The first house is the hardest one to buy, not because the process is complicated but because nobody explains the Kentucky-specific parts until you are already under contract. This guide fixes that. It covers the down payment programs that actually exist in Kentucky and Louisville in 2026, what each loan type costs, what closing costs look like here, the seller disclosure form you will receive, how inspection contingencies work, the buyer representation agreement you will sign before your first showing, a 12-step timeline, and the mistakes we see most often. Winner Realty's in-house lender, Cam Keehn, is licensed in Kentucky and Indiana and handles most of the first-time buyer financing described below.

How much you actually need down

The 20% down payment is the most persistent myth in real estate. Against the Louisville-wide median sale price of $280,000 (August 2026, Flexmls), 20% is $56,000; most first-time buyers in Louisville put down 0% to 5% and use one of four loan types.

• Conventional 3% down. Fannie Mae and Freddie Mac programs allow 3% down for qualifying first-time buyers, with private mortgage insurance that drops off once you reach 20% equity. Kentucky Housing Corporation's conventional option requires a 660 credit score and 3% down.
• FHA 3.5% down. Insured by the Federal Housing Administration, with a lower credit threshold (KHC's FHA product starts at 620) and an upfront plus monthly mortgage insurance premium that stays for the life of the loan at the minimum down payment. The FHA appraisal also checks basic safety and habitability.
• USDA Rural Development 0% down. Available only in USDA-designated rural areas and subject to income limits. Parts of Bullitt, Oldham, Shelby, Spencer, Henry and Hardin counties qualify; nearly all of Jefferson County does not. Check the exact address on USDA's eligibility map before you fall in love with a house.
• VA 0% down. For eligible veterans, service members and some surviving spouses, with no monthly mortgage insurance. Our Fort Knox and military relocation guide walks through the 2026 funding fee tiers.

Whichever loan you choose, the down payment is only part of the cash you need. Add closing costs, prepaid taxes and insurance, and a reserve for the first repair. That is where assistance programs come in.

Kentucky Housing Corporation programs

Kentucky Housing Corporation (KHC) is the state's housing finance agency. It does not lend directly; you apply through a KHC-approved lender, and Cam Keehn can originate KHC loans. The facts below are from kyhousing.org as of September 2026; confirm current terms with your lender, since KHC adjusts them.

• KHC first mortgages. 30-year fixed conventional, FHA, VA and RHS (USDA) loans, with a maximum loan amount and purchase price limit of $566,354 statewide. Minimum credit score is 620 for FHA, VA and RHS and 660 for conventional.
• Down Payment Assistance (DAP). Up to $12,500, available in $100 increments, structured as a second mortgage repayable over 15 years alongside the first mortgage. It can be used for down payment and closing costs. The interest rate on the DAP second is set by KHC and changes; ask your lender for the current figure before you apply.
• Income limits. KHC's income limits vary by county and by program (its Secondary Market limits versus its Mortgage Revenue Bond limits), and the MRB program carries a first-time buyer requirement that the Secondary Market program does not. KHC lists its most common program limits in a range of roughly $152,775 to $192,325 depending on county and household size, which covers most Louisville-area first-time buyers. Ask your lender for Jefferson County's current limit before you apply, because it is updated on KHC's schedule, not the calendar year.
• Homebuyer education. Some KHC and lender programs require a homebuyer education course; confirm with your lender which course, if any, applies to your loan.

Louisville Metro Down Payment Assistance

Louisville Metro's Office of Housing and Community Development runs its own Down Payment Assistance Program, and it is more generous than most people expect. Per louisvilleky.gov:

• Amount: up to 20% of the purchase price, not to exceed $30,000, as a 0% interest, partially forgivable loan.
• Forgiveness: you must occupy the home as your primary residence for 5 to 10 years depending on the amount received; after that period 50% of the loan is forgiven and the remaining balance is due when you sell.
• Income limit: 80% of Area Median Income, for example $55,450 for a one-person household, $63,400 for two people and $104,550 for eight.
• Purchase price caps: $260,000 for an existing home and $331,000 for new construction, inside Louisville Metro.
• Eligibility: not limited to first-time buyers, but applicants may not currently own a home. A minimum six-hour homebuyer counseling course from a HUD-approved agency is required, and both co-applicants or spouses must complete it.
• Timing: the program reopened for the fiscal year on August 17, 2026 and stays open as long as funding lasts, so applying early in the cycle matters.

The two programs can sometimes be layered, and the order in which you apply matters. Tell your lender at the first conversation that you want to use assistance; a purchase contract written without the program's timelines built in is the most common way buyers lose the money.

Closing costs in Kentucky: what the buyer pays

Kentucky is a title-company and closing-attorney state; either can conduct the closing, and in Louisville a title company with an attorney on staff is the norm. Buyer-side costs generally include the lender's origination and underwriting fees, the appraisal, a credit report, the lender's title insurance policy (required by the lender) and optionally an owner's policy, title search and settlement fees, recording fees at the county clerk, and prepaids: the first year of homeowner's insurance, and escrow deposits for property taxes and insurance. A rough planning figure for a Louisville purchase is 2% to 4% of the price, before any seller credit; ask Cam Keehn for a written Loan Estimate, which federal rules require within three business days of your application.

Two Kentucky specifics work in the buyer's favor. First, the real estate transfer tax is paid by the seller (the grantor) at $0.50 per $500 of value, or 0.1%, under KRS 142.050, so it never appears on your side of the statement. Second, property taxes are billed in arrears in the fall, so at closing the seller credits you for the portion of the year they owned the home, which reduces your cash to close.

The seller disclosure form and what it does not tell you

Kentucky requires sellers represented by a licensee to complete the Seller's Disclosure of Property Condition, KREC Form 402 (revised December 2022), under KRS 324.360 and 201 KAR 11:121. The seller answers questions about the roof, basement and foundation, plumbing, electrical, HVAC, water damage, termites, boundary disputes, zoning and more, as far as they are aware. Three things to understand: it is a disclosure of what the seller knows, not a warranty; a seller who has never lived in the house (an estate, an investor or a flipper) may know very little; and a bank-owned or for-sale-by-owner property may not come with the form at all. Read it before you write an offer, then use the inspection to verify it.

Inspection contingencies, done right

A Kentucky purchase contract typically gives the buyer a set number of days, often 7 to 10, to complete inspections and either accept the property, request repairs or a credit, or terminate and receive the earnest money back. Budget for a general home inspection, a termite inspection (usually required for VA loans and wise for everyone), a radon test, and a sewer camera scope on anything built before 1980. Louisville's older housing stock, from Old Louisville to Germantown to the 1950s ranches of Okolona, comes with cast-iron and clay sewer laterals, galvanized supply lines, and panels that insurers dislike. A first-time buyer who skips the sewer scope to save $250 is the buyer who calls us about a $9,000 lateral replacement in month three. Your agent should attend the inspection and help you sort findings into safety, expensive, and cosmetic.

The buyer representation agreement

Since August 17, 2024, following the National Association of Realtors settlement, an agent who belongs to an MLS must have a written buyer agreement signed with you before touring a home with you, including a live virtual tour. The agreement states what the agent will do, how much the agent will be paid and by whom, and that the amount is negotiable and cannot be open-ended. This is not a trap. It is a chance to ask what you are getting: how offers will be written, who handles inspections, what happens if the seller offers to pay part of the buyer-agent fee (many still do, and it is negotiated in the offer). Winner Realty walks through the form on the first call, and Lisa Tucker, Principal Broker, reviews every contract before it goes out.

A 12-step first purchase

1. Credit and cash check. Pull your credit, fix errors, and tally cash for down payment, closing costs and reserves.
2. Pre-approval with Cam Keehn. A real pre-approval, with documents, not an online pre-qualification. This is where KHC and Louisville Metro assistance gets mapped in.
3. Buyer consultation and representation agreement. Price band, areas, must-haves, and the written agreement.
4. Homebuyer education if your program requires it; do it now, not at week five.
5. Search and showings. Use the neighborhood guides on this site to narrow by housing type and commute; see how the metro differs by housing stock.
6. Offer. Price, earnest money, inspection and financing contingencies, closing date, and any seller concession toward closing costs.
7. Under contract. Earnest money deposited; the seller's disclosure reviewed.
8. Inspections within the contingency window; repair negotiation.
9. Appraisal ordered by the lender; if it comes in low, renegotiate or bring the difference.
10. Title and insurance. Title search, homeowner's insurance bound, assistance program approvals finalized.
11. Clear to close and final walk-through the day before or day of closing.
12. Closing. Sign at the title company or attorney's office, or remotely under Kentucky's online notarization law; get keys. Colleen Reilly manages this calendar for every Winner Realty buyer.

Mistakes we see most often

• Opening a credit card or financing furniture before closing. Lenders re-pull credit; new debt can kill an approval.
• Shopping above the pre-approval. The payment, not the price, is the number that matters.
• Skipping the sewer scope and radon test on older houses.
• Waiving the inspection to win a bidding war. In a market with 2.9 months of supply and a 28-day median time on market (Louisville, August 2026), well-priced homes move, but a shorter inspection window beats no inspection.
• Forgetting the property tax escrow in the monthly budget; Jefferson County's combined 2025 rate runs roughly $1.00 to $1.26 per $100 of assessed value depending on district.
• Not asking about assistance until after the contract. Both KHC and Louisville Metro have timelines that need to be written into the contract.
• Assuming a fixer-upper is cheaper. Compare an analyzer-style repair budget against move-in-ready homes before committing.

Alternatives when a mortgage does not fit yet

Some first-time buyers are a year away from qualifying. Kentucky allows several paths that an experienced agent can structure legally: lease options and rent-to-own, seller financing, and assuming a seller's existing FHA or VA loan. Each has risks, and each should be reviewed by an attorney, but they are real tools rather than gimmicks when used correctly.

Frequently asked questions

How much down payment do I need to buy a house in Kentucky?

As little as 0% with VA or USDA, 3% with a conventional first-time buyer loan, or 3.5% with FHA. KHC's DAP can cover up to $12,500 of that, and Louisville Metro's program up to $30,000 for income-qualified buyers.

Is the Kentucky Housing Corporation down payment assistance a grant?

No. KHC's DAP is a second mortgage repayable over 15 years. Louisville Metro's program is a 0% loan that is 50% forgiven after the occupancy period, with the balance due at sale.

Who pays closing costs in Kentucky?

Buyers pay lender, title, recording and prepaid costs, typically 2% to 4% of price. Sellers pay the 0.1% transfer tax, their own agent's fee, and any credit they agreed to give the buyer.

Do I have to sign a buyer agreement before seeing a house?

Yes, since August 17, 2024, for any MLS-member agent, including for live virtual tours. The terms, including compensation, are negotiable.

What is KREC Form 402?

Kentucky's Seller's Disclosure of Property Condition, required under KRS 324.360 and 201 KAR 11:121 when the seller is represented by a licensee. It reports what the seller knows; it is not a warranty.

Can I buy a first home in Southern Indiana with Winner Realty?

Yes. Winner Realty and Cam Keehn are both licensed in Indiana. Indiana has its own assistance programs through the Indiana Housing and Community Development Authority, which we can walk through with you.

Start with a real number

Book a first-time buyer consultation with Rob Bergeron, Owner-Realtor, and get a written pre-approval with assistance programs mapped in from Cam Keehn. If you are weighing a fixer-upper against a move-in-ready home, run the numbers in our property analyzer, and if you already own and are trading up, check your home value first.