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Down Payment Assistance is Back!

New KHC Program Offers Down Payment Assistance, Opens Doors for Wide Range of Homebuyers

For those would-be homebuyers for whom a down payment is an obstacle to owning a home, help has arrived. Just when down payment assistance seemed to be a thing of the past, a new Kentucky Housing program allows buyers to combine a down payment assistance loan with great interest rates, getting them in the door of that new home for much less. Smart homebuyers can also take advantage of the Mortgage Credit Certificate (if it is your first home) which may allow you to reduce the amount of federal income tax you pay. For more information on MCC download the KHC-MCC-Flyer.

In many cases, buyers will be able to get in the door of a new home for around 1.5% of the total home price, including their earnest money deposit and closing costs.

Greater Eligibility

Unlike past Kentucky Housing Programs, which were available to a more limited range of buyers, the new program opens up a much greater range of buyer eligibility.

  • Income limits are higher and can be based on a single borrower as opposed to a total household income.
  • Non-first time homebuyers are now eligible.
  • Homes can have a purchase price of up to $243,000
  • Some buyers will also qualify for even greater savings with Mortgage Credit Certificates (MCC's), which are now able to be combined with KHC loans. The MCC is a tax credit that saves qualifying homebuyers thousands of dollars over the life of their loan.

New Income Limits

The new income limits for Kentucky Housing loans are based on annual borrower income, and vary by county. Here's how they break down for Central Kentucky and the Louisville area:

Fayette, Woodford, Jessamine and Scott Counties - $114,625
Jefferson and Oldham Counties - $108,150

How the Down Payment Assistance Program (DAP) Works

A minimum of 3.5% down payment is required with this loan. Down payment assistance loans are available from $4000-$6,000, and are paid back over a period of ten years. They are typically offered to buyers with limited cash reserves and carry an interest rate of 6%. These loans can make a critical difference to buyers for whom the down payment is an obstacle. Buyers whose 3.5% down payment is less than the $6000 limit may choose to use the remainder of a down payment loan to pay closing costs, further reducing the amount needed to bring to closing.

How to Know if it's Right for You

Talk to your lender about the new programs and let them walk you through the process. Kentucky Housing Loans are available through Walden Mortgage Group and more than a hundred other partner banks and mortgage companies in Kentucky. The loan application, approval, and closing process is handled through the same channels as any other type of home loan.

Walden Mortgage Group is a full service lender, offering a wide variety of loan programs, and convenient locations in both the Lexington and Louisville area. They can be contacted in Lexington at (859) 514-4444 and Louisville at (502) 213-9000. Visit their website at www.waldenmg.com.

How the Programs Were Created

The new programs, which were introduced in mid-August are the result of legislation approved in April 2011 by the Kentucky State Legislature. The programs opened the door to greater homebuying opportunities for Kentuckians by significantly raising income limits for KHC loans, which have traditionally been available only to first time homebuyers with limited incomes. Kentucky Housing Loans are especially desirable for buyers without a lot of cash on hand to begin their home ownership investment, since they are one of the few remaining programs that allow down payment assistance programs. They are also fixed rate loans at or near market rates, which make them an excellent choice for homebuyers.

Future programs that are expected to be rolled out in September 2011 by KHC will include VA and RHS products, which are 100% loan types that will give buyers even more options.

Where do I go next?

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