Kentucky First-Time Homebuyer Programs 2026: KHC Down Payment Assistance Explained

One of the biggest hurdles to buying a first home in Kentucky is not the monthly payment—it is coming up with the down payment and closing costs. The good news is that there are real programs designed to help. The Kentucky Housing Corporation (KHC) and other programs make it possible for many buyers to get into a home with little to no money out of pocket. Here is what is available in 2026.

KHC Down Payment Assistance (DPA)

KHC's Down Payment Assistance program provides up to $12,500 toward your down payment and closing costs. It is important to understand this is not a grant—it is a repayable second mortgage paid back over a 15-year term, and it pairs with a KHC first mortgage (FHA, VA, USDA, or Conventional). The interest rate is set by KHC and is subject to change.

Key points:

• Assistance up to $12,500, in $100 increments
• Repaid as a secondary loan over 15 years
• Available to all KHC first-mortgage recipients who meet purchase price and income limits
• First-time buyer status is not always required—check current KHC guidelines

Other Programs Kentucky Buyers Should Know

• USDA Rural Development loans: 0% down in eligible rural areas—and much of Laurel County and the surrounding region qualifies.
• FHA loans: As little as 3.5% down with flexible credit requirements.
• VA loans: Zero down for qualifying veterans and active-duty military.
• Welcome Home Grant: Limited, seasonal funding that can provide several thousand dollars toward a purchase—funds go fast when released.

How to Get Started in Laurel County

The first step is getting pre-approved with a lender who works with KHC and USDA loans. From there, knowing your true budget makes house hunting far less stressful. If your credit needs a little work first, read our guide on credit repair made simple. To understand the other upfront costs, see understanding buyer closing costs in Kentucky and our first-time home buyer's guide to Laurel County, KY.

Senior or disabled buyers should also review the Kentucky Homestead Exemption for ongoing property tax savings.

Sources

• Kentucky Housing Corporation — Down Payment Assistance

Program amounts, rates, and eligibility change and depend on funding availability. This is not a commitment to lend or financial advice—confirm details with a licensed lender and KHC. Ready to start? Contact Wes Williams at Williams Elite Realty for a referral to a trusted local lender.