First-time home buyer programs in Kentucky: KHC and Louisville

Who counts as a first-time buyer in Kentucky?

The rule depends on the program.

• KHC mortgage revenue bond (MRB) loans. “In most of Kentucky, you have to be a first-time homebuyer.” In targeted areas, both first-time and repeat buyers can use them (KHC).
• Louisville Metro’s down payment program. “You do not have to be a first-time buyer to qualify.” You may have owned a home before, but not in the twelve months before you apply.
• KHC’s Shared Appreciation Mortgage. It is for first-time buyers and new construction only (KHC).

KHC loans and down payment assistance

KHC is the state housing finance agency. Its loans are 30-year fixed-rate mortgages, with a maximum loan of $566,354 (KHC, effective May 18, 2026).

FHA, VA and RHS loans can be issued as MRB loans, which carry income limits that vary by county. KHC says its most common program has income limits that range from $152,775 to $192,325, depending on the county, and that a KHC-approved lender confirms eligibility. MRB loans have lower limits. For Jefferson County, KHC’s table effective September 1, 2026 shows:

Source: KHC, MRB Gross Annual Household Income Limits, effective September 1, 2026. The purchase price limit is $566,354.

KHC Down Payment Assistance (DPA) provides up to $12,500, in $100 steps, as a secondary loan repaid over 15 years. It is available with a KHC first mortgage that meets the price and income limits, and KHC says it can be combined with other incentives from its lenders when available.

Shared Appreciation Mortgage (SAM). KHC offers up to 25% of the purchase price or appraised value as a 0% interest, deferred-payment second mortgage for new construction. In exchange, you repay the loan plus a share of the home’s appreciation when you sell, refinance or reach another maturity event. If you sell at a loss, you still owe the full SAM principal. The course required for SAM costs $35, paid to eHome America.

Louisville Metro Down Payment Assistance

Louisville Metro Government’s Office of Housing & Community Development runs the program. Its August 2026 handbook sets these rules.

• Income. Household gross income of 80% of area median income or less, set by HUD. Effective July 1, 2026: $55,450 for one person, $63,400 for two, $71,300 for three, $79,200 for four.
• Amount. Based on need and debt capacity, no more than 20% of the purchase price, with total Metro assistance capped at $30,000.
• Price limits (effective September 1, 2024): existing home $260,000 for one unit and $301,000 for a duplex; new home $331,000 and $423,000.
• Before you apply. Complete at least 6 hours of homeownership counseling from a HUD-certified agency, get pre-approved by a local lender, and have at least $2,000 in your bank accounts. If you are married, both spouses must apply and complete counseling.
• Credit. No unpaid collections or charge-offs and no undischarged bankruptcy, but up to $10,000 in medical collections is allowed.
• The home. It must pass a Louisville Metro inspection and an environmental review, and you must also buy a private inspection. Assistance is denied if the home is in a flood plain or appraises below the contract price.
• Fixed-rate loans only. The handbook accepts no adjustable-rate mortgages or loans with prepayment penalties.

How the Louisville loan is repaid

Metro lends the money as a second mortgage recorded with the Jefferson County Clerk. You must live in the home as your main residence for a period of affordability.

The remainder is repaid out of the net sale proceeds when you sell, with no interest. The handbook also asks you to bring, ideally, at least 2% of the price as your own down payment.

An example

At the Louisville median home value of $241,700, 20% would be $48,340, but the $30,000 cap applies. A buyer approved for $30,000 falls in the 10-year tier: after ten years, $15,000 is forgiven, and the other $15,000 is repaid from the sale proceeds. This is an example; the Case Review Board decides each amount, and funding is not guaranteed.

Comparison of the main programs

How to apply

Start with a KHC-approved lender for KHC loans, DPA and SAM; KHC’s phone number is 502-564-7630. For Louisville Metro, complete counseling first, then submit a full application to the Office of Housing. Applications are processed in the order received, with no waiting list and no reserved funds, and an eligibility decision is generally issued within 45 days of a completed application. A conditional commitment is good for six months. Louisville’s Section 8 homeownership program has been paused since July 1, 2025.

Prices and closing costs matter as well: see Kentucky home prices, the Kentucky closing costs guide, and buying a home in Louisville. General guides: FHA loans, VA loans and private mortgage insurance.