Home Loans in Kentucky
Financing your home: VA, FHA, USDA, conventional & more
The right loan can save you thousands and may mean little or no money down. Here's a plain-English breakdown of every major option for buyers in Grayson County, Hardin County and around Fort Knox.
Loan options at a glance
A quick side-by-side. Details on each loan are below.
| Loan | Typical minimum down | Mortgage insurance | Best for |
|---|---|---|---|
| VA | $0 | None (one-time funding fee, often waived for disabled veterans) | Veterans, service members, some surviving spouses |
| USDA | $0 | Small upfront and annual guarantee fee | Rural and small-town buyers within income limits |
| FHA | 3.5% | Upfront and monthly MIP | Lower credit scores, first-time buyers |
| Conventional | 3–5% | PMI until about 20% equity, then it can be removed | Good credit, any property type, second homes |
| KHC | Down payment help available | Depends on the loan paired with it | Kentucky first-time and moderate-income buyers |
| Jumbo, land, construction | Usually 10–20%+ | Varies | Higher-priced homes, raw land, farms, building new |
Figures are typical guidelines, not guarantees. Programs, fees, and limits change, and your lender will confirm what you qualify for.
For veterans & military
VA loan
Backed by the U.S. Department of Veterans Affairs, the VA loan is one of the best mortgage programs available, and one many eligible buyers underuse.
- No down payment in most cases
- No monthly mortgage insurance
- Competitive interest rates
- Benefit can be used more than once
- Funding fee waived for many veterans receiving VA disability compensation
Good to know
- You'll need a Certificate of Eligibility (COE), which your lender can usually pull for you
- A one-time VA funding fee applies unless you're exempt
- The home must meet VA minimum property requirements
- It's for a home you'll live in, not raw land or pure investments
Eligible: veterans, active-duty service members, many Guard and Reserve members, and some surviving spouses. PCSing to Fort Knox? See the PCS guide →
Great for rural Kentucky
USDA loan
USDA Rural Development loans help buyers in eligible rural areas buy with no money down. Much of Grayson County and the surrounding countryside may qualify.
- No down payment
- Competitive rates, often below other low-down-payment options
- Lower guarantee fees than FHA mortgage insurance in many cases
- You don't have to be a first-time buyer
Good to know
- The property must be in an eligible area. Check the USDA eligibility map
- Household income limits apply, based on the county and family size
- For a primary residence only
- Small upfront and annual guarantee fees
Flexible credit
FHA loan
Insured by the Federal Housing Administration, FHA loans are popular with first-time buyers and anyone rebuilding credit.
- As little as 3.5% down with a qualifying credit score
- More forgiving credit and debt-to-income guidelines
- Down payment can come from gift funds
- Can be paired with Kentucky down payment assistance
Good to know
- Mortgage insurance (MIP) includes an upfront premium plus a monthly premium, often for the life of the loan
- FHA loan limits vary by county
- The home must meet FHA property standards
- For a primary residence only
Most common
Conventional loan
A conventional loan isn't backed by a government agency. It's the most common type of mortgage and the most flexible on property type.
- As little as 3% down for some first-time buyer programs
- PMI can be removed once you reach enough equity
- No PMI at all with 20% down
- Works for primary homes, second homes, and investment properties
Good to know
- Usually needs stronger credit than FHA
- Private mortgage insurance (PMI) applies with less than 20% down
- Loan amounts above the conforming limit become jumbo loans
Kentucky programs
Kentucky Housing Corporation (KHC)
KHC is Kentucky's state housing finance agency. Through approved lenders, it offers first-mortgage programs and down payment assistance to help eligible buyers cover the down payment and closing costs.
- Help with down payment and closing costs
- Pairs with FHA, VA, USDA, and conventional loans
- Homebuyer education to help you prepare
Good to know
- Income and purchase-price limits apply
- Assistance amounts and terms change, so ask a KHC-approved lender for current details
- Learn more at kyhousing.org
Special situations
Other loan options
Jumbo loans
For loan amounts above the conforming limit. Expect stronger credit, larger down payments, and more cash reserves.
Land & lot loans
Raw land usually needs a land loan from a local bank or credit union, often with 20% or more down. See the land value guide.
Farm loans
Working farms and large acreage are often financed through farm-credit lenders or agricultural loan departments at local banks.
Construction loans
Buy land and build. Some lenders offer one-time-close construction loans, including VA and FHA versions.
Renovation loans
Programs like FHA 203(k) roll repair costs into your mortgage, which is useful for homes that need work.
Manufactured homes
Many loan types can finance manufactured homes on a permanent foundation with land. Requirements vary by program.
How to get pre-approved
A pre-approval tells you what you can afford and shows sellers you're a serious buyer. Do it before you start touring homes.
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Talk to a lender
Share your goals, income, and the type of home you want. They'll recommend the right loan.
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Send your documents
Pay stubs, W-2s or tax returns, bank statements, and photo ID. Veterans: your DD-214 or a Statement of Service.
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Get your pre-approval letter
You'll know your price range and estimated payment, and your offers will carry more weight.
Costs to plan for besides the down payment
- Earnest money when your offer is accepted (applied toward your purchase)
- Home inspection, plus well, septic, or radon tests on rural homes
- Appraisal fee
- Closing costs, which can sometimes be negotiated for the seller to pay
- Prepaids: homeowners insurance and property-tax escrow
Steven's preferred lender
Ready to get pre-approved?
Kendall Breen
Motto Mortgage Home Group · Elizabethtown, KY
NMLS #2212216
- Conventional
- FHA
- VA
- USDA
- KHC
- Jumbo
"Kendall did the loan on my own house and has helped many of my clients. She's genuinely my preferred lender."Steven Gibson
This is a personal recommendation. Steven receives no compensation for referring you, and you're free to use any lender you choose. Steven Gibson and RE/MAX Executive Group are not lenders, and loan approval, rates, and terms are determined by the lender.
Financing FAQ
Which loan is best for me?
It depends on your service history, credit, income, savings, and the property. Veterans usually come out ahead with VA. Rural buyers within income limits should look at USDA. FHA helps when credit needs work, and conventional often wins with good credit and some savings. A lender can compare them side by side for you.
What credit score do I need to buy a home?
It varies by loan and lender. FHA is generally the most flexible, while conventional loans usually want stronger scores. Even if your credit isn't where you want it, a lender can often give you a plan to get there.
Can I buy a home with no money down?
Yes. VA and USDA loans often require no down payment, and Kentucky Housing Corporation programs can help with down payment and closing costs on other loans. You'll still want some savings for earnest money, inspections, and moving.
What's the difference between pre-qualified and pre-approved?
A pre-qualification is a quick estimate based on what you tell a lender. A pre-approval means the lender has reviewed your actual documents and credit, which is much stronger when you make an offer.
Can the seller help with my closing costs?
Often, yes. Sellers can agree to pay some of your closing costs, within limits set by your loan program. Steven can help you decide whether to ask for it as part of your offer.
Pre-approved and ready to look?
Tell Steven what you're looking for and he'll start sending homes that fit your budget.
This page is general information, not a loan offer or financial advice. Loan programs, limits, fees, and eligibility rules change. Confirm all details with a licensed mortgage lender.