Kentucky First-Time Home Buyer Grants 2026: KHC, Louisville & Lexington Programs
KHC DPA: up to $10,000 at 1% · Louisville: $20K forgivable · Lexington GRASP: $25,000 · MCC: $2,000/yr tax credit
Kentucky median home price: $215,000 · 620+ credit · Most affordable first-time buyer market in the US
🏡 Why Kentucky Is One of America's Best States for First-Time Buyers
$215,000
Statewide Median Price
2nd most affordable in US
$25,000
Max DPA Available
Lexington GRASP program
$2,000/yr
MCC Tax Credit
Every year you own
Kentucky DPA Programs Compared (2026)
| Program | Amount | Repayment | Income Limit | Area |
|---|---|---|---|---|
| KHC Regular DPA | Up to $10,000 | 3.75%, 10 years | County limits | Statewide |
| KHC Affordable DPA | Up to $10,000 | 1%, 10 years | ≤80% AMI | Statewide |
| KHC Welcome Home | $5,000 grant | None! (Grant) | County limits | Targeted counties |
| Louisville Metro DPA | Up to $20,000 | Forgivable (5yr) | ≤80% AMI | Jefferson County |
| Lexington GRASP | Up to $25,000 | Deferred (0%) | ≤80% AMI | Lexington city |
| KY MCC Tax Credit | $2,000/yr credit | N/A (tax credit) | KHC limits | Statewide |
Kentucky Mortgage Credit Certificate (MCC): Save $2,000/Year on Taxes
The Kentucky MCC gives first-time buyers a 25% federal income tax credit on their annual mortgage interest — every single year they live in the home. This is not a deduction (which just reduces taxable income) — it's a dollar-for-dollar tax credit that directly reduces your tax bill.
📊 MCC Real Example: $250K Kentucky Home at 6.15%
- • Year 1 mortgage interest paid: ~$15,100
- • MCC credit (25%): $2,000 (capped at $2,000/year)
- • Over 10 years: $20,000 in tax savings
- • Remaining 75% of interest still fully deductible if you itemize
MCC stacks with KHC DPA programs. Apply through a KHC-approved lender at closing.
KHC Income & Purchase Price Limits by County (2026)
| County / City | Income (1–2 HH) | Income (3+ HH) | Max Purchase Price |
|---|---|---|---|
| Jefferson Co. (Louisville) | $105,000 | $120,750 | $367,700 |
| Fayette Co. (Lexington) | $98,400 | $113,160 | $367,700 |
| Boone/Kenton (NKY) | $102,000 | $117,300 | $367,700 |
| Warren Co. (Bowling Green) | $88,800 | $102,120 | $367,700 |
| Daviess Co. (Owensboro) | $82,400 | $94,760 | $367,700 |
| McCracken Co. (Paducah) | $80,000 | $92,000 | $367,700 |
| Targeted Areas (all KY) | Above limits OK | Above limits OK | $449,300 |
| Rural KY Counties | $75,000–$85,000 | $86,000–$97,750 | $367,700 |
Kentucky First-Time Buyer FAQs
What first-time home buyer grants are available in Kentucky in 2026?
Kentucky first-time home buyer grants and programs in 2026: (1) KHC Regular Down Payment Assistance Program — up to $10,000 at 3.75% interest, 10-year term (not a grant — a second mortgage). (2) KHC Affordable Down Payment Assistance — up to $10,000 at 1% interest, 10 years, for buyers earning ≤80% AMI. (3) KHC Welcome Home Program — $5,000 grant (no repayment) for targeted counties and neighborhoods. (4) Louisville Metro DPA — up to $20,000 forgivable for Louisville/Jefferson County buyers. (5) Lexington GRASP Program — up to $25,000 for Lexington city limits (income ≤80% AMI). (6) Kentucky Homebuyer Tax Credit (MCC) — 25% of mortgage interest as federal tax credit annually (up to $2,000/year). All require 620+ credit and homebuyer education.Check your personalized rate →
How does the Kentucky Housing Corporation (KHC) program work?
KHC (Kentucky Housing Corporation) is the state's housing finance agency. In 2026, KHC offers: First mortgage: 30-year fixed at below-market rate (typically 0.25%–0.50% below conventional). Down payment assistance: $10,000 second mortgage at 1%–3.75% interest, 10-year repayment term (NOT forgivable — you must repay it). Loan types: FHA, VA, USDA, conventional. Requirements: first-time buyer (no ownership in 3 years), 620+ credit, income ≤$105,000–$115,000 depending on county, purchase price ≤$367,700 (non-targeted) or $449,300 (targeted areas). Apply through a KHC-approved lender, not directly through KHC.Check your personalized rate →
What is the income limit for Kentucky first-time home buyer programs?
Kentucky KHC income limits for 2026 (1–2 person / 3+ person households): Jefferson County (Louisville): $105,000 / $120,750. Fayette County (Lexington): $98,400 / $113,160. Boone/Kenton/Campbell (NKY/Cincinnati): $102,000 / $117,300. Warren County (Bowling Green): $88,800 / $102,120. McCracken County (Paducah): $80,000 / $92,000. Most rural KY counties: $75,000–$85,000 / $86,000–$97,750. MCC (Mortgage Credit Certificate) has slightly different limits — check kyhousing.org for your county's exact figures.Check your personalized rate →
What is the purchase price limit for KHC loans in Kentucky?
KHC 2026 purchase price limits: Non-targeted areas (most of KY): $367,700. Targeted areas (economically distressed counties — buyers don't need to be first-time buyers here): $449,300. Louisville MSA and Lexington MSA: $367,700. New construction: same limits. Kentucky's affordable median home price ($215,000 statewide, $285,000 Louisville) means the $367,700 limit covers virtually all first-time buyer purchases in the state — unlike California or New York where limits are frequently exceeded.Check your personalized rate →
Is Kentucky a good state for first-time home buyers?
Kentucky is one of the most affordable states for first-time buyers in 2026: Statewide median home price: ~$215,000 (among lowest in the US). No major housing market overheating like FL, TX, or CA. Strong DPA programs (up to $25,000 in Lexington). MCC tax credit worth $2,000/year. Low property taxes (0.83% average statewide). Affordable cities: Louisville ($285K median), Lexington ($310K), Bowling Green ($240K), Owensboro ($195K), Covington/NKY ($265K). Cons: Some rural areas have limited inventory. Economic diversity is lower than coastal states. For a first-time buyer, $215K median + $10K–$25K DPA means many KY buyers can purchase with $5,000–$8,000 out of pocket.Check your personalized rate →
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