If cash for a down payment is what stands between you and buying a home in Kentucky, there is a state program built for exactly that. Most people are surprised to learn it is a loan and not a gift. That is not a bad thing, but you should know the monthly cost before you sign.
What the program is
The Kentucky Housing Corporation (KHC) runs a Down Payment Assistance Program, called DAP. It gives you a second mortgage that covers part of your down payment, closing costs and prepaid items. Prepaids are things like homeowners insurance and property tax set aside at closing.
Based on recent lender and program guides, as of fall 2026 the terms are:
Up to $12,500, available in $100 steps.
A 15-year repayment term.
A fixed interest rate of about 4.75 percent. KHC sets the rate, and it can change.
It goes with a KHC first mortgage, which can be FHA, VA, USDA or conventional.
Older guides still online list smaller amounts and a lower rate. Those are out of date. Check the current terms with a KHC-approved lender before you plan around any number.
What it costs you
Here is the math on the full $12,500 at 4.75 percent over 15 years:
Item | Amount |
|---|---|
Amount borrowed | $12,500 |
Monthly payment | about $97 |
Total repaid over 15 years | about $17,500 |
Interest paid | about $5,000 |
That $97 is on top of your regular mortgage payment. Plan for it when you work out what you can afford each month. The second mortgage is generally due in full when you sell, refinance or pay off the first mortgage.
What it does for a Louisville purchase
The September 2026 median sold price for single-family homes in Jefferson County was $285,000. Here is how the cash needed lines up on that price:
A 3 percent down payment is $8,550.
Closing costs for a buyer usually run 2 to 5 percent of the price, which is $5,700 to $14,250.
Together, that is roughly $14,250 to $22,800 of cash to bring to closing.
A $12,500 loan can cover most of the low end of that range. That is what the program is for. Use the free Kentucky buyer closing cost calculator to see your own number.
The fine print
Income limits and a maximum purchase price apply. KHC updated its income limits on September 1, 2026, and they vary by county.
You apply through a KHC-approved lender, not directly through the program.
Louisville Metro runs its own separate down payment program for lower and moderate incomes, with its own rules. Ask a lender about both.
Start at the Kentucky Housing Corporation's site for the current terms and a list of approved lenders. For a longer walk through every program, read the Winner Realty guide to down payment assistance programs in Kentucky.
For every cost on the buyer's side, see How Much Are Closing Costs in Louisville, Kentucky? For where prices sit, see What Is the Median Home Price in Louisville? To know whether you have room to negotiate, read Is Louisville a Buyer's Market or a Seller's Market?
This is general information, not financial advice. Program terms change, so confirm with a lender. Questions about buying? Text or email me at (502) 305-8915 or [email protected].
Rob Bergeron, Owner-Realtor, Winner Realty