Kentucky Home Loans & Mortgage Rates
Uniform $541,287 FHA limit across all 120 counties, KHC DPA up to $10,000, low property taxes (0.80-0.86%), and exceptional affordability from Louisville to Lexington.
Median Price
$240,000
YoY Change
+4.2%
Days on Market
50 days
Market
2.8 months
Kentucky offers exceptionally affordable homeownership with two growing metros that anchor the state’s economy. Louisville is the largest market, powered by healthcare (Humana, Norton Healthcare), logistics (UPS Worldport hub), and bourbon/manufacturing. Lexington is the state’s second city, driven by the University of Kentucky, healthcare, and the iconic horse industry. With a statewide median of about $240,000, Kentucky is one of the most accessible states for first-time buyers.
Jefferson County (Louisville) has a median around $245,000. Fayette County (Lexington) approximately $285,000. Oldham County (suburban Louisville) is the priciest at roughly $380,000. Boone/Kenton/Campbell counties (Northern KY, Cincinnati suburbs) range $250,000-$300,000. Warren County (Bowling Green) about $250,000. Daviess County (Owensboro) approximately $195,000. Eastern Kentucky and Appalachian counties commonly under $125,000.
Kentucky’s FHA limits are uniform at $541,287 across all 120 counties. At Kentucky price points, FHA limits are more than double the median. The Kentucky Housing Corporation (KHC) runs programs providing competitive rates and up to $10,000 in DPA. Kentucky has low property taxes (0.80-0.86%) and moderate closing costs.
2026 Loan Limit Takeaways
100% uniform at $541,287. More than double the $240,000 statewide median. Even Oldham County ($380K) is well within range. FHA is the most accessible loan type across all 120 Kentucky counties.
Down Payment Assistance Notes
KHC’s $10,000 DPA on a $240,000 home covers the full FHA down payment ($8,400) with funds remaining for closing costs. The KHC programs are available statewide through approved lenders. All programs require homebuyer education. The MCC tax credit adds ongoing annual savings beyond the initial DPA.
Closing Costs in Kentucky
Kentucky has moderate closing costs with a simple structure.
Transfer Tax: $0.50 per $500 of consideration (approximately 0.10%). Typically seller-paid. On a $240,000 home, about $240.
Mortgage Recording Tax: Kentucky does not impose a separate mortgage recording tax. Standard recording fees apply.
Attorney State: Kentucky traditionally uses attorneys at closing. Attorney fees typically $500-$1,500.
Title Insurance: Typically $700-$1,500.
Estimated Total Buyer Closing Costs: On a $240,000 purchase, expect approximately $3,600-$8,400 (1.5-3.5%). Kentucky’s minimal transfer tax and affordable home prices keep costs low. The attorney requirement adds modestly.
Property Taxes in Kentucky
Kentucky property taxes are low, well below the national average.
Statewide Average: Approximately 0.80-0.86% effective rate.
State Property Tax: Kentucky imposes a small state property tax of approximately $0.122 per $100 of assessed value. County and school district taxes are additional.
County Effective Rates: Jefferson County (Louisville) approximately 0.93%. Fayette County (Lexington) about 0.87%. Boone County approximately 0.85%. Oldham County about 0.80%. Warren County approximately 0.75%.
Homestead Exemption: Kentucky offers a homestead exemption for homeowners 65+ that exempts approximately $46,350 (2025) of assessed value from property taxes. Annual inflation adjustments apply.
On a $245,000 Louisville home, expect approximately $2,280/year. In Lexington on a $285,000 home, about $2,480. In eastern Kentucky on a $125,000 home, approximately $875-$1,000. Kentucky property taxes are very manageable.
USDA Loan Eligibility in Kentucky
Kentucky has the most extensive USDA eligibility in the region.
Eastern Kentucky (Appalachian counties) is broadly eligible: Pike, Floyd, Knott, Letcher, Perry, Breathitt, Owsley, Lee, and dozens more. Central Kentucky between Louisville and Lexington has eligible areas. Western Kentucky outside Bowling Green and Paducah (Henderson, Union, Muhlenberg, Todd, Logan, Hart counties). Southern Kentucky along the Tennessee border (Wayne, Clinton, Cumberland, Monroe, Metcalfe).
Commuter-friendly USDA areas include outer Spencer, Nelson, and Anderson counties (Louisville commuter), outer Jessamine and Clark counties (Lexington commuter), and areas along I-65, I-75, and I-64 corridors. With home prices under $125,000 in many eligible areas, USDA zero-down financing makes Kentucky one of the most accessible states for rural homeownership.
KY Loan Limits by County
2026 FHA and conforming loan limits for major Kentucky counties.
| County | FHA Limit (1-unit) | Conforming Limit | High-Cost |
|---|---|---|---|
| Boone County (Florence) | $541,287 | $832,750 | No |
| Bullitt County (Shepherdsville) | $541,287 | $832,750 | No |
| Campbell County (Newport) | $541,287 | $832,750 | No |
| Christian County (Hopkinsville) | $541,287 | $832,750 | No |
| Daviess County (Owensboro) | $541,287 | $832,750 | No |
| Fayette County (Lexington) | $541,287 | $832,750 | No |
| Hardin County (Elizabethtown) | $541,287 | $832,750 | No |
| Jefferson County (Louisville) | $541,287 | $832,750 | No |
| Kenton County (Covington) | $541,287 | $832,750 | No |
| Madison County (Richmond) | $541,287 | $832,750 | No |
| McCracken County (Paducah) | $541,287 | $832,750 | No |
| Oldham County (La Grange) | $541,287 | $832,750 | No |
| Pike County (Pikeville) | $541,287 | $832,750 | No |
| Scott County (Georgetown) | $541,287 | $832,750 | No |
| Warren County (Bowling Green) | $541,287 | $832,750 | No |
Down Payment Assistance in Kentucky
Programs from Kentucky Housing Corporation (KHC) and local agencies.
KHC Regular DPA
Repayable Second Mortgage
KHC Regular DPA
Up to $10,000 as a repayable second mortgage with a fixed interest rate. Monthly payments required. Must pair with KHC first mortgage (30-year fixed). 620 credit minimum. Income and purchase price limits vary by county. Available to first-time buyers and repeat buyers in targeted areas. Homebuyer education required.
Amount
Up to $10,000
Income Limit
KHC income limits (vary by county)
Eligible Loans
FHA, VA, USDA, Conventional
KHC Affordable DPA
Forgivable Second Mortgage
KHC Affordable DPA
Up to $10,000 as a forgivable second mortgage for lower-income buyers. May be forgiven over time if conditions are met. Must pair with KHC first mortgage. More restrictive income limits than Regular DPA but better forgiveness terms.
Amount
Up to $10,000
Income Limit
Lower income limits (varies)
Eligible Loans
FHA, Conventional
KHC Mortgage Credit Certificate (MCC)
Federal Tax Credit
KHC Mortgage Credit Certificate (MCC)
Federal tax credit of up to 25% of annual mortgage interest paid, capped at $2,000/year. Can be combined with DPA. First-time buyers or targeted area purchases. Provides ongoing annual savings.
Amount
Up to 25% of mortgage interest (capped at $2,000/year)
Income Limit
KHC income limits
Eligible Loans
FHA, VA, Conventional
Closing Costs & Taxes in Kentucky
Transfer Taxes
Transfer tax $0.50 per $500 (approximately 0.10%). Typically seller-paid. On a $240,000 home, about $240. No mortgage recording tax. Standard recording fees apply.
Closing Notes
Attorney state — fees typically $500-$1,500. Title insurance $700-$1,500. Budget 1.5-3.5% of purchase price for buyer closing costs. Minimal transfer tax and affordable prices keep costs low.
Property Tax Rate
State average: 0.80-0.86%
Homestead exemption for homeowners 65+ exempts approximately $46,350 (2025) of assessed value from property taxes. Annual inflation adjustments apply.
USDA Eligible Areas in Kentucky
Extensive USDA eligibility across the state. Eastern Kentucky (Appalachian counties) broadly eligible. Central Kentucky between Louisville and Lexington, western Kentucky outside Bowling Green and Paducah, and southern Kentucky along the Tennessee border all have qualifying areas. Commuter-friendly areas along I-65, I-75, and I-64 corridors also qualify.
Check USDA eligibility map →Kentucky Mortgage FAQ
What are the FHA loan limits in Kentucky for 2026?
Uniform $541,287 across all 120 counties. More than double the $240,000 statewide median. FHA is highly accessible across all Kentucky markets.
How does KHC DPA work?
KHC offers up to $10,000 in down payment assistance paired with a competitive 30-year fixed-rate first mortgage. Available as repayable or forgivable second mortgage depending on the program. 620 credit minimum. Income limits vary by county. Homebuyer education required. On a $240,000 home, $10,000 covers the full FHA down payment with funds remaining.
Is Northern Kentucky part of Cincinnati's market?
Yes. Boone, Kenton, and Campbell counties form the Northern Kentucky suburbs of Cincinnati. Medians range $250,000-$300,000. The $541,287 FHA limit applies. These buyers benefit from Kentucky's lower property taxes (0.85%) vs. Ohio (1.25%+) while accessing Cincinnati's job market.
How do Kentucky property taxes compare?
Low at 0.80-0.86% effective rate, well below the national average. On a $245,000 Louisville home, expect about $2,280/year. Kentucky also offers a homestead exemption for seniors 65+ exempting approximately $46,350 of assessed value.
What about eastern Kentucky and Appalachian areas?
Eastern Kentucky offers some of the most affordable homeownership in America with medians under $125,000. USDA zero-down financing is broadly available. KHC DPA programs work statewide. The $541,287 FHA limit is roughly 4x the typical purchase price in these areas.
Does Kentucky have a transfer tax?
Minimal. Only 0.10% ($0.50 per $500), typically seller-paid. No mortgage recording tax. Combined with affordable prices and attorney fees of $500-$1,500, Kentucky's total closing costs are very manageable at 1.5-3.5%.
Are there military benefits for Kentucky homebuyers?
Yes. Kentucky is home to Fort Knox (Hardin County), Fort Campbell (on the Tennessee border), and the Blue Grass Army Depot. VA loans offer zero down. KHC programs work with VA loans. Kentucky's affordable prices and low property taxes are ideal for military families.
Are USDA loans available in Kentucky?
Extensively. Kentucky has some of the most USDA-eligible territory in the eastern US. Eastern Kentucky, western Kentucky, and rural central Kentucky all qualify. Zero-down USDA plus sub-$125,000 prices makes rural Kentucky among the most affordable places to own a home anywhere.