Nationwide first-time homebuyer programs

A “conventional” mortgage sourced through the private market can have pretty demanding requirements, including a credit score of at least 620 and a typical down payment of 5%.

More: Use these savings accounts to build up your down payment.

Those standards can be tough to meet when you’re a first-time buyer, so you may want to look into one of these nonconventional mortgages offered through the federal government.

FHA loans

FHA loans were created by the Federal Housing Administration, which is part of the Department of Housing and Urban Development, to help more Americans become homeowners.

These loans typically have less stringent requirements. You’ll need a minimum credit score of 580 and are able to make just a 3.5% down payment, but if you can put more money down upfront, you could be eligible with a credit score as low as 500.

The FHA's Loan Requirements Explained.

A walkthrough of how to meet the FHA's requirements.

See Guide

VA loans

These loans were created thanks to an act passed by Congress in 1944 to help veterans secure homes. As a result, today’s U.S. Department of Veterans Affairs (VA) can guarantee or insure home loans made to veterans by various lending institutions.

Active service members, veterans and some surviving military spouses can all qualify for a VA loan. There are fees associated — notably a sizable funding fee — but borrowers are exempt from down payment and mortgage insurance obligations.

USDA loans

USDA loans are for lower-income rural and suburban Americans and are guaranteed by the United States Department of Agriculture. Like VA loans, these loans don’t require a down payment or private mortgage insurance.

With a USDA home loan, you’ll have to pay a few fees: an upfront 1% guarantee fee and an annual 0.35% fee. But the total cost still ends up lower than the amount you’d pay in mortgage insurance on another type of loan.

These loans aren’t ideal for most households: They have a strict income limit. The current income limits in most parts of the U.S. are $86,850 for one- to four-member households and $114,650 for five- to eight-member households, but the thresholds may be higher if you live in a county with a steeper-than-average cost of living. The USDA’s website has the exact figures for each region.

First-time homebuyer qualifications in Kentucky

The Kentucky Housing Corporation offers a number of programs for first-time homebuyers from low- to moderate-income households. You’ll work with an approved lender on the application process to qualify for the KHC’s assistance programs.

To qualify for the agency’s loans, you must:

  • Fall within your county’s “secondary market” income limit for qualifying for a reduced-interest loan with fewer overall requirements.
  • Be a U.S. citizen or qualified noncitizen.
  • Have a credit score of at least 620 (though some programs will require a higher score).

More: Get a free credit score and credit monitoring from Credit Sesame.

Programs for first-time homebuyers in Kentucky in 2021

Infographic explaining programs for first-time home-buyers in KY

The KHC offers a number of programs to help Kentucky residents afford to buy a home, from mortgage loan programs to down payment assistance and federal tax credit programs.

The housing agency also offers potential homebuyers access to resources including housing counseling and education, and a homebuying guide.

Conventional Preferred Program

The Kentucky Housing Corporation offers a few different loan programs, including the Conventional Preferred program. These home loans have 30-year fixed interest rates, so your rate won’t change over the life of the loan. The mortgages are serviced by the KHC and maintained in Kentucky, not sold off the way other mortgages are.

To qualify for this program, you’ll need:

  • A minimum credit score of 660.
  • A down payment of 3% of your purchase price.
  • To pay monthly mortgage insurance.
  • An income that doesn’t exceed 80% of the local median income.

With the Conventional Preferred Program, you also can make use of any of the state’s down payment assistance programs for help with your closing costs.

Conventional Preferred Plus 80 Program

Many of the requirements for the Preferred Plus 80 program are similar to those for the Conventional Preferred Program loans. You’ll need:

  • A minimum credit score of 660.
  • A down payment of 3% of your purchase price.
  • Monthly mortgage insurance.
  • An income that doesn’t exceed your county’s “secondary market” limit.

And, the KHC’s down payment assistance programs can be used in conjunction with the Conventional Preferred Plus 80 program.

Home Buyer Tax Credit

This tax credit gives you a dollar-for-dollar reduction on your federal taxes of up to 25% of the interest you pay on your mortgage for each calendar year you occupy your home. The credit is available for all first-time homebuyers.

To qualify, your home’s purchase price must be under $294,600 and the money you make must be within the income limits for your county and household size.

You can apply for the tax credit through your approved lender for an FHA, VA, USDA or conventional 30-year fixed rate mortgage loan.

Regular Down Payment Assistance Program

To help cover your down payment and closing costs, your approved lender can help you apply for a down payment assistance loan. For homes with a purchase price of up to $327,334, KHC’s Regular Down Payment Assistance program will offer the buyer a loan of up to $6,000 in $100 increments. The loan has a 10-year term at a 5.5% interest rate. The program is available to all KHC first mortgage loan recipients.

Affordable Down Payment Assistance Program

The purchase price limit for the Affordable Down Payment Assistance Program is also $327,334, but if you meet this program’s income limits, you can receive an up to 10-year, $6,000 loan at just 1% interest.

The Best Lenders for a Mortgage

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Next steps

Now that you know all your options, you may be asking yourself: “What next?”

A great first move would be to take a look at your credit score and see how you measure up to your ideal loan’s requirements. You can get a free score through the site Credit Sesame.

Is your score disappointing? That’s OK; you have plenty of options. An organization like Self credit repair can help you bring your score up.

Once you’re in good shape, don’t forget to gather the important documents you’ll need to prove you’ve got money in the bank and cash flowing in.

Then you can finally think about getting pre-approved for a mortgage and start shopping for your new place.

Support for new homebuyers in other states

Arizona Department of Housing (ADOH) Read More
Arkansas Development Finance Authority (ADFA) Read More
California Housing Finance Agency (CalHFA) Read More
Colorado Housing and Finance Agency (CHFA) Read More
Connecticut Housing Finance Authority (CHFA) Read More
Delaware State Housing Authority (DSHA) Read More
Florida Housing Finance Corp. (Florida Housing) Read More
Georgia Dream Read More
Hawaii Housing and Finance Development Corporation (HHFDC) Read More
Idaho Housing and Finance Association Read More
Illinois Housing Development Authority (IHDA) Read More
Indiana Housing and Community Development Authority (IHCDA) Read More
Iowa Finance Authority (IFA) Read More
Kansas Housing Resources Corporation Read More
Kentucky Housing Corporation (KHC) Read More
Louisiana Housing Corporation (LHC) Read More
MassHousing (Massachusetts) Read More
Michigan State Housing Development Authority (MSHDA) Read More
Minnesota Housing Read More
Missouri Housing Development Commission (MHDC) Read More
Montana Board of Housing (MBOH) Read More
Nebraska Investment Finance Authority (NIFA) Read More
Nevada Housing Division Read More
New Mexico Mortgage Finance Authority (MFA) Read More
State of New York Mortgage Agency (SONYMA) Read More
North Carolina Housing Finance Agency (NCHFA) Read More
Ohio Housing Finance Agency (OHFA) Read More
Oklahoma Housing Finance Agency (OHFA) Read More
Oregon Housing and Community Services (OHCS) Read More
Pennsylvania Housing Finance Agency (PHFA) Read More
South Dakota Housing Development Authority (SDHDA) Read More
Tennessee Housing Development Authority (THDA) Read More
Texas Department of Housing and Community Affairs (TDHCA) Read More
Utah Housing Corp Read More
Virginia Housing Read More
Washington State Housing Finance Commission (WSHFC) Read More
Wisconsin Housing and Economic Development Authority (WHEDA) Read More
Wyoming Community Development Authority (WCDA) Read More

About the Author

Sigrid Forberg

Sigrid Forberg

Staff Writer

Sigrid is a staff writer with MoneyWise. A graduate of Carleton University's journalism program, she spent the better part of the last six years writing about business and retail. In her spare time, she enjoys reading, baking and riding her bicycle.

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