Kentucky SmartBuy Down Payment Assistance can provide 3.5% forgivable assistance or up to 5% through a repayable option when paired with an eligible FHA, USDA, or HUD 184 mortgage. The forgivable second lien has 0% interest and no monthly payment. SmartBuy does not require you to be a first-time home buyer, and it has no income restriction beyond the rules of the underlying USDA loan, when applicable.
Updated August 24, 2026. Reviewed by Joel Lobb, Kentucky mortgage broker, NMLS #57916. Program details are based on the official SmartBuy government program matrix effective March 24, 2026 and remain subject to change.
See If SmartBuy DPA Works for Your Situation
Joel Lobb can compare SmartBuy with other Kentucky down payment assistance programs and review your numbers at no cost or obligation.
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Kentucky SmartBuy DPA at a glance
*USDA borrowers must still meet USDA household-income limits. Other requirements and lender overlays apply.
What is the SmartBuy DPA program?
SmartBuy is a Click n’ Close wholesale program that combines an eligible government first mortgage with a separate, subordinated second lien. In Kentucky, it may be paired with an eligible FHA loan, USDA Rural Housing loan, or HUD 184 loan. It cannot be paired with a conventional first mortgage.
The 3-year and 5-year forgivable options provide 3.5% of the lower of the purchase price or appraised value. Their second liens carry 0% interest and no monthly payment and may be forgiven when the applicable delinquency condition is satisfied. Separate repayable options can provide 3.5% or 5% but carry a monthly payment, 9.99% interest, 30-year amortization, and a 10-year balloon.
SmartBuy has no first-time home-buyer restriction and no separate income cap beyond USDA guidelines. For a broader look at other choices, read the 2026 Kentucky first-time home buyer programs guide.
Five SmartBuy DPA options for Kentucky buyers
SmartBuy offers five distinct structures. Choose the one that best fits your timeline, credit profile, and goals:
3-Year Forgivable Second Lien
3.5% DPA
DPA: 3.5% of the lower of the purchase price or appraised value
Interest: 0% — no monthly payment on 2nd lien
Forgiven when: No 90-day+ delinquency in first 36 payments
Min. Score: 640 (blended: 660)
Manual UW: Eligible
May fit: Buyers seeking 3.5% assistance and the shorter forgiveness period5-Year Forgivable Second Lien
3.5% DPA
DPA: 3.5% of the lower of the purchase price or appraised value
Interest: 0% — no monthly payment on 2nd lien
Forgiven when: No 90-day+ delinquency in first 60 payments
Min. Score: 640 (blended: 660)
Manual UW: Not allowed
May fit: Buyers seeking 3.5% assistance who can meet AUS requirements10-Year Repayable Second Lien
3.5% or 5%
DPA: 3.5% or 5% of the lower of the purchase price or appraised value
Interest: 9.99% — 30-yr amortization with 10-yr balloon
Not forgivable — monthly payment on 2nd lien applies
Min. Score: 660 (blended: 670)
Manual UW: Not allowed
May fit: Buyers with 660+ credit who need more than 3.5% and can qualify with the second-lien paymentClosing Cost Repayable Second Lien
3.5% or 5%
DPA: 3.5% or 5% for down payment, closing costs, or prepaids
Includes outside-of-closing costs
Structure: 9.99% repayable second lien, 30-year amortization, 10-year balloon
Min. Score: 660
First Lien: FHA 203b only (no HUD 184)
May fit: Buyers whose main cash-to-close need includes closing costs or prepaid itemsFHA SmartRefi
1%–3.5%
DPA: 1%, 1.5%, 2%, 2.5%, 3%, or 3.5% of the lower of the current balance or appraised value
Purpose: Refinance transactions only — covers refi costs
Structure: 9.99% repayable second lien, 30-year amortization, 10-year balloon
Cannot refinance an existing SmartBuy loan
Min. Score: 660
First Lien: FHA 203b only (no HUD 184)
May fit: Eligible FHA homeowners who need help covering refinance costsHow SmartBuy forgiveness works
The 3-year forgivable option, step by step
SmartBuy options compared side by side
These details reflect the Click n’ Close SmartBuy government matrix effective with locks as of March 24, 2026. Verify current terms before applying.
| Feature | 3-Yr Forgivable | 5-Yr Forgivable | 10-Yr Repayable | Closing Cost Rep. | FHA SmartRefi |
|---|---|---|---|---|---|
| DPA Amount | 3.5% | 3.5% | 3.5% or 5% | 3.5% or 5% | 1%–3.5% |
| Forgivable? | Yes (36 mo.) | Yes (60 mo.) | No — Repayable | No — Repayable | No — Repayable |
| 2nd Lien Interest | 0% | 0% | 9.99% | 9.99% | 9.99% |
| Monthly 2nd Lien Pmt | None | None | Yes (10-yr balloon) | Yes | Yes |
| Min. Credit Score | 640 | 640 | 660 | 660 | 660 |
| Blended Score Min. | 660 | 660 | 670 | 670 | 670 |
| Manual Underwriting | Eligible | Not allowed | Not allowed | Not allowed | Not allowed |
| First Lien Types | FHA 203b, 203(k), HUD 184, USDA | FHA 203b, 203(k), HUD 184, USDA | FHA 203b, 203(k), HUD 184, USDA | FHA 203b only | FHA 203b only |
| Transaction Type | Purchase only | Purchase only | Purchase only | Purchase only | Refinance only |
| SmartBuy Income Limit | None beyond USDA rules | None beyond USDA rules | None beyond USDA rules | None | None |
| First-Time Buyer Req. | Not required | Not required | Not required | Not required | Not required |
| Rate Buydowns | Allowed (2-1 buydown fee 0.50%) | Allowed | Allowed | Allowed | Not permissible |
| High Balance Loans | Not permissible | Not permissible | Available (Ginnie Mae) | Not permissible | Not permissible |
SmartBuy DPA credit score requirements
SmartBuy’s credit requirements are tiered by option. Here is how they break down for individual borrowers and two-borrower households:
Forgivable Options (3-yr & 5-yr)
640
Minimum representative credit score
All borrowers must have at least one score
Repayable Options (10-yr, CC, SmartRefi)
660
Minimum representative credit score
No loan level price adjustment applied
How the blended credit score option works
SmartBuy’s blended-score option may allow a household with multiple occupying borrowers to qualify using the average of their representative scores, but only when all program conditions are met:
- Only occupying borrowers’ representative scores are included
- The primary wage earner must earn at least 60% of total household income, including non-qualifying income
- The primary wage earner must have the higher credit score
- The loan must receive an AUS approval (no manual underwriting)
- Minimum blended score: 660 (forgivable) or 670 (repayable)
Worked Example
Borrower 1: 720 middle score, $6,000/month income (66.7% of household income — meets the 60% test, and has the higher score)
Borrower 2: 640 middle score, $3,000/month income
Blended score: (720 + 640) ÷ 2 = 680 — qualifies for both the forgivable (660 min.) and repayable (670 min.) options.
Note: The blended score is used for qualification only. Loan pricing is still based on each borrower’s individual representative score. If the lower income earner has the higher score, blended scoring cannot be used. Contact Joel to run your exact scenario.
Who qualifies for SmartBuy DPA in Kentucky?
Who Qualifies
- Any buyer using FHA, USDA, or HUD 184 first mortgage
- Previous homeowners — no first-time buyer requirement
- Buyers with 640+ credit score (forgivable)
- FHA borrowers who exceed the income limits of other assistance programs
- Two-borrower households eligible for blended scoring
- Eligible properties throughout Kentucky
- Owner-occupied primary residences
- Single-family, attached/detached, condos, PUDs
- Double-wide manufactured homes
Who Does Not Qualify
- Conventional first mortgage borrowers
- Borrowers with revocable trusts
- Borrowers with foreclosures on record
- Investment properties or second homes
- Single-wide manufactured homes
- New York state residents or U.S. territories
- Borrowers refinancing an existing SmartBuy loan
- Streamline refinances (for SmartRefi option)
- Mortgage Credit Certificate (MCC) stacking
How to apply for SmartBuy DPA in Kentucky
Review your credit
The published minimum representative score is 640 for forgivable options and 660 for repayable options. Blended-score rules may help some households with multiple occupying borrowers.
Choose an eligible first mortgage
SmartBuy purchase options may pair with FHA 203(b), FHA 203(k) Limited, USDA Rural Housing, or HUD 184 financing. Eligibility differs by loan and borrower.
Compare forgivable and repayable options
Compare the assistance amount, credit requirement, second-lien payment, interest, balloon term, underwriting method, and forgiveness conditions—not just the cash available at closing.
Complete the mortgage application
Submit the requested income, asset, identification, and property documents. You can begin with Joel’s Kentucky mortgage pre-qualification application. AUS approval is required for most options.
Review both loans before closing
The SmartBuy second lien has a separate loan number and disclosure. Read its repayment, balloon, forgiveness, occupancy, sale, and refinance provisions before signing.
Meet the post-closing requirements
For a forgivable option, avoid a delinquency of 90 days or more during the first 36 or 60 first-mortgage payments, as applicable. Confirm forgiveness and lien-release procedures with the servicer.
SmartBuy DPA vs. KHC down payment assistance
Both SmartBuy and KHC’s $12,500 down payment assistance program can help eligible Kentucky buyers reduce cash needed at closing. SmartBuy includes a 3.5% forgivable option tied to eligible government loans; KHC’s regular DAP is currently a repayable $1,000-to-$12,500 second mortgage tied to a KHC first mortgage. KHC regular DAP is available to eligible first-time and repeat buyers.
| Feature | SmartBuy DPA | KHC DPA |
|---|---|---|
| Assistance Amount | 3.5% forgivable; 3.5% or 5% on eligible repayable options | $1,000–$12,500 |
| Forgivable Option | Yes — 3.5% with a 3- or 5-year condition | No — regular DAP is repayable |
| First-Time Buyer Req. | Not required | Not required for regular DAP; MRB first-mortgage rules may differ |
| Income Limits | No separate SmartBuy limit; USDA limits still apply | Yes — based on the selected KHC first-mortgage program |
| Published Min. Credit Score | 640 forgivable; 660 repayable | 620 government; 660 conventional |
| First Mortgage Type | FHA, USDA, HUD 184 only | FHA, VA, USDA, or Conventional |
| Property Type | SFR, Condo, PUD, Double-Wide | Per underlying loan program |
| Current 2nd-Lien Terms | 0% and no payment if forgivable; 9.99% with a 10-year balloon if repayable | 4.75% fixed, amortized over 15 years |
| Available In | Kentucky and most U.S. states | Kentucky only |
KHC terms above were checked against the Kentucky Housing Corporation program guide dated June 13, 2026. KHC and SmartBuy terms can change.
Watch: Kentucky down payment assistance explained
Prefer video? Joel breaks down Kentucky first-time buyer programs and down payment assistance options — including how DPA second liens work — on his YouTube channel:
More Kentucky mortgage videos on Joel’s YouTube channel — @KentuckyMortgageExpert
Kentucky mortgage and DPA resources
Dig deeper into your Kentucky loan options with these guides and official program resources:
Joel’s Kentucky Loan Guides
- Kentucky First-Time Home Buyer Programs 2026Complete guide to every KY program
- Kentucky FHA Loan Requirements580 score, 3.5% down explained
- Kentucky USDA Rural Housing LoansZero-down eligibility & county limits
- Kentucky VA Loan InformationZero down for veterans & military
- KHC $12,500 Down Payment AssistanceKentucky Housing Corporation DPA
- Kentucky Mortgage BlogRates, tips & program updates
Official Program Resources
- SmartBuy Government Program MatrixOfficial matrix effective March 24, 2026
- Kentucky Housing Corporation — DPAOfficial KHC program page
- USDA Property Eligibility MapCheck if a Kentucky address qualifies
- HUD — FHA Loan BasicsOfficial FHA program information
- CFPB — Buying a HouseConsumer Financial Protection Bureau
- NMLS Consumer AccessVerify any loan officer’s license
Frequently asked questions about Kentucky SmartBuy DPA
What is SmartBuy Down Payment Assistance?
SmartBuy DPA is a Click n’ Close program that pairs an eligible government first mortgage with a subordinated second lien. The forgivable purchase options provide 3.5% of the lower of the purchase price or appraised value. Eligible repayable options may provide 3.5% or 5%. SmartBuy has no first-time home-buyer restriction and no separate income restriction beyond USDA guidelines.
Is SmartBuy DPA forgivable?
SmartBuy offers 3-year and 5-year forgivable options. Each provides 3.5% DPA through a second lien with 0% interest and no monthly payment. The lien is fully forgivable if there is no delinquency of 90 days or more during the first 36 or 60 first-mortgage payments, depending on the option. Repayable options are not forgivable and currently carry 9.99% interest, 30-year amortization, and a 10-year balloon.
What credit score do I need for SmartBuy DPA?
For the 3-year or 5-year forgivable option, the minimum representative credit score is 640. For the 10-year, closing-cost, and SmartRefi repayable options, the minimum is 660. All borrowers must have at least one score. A blended-score option is available for eligible households with multiple occupying borrowers; the minimum blended score is 660 for forgivable options or 670 for repayable options.
Do I have to be a first-time home buyer?
No. SmartBuy DPA does not require you to be a first-time home buyer. Previous homeowners may qualify if they meet the selected first-mortgage, credit, occupancy, property, and other program requirements. KHC’s regular DAP can also serve eligible repeat buyers.
Does SmartBuy DPA have income limits?
SmartBuy does not impose a separate income limit. USDA borrowers must still meet USDA household-income rules, and every borrower must meet the requirements of the underlying first mortgage.
What first mortgages does SmartBuy pair with?
SmartBuy purchase DPA may pair with FHA 203(b), FHA 203(k) Limited, USDA Rural Housing, or HUD 184 financing, subject to option-specific rules. It cannot be used with a conventional first mortgage. The current SmartBuy matrix caps eligible FHA 203(k) Limited renovation work at $75,000.
What if my credit score is below 640?
The published minimum representative score for SmartBuy’s forgivable options is 640. If your score is lower, compare other programs instead of assuming you are ineligible for homeownership. KHC currently publishes a 620 minimum score for several government first-mortgage options, though approval and DAP eligibility require more than the minimum score.
What is the SmartBuy blended credit score option?
For households with multiple occupying borrowers, SmartBuy may allow the average of the borrowers’ representative scores to be used for qualification. The primary wage earner must earn at least 60% of total household income and have the higher credit score, and the loan must receive AUS approval. The minimum blended score is 660 for forgivable options or 670 for repayable options. Pricing still uses each borrower’s individual representative score.
Can I buy any type of home with SmartBuy DPA?
Eligible property types include single-family detached or attached homes, condominiums, planned unit developments, and double-wide manufactured homes. Single-wide manufactured homes, investment properties, and second homes are not eligible. At least one borrower must occupy the property as a primary residence.
Find Out If SmartBuy Is Right for You
Joel can compare SmartBuy, KHC, and other available Kentucky DPA options based on your financing, credit profile, property, and cash-to-close goal.
Get My Free Pre-Approval 502-905-3708 kentuckyloan@gmail.com
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