How much of a down payment do I need to buy a house in Kentucky?

Kentucky offers up to $10,000 in assistance for down payment and closing costs to home buyers in the form of a 10-year second mortgage that requires a monthly payment. Although many home buyers in Kentucky will qualify for this assistance, you can also get a zero down payment mortgage through VA or the USDA. In addition, conventional mortgages typically only require 3% down, and FHA mortgages just 3.5%.

How much are closing costs in Kentucky?

Kentucky is one of the most affordable states for closing costs. If you're buying a home, you can expect your closing costs to average $2,802. If you're simply refinancing an existing home, even better -- your closing costs will average $1,907.

What does homeowners insurance cost in Kentucky?

Kentucky homeowners insurance can be kind of pricey, at 38% more than the national average. If you're insuring your home for $200,000, you'll pay $3,082 on average, $849 more than the national average of $2,233.

What is the property tax rate in Kentucky?

Kentucky is 36th out of 50 states when it comes to property tax as a percent of property value. The average property tax rate in Kentucky is 0.72% of your home's assessed value.

Kentucky Mortgage Calculator

Kentucky is a state full of potential, with every kind of environment you can imagine, from quiet rural spaces to busy urban areas. The Bluegrass State has a lot to offer, along with a rich history that includes the famous Bourbon Trail.

If you're moving to the state, or just moving around within it, you'll want to be armed with all the numbers to make your Kentucky mortgage a reality -- this Kentucky mortgage calculator can help. Just enter the right data in the right fields, press the button, and you'll have a good idea of what to expect when you go shopping this real estate season.

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Kentucky is a state full of potential, with every kind of environment you can imagine, from quiet rural spaces to busy urban areas. The Bluegrass State has a lot to offer, along with a rich history that includes the famous Bourbon Trail.

If you're moving to the state, or just moving around within it, you'll want to be armed with all the numbers to make your Kentucky mortgage a reality -- this Kentucky mortgage calculator can help. Just enter the right data in the right fields, press the button, and you'll have a good idea of what to expect when you go shopping this real estate season.

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Kentucky housing market 2024

Kentucky's real estate market has been pretty slow and steady over the last few years, but it has been consistently rising. Since January 2019, the median sales price of a home in the state has gone from $162,600 to $242,800 in January 2024, a 49.32% increase. Despite that, Kentucky is still an incredibly inexpensive place to call home compared to the national median home sales price.

The winter season tends to be a pretty slow time for real estate, but Kentucky homes still only spent about 49 days on the market in January 2024. Supply there still remains low, with about three months of inventory available to buyers, pushing up the percentage of homes that sold above their list price to 16.7%. The average home seller got 97.1% of their asking price in January 2024, indicating that Kentucky markets are still competitive.

Although Kentucky might not be the most difficult place to find your next home, it can still be a good idea to be ready ahead of time. Spend some time talking to the best mortgage lenders to help you choose a loan that's right for your needs in Kentucky. You may have more options than you think, depending on where in the state you buy.

Here's a quick peek at some of the most important Kentucky markets and how things are doing there.

Metropolitan Area	Median Home Value	1-Year Change
Bowling Green	$242,000	(9.38%)
Covington	$214,900	22.1%
Lexington	$310,343	8.9%
Louisville	$235,000	14.6%
Owensboro	$180,000	12.6%

Data source: Redfin. Figures accurate as of Feb. 29, 2024.

How do I calculate my mortgage payment?

Most people opt out of doing their own mortgage math and instead take advantage of a mortgage calculator like this one. But, if you want to see how it all goes together, here's the basic formula:

There are three parts to your basic mortgage payment:

Principal: The principal is how much money you borrowed if it's your first payment, or how much you still owe, if it's any payment after that. It doesn't include interest.
Interest: Interest is the amount you pay, essentially, for the privilege of borrowing money. Very rarely is it free to borrow a mortgage (though there are some first-time home buyer second mortgages that do have 0% interest).
Term: The term is how many of your mortgage payments remain. In the above equation, it's referred to as "months," which is correct for that calculation. You can also express the term in years, when appropriate, such as when you say that you're getting a 30-year fixed interest mortgage loan.

These items, taken together and put through the above calculation, result in your mortgage payment, also known as "P+I" or "PI" since it's only your principal amount and your interest amount calculated together.

Additional items may be included in your monthly payment, if your loan escrows additional expenses on your behalf. These would include things like:

Homeowners insurance
Mortgage insurance (PMI for conventional loans, MIP for FHA loans)
Flood insurance
Property taxes
Homeowners association dues
Additional assessments

To calculate your new mortgage with these additional expenses included, just click "Show additional inputs" on the mortgage calculator above and add your estimated figures. It will get you a very close estimate of what to expect.

Things to know before buying a house in Kentucky

Kentucky real estate prices are definitely affordable for many, but so are their property taxes. In Kentucky, the average property tax rate is 0.72% of a property's assessed fair market value, making the state 36th in the nation. If your home in Kentucky is assessed at $117,800, for example, you'll only pay $843 per year.

Kentucky's climate, like many others, is changing, though much of Kentucky is seeing a slower increase in temperature than a lot of the country. Rainfall, however, is increasing, with more rain falling at once, which can have the paradoxical effect of reducing groundwater supplies.

Due to the more intense rain events, flooding is becoming a more significant weather problem in parts of the state, and tornadoes and winter storms are issues across Kentucky. Because of these weather hazards, it's important to seriously consider more than just a basic homeowners insurance policy. Additional coverage like wind or flood insurance can help you recover when the most brutal weather strikes -- remember, your homeowners policy won't always pay for these hazards.

Once you have a ballpark price for that from your insurance agent, plug that number into the Kentucky mortgage calculator to help give you a better estimate of your overall payment.

Tips for first-time home buyers in Kentucky

If you're a resident of Kentucky, there's good news! You may be able to get down payment assistance through the Kentucky Housing Corporation. It only has one option for down payment assistance, but many Kentucky buyers may qualify. Here are the details:

Purchase price must be below $481,176
Income is based on county, but cannot exceed $101,100 for a one-to-two person household.
Down payment and closing costs assistance up to $10,000
Assistance terms: 10-year loan at 3.75%

Advice for all first-time borrowers

Regardless of which home mortgage program you use, and whether you choose to take advantage of first-time home buyer programs in Kentucky, you'll need to become the very best version of yourself when it comes to your financial profile.

This means ensuring you:

Continue to make your bill and debt payments on time
Keep your credit card utilization low
Pay down debt to improve your debt-to-income ratio
Don't change jobs (and if you do, stay in your same industry with a pay increase)
Don't open any new credit accounts until after closing

Applying for new credit or closing accounts while you're in underwriting can spell disaster for your mortgage. The best thing to do once you've found a house is absolutely nothing (besides paying your bills, of course). It's exciting to plan on furnishing your new home, but you can fill up online shopping carts to your heart's desire before closing day and pull that trigger after you have the keys.

Underwriters check your credit more than once during the process, and the last thing you want is for your loan to not be funded because you've made a serious credit mistake in the week or two before closing, leaving you unable to buy a house.

FAQs

Kentucky offers up to $10,000 in assistance for down payment and closing costs to home buyers in the form of a 10-year second mortgage that requires a monthly payment. Although many home buyers in Kentucky will qualify for this assistance, you can also get a zero down payment mortgage through VA or the USDA. In addition, conventional mortgages typically only require 3% down, and FHA mortgages just 3.5%.
Kentucky is one of the most affordable states for closing costs. If you're buying a home, you can expect your closing costs to average $2,802. If you're simply refinancing an existing home, even better -- your closing costs will average $1,907.
Kentucky homeowners insurance can be kind of pricey, at 38% more than the national average. If you're insuring your home for $200,000, you'll pay $3,082 on average, $849 more than the national average of $2,233.
Kentucky is 36th out of 50 states when it comes to property tax as a percent of property value. The average property tax rate in Kentucky is 0.72% of your home's assessed value.

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