Ready to buy a home in the Bluegrass State?
With a lower overall cost of living and beautiful landscapes, Kentucky offers a desirable lifestyle with financial benefits. Your dream home could be a charming single-family house in Lexington or a cabin condo in Rogers.
Whether you’re a first-time homebuyer or new to Kentucky’s housing market, this guide will teach you everything you need to know. We’ve broken down the entire home-buying process into 13 actionable steps.
Houzeo is America’s best home buying and selling platform.
For Home Sellers: List your home for a Flat Fee, and save 2.5% to 5.5% on the listing agent commission! That’s thousands of dollars extra in your pocket.
For Home Buyers: Houzeo has the most number of houses for sale in Kentucky. Start your dream home search now!
Yes! You can list your home for sale or search millions of homes on the Houzeo mobile app!
Download now on the Apple App Store (iOS) or the Google Play Store (Android).
Key Takeaways:
- Get Pre-Approved ASAP: In a buyer’s market like Kentucky, a pre-approval letter helps you stand out.
- Save Thousands with Assistance Programs: Programs like “Kentucky Housing Corporation (KHC) Programs” provide $10,000 at a 3.75% interest rate, repayable over 10 years.
- Don’t Skip Kentucky-Specific Inspections: Termite inspections are common in Kentucky due to soil conditions, and radon testing is recommended across much of the state. These inspections can also be required for certain loans or insurance policies.
- Ask for Credits, Not Repairs: If the inspection has issues, ask the seller for credit at closing. This allows you to hire your own contractors and prevent closing delays.
- Protect Your Investment and Your Wallet: Consider getting flood insurance, especially if you’re buying in one of Kentucky’s many flood-prone areas near rivers or low-lying regions. Don’t forget to file for the Homestead Exemption to save up to $50,000 on your home’s taxable value.
How to Buy a Home for the First Time in Kentucky: 13 Steps!
This step-by-step guide walks first-time home buyers in Kentucky through everything, from assessing finances and budgeting for a down payment to choosing the right mortgage. These 13 steps make the Kentucky real estate process clear, simple, and manageable.
Step 1: Assess Your Finances
As a first-time home buyer in Kentucky, the two factors that should matter the most to you are your credit score and Debt-to-Income (DTI) ratio. Additionally, you must also consider how much you can afford for a down payment, a monthly mortgage, taxes, and insurance.
What Is Your Credit Score?
A credit score is a three-digit number that indicates your creditworthiness to lenders. The minimum credit score to buy a house in Kentucky depends on the type of mortgage you get.
Minimum and Ideal Credit Scores by Loan Type
| Loan Type | Minimum Score | Ideal Score |
|---|---|---|
| FHA | 500 (10% down) | 580+ (3.5% down) |
| Conventional | 620 | 740+ for best rates |
| VA | No minimum | 620 |
| USDA | No minimum | 640 |
Portfolio mortgage loans are easy to qualify for. Here, the credit score needed to buy a house starts at around 580. VA loans are available only to veterans and active-duty service members, and require a score of 620. FHA loans also accept scores as low as 580. They are good for buyers with lower credit scores looking for houses in Kentucky.
When purchasing property in Kentucky, you can check your credit score using several reliable methods. Most of them are free and will not harm your score:
- Annual Credit Reports: Federal law entitles you to one free credit report every 12 months from each of the three major credit bureaus: Equifax, Experian, and TransUnion. These can be accessed through the official, government-authorized website, AnnualCreditReport.com.
- Credit Monitoring Services: Many banks, credit card issuers, and financial service apps provide complimentary and regular access to the FICO score. This is a convenient way to track your credit health over time.
Knowing how to repair your credit score is important to get better mortgage rates. If you’re a first time home buyer in Kentucky, here’s what you need to do:
- Pay down credit card balances and make all payments on time.
- Avoid opening multiple new accounts quickly.
- Consider becoming an authorized user on a family member’s account with a good history.
- Monitor your score regularly to track progress.
How to Calculate Your Monthly Mortgage Payment in Kentucky?
As a first time home buyer in Kentucky, knowing your average mortgage payment helps you plan your budget. Your total payment includes 4 key components, often called PITI:
- Principal and Interest: This is a major chunk of your payment, covering the amount you borrowed (principal) and the cost of borrowing (interest). It’s determined by your loan amount, interest rate, and loan term.
- Taxes: Kentucky property taxes are based on your home’s assessed value. The lender holds these funds in an escrow account and pays the tax on your behalf.
- Insurance: Lenders require you to have homeowners’ insurance to protect the property. The annual premium is usually divided by 12 and added to your monthly payment, also managed through the escrow account.
Apart from PITI, your monthly payment may also include Private Mortgage Insurance if your down payment is less than 20%, and HOA fees.
What Is a Debt-to-Income (DTI) Ratio?
Your debt-to-income ratio shows how much of your monthly income goes toward debt payments, including mortgage, car loans, credit cards, and student loans. To calculate it, add all monthly debts and divide the total by your gross pre-tax monthly income.
A high DTI can prevent you from qualifying for a mortgage, as it shows that you struggle to manage your debt. For the best mortgage rates and a higher likelihood of mortgage approval in Kentucky, aim for a DTI ratio of 36% or lower.
💡 You can still qualify for a loan in Kentucky despite a high DTI if you have compensating factors like a strong credit history, significant cash reserves or savings, stable long-term employment, etc.
Recommended DTI Ratios by Loan Type
| Loan Type | Recommended DTI Ratio | With Compensating Factors |
|---|---|---|
| Conventional | 36% back-end | 45-50% |
| FHA | 43% back-end | Up to 50% |
| VA | 41% | Can exceed 50% with the residual income test |
| USDA | 41% back-end | 44% with strong credit |
To improve your DTI ratio for a mortgage, you can either reduce your monthly debts or increase your verifiable income.
- Pay Down Debt: Use a tax refund or bonus to clear smaller loans, or consolidate multiple debts into a single loan with a lower monthly payment.
- Increase Verifiable Income: Ask for a raise, take on part-time work, or start a side business. Include all consistent income sources on your application, such as bonuses or commissions, but remember that lenders require a two-year history for secondary income.
- Adjust Your Housing Budget: A larger down payment reduces your loan amount and your monthly mortgage payment. You can also consider a lower home purchase price to keep your future housing costs down.
Step 2: Budget for Your Down Payment and Closing Costs
You should set aside money for the down payment and closing costs. Kentucky’s first time home buyer programs help make homeownership accessible and affordable.
How Much Down Payment Does a Kentucky First Time Home Buyer Need?
Typically, the down payment on a house for a first time home buyer in Kentucky usually ranges from 3% to 20% of the property’s price. However, it can vary based on the loan type. FHA loans require just 3.5% down, while some conventional loans allow a 3% down payment.
To help with these upfront costs, there are many state and local down payment assistance programs in Kentucky. They provide grants or loans to cover these expenses.
👉 First-Time Home Buyer Programs in Kentucky: Find out which is the #1 downpayment assistance program in the Bluegrass State.
How to Estimate Closing Costs in Kentucky?
Closing costs are fees and expenses paid at closing beyond your down payment. Typically, buyer closing costs in Kentucky usually range from 2% to 5% of the home’s price. So, for a $281,600 home, buyers might pay $5,632 to $14,080.
These fees cover lender charges, appraisals, inspections, title insurance, taxes, agent commissions, and recording fees when buying a property in Kentucky.
Step 3: Get Pre-Approved for a Mortgage
Secure your financing early by getting pre-approved for a mortgage as a first time homebuyer in Kentucky. This step helps you understand your budget and strengthens your offer when buying a house.
How to Get Pre-approved as a First Time Home Buyer in Kentucky?
You need to follow these steps to get pre-approved when buying a house in Kentucky:
- Gather Financial Documents: Provide proof of income (recent pay stubs and W-2s), tax returns (last two years), asset statements, debt information, and a government-issued ID.
- Choose a Lender and Apply: Compare lenders in Kentucky and submit a mortgage application to get the best rates and terms.
- Receive Pre-Approval Letter: The lender verifies your info and issues a letter stating your approved loan amount, usually valid for 30–90 days.
A mortgage preapproval turns you from a casual house hunter to a serious buyer in Kentucky, as it:
- Strengthens Your Offer: 86% of the sellers prefer buyers with a pre-approved mortgage. For the strongest position, ask for a fully underwritten pre-approval, where the lender has already verified all your documents.
- Defines Your Budget: It clarifies exactly how much you can afford, allowing you to focus your home search on a realistic price range.
- Speeds Up Closing: With much of the financial vetting already completed, the mortgage process is streamlined once your offer on a home is accepted.
Yes, you can get pre-approved and even buy a home with bad credit in Kentucky. However, your loan options may be limited. You can also expect higher interest rates with poor credit.
Step 4: Choose the Right Mortgage
As a first time homebuyer in Kentucky, assess your finances and select a loan that fits your budget and qualifies you for available programs.
| Feature | Conventional | FHA | VA | USDA |
|---|---|---|---|---|
| Min Credit Score | 620 | 580 (500 w/10% down) | No minimum | 640 |
| Min Down Payment | 5% to 20% | 3.5% | 0% | 0% |
| Max DTI | 45% to 50% | 43% to 50% | 41%+ | 41% to 44% |
| Mortgage Insurance | PMI if <20% | Always | None | Always |
| Loan Limits | $832,750 | $524,225 | $832,750 | Varies |
| Property Eligibility Criteria | Few | Must meet FHA standards | Must meet VA standards | Rural/suburban areas only |
Step 5: Decide Where to Buy a Home in Kentucky
Deciding where to buy is one of the most important steps for a first time homebuyer in Kentucky. Consider factors like local housing markets, popular neighborhoods, cost of living, and amenities to help you find the best places to live in Kentucky.
Why Now Is the Time to Buy in Kentucky
The Kentucky housing market is a seller’s market. You now have more negotiating power and a wider selection of properties to choose from:
- Housing Supply is High: Kentucky has a 3-month housing supply, which is the benchmark for a buyer’s market.
- Prices Have Stabilized: The median home price has remained relatively constant at $281,600. This allows you to set your budget with more certainty.
- Sellers are Negotiating: 33.1% of homes in Kentucky have seen price drops, signaling increased seller flexibility.
- Homes are on the Market Longer: Properties are taking an average of 47
- days to sell, which allows you to make more informed decisions.
These trends show that now is the best time to buy a house in Kentucky. According to Mauricio Umansky, founder of The Agency, the current market provides “great opportunities for buyers to be aggressive and write strong offers.”
Popular Areas for Different Buyer Types
With the market now in your favor, you can be more selective about where you buy. Use this advantage to find a neighborhood that matches your priorities, whether it’s schools, commute, or lifestyle.
- Best Areas for Families: Neighborhoods like Beaumont, Jeffersontown, and Crescent Springs are top choices for their excellent schools and family-friendly parks. If you envision life in a community designed for family connection, explore homes for sale in Louisville, KY. Properties with access to top-tier schools and parks typically range between $350,000 and $700,000.
- Best Areas for Retirees: For those seeking an active retirement, Danville, Georgetown, and Bardstown offer low-maintenance living and vibrant social activities. If you are interested in a community renowned for its active lifestyle, consider homes for sale in Danville, where prices generally range from $225,000 to $400,000.
- Best Areas for Young Adults: Cities like Newport and Covington offer thriving job markets and vibrant social scenes. If a cosmopolitan lifestyle is what you seek, browse the latest Downtown Louisville houses for sale, where you can find modern condos and apartments starting at just $200,000.
Consider the Cost of Living When Choosing a Location
When looking for the best place to buy a house in Kentucky, consider the overall cost of living, as lower home prices can be offset by higher taxes or insurance.
- High-Cost Areas: St. Matthews, Cold Spring, and Middletown are 3-5% above the national average.
- Moderate-Cost Areas: Paducah and Owensboro are near or just below the national average.
- Low-Cost Areas: Middlesboro and Madisonville are 20-30% below the national average.
Step 6: Start House Hunting in Kentucky
Once you’re pre-approved and know where you want to live, the next step is finding the right house. As a first-time home buyer in Kentucky, you have two options:
- Work with a Realtor.
- Search for homes online.
An experienced agent can give you valuable local insights and expert guidance on neighborhood trends. However, you’ll have to negotiate the buyer agent commission with the seller, which may raise the home sale price.
If you prefer to take the lead, a high-tech platform like Houzeo is what you need. Whether you’re looking for beachfront mansions, high‑rise penthouses, spacious big homes, or luxury homes in Kentucky, Houzeo has you covered. You can browse through thousands of listings, set alerts, and save your search. You can even schedule showings and submit offers, all by yourself.
Don’t Just Browse. Buy.
Your entire home purchase, managed in one place.
Download the Houzeo Mobile AppStep 7: Schedule and Attend Home Showings
After you narrow down your list of potential homes, schedule and attend showings to see each property in person. For a first-time home buyer in Kentucky, visiting homes firsthand helps you evaluate condition, layout, and neighborhood, ensuring you make an informed choice.
During the showing, ask specific questions like:
- How long has the home been on the market?
- Why is the owner selling?
- What is the age of the roof, HVAC system, and water heater?
- Are there any HOA fees or pending special assessments?
- Is the property located in a flood zone?
When buying a house in Kentucky for the first-time, check the property carefully during the open house. Look for roof sagging, foundation cracks, water stains, uneven floors, or sticking doors, which may indicate serious issues.
As a first time home buyer in Kentucky, there are three main aspects you need to focus on when shortlisting homes:
- Property Condition and Inspection: Kentucky’s climate and soil conditions can impact homes. Make sure to ensure thorough inspections for foundation issues, mold, and HVAC system reliability.
- Commute and Lifestyle: Test your commute during rush hour. Visit the neighborhood at different times to check for noise from traffic, airports, or nightlife. Ensure convenient access to key amenities like schools, groceries, and parks.
- Kentucky Home Loans/Assistance Program Eligibility: If you’re applying for a loan or first time buyer program in Kentucky, ensure that the house complies with its property requirements, or you may risk losing the assistance.
Step 8: Make an Offer
When crafting an offer, make a competitive bid but stay within your budget. As a first-time home buyer in Kentucky, consider factors like the home’s market value, recent comparable sales, and any repairs needed. This increases your chances of getting a fair deal.
Step 1: Analyze Recent Sales
Your agent will pull up real estate comps that are similar to the one you want. Focus on the final sale price, not the list price. Home prices in many Kentucky metro areas have seen modest declines, so your offer should reflect this trend.
Step 2: Adjust for the Home’s Condition
Factor in the age and condition of the roof and HVAC. If a comparable home sold for $$281,500 but had a new roof, and your target home needs a $20,000 replacement, adjust your offer to account for that expense.
Step 3: Factor in Today’s Market
With more homes for sale, you have leverage. Even home builders are lowering their prices by almost 6% to attract buyers. So, for a home that is priced fairly, offer 3% to 5% less. If it is overpriced, you can justify an even lower offer, citing both the comps and market trends.
What is an Earnest Money Deposit in Kentucky?
An earnest money deposit is a “good-faith” payment that shows you are a serious buyer. This money is held in escrow and applied towards your down payment at closing.
In Kentucky, the standard deposit is 1% to 3% of the purchase price. On a $281,500 home, this would be between $2,815 and $8,445. In highly competitive markets like Miami or Naples, sellers may expect a deposit closer to 10%.
Once your offer is accepted, you typically have 3 business days to submit the deposit to an escrow agent, such as a title company or real estate attorney.
Yes, you can get your earnest money deposit back in Kentucky, but only if you back out of the sale for the following reasons:
- The inspection reveals major issues, and you exercise the inspection contingency.
- The appraisal comes in low, and you exercise the appraisal contingency.
- You’re unable to secure the required financing, and exit during the financing contingency period
- Title issues are discovered.
Many Kentucky first time home buyers forfeit their earnest money because:
- They back out after the contingency periods expire without a valid reason.
- They violate contract terms.
- The seller meets all contract obligations, but the buyer still refuses to close.
Step 9: Conduct Home Inspections
First-time home buyers in Kentucky should schedule home inspections to uncover any issues before buying a house. You typically get the inspection report within 24 to 48 hours.
Which Kentucky Home Inspections Should You Schedule?
A standard home inspection in Kentucky isn’t enough. The state’s unique climate and weather risks require a few specialized inspections:
- General Home Inspection ($300–$600): A licensed inspector will examine everything from the roof to the foundation. They pay special attention to storm damage, proper drainage, and the age of the AC unit.
- Radon Testing ($100–$200): Radon gas is naturally occurring in parts of Kentucky and can pose health risks. Testing helps determine if mitigation measures are needed.
- Chimney and Fireplace Inspection ($100-$200): A routine check ensures safety and proper function, especially in homes with wood-burning fireplaces.
- WDI / Termite Inspection ($120–$170): A termite inspection is mandatory for government-backed loans like FHA and VA, and is highly recommended for all others. Kentucky’s warm, damp climate is a breeding ground for termites and other pests that can cause severe structural damage.
Consider Other Specialized Inspections
Based on the property, a Kentucky first-time home buyer may want to conduct additional tests. For older homes, a sewer scope can detect cracks or tree roots in the main sewer line, saving you from a $15,000 repair down the road. If you see large cracks or uneven floors, a $700 foundation inspection is worth the investment.
For rural properties, a septic inspection is essential. If the home has a pool, a separate pool inspection will check the pump, filter, and structure for costly defects.
It’s not recommended. Even if you plan to buy cheap homes in Kentucky, skipping a home inspection can lead to unexpected repair costs.
Step 10: Complete the Home Appraisal
After the inspection, your lender will typically order a home appraisal, which professionally values the property to ensure it matches your offer.
Why Do Lenders Need Appraisals?
A home appraisal in Kentucky confirms the property’s market value. Appraisers typically focus on the following parameters:
- Property Condition and Age: Appraisers evaluate the overall condition of the home, including the roof, foundation, plumbing, and electrical systems, as older or poorly maintained homes may appraise for less.
- Insurance and Mitigation Features: The age of the roof, the presence of hurricane shutters, and impact-resistant windows directly affect a home’s insurability and, therefore, its market value.
- Condo/HOA Health: Appraisers closely examine a condo association’s financial health. They look for anything that may reduce the unit’s value, like the association’s reserve funds or any pending special assessments.
A standard appraisal in Kentucky costs between 0 and 0 and typically takes 7 to 14 days to complete. For luxury or waterfront properties, the cost and timeline can be higher.
If the appraisal comes in lower than your offer price, you have an appraisal gap. In such a situation, you can either:
- Renegotiate the Price: Ask the seller to lower the price to the appraised value. In the current market, many sellers are willing to negotiate.
- Cover the Gap: If the seller won’t budge, you can choose to pay the difference in cash.
- Dispute the Appraisal: If you believe the appraiser made a factual error or used poor comparable sales, you can file for a Reconsideration of Value.
- Walk Away: If you cannot reach an agreement, your appraisal contingency allows you to cancel the contract and get your earnest money back.
Step 11: Negotiate Repairs and Credits
As a first time home buyer in Kentucky, use your home inspection results to negotiate repairs and request credits from the seller. This step can help reduce unexpected costs and ensure your new house is move-in ready.
How to Use Your Inspection Report to Negotiate Repairs?
Your negotiation strategy should center on issues that impact the home’s safety, structural integrity, and insurability. Minor cosmetic flaws are not worth fighting over and can make you seem unreasonable. It’s easy to make this mistake as a first home buyer in Kentucky.
Focus your request on these critical areas:
- Safety Hazards: This includes outdated and dangerous electrical panels, faulty wiring, or missing safety features like GFCI outlets near water.
- Structural Problems: Any issues with the foundation, load-bearing walls, or the roof structure.
- System Failures: A failing HVAC system, major plumbing leaks, or an old roof.
Get 2 to 3 written estimates from licensed contractors for any major repairs. A repair request that includes professional quotes shows you are serious and have done your homework.
Should You Ask for Repair Credit?
While you can ask the seller to perform the repairs themselves, it’s better to ask for credit instead. Credit gives you the funds to hire your own contractors and ensures the work is done to your standards, not just the cheapest way possible. It also allows the sale to proceed on schedule, without any delays.
How to Negotiate Seller Concessions
Seller concessions are a powerful tool for reducing your out-of-pocket closing costs when buying real estate in Kentucky. Here, the seller pays for some of your expenses, such as the appraisal, title insurance, or property taxes.
Your ability to negotiate concessions depends on your loan type. Each loan program sets a maximum limit on how much a seller can contribute:
| Loan Type | Minimum Down Payment | Maximum Seller Concession |
|---|---|---|
| Conventional | Less than 10% | 3% of the purchase price |
| Conventional | 10% or more | 6% of the purchase price |
| FHA Loan | Any amount | 6% of the purchase price |
| VA Loan | Any amount | 4% of the purchase price |
| USDA Loan | Any amount | 6% of the purchase price |
Step 12: Review Your Closing Costs
After negotiating repairs and credit as a first time home buyer in Kentucky, review all closing costs carefully. Check title fees, escrow, insurance, and taxes so you can finalize your budget and confidently buy your house.
Understanding Closing Costs in Kentucky
- Kentucky-Specific Taxes ($1,500+): Your closing costs will include two specific state taxes. The Documentary Stamp Tax costs $0.35 per $100 of your loan amount, while the Intangible Tax costs $0.20 per $100. On a $300,000 loan, these two taxes alone will add $1,650 to your bill.
- Title Fees ($2,000+): These fees cover the title search, settlement services, and title insurance policies for both you and your lender. In Kentucky, the party responsible for paying the owner’s title insurance varies by county.
- Third-Party Fees ($1,000 to $1,500): This category includes the appraisal fee, credit report fee, and flood certification fee. It also covers any inspections you ordered, like the general, 4-point, and WDO inspections.
- Prepaid and Escrow Costs ($3,000 to $6,000): You will pay for your first year of homeowners’ and flood insurance upfront. You will also fund your escrow account with several months of property tax and insurance payments to cover future bills.
Step 13: Close on Your New Home
Closing day is the moment you officially become the owner of your new Kentucky home. Its success depends on a careful final walk-through, a smooth funding process, and making sure all legal documents are properly signed and recorded.
Complete Your Final Walk-Through
Within 24 hours of closing, you will do one last walk-through of the property. This is not a formal inspection, but rather your final chance to see if you want this home. Use this checklist:
- Verify Repairs: Bring your inspection report and repair addendum. Confirm that all negotiated repairs have been completed to a professional standard.
- Test Everything: Run the air conditioning and test all appliances. Make sure every system is functioning as it should.
- Check for Included Items: Ensure all items that were supposed to be included in the sale, like appliances, window treatments, and light fixtures, are still in place.
- Look for Signs of Additional Damage: Make sure no new damage has occurred since your last visit. If you see any issues, notify your agent and the title company immediately before you sign any documents.
Sign the Documents
While there are numerous documents to sign, the most important ones are:
- The Closing Disclosure: You will sign the final version of this document, which outlines all your loan terms and costs.
- The Promissory Note: This is your legal promise to repay the loan. The promissory note outlines the loan amount, interest rate, repayment schedule, and maturity date.
- The Mortgage: This document secures the property as collateral for your loan.
Once you have signed everything, you will provide your “cash to close” amount via a cashier’s check or wire transfer. After your lender sends their funds to the title company, the deal is officially funded.
Get Your Keys and Celebrate
Once the deal is funded, the title company will record the new deed with the county, officially transferring ownership to you. After they pay the seller and other parties, you will finally get the keys to your new home.
Congratulations, you are officially a Kentucky homeowner! 🎉
🚩 What are the Red Flags to Look for When Buying a House in Kentucky?
A new home is a huge financial investment. To ensure that you don’t sink your money into a dud, look out for these red flags:
1. Bargain-Priced Homes
An asking price that’s significantly lower than comparable homes in the area seems like a dream come true. But that’s just until the roof collapses or faulty electrical systems burn the house down.
An extremely low price could mean the property is uninsurable, or is located in a high-risk flood zone with steep insurance costs. So before you put in an offer, check the home’s sale history and other permits from the local county’s office. Also, get insurance quotes to understand your total expense better.
2. Neighborhood Sell-Out
During the open house, if you notice too many “For Sale” signs on a single street or in a small community, it should ring alarm bells. It could be due to skyrocketing HOA fees, declining school quality, or a recent increase in crime rates. It could also point to a future nuisance, like a commercial development planned nearby.
Talk to potential neighbors to get their opinion on the area. You can also check community social media pages or online forums like Nextdoor for discussions about local issues.
3. Excessive Use of Air Fresheners
A few scented candles create a welcoming atmosphere, but if a home smells like a lavender bubble burst in it, then there’s something fishy. It may be covering up a musty smell that highlights the presence of mold and plumbing issues.
Pay close attention to the smell in the closets, bathrooms, and around the air conditioning unit. Open kitchen and bathroom cabinets and smell the area under the sink. If you detect a musty odor, ask for a separate mold inspection along with the standard home inspection.
4. Sloping or Uneven Floors
Floors that are noticeably slanted or feel bouncy can indicate foundation problems. Given Kentucky’s expansive clay soil expands when wet and contracts during dry spells. Minor settling may be acceptable in older homes, but significant slopes signal a major structural issue.
Bring a marble or a golf ball with you to showings and place it on the floor in different rooms to see if it rolls. Also, look for other signs of foundation issues, like large zigzag cracks in the drywall, especially above door frames.
5. Condensation in Windows
Fog trapped between the panes of double-glazed windows is a sign that the seal has failed. When the seal breaks, the insulating argon gas leaks out and is replaced by moisture-filled air. This compromises the window’s energy efficiency and leads to higher cooling costs in Kentucky’s hot climate.
Inspect each window and pay special attention to those that receive direct sunlight, as heat can cause seals to fail faster. If you see failed seals, get a quote for window replacement to use as a negotiating point.
What Should You Do After Closing?
Welcome home! Now it’s time to handle a few must-dos to protect your investment:
- File for Homestead Exemption: If the house is your primary residence, apply for Kentucky’s Homestead Exemption to reduce your property taxes. Eligible homeowners (typically aged 65 or older or fully disabled) can receive an annual property value reduction in dollars. This is especially helpful in higher-tax areas like Jefferson County and Fayette County.
- Set Up Utilities: Get the water, electric, internet, and trash services connected. Don’t forget pest control, especially in humid areas like Louisville, Bowling Green, and Western Kentucky, where bugs are active year-round.
- Get Insurance: Homeowners insurance is required if you’re financing, and storm insurance may be needed in FEMA zones. Rates may be higher in storm-prone areas like Western Kentucky and parts of Louisville.
- Home Maintenance Plan: Schedule AC tune-ups at least twice a year, clear gutters regularly, and inspect roofs for storm damage or algae buildup. Consider wind mitigation upgrades to reduce insurance costs.
How to Buy a House in Kentucky Without a Realtor?
Research neighborhoods and browse listings on trusted sites like Houzeo. Then, schedule showings directly with sellers or their agents. You can also hire a real estate attorney to review contracts and handle legal details.
Next, get pre-approved for a mortgage, make an offer, schedule inspections, and negotiate repairs. With the necessary due diligence, you can buy a house without a Realtor.
Which First Time Home Buyer Programs in Kentucky Can You Apply For?
Various programs make homeownership accessible for a first time home buyer in Kentucky. They assist with down payments through grants or low-interest, deferred-payment loans. Applicants must meet the income and credit score criteria and complete a homebuyer education course to avail of these programs.
| Program Name | Eligibility | Grants | Key Benefit |
|---|---|---|---|
| Kentucky Housing Corporation (KHC) Regular Down Payment Assistance (DAP) | Must be approved for a KHC First Mortgage Loan. | Up to $12,500$ ($100$ increments) for down payment/closing costs. Structured as a 15-year second mortgage (approx. 4.75% interest). | Significantly reduces cash needed at closing (can cover down payment and costs). |
| KHC Conventional Preferred / Conventional Preferred Plus 80 | First-time (and in some cases repeat) buyers statewide; meet income, credit, and property-price caps. | 30-year fixed-rate mortgage with as little as 3% down payment. Can be paired with KHC DAP for further savings. | Affordable fixed-rate mortgage + lower down payment. It is useful if savings are limited. |
| Louisville Metro DPA | Income ≤ 80% of AMI, pre-approved mortgage | Non-repayable mortgage subsidies and 0-2% loans | Assistance to reduce mortgage burden |
| FHA / VA / USDA Loans (with KHC or standalone) | FHA: first-time buyers or buyers with lower credit; VA: eligible veterans / service members; USDA: rural homebuyers meeting income & location criteria. | FHA: as low as 3.5% down; VA/USDA: $0 down for eligible buyers. When combined with KHC DAP, upfront cost can be minimized significantly. | Enables low- or no-down-payment homebuying. It is helpful for first-time buyers or those with limited savings. |
| Bank Assistance and FHA Grants | Meets lender/FHA requirements | Down payment grants up to $10,000 | FHA loans with 3.5% down |
1. Kentucky Housing Corporation (KHC) Regular Down Payment Assistance (DAP)
- Eligible Buyers: Buyers approved for a KHC first-mortgage loan.
- Credit Score: Typically 620+ depending on loan type.
- Assistance: Up to $12,500 in $100 increments for down payment and closing costs; issued as a 15-year second mortgage at ~4.75% interest.
The KHC Regular DAP is Kentucky’s primary down payment and closing cost assistance option. If you’re approved for a KHC first mortgage, you can borrow up to $12,500 as a low-interest second mortgage. This program significantly lowers the upfront cash needed at closing and is ideal for buyers who meet KHC income, purchase price, and credit requirements.
2. KHC Conventional Preferred / Conventional Preferred Plus 80
- Eligible Buyers: First-time and some repeat buyers statewide who meet income, credit, and property price limits.
- Credit Score: Generally 660+.
- Assistance: Access to 30-year fixed-rate loans with as little as 3% down, plus the option to pair with KHC DAP.
The Conventional Preferred and Preferred Plus 80 programs from KHC offer affordable 30-year fixed-rate mortgages with reduced mortgage insurance and low down payment requirements. Buyers can combine these loans with the Regular DAP to further cut their upfront costs. This makes them excellent choices for Kentuckians with limited savings who still want a competitive mortgage.
3. Louisville Metro Down Payment Assistance (DPA)
- Eligible Buyers: Households earning ≤ 80% of Area Median Income (AMI) with a pre-approved first mortgage.
- Credit Score: Varies by lender.
- Assistance: Non-repayable subsidies and 0%–2% interest loans depending on need and program funding.
The Louisville Metro DPA program helps income-eligible buyers purchase homes within the Louisville city limits. Assistance can come in the form of forgivable loans or low-interest financing designed to reduce your mortgage burden. It is especially helpful for buyers who meet AMI limits and want to stay within Jefferson County.
4. FHA, VA, and USDA Loans (Standalone or Paired with KHC)
Eligible Buyers:
- FHA: First-time or repeat buyers needing flexible credit options.
- VA: Eligible veterans, active-duty service members, and some surviving spouses.
- USDA: Rural homebuyers meeting income caps and property-location rules.
Assistance: - FHA: 3.5% down
- VA & USDA: $0 down
- Can be combined with KHC DAP to lower upfront costs even further.
These federal loan programs are popular across Kentucky, especially USDA loans in rural counties. FHA offers a low barrier to entry with flexible credit requirements, while VA and USDA provide full zero-down financing. When paired with KHC DAP, these loans can reduce your required cash at closing to almost nothing.
5. Bank Assistance and FHA Grants
- Eligible Buyers: First-time buyers who meet lender and FHA underwriting guidelines.
- Credit Score: FHA typically requires 580+ for maximum financing.
- Assistance: Bank-provided grants up to $10,000, plus FHA’s 3.5% down payment option.
Some Kentucky lenders, such as regional banks and national institutions like Bank of America, offer down payment grants, lender credits, or closing cost assistance. FHA loans complement these incentives by allowing a low 3.5% down payment and flexible credit qualifications, giving first-time buyers more ways to afford a home in Kentucky.
» First Time Buyer Programs: Find the perfect program that helps you get the key to your first home.
What Should You Know Before Buying a House in Kentucky?
Before you buy a home in the Bluegrass State, you must understand the factors that can impact your budget and lifestyle.
What are Some Additional Costs When Buying Houses in Kentucky?
Apart from the purchase price, you must account for several other expenses, like property taxes and potential HOA fees. However, the most critical consideration for any Kentucky homebuyer is insurance.
- Why Homeowners Insurance is Crucial: Kentucky’s susceptibility to severe storms, flooding, tornadoes, and wind events makes homeowners’ insurance important. This coverage protects your investment from catastrophic damage.
- High Insurance Costs: Due to these risks, the projected annual cost of homeowners’ insurance may go as high as ,060 – ,510. That’s almost 5 times the national average!
- Choosing the Right Policy: When selecting a policy, ensure it provides adequate strong wind and storm coverage. You could lower your premium by choosing a home with wind mitigation features like impact windows or a newer roof.
Do You Need Separate Flood Insurance in Kentucky?
Yes, you do. Standard homeowners’ insurance does not cover flood damage, so a separate policy is necessary for protection. FEMA maps determine your property’s flood risk:
| Flood Zone | Risk Level | Insurance Recommendation |
|---|---|---|
| A, AE, V, VE | High-Risk | Mandatory for most mortgages. These areas have at least a 1% chance of flooding annually. |
| B, C, X | Low-to-Moderate | Highly Recommended. Roughly 25% of all flood claims happen in these “lower-risk” areas. |
When is Flood Insurance Required?
Whether you need flood insurance typically depends on your property’s location, your mortgage lender, and your homeowners’ insurance provider. However, there are two main situations where flood insurance is mandatory in Kentucky:
- Federally-Backed Mortgages in High-Risk Zones: If your home is in a high-risk flood zone and you have a federally-backed mortgage, federal law requires you to have flood insurance.
- Citizens Property Insurance Policies: Kentucky state law requires most homeowners with policies from Citizens Property Insurance to have flood insurance. As of January 1, 2025, this applies to all homes insured by Citizens with a value of $500,000 or more, regardless of their flood zone.
Why First-Time Homebuyers Should Explore Kentucky Now?
Kentucky is a smart choice for first-time buyers, thanks to its steady job market and a market that now favors buyers. From the vibrant urban energy of Louisville to the small-town charm of Bowling Green, there’s a community for every budget.
With thousands of homes for sale and numerous down payment assistance programs, homeownership is more attainable than ever.
» Houzeo Reviews: Read what customers have to say about Houzeo, Kentucky’s best home buying website.
