred-payment second mortgage — no monthly payment while you hold it.
When you sell, refinance, or reach maturity, you repay the original amount plus a predetermined share of any increase in the home’s value. If the home has not appreciated, you repay principal only.
Read this part carefully: if property values fall and a sale produces a loss, you still owe the full SAM principal. That risk sits with you, not the program.
SAM is restricted to first-time buyers, new construction only, owner-occupied Kentucky homes. A $35 homebuyer education course through eHome America is required.
Kentucky income and purchase price limits
Two limits govern eligibility, and both come from Kentucky Housing Corporation.
| Limit | Amount | Notes |
|---|---|---|
| Purchase price limit | $544,232 | Stated in KHC’s Secondary Market and MRB income limit documents, effective June 23, 2025 |
| Secondary Market income limit | $147,350 | Standard figure for counties not separately listed; several counties are higher |
| MRB income limit, 1–2 person | $85,080–$111,800 | Varies by county |
| MRB income limit, 3+ person | $99,260–$128,570 | Varies by county |
County-level figures change and the two funding sources use different tables. Confirm your specific county and household size with a KHC-approved lender before relying on any number here.
Who qualifies in Kentucky
Eligibility runs on four tests, and all of them are checked before you are under contract rather than after.
| Test | Requirement |
|---|---|
| Income | Household income at or below the KHC limit for your county and funding source |
| Purchase price | Contract price at or below $544,232 |
| Credit | 620 for KHC FHA, VA and RHS; 660 for KHC conventional |
| Occupancy | Owner-occupied primary residence in Kentucky |
| First-time status | Required for the Shared Appreciation Mortgage only, not for standard Down Payment Assistance |
Income for these tests is household income, which is not the same as the income used to qualify you for the mortgage itself. A file can pass underwriting and still fail the KHC limit.
Steps to buying your first home in Kentucky
The order matters more than most buyers expect, because assistance eligibility is determined before you shop, not after.
| Step | What Happens |
|---|---|
| 1. Check income and price limits | Confirm your county’s KHC limits and household size with an approved lender |
| 2. Complete homebuyer education | Required for SAM; commonly required or recommended for other assistance |
| 3. Get pre-approved through a KHC lender | A general pre-approval does not establish KHC eligibility |
| 4. Shop within the price limit | A contract above the limit disqualifies the assistance, not just reduces it |
| 5. Close | Assistance funds are applied at closing toward down payment and costs |
