Kentucky Housing Corporation (KHC)


Kentucky Housing- KHC Loan Programs

Kentucky Housing Corporation (KHC)

The Kentucky Housing Corporation provides purchase financing funds for qualified buyers in Kentucky who have not owned their own home in the most recent three years or who buy in defined, Target Areas. The KHC program interest rate is typically below market and may be used with Conventional, FHA, VA or RHS loans. Down payment assistance may also be available from KHC. Household income limits and price limits apply. We were the first lender to be delegated by KHC to underwrite loans for approval and closing and are the Top Lender for KHC.

<!––>Kentucky Housing Corporation<!––>

<!––>Kentucky Housing Corporation<!––>

KHC Loan Programs

•All Kentucky Housing first mortgage loans are for a 30-year term at a fixed rate of interest.

•The home you purchase through Kentucky Housing must be the only residential property you own and you must occupy the home as your principal residence while the loan debt is still outstanding.

•To qualify, you must meet KHC’s regular income guidelines, make a down payment or qualify for down payment assistance, be a US citizen or legal alien and have an acceptable credit history.

•Some Kentucky Housing loans are subject to a federal recapture tax. Recapture is a federal income tax that the borrowers may have to pay if they have considerable growth in their income and they sell or transfer their KHC-financed home within 9 years. However, KHC has implemented a Recapture Tax Guarantee Program for all loans that close after October 1, 2006. The Recapture Tax Guarantee Program will reimburse homeowners if they are subject to pay the Federal Recapture Tax on their KHC mortgage loan upon the sale of their home.


•Insured by approved mortgage insurance company.

•Minimum credit score of 660 or better.

•Quick turnaround time, 20 percent down payment and no up-front or monthly mortgage insurance.


•Insured by the Federal Housing Administration.

•Down payments as little as 3.5 percent.

•Can use DAP for 3.5 percent down payment requirement.

•Upfront and monthly mortgage insurance.

•Minimum credit score of 620.


•Guaranteed by the Veterans Administration for qualified military veterans.

•No down payment if the property appraises for the sale price or greater.

•Credit underwriting is flexible.

•Minimum credit score of 620.

•No monthly mortgage insurance payments.


•Guaranteed by Rural Housing Services (RHS).

•Home must be located in a rural area as defined by RHS.

•No down payment if the property appraises for the sale price or greater.

•Minimum credit score of 620.

•No monthly mortgage insurance payments.

Mortgage Credit Certificates (MCC)

A Mortgage Credit Certificates (MCC) reduces the amount of federal income tax you pay, giving you more available income to qualify for a mortgage loan. MCCs are NOT mortgages. They are tax credits that put extra cash in your pocket each month, so you can more easily afford a house payment. That means fewer tax dollars will be withheld from your regular paycheck, increasing your take-home pay. The federal government allows every homeowner an income tax deduction for all the interest paid each year on a mortgage loan. But an MCC gives you a tax credit of 25 percent (not to exceed $2,000). You can still deduct the remaining 75 percent interest on your income taxes. A tax credit is not the same as a tax deduction. A tax deduction reduces the portion of your income that is taxed, so you pay less. A tax credit is a direct, dollar for dollar reduction in the total tax you owe. The MCC is effective for the life of the loan as long as you live in the home. If you sell your home in the first nine years of ownership, you may be subject to Federal Recapture Tax.

Special First Mortgage Loan Programs

New Construction Program for Single-Parent, Disabled and Elderly Households offers loans for newly constructed houses at interest rates from 1 to 6 percent. These limited funds are available, usually in July, on a first-come, first-served basis.

Kentucky Housing Corporation (KHC)


•Interest rate determined by the families’ ability to repay the loan.

•For new homes with a purchase price of $115,000 or less.

•Eligible borrowers:

◦Single parents (at least one dependent under the age of 18 must live in the home.)

◦Households with a person who has a permanent disability and who receives some form of disability income (SSI, SSDI, Veterans Disability etc.).

◦Households where at least one of the home buyers is age 62 or older.

•Income guidelines:

◦$28,000 for a household of 1 or 2 people; or

◦$33,000 for a household of 3 or more people.

•Kentucky Housing’s DAP loan program may be used for down payment and closing cost assistance.

Applying for a Kentucky Housing loan is easy. Just contact one of our approved lenders near you and ask for a Kentucky Housing loan.
Second Mortgage Products

Down Payment Assistance Program (DAP) Guidelines

Only home buyers obtaining a Kentucky Housing Corporation first mortgage are eligible for DAP funds.

Zero Point or Regular Rate option on loans utilizing DAP.

Regular DAP

Reservations as of July 26, 2010

 Eligible Applicants – Households whose gross annual income does not

exceed KHC’s regular income guidelines and who are utilizing a KHC


 Eligible Properties – New and existing properties with a maximum

purchase price of $243,000.

 DAP Loan Amount – up to $4,000 in $100 increments with a $500

minimum. Must go maximum allowed LTV on first-mortgage amount.

 Interest Rate – 6%.

 Terms – Loan is repaid over a seven-year term.

Ratios – Ratios with AUS approval can go 40%/45%. May gross-up nontaxable

income to help qualify for the loan.

 Forms

 DAP GFE and TIL must be on a separate form from the first mortgage

GFE and TIL. Tool to create the GFE is available under Loan

Connection Services.

 DAP fees: $50 document prep to closing agent (VA borrower cannot

pay). Recording fees – actual recording cost.

 KHC provides note and mortgage in closing documents set.

 Other

 Buyer or seller may use own funds to pay for repairs and payoff

existing debt; DAP funds may not be used.

HOME-Funded DAP Loans

Criteria HOME DAP HOME Family DAP

(Available on a limited basis)

HOME Special DAP

(Available on a limited basis)



Households whose gross annual income

does not exceed HOME Program income


First-time home buyers whose gross

annual household income does not exceed

HOME Program income guidelines and

who are a single- or two-parent household

with at least one dependent child under the

age of 18.

Households whose gross annual income

does not exceed HOME Program income

guidelines and who meet one of the


 At least one of the home buyers is age

62 or older;

 At least one member of the household

has a permanent disability and is

receiving disability income.



For all HOME, HOME Family, and HOME Special DAPs:

 Existing (previously occupied) property only up to a maximum purchase price of $195,700.

 Property cannot be located within 3,000 feet of an airport runway.

 If house was built before January 1, 1978 and has extensive lead-based paint problems, property will not be eligible for programs.


DAP Loan


Minimum of $1,000 up to a maximum of

$4,500 based on need. Must go maximum

on first mortgage amount.

Up to a maximum of $10,000 based on minimum ratios of 29/41 (minimum $4,600).

Loan Terms For all HOME, HOME Family, and HOME Special DAPs:

Second mortgage loan forgiven over five years; no monthly repayment required.

Forms For all HOME, HOME Family, and HOME Special DAPs:

 DAP GFE – Tool to create this form is available under Loan

Connection Services.

 DAP fees:

 $50 document prep to closing agent (VA borrower

cannot pay).

 Recording fees – actual recording cost.

 KHC provides note and mortgage in closing documents set.

 All liquid assets must be listed on the loan application.

 All loans require Notification to Seller (KHC Form 95).

 All loans require an HQS Inspection

 HQS Inspection Form (Form 89) will be printed with KHC forms.

 Full HQS Inspection Form is available on KHC’s Web site.

 Lead-Based Paint Requirements – If house was built before January

1, 1978, borrower must receive Lead-Based Paint pamphlet and sign

HOME Lead-Based Paint Notice (KHC revised Form 96) as of or

before the contract date. (Purchase contracts that have the same

language as Form 96 are acceptable.)

Credit  May gross up non-taxable income 15% to

help qualify for loan.

 Ratios 29%/41% or 40%/45% with AUS approval.

 Must gross up non-taxable income 15%.

 All household occupants (18 years and older) with income must be included on the loan

and be credit-ready.

Other  When using DU/LP, down payment assistance funds with payments deferred five years or more must be entered in DU/LP as

subordinate financing instead of gifts.

 Borrowers must use all their own funds before any source of HOME DAP funds are used. However, borrower can retain reserves of

their own funds equal to two months’ housing payments (PITI).

 Borrower may use their funds to pay off existing debt to qualify.

 The seller must pay for any required repairs. Final inspection can be paid by borrower or seller.

 HOME funds cannot be used with REOs.

 Lender must disclose any Secondary Financing on a separate GFE and HUD-1 beginning January 1, 2010.


 Minimum 660 credit score required.

 Maximum loan-to-value (LTV) ratio is 80%.

 Maximum ratios 40/45 with AUS approval.

 No down payment assistance products may be used. Borrower must meet down payment requirements with their own funds or a gift.

 Pre-purchase education required as per AUS findings.

 Not available for manufactured housing.

 Appraiser Independence required (see page 3).

 KHC does not presently have a product for 81% LTV or greater.

Rural Housing Services (RHS)

 Minimum 620 credit score required.

 Financing to 100% of the appraised value, plus guarantee fee of 3.5%.

 All KHC DAP programs and other KHC-approved secondary financing may be used.

 No maximum on seller-paid items.

 Ratio requirements and guarantee fee per agency guidelines.

 KHC will accept Government Underwriting System (GUS) findings, including reduced documentation and, with approval, expanded

ratios up to 40/45.

Veteran’s Administration (VA)

 Minimum 620 credit score required.

 Ratios up to 40/45% with AUS Approval.

 Financing to 100% of the lesser of the appraised value or sale price.

 All KHC DAP programs and other KHC-approved secondary financing may be used.

 Maximum 4% seller-paid items.

 Follow agency guidelines for ratio requirements and funding fee.



Effective November 8, 2010

The income limitations listed below are imposed by federal law.

Failure to comply with them may create adverse consequences for Kentucky Housing Corporation and its bondholders.

Funding Source: New Bond Funds (Purchase Price Limit – $243,000)

Person(s) per household (1 or 2) (3 or more) Person(s) per household (1 or 2) (3 or more)

Anderson 67,360 77,470 Jefferson 74,160 86,520

Ballard 64,320 75,040 Jessamine 67,220 77,310

Barren 58,200 67,900 Kenton 83,400 97,300

Boone 83,400 97,300 Larue 66,720 77,840

Bourbon 78,600 91,700 Laurel 53,000 60,950

Boyd 58,200 67,900 Livingston 61,440 71,680

Boyle 66,360 77,420 Lyon 62,040 72,380

Bracken 83,400 97,300 Madison 66,480 77,560

Bullitt 74,160 86,520 Marshall 67,560 78,820

Caldwell 54,840 63,980 McCracken 64,920 75,740

Calloway 62,040 72,380 McLean 67,320 78,540

Campbell 83,400 97,300 Meade 62,280 72,660

Carroll 68,400 79,800 Mercer 66,960 78,120

Christian 63,000 73,500 Muhlenberg 53,000 60,950

Clark 78,600 91,700 Nelson 67,080 78,260

Daviess 67,620 78,540 Oldham 74,160 86,520

Edmonson 64,560 75,320 Pendleton 83,400 97,300

Fayette 67,220 77,310 Scott 78,600 91,700

Franklin 67,180 77,260 Shelby 75,770 87,135

Gallatin 83,400 97,300 Simpson 66,120 77,140

Garrard 64,080 74,760 Spencer 74,160 86,520

Grant 64,920 75,740 Taylor 53,000 61,740

Graves 58,440 68,180 Trigg 63,000 73,500

Greenup 58,200 67,900 Trimble 74,160 86,520

Hancock 67,320 78,540 Union 66,960 78,120

Hardin 66,720 77,840 Warren 64,560 75,320

Harrison 65,400 76,300 Webster 73,680 85,960

Henderson 68,040 78,250 Woodford 67,220 77,310

Henry 74,160 86,520

For all other counties not listed above: 63,600 (1 or 2 persons) 74,200 (3 or more persons)

Funding Source: New Construction Program for Single Parents, Disabled, and Elderly Households

Income Limit

$28,000 for households of 1-2 persons or $33,000 for households of 3 or more people

Purchase Price Limit


Mortgage Revenue Bond Programs – KHC Program Guide – November 8, 2010 Page – 8 of 9



Effective May 20, 2010

Purchase Price Limit When HOME Funds Are Used – $195,700

Person(s) (1) (2) (3) (4 or more)

Adair, Bath, Bell, Breathitt, Carter, Casey, Clay, Clinton, Cumberland, Elliott, Estill, Floyd,

Fulton, Green, Harlan, Hart, Jackson, Johnson, Knott, Knox, Laurel, Lawrence, Lee, Leslie,

Letcher, Lewis, Lincoln, Magoffin, Martin, McCreary, Menifee, Metcalfe, Monroe, Morgan,

Owsley, Perry, Pike, Powell, Pulaski, Rockcastle, Russell, Wayne, Whitley, and Wolfe

23,800 27,200 30,600 34,000

Bullitt, Henry, Jefferson, Oldham, Spencer, and Trimble 34,650 39,600 44,550 49,450

Bourbon, Clark, Fayette, Jessamine, Scott, and Woodford 36,700 41,950 47,200 52,400

Boone, Bracken, Campbell, Gallatin, Kenton, and Pendleton 38,950 44,500 50,050 55,600

Other Counties

Person(s) (1) (2) (3) (4 or more) Person(s) (1) (2) (3) (4 or more)

Allen 26,750 30,550 34,350 38,150 Larue 31,150 35,600 40,050 44,500

Anderson 36,300 41,500 46,700 51,850 Livingston 28,700 32,800 36,900 40,950

Ballard 30,050 34,350 38,650 42,900 Logan 28,500 32,600 36,650 40,700

Barren 27,200 31,050 34,950 38,800 Lyon 28,950 33,100 37,250 41,350

Boyd 27,200 31,050 34,950 38,800 Madison 31,050 35,500 39,950 44,350

Boyle 31,000 35,400 39,850 44,250 Marion 25,900 29,600 33,300 36,950

Breckinridge 26,550 30,350 34,150 37,900 Marshall 31,550 36,050 40,550 45,050

Butler 25,700 29,350 33,000 36,650 Mason 27,100 30,950 34,800 38,650

Caldwell 25,600 29,250 32,900 36,550 McCracken 30,350 34,650 39,000 43,300

Calloway 28,950 33,100 37,250 41,350 McLean 31,450 35,950 40,450 44,900

Carlisle 24,300 27,750 31,200 34,650 Meade 29,050 33,200 37,350 41,500

Carroll 31,950 36,500 41,050 45,600 Mercer 31,300 35,750 40,200 44,650

Christian 29,400 33,600 37,800 42,000 Montgomery 27,550 31,450 35,400 39,300

Crittenden 26,450 30,200 34,000 37,750 Muhlenberg 24,300 27,800 31,250 34,700

Daviess 31,450 35,950 40,450 44,900 Nelson 31,300 35,800 40,250 44,700

Edmonson 30,150 34,450 38,750 43,050 Nicholas 25,800 29,450 33,150 36,800

Fleming 24,200 27,650 31,100 34,550 Ohio 25,200 28,800 32,400 36,000

Franklin 36,800 42,050 47,300 52,550 Owen 28,200 32,200 36,250 40,250

Garrard 29,900 34,200 38,450 42,700 Robertson 25,800 29,450 33,150 36,800

Grant 30,350 34,650 39,000 43,300 Rowan 24,950 28,500 32,050 35,600

Graves 27,300 31,200 35,100 38,950 Shelby 38,850 44,400 49,950 55,500

Grayson 24,050 27,450 30,900 34,300 Simpson 30,900 35,300 39,700 44,100

Greenup 27,200 31,050 34,950 38,800 Taylor 24,750 28,250 31,800 35,300

Hancock 31,450 35,950 40,450 44,900 Todd 26,150 29,900 33,650 37,350

Hardin 31,150 35,600 40,050 44,500 Trigg 29,400 33,600 37,800 42,000

Harrison 30,550 34,900 39,250 43,600 Union 31,300 35,750 40,200 44,650

Henderson 34,400 39,300 44,200 49,100 Warren 30,150 34,450 38,750 43,050

Hickman 26,900 30,750 34,600 38,400 Washington 28,500 32,550 36,600 40,650

Hopkins 27,650 31,600 35,550 39,450 Webster 34,400 39,300 44,200 49,100

Mortgage Revenue Bond Programs – KHC Program Guide – November 8, 2010 Page – 9 of 9

Call us today for your KHC loan.  502-905-3708 or email

Kentucky Housing Corporation (KHC)

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