Kentucky VA Home Loans · Updated September 2026
Quick answer
Yes. Kentucky Housing Corporation (KHC) offers VA first mortgages, and every KHC first-mortgage borrower who meets KHC’s income and purchase-price limits can add KHC’s Down Payment Assistance of up to $12,500 for down payment and closing costs. It’s repaid as a second loan over 15 years. The catch: it must be a KHC VA loan through a KHC-approved lender, not just any VA loan, so KHC’s limits and terms apply.
Why would a $0-down VA buyer need assistance?
A VA loan needs no down payment, but nobody closes on a home for exactly $0. Kentucky VA buyers still face:
- Closing costs: title, recording, credit report, appraisal and other allowable fees. See what veterans can and can’t be charged.
- Prepaids: the first year of homeowners insurance, plus escrow deposits for taxes and insurance.
- The VA funding fee: 2.15% on first use with $0 down unless you’re exempt. It’s usually financed, but sometimes paid in cash.
- Earnest money and reserves: cash the lender may want you to keep after closing.
On a typical Kentucky purchase that adds up to several thousand dollars, even with zero down. KHC’s assistance exists to bridge exactly that gap.
KHC VA loan requirements (2026)
- Credit score: 620 minimum for KHC’s VA option. Standard VA loans outside KHC may go lower; see VA credit requirements.
- Loan type: 30-year fixed rate.
- Purchase price limit: $566,354 statewide (effective September 1, 2026).
- Household income limits: these vary by county and household size, and they’re the most common reason buyers don’t qualify, so check them first. See the 2026 KHC income limits.
- VA eligibility: you still need a Certificate of Eligibility and must meet VA service requirements. See the VA eligibility rules.
How the KHC down payment assistance loan works
KHC’s assistance is not a grant. It’s a second mortgage of up to $12,500, in $100 increments, repaid over 15 years, and it closes at the same time as your VA first mortgage. That means a second, small monthly payment. KHC sets the rate and changes it periodically, so here’s what $12,500 costs at a few rates:
| Assistance amount | At 4% | At 5% | At 6% |
|---|---|---|---|
| $12,500 over 15 years | about $92/mo | about $99/mo | about $105/mo |
| $6,000 over 15 years | about $44/mo | about $47/mo | about $51/mo |
I’ll quote KHC’s current rate when we run your numbers. The payment counts in your debt-to-income ratio, which trims your buying power slightly. That’s usually a worthwhile trade for keeping your savings intact.
KHC assistance vs. seller-paid closing costs: which is better?
VA lets the seller pay your normal closing costs plus up to 4% in concessions. When the market lets you negotiate that, it’s free money, with no repayment, no second lien and no extra payment. KHC assistance is the better tool when:
- You’re competing with other offers and asking for concessions would weaken yours
- The seller won’t budge, but the house is right
- You need help with prepaids and reserves that concessions don’t fully cover
Many of my KHC VA buyers use both: concessions cover what the seller agrees to, and the assistance covers the rest.
A realistic Kentucky example
A $250,000 home in Louisville with a KHC VA loan and $0 down:
- Closing costs and prepaids: roughly $6,000 to $8,000, depending on taxes, insurance and the time of year
- Funding fee (2.15% = $5,375): financed into the loan, so $0 at the table
- The seller agrees to $3,000 in concessions, and KHC assistance covers the remaining $3,000 to $5,000
- Cash needed at closing: little more than your earnest money, plus a small assistance payment of roughly $25 to $50 a month on that amount
Documents you’ll need
- Certificate of Eligibility (I can pull it electronically)
- DD-214 if you’ve separated from service
- Last 2 years’ W-2s and 30 days of pay stubs, or 2 years of tax returns if self-employed
- 2 months of bank statements
- Photo ID
- Income information for every adult in the household (KHC income limits count household income)
The full list is in the VA document checklist.
KHC and VA loan FAQs
Can I use KHC down payment assistance with any VA loan?
No. The assistance pairs with KHC’s own first mortgages, so your VA loan must be a KHC VA loan made through a KHC-approved lender.
Is KHC’s down payment assistance a grant?
No. It’s a second loan of up to $12,500, repaid over 15 years alongside your first mortgage.
Do I have to be a first-time homebuyer?
KHC’s program is built around income and purchase-price limits rather than first-time status alone. Ask me whether your situation qualifies.
What credit score do I need for a KHC VA loan?
620 is the minimum for KHC’s VA option. If you’re below that, a standard VA loan with seller concessions may still work.
Check whether KHC and VA work for you
One quick review of your income against the county limits tells us whether the combination fits. I’ll run both scenarios side by side: KHC with assistance, and a straight VA loan with seller concessions. Call or text 502-905-3708 or request a free VA loan review.