Please watch video below about the Welcome Home Grant info for 2026👇🙂

2026 Kentucky Welcome Home Grant Is Out of Funds: What Kentucky Home Buyers Can Do Now

Important 2026 update: The Kentucky Welcome Home Grant through FHLB Cincinnati is now closed for 2026. That means the popular $10,000 to $20,000 Welcome Home Grant funds are no longer available for new Kentucky home buyers this year.

If you were counting on the Welcome Home Grant to help with your down payment or closing costs, do not panic. This is frustrating, but it does not mean you are out of options. Kentucky buyers still have several strong loan programs available, including USDA zero-down loans, Kentucky Housing Corporation down payment assistance, FHA loans with 3.5% down, VA loans for eligible veterans, and certain lender-based down payment assistance options.

Why the Welcome Home Grant Runs Out So Fast

The Welcome Home Grant is attractive because it can provide up to $20,000 in assistance for eligible buyers. Funds can be used toward down payment and closing costs, and the grant generally does not have to be repaid if the buyer follows the program’s owner-occupancy rules.

The problem is simple: demand is much higher than available funding. Buyers across Kentucky, Ohio, and Tennessee are competing for limited funds through participating lenders. Once the money is reserved, the program closes.

That is why I always tell Kentucky buyers not to build their entire home-buying plan around one grant. A better strategy is to get pre-approved, check every available program, and structure the loan based on what is actually available today.

Best Alternatives Now That the Welcome Home Grant Is Gone

Here are the main options Kentucky buyers should look at now.

1. USDA Rural Housing Loan: Zero Down Payment

The USDA Rural Housing loan is one of the best no-money-down mortgage programs available in Kentucky. Many areas outside the larger cities may qualify, and some suburban areas may qualify as well.

• Zero down payment for eligible buyers
• Property must be located in an eligible USDA area
• Household income limits apply
• Primary residence only
• Seller-paid closing costs may be allowed
• Good option for rural and small-town Kentucky buyers

This program is especially strong for buyers looking in counties and communities outside Louisville, Lexington, Bowling Green, Northern Kentucky, and other larger metro areas. If the property and income qualify, USDA can be a true zero-down option.

Learn more about Kentucky USDA zero-down home loans

2. KHC Down Payment Assistance: Up to $12,500

Kentucky Housing Corporation, also known as KHC, offers down payment assistance that can help Kentucky buyers cover down payment, closing costs, and prepaid items.

• Up to $12,500 in assistance
• Structured as a repayable second mortgage
• 15-year repayment term
• Fixed rate currently listed by KHC at 4.75%
• Must be paired with a KHC first mortgage
• Available with eligible FHA, VA, USDA/RHS, and conventional KHC loans

This is not the same as the Welcome Home Grant. KHC Regular DAP is a repayable second mortgage, not free money. But for many buyers, it can be the difference between waiting another year and buying now.

KHC can be a strong fit for buyers who have stable income and credit but are short on cash to close.

Learn more about KHC down payment assistance in Kentucky

3. FHA Loan With 3.5% Down

FHA loans remain one of the most flexible mortgage options for Kentucky home buyers. FHA is not a zero-down loan by itself, but the required down payment can be as low as 3.5% for qualified buyers.

• 3.5% minimum down payment for eligible borrowers
• More flexible credit guidelines than many conventional loans
• Gift funds may be allowed
• Seller concessions may help cover closing costs
• Can sometimes be paired with approved down payment assistance

FHA is often a good option if your credit score is not high enough for the best conventional pricing or if you need more underwriting flexibility. The tradeoff is that FHA has upfront and monthly mortgage insurance, so the full payment needs to be reviewed carefully.

Learn more about Kentucky FHA loans

4. FHA 3.5% Down Payment Assistance / Grant-Style Options

Some participating lenders and down payment assistance providers may offer programs designed to help cover the FHA 3.5% down payment. These programs can change quickly and may have stricter rules on credit score, debt-to-income ratio, income limits, interest rate, and repayment terms.

Here is the key point: do not assume every “grant” is free money. Some programs are forgivable after a certain period. Some are repayable second mortgages. Some may come with a higher first mortgage rate. The numbers need to be compared side by side before you commit.

If you are looking for a low-cash-to-close FHA loan, I can review whether a 3.5% assistance option, KHC assistance, seller concessions, or gift funds makes the most sense for your file.

5. VA Loan: Zero Down for Eligible Veterans

If you are an eligible veteran, active-duty service member, or qualified surviving spouse, a VA loan may be one of the best mortgage options available.

• Zero down payment for eligible buyers
• No monthly mortgage insurance
• Flexible underwriting
• Primary residence only
• VA funding fee may apply unless exempt

If you qualify for VA, it should be reviewed before FHA or conventional financing because the monthly payment can often be better without monthly mortgage insurance.

Learn more about Kentucky VA home loans

Which Program Is Best for Kentucky Buyers?

Program	Down Payment	Best For	Main Catch
USDA Rural Housing	0% down	Rural and eligible suburban Kentucky buyers	Property and income limits apply
KHC Down Payment Assistance	Assistance up to $12,500	Buyers short on cash to close	Repayable second mortgage
FHA Loan	As low as 3.5%	Buyers needing flexible credit guidelines	Mortgage insurance required
FHA 3.5% Assistance Option	May cover down payment	Buyers needing help with FHA down payment	Terms vary by provider and lender
VA Loan	0% down	Eligible veterans and military buyers	VA eligibility required

Do Not Wait Just Because the Welcome Home Grant Is Gone

Here is the honest answer: if the Welcome Home Grant was the only way your loan could work, then yes, you may need to regroup. But many Kentucky buyers still have a path forward without it.

The right structure may be:

• USDA zero down if the property is eligible
• KHC down payment assistance if income and credit qualify
• FHA with seller-paid closing costs
• FHA with approved down payment assistance
• VA zero down if you are eligible
• Conventional 3% down if your credit profile supports it

The key is to run the numbers correctly before you write an offer. A program may sound good online, but the real test is whether your income, credit score, debts, property location, purchase price, and cash-to-close all fit the guidelines.

What Kentucky Buyers Should Do Next

1. Get pre-approved before shopping seriously.
2. Confirm your credit score using mortgage credit scores, not consumer app scores.
3. Check USDA property eligibility if you are shopping outside major city limits.
4. Review KHC income limits and down payment assistance eligibility.
5. Compare FHA, USDA, VA, KHC, and conventional options side by side.
6. Ask for a real cash-to-close estimate before making an offer.

Frequently Asked Questions

Is the 2026 Kentucky Welcome Home Grant still available?

No. The 2026 Welcome Home Grant through FHLB Cincinnati is now closed and out of funds for new reservations.

Can I still buy a house in Kentucky with no money down?

Possibly. USDA Rural Housing and VA loans both offer zero-down financing for eligible buyers. USDA depends on property location and household income. VA depends on military eligibility.

Is KHC down payment assistance a grant?

KHC Regular DAP is not a grant. It is a repayable second mortgage that can provide up to $12,500 in assistance for qualified buyers using a KHC first mortgage.

Can FHA be used with down payment assistance?

Yes, FHA loans can often be paired with approved down payment assistance, gift funds, and seller concessions, depending on program rules and lender guidelines.

What is the minimum down payment for FHA?

FHA allows down payments as low as 3.5% of the purchase price for eligible buyers.

Should I wait until the Welcome Home Grant comes back next year?

Not necessarily. If you qualify for USDA, VA, KHC, FHA, or another assistance program now, waiting may not be the best move. Home prices, rates, inventory, and grant availability can all change. The better move is to compare your options today and make a decision based on real numbers.

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Joel Lobb · Mortgage Loan Officer · NMLS #57916 · Company NMLS #1738461 · Equal Housing Lender. This information is for educational purposes only and is not a commitment to lend. All loans are subject to credit approval, underwriting approval, property eligibility, program guidelines, and funding availability. Program terms, rates, income limits, purchase price limits, and assistance amounts may change without notice. Not affiliated with or endorsed by FHA, VA, USDA, FHLB Cincinnati, Kentucky Housing Corporation, or any government agency.