Last updated: April 2026 · Program availability changes frequently
Down Payment Assistance in Louisville: Overview
Louisville buyers can access up to $10,000 in deferred down payment assistance through Kentucky Housing Corporation, stack it with a local trust fund program for a combined $18,000, and add a federal tax credit worth approximately $4,200 per year. The barrier is not the money. The barrier is that KHC does not have the brand recognition of Ohio's OHFA or Indiana's IHCDA, so buyers assume Kentucky does not have competitive programs. That assumption is wrong and it costs real money.
Kentucky Housing Corporation is one of the most consistent, well-funded state housing agencies in the South. The KHC Affordable Down Payment Assistance program delivers $10,000 deferred at 1% simple interest for buyers at or below 80% AMI. The Regular DPA provides $7,500 to qualifying buyers above that income threshold. Both require a 620 credit minimum, which is more accessible than what most comparable state programs require. On a $260,000 Louisville purchase, the FHA down payment is $9,100 and closing costs run approximately $6,000. The KHC Affordable DPA alone covers 66% of total cash needed. Stack the Louisville Metro Affordable Housing Trust Fund on top and the buyer can reach the closing table with zero out of pocket.
The KHC Mortgage Credit Certificate adds another layer that most buyers never claim. The MCC provides a 25% federal tax credit on mortgage interest paid each year. On a $240,000 mortgage at 7%, that is approximately $4,200 per year in direct tax savings. The MCC must be applied for at closing. Buyers who close without it cannot add it retroactively. For a buyer who qualifies, skipping the MCC is the equivalent of declining $4,200 per year in free money.
Louisville is the largest city in Kentucky, the bourbon capital of the world, home to UPS Worldport and three major health systems, and host to a University of Louisville campus with 22,000 students. The metro's median home price of approximately $260,000 sits well below the FHA loan limit of $472,030. The gap between what people assume about Kentucky's programs and what KHC actually offers is the central story of the Louisville market. The buyers leaving money on the table are not doing so because programs do not exist. They are doing so because no one told them to look.
Quick Answer
Yes. Louisville has a statewide KHC program offering $7,500 (Regular DPA) or $10,000 (Affordable DPA for buyers at 80% AMI) deferred with no monthly payment, plus a federal MCC tax credit worth approximately $4,200 per year. Louisville Metro periodically funds additional DPA through the Affordable Housing Trust Fund.
On a $250,000 FHA purchase: the FHA down payment is $8,750 and closing costs run $5,500 to $7,000, totaling approximately $14,250 to $15,750 needed. KHC Affordable DPA ($10,000) plus Louisville Metro Trust Fund ($8,000) equals $18,000, covering 100% of the cash requirement. Buyer out of pocket: $0.
For buyers above 80% AMI: KHC Regular DPA ($7,500) covers 48-53% of total cash needed on the same $250,000 purchase. Add the KHC MCC and the buyer receives $4,200 per year in federal tax credits on top of the DPA assistance.
KHC and Louisville City Programs
KHC Regular Down Payment Assistance
The baseline KHC product. No monthly payment. No interest. Due on sale or refinance. Available to buyers between 80% and approximately 110% AMI who exceed the Affordable DPA income threshold. Any buyer who qualifies for both should always choose Affordable DPA over Regular DPA. Contact KHC at kyhousing.org or 502-564-7630.
KHC Affordable Down Payment Assistance
The stronger product for lower-income buyers. $2,500 more than Regular DPA at minimal cost: 1% simple interest accumulates on the balance but no monthly payment is ever required. For a buyer at 80% AMI who qualifies, there is no scenario where Regular DPA is the better choice. The interest differential on $10,000 at 1% over a typical hold period is negligible. Always select Affordable over Regular when income qualifies.
KHC Homebuyer Tax Credit (Mortgage Credit Certificate)
The most underused KHC benefit. The MCC is a dollar-for-dollar federal income tax credit, not a deduction. On a $240,000 mortgage at 7% interest, the first year's interest is approximately $16,800, and 25% of that is $4,200 directly off your federal tax bill. It stacks with KHC Regular DPA, KHC Affordable DPA, or any other program. It must be applied for at closing. Buyers who close without it cannot claim it retroactively. Every eligible Louisville buyer should apply for the MCC at closing without exception.
Louisville Metro Affordable Housing Trust Fund
Louisville Metro periodically channels funds through the Affordable Housing Trust Fund to support homebuyer DPA programs. Amounts vary by funding cycle. Programs open and close based on appropriations. Contact Louisville Metro's Office of Housing directly at (502) 574-5070 before planning your purchase around this program. When active, it stacks with KHC programs to push the combined assistance above $18,000 for 80% AMI buyers.
Louisville Urban League Homeownership Program
The Louisville Urban League provides homebuyer education and counseling that connects buyers to available DPA resources. Some KHC and local programs require HUD-approved homebuyer counseling as a prerequisite. The Urban League is a recognized counseling provider. Buyers who need required counseling for KHC or Louisville Metro programs can complete it here. Call (502) 585-4622 or visit louul.org to schedule.
USDA Rural Development (Suburban Louisville Areas)
Louisville buyers targeting suburban-adjacent areas should check USDA eligibility by address. Parts of Bullitt County, Spencer County, and Oldham County may qualify for USDA Rural Development zero-down financing. The Louisville Metro core and most of Jefferson County are not USDA-eligible, but buyers looking in Shepherdsville, Mt. Washington, or rural Oldham County properties should verify before assuming USDA is unavailable. Check eligibility by address at eligibility.sc.egov.usda.gov.
The Indiana line matters: Louisville Metro sits on the Kentucky-Indiana border. Buyers purchasing in Clark County, Indiana (New Albany, Jeffersonville, Clarksville) use IHCDA programs, not KHC. These are entirely separate state systems. If you are considering both sides of the river, verify which state programs apply to your specific purchase address before proceeding. KHC applies only to Kentucky properties.
How DPA Programs Work in Louisville
KHC Deferred DPA Structure
Both KHC Regular DPA ($7,500 at 0%) and KHC Affordable DPA ($10,000 at 1%) are structured as deferred second mortgages. No monthly payment is required. The balance is due when you sell, refinance, or transfer the home. For buyers who stay in the home long-term, the deferred repayment structure means the DPA effectively functions like a forgivable grant for the duration of occupancy. The 1% simple interest on Affordable DPA is minimal: on $10,000 over 7 years, the accumulated interest at payoff is approximately $700.
KHC Mortgage Credit Certificate
The MCC is a federal benefit administered through KHC. It converts 25% of your annual mortgage interest into a direct federal tax credit. This reduces your federal income tax liability dollar-for-dollar. On a $240,000 mortgage at 7%, year one interest is approximately $16,800. The MCC converts $4,200 of that into a tax credit. This benefit applies every year you hold the loan as a primary residence. Unlike DPA which is received once at closing, the MCC compounds in value over time and is the single most valuable per-dollar KHC benefit for buyers who hold long-term.
Louisville Metro Trust Fund
Louisville Metro's Affordable Housing Trust Fund is a city-level supplement to KHC programs. It is appropriations-dependent, meaning it opens and closes based on available city funding. When active, it stacks cleanly with KHC products. Buyers at 80% AMI who combine KHC Affordable DPA with the Trust Fund can reach zero out-of-pocket on a $250,000 FHA purchase. Always call (502) 574-5070 to confirm current availability before designing a stack that includes this program. Do not go under contract assuming it is active.
Stacking in Louisville
KHC DPA provides the second mortgage layer. The MCC provides the federal tax benefit. Louisville Metro Trust Fund provides the supplemental city layer when funded. The KHC first mortgage is the foundation all products build on. Buyers must use a KHC-approved lender who can originate the first mortgage and all layered products together. Not every Louisville mortgage company offers KHC products. Finding an approved lender who understands the full stack is the most important first step in the Louisville process. Verify approved lenders at kyhousing.org.
Get Your Free Louisville DPA Action Plan
Tell us about your situation and we will put together a personalized guide to the programs you may qualify for.
We are putting together your action plan.
Check your email for next steps. In the meantime, you can also schedule a free consultation.
Schedule a Free ConsultationRelated Pages
This guide is for informational purposes only and is not a commitment to lend. Program availability, terms, and eligibility requirements change frequently. All program details should be verified directly with the administering agency or an approved lender before making financial decisions. DownPaymentScout is an independent resource and is not affiliated with any government agency or lending institution. Information is believed accurate as of the date shown but is not guaranteed. Last updated April 2026. Program availability changes frequently. Verify all KHC programs at kyhousing.org and Louisville Metro programs at (502) 574-5070.