This program changes when you can buy, not whether buying makes sense for your budget. Those are two different questions, and worth answering separately before you get attached to a number.

What's the real cost of getting into a home sooner, and does it fit your monthly budget once the second payment is added?

KHC Down Payment Assistance at a Glance

Here is the current picture, based on Kentucky Housing Corporation's published program terms:

$12,500 Max down payment assistance available	620 Minimum credit score, FHA/VA/RHS loans	15 yrs Repayment term on the assistance loan
$147K–$196K Typical household income limits, by county	$566,354 Maximum home purchase price	$100 Increments the assistance is offered in

The biggest thing to understand before going further: this is a loan, not a grant. It reduces the cash you need at closing, but it adds a second monthly payment for 15 years.

What Is KHC Down Payment Assistance?

Kentucky Housing Corporation (KHC) is the state's housing finance agency. Its Down Payment Assistance program provides a repayable second loan of up to $12,500 in $100 increments, which can be applied to your down payment, closing costs, or both. The assistance is only available when paired with a KHC first mortgage through a KHC-approved lender, so if you're set on a different loan product, this specific program won't apply.

The assistance loan is repaid over a 15-year term as a separate monthly payment alongside your primary mortgage. It's not forgiven over time. It's a second loan with its own repayment schedule, which is the piece some buyers miss when they hear "$12,500 toward your down payment" and stop listening.

How Does the KHC DPA Program Actually Work?

You apply for a KHC first mortgage through an approved lender, and the DPA is layered in as a second loan. It reduces the cash you need on hand, but it adds a second monthly payment for 15 years. Here's the mechanism in plain terms:

1	Work with a KHC-approved lender to get pre-approved for a KHC first mortgage (FHA, VA, USDA, or conventional loan structured through KHC).
2	If you meet the income, credit, and purchase price limits, the lender layers in the DPA as a second loan.
3	At closing, the DPA funds cover some or all of your down payment and closing costs, so less cash comes out of your pocket.
4	You then make two payments each month: your regular mortgage payment and a separate payment on the DPA second loan, repaid over 15 years.

Third-party lender sources have quoted the DPA's interest rate around 4.75% on recent program terms, though Kentucky Housing Corporation doesn't publish that figure directly on its own site, and rates are subject to change. Confirm the current rate with a KHC-approved lender before you build your numbers around it.

Who Qualifies for KHC Down Payment Assistance?

Eligibility comes down to three things: credit score, household income, and the home's purchase price. Per KHC's published eligibility guidelines:

Credit score

Minimum of 620 for FHA, VA, and RHS-backed KHC loans. You don't need excellent credit, but a lender will walk through your specific score and how it affects your loan options.

Household income

Limits vary by program and county, with KHC's most common program ranging roughly from $147,350 to $195,650. This isn't a strict cutoff across the board. It's program-specific, so don't rule yourself out based on a number you saw somewhere else.

Purchase price

KHC loan programs currently apply to homes priced up to $566,354, which covers the overwhelming majority of homes for sale across Jefferson County, Bullitt County, Oldham County, and the rest of Greater Louisville.

Because eligibility depends on the interaction between all three factors, and because income limits shift by county and program, the only reliable way to know where you stand is a conversation with a KHC-approved lender.

Does This Program Make Financial Sense for You?

This is where the price-versus-payment distinction matters most. A $12,500 assistance loan sounds like it lowers your cost. What it actually does is restructure your cost: less cash today, more monthly obligation over 15 years. Neither is automatically the better choice. It depends on your specific numbers.

Would you rather pay more in cash now, or more in monthly obligation over the next 15 years?

Run this comparison before deciding:

Factor	Save It Yourself	Use KHC DPA
Time to purchase	Delayed until savings goal is met	Faster, often significantly
Cash needed at closing	Higher	Lower
Monthly payment	Just your primary mortgage	Primary mortgage plus DPA repayment
Total cost over 15 years	Lower (no second loan interest)	Higher, offset by earlier market entry
Best fit for	Buyers who are payment-qualified now but cash-constrained tend to benefit most from the DPA; buyers with a clear savings timeline and no urgency often do better saving it themselves

The buyers who benefit most from this program are the ones who can already afford the monthly cost of homeownership but are stuck on the upfront cash. If your monthly budget is tight even without a second payment, the DPA doesn't solve your real problem. It just moves it later.

KHC also recently introduced a Shared Appreciation Mortgage (SAM) program as another way to reduce upfront costs, structured differently from the DPA (it involves KHC sharing in future home appreciation rather than charging a fixed second loan payment). It's new enough that most buyers haven't heard of it yet, but it's worth asking a KHC-approved lender whether it fits your situation better than the standard DPA, especially if a second monthly payment is the sticking point.

What About Buyers on the Indiana Side?

KHC assistance is a Kentucky-only program, so it doesn't apply if you're purchasing in Southern Indiana, New Albany, or Clark and Floyd counties. Indiana has its own state housing finance agency with separate down payment assistance options, which is a different program with different terms. If Southern Indiana is on your radar, that's a conversation worth having early, since it changes which financing path applies to you. For a deeper look at how the two states compare more broadly, see this Kentucky vs. Indiana cost of living comparison.

A Better Down Payment Assistance Checklist

Before assuming this program is or isn't for you, work through these steps in order:

1	Confirm your first mortgage typeDPA only pairs with a KHC first mortgage through an approved lender.
2	Check your credit scoreMost programs require a 620 minimum.
3	Verify your household income against program limitsThese vary by county and program.
4	Confirm the home's purchase price falls under the limitCurrently $566,354.
5	Run the added monthly payment against your actual budgetNot just what you're approved for.
6	Ask about the Shared Appreciation Mortgage as an alternativeIt may fit better if a second payment is the concern.

Frequently Asked Questions

So, Is KHC Down Payment Assistance Right for You?

If cash to close is the real obstacle between you and buying, KHC's Down Payment Assistance is worth a serious look, paired with an honest look at what a second monthly payment does to your budget. The numbers matter more than the headline figure. Before you decide, it's worth running your actual scenario, not a generic one, against a lender who can confirm current rates and your specific eligibility.