Kentucky Housing Corporation (KHC) Loan Program

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Down Payment Closing Cost Assistance

KHC recognizes that down payments, closing costs, and prepaids are stumbling blocks for many potential home buyers. Here are several loan programs to help.  Option Financial is a Delegated Lender with Kentucky Housing allowing us to offer and underwrite these loans in-house.

Regular DAP

  • Purchase price up to $349,525 with Secondary Market.
  • Assistance in the form of a loan up to $7,500 in $100 increments.
  • Repayable over a ten-year term.
  • Available to all KHC first-mortgage loan recipients.

Affordable DAP

  • Purchase price up to $349,525 with Secondary Market.
  • Assistance up to $7,500.
  • Repayable over a ten-year term.
  • Borrowers must meet Affordable DAP income limits.

Down Payment and Closing Costs

  • No liquid asset review and no limit on borrower reserves.
  • Specific credit underwriting standards may apply to down payment programs.


Secondary Market Eligibility

To qualify for a Secondary Market KHC loan, you must meet the following requirements:

  • Meet Secondary Market Income Limits for your county.
  • Be a U.S. citizen, other national or qualified alien person
  • Have a minimum credit score of 620.
  • Be a first-time or repeat homebuyer.

Property Eligibility

The home you wish to purchase must meet the following guidelines.

  • Borrower must occupy the home within 60 days of closing and for duration of loan.
  • New or previously occupied detached, single-family home.
  • New or previously occupied condominium, townhouse, or attached unit in a planned unit development.
    • Check with Option Financial for eligible condominiums.
  • New or previously occupied manufactured housing, single or double wide, permanently affixed to the foundation and taxed as real estate
    • Must meet loan type’s foundation requirements.

Purchase Price Limitations

Secondary Market First Mortgage Programs and KHC's Homebuyer Tax Credit

Secondary Market New and Existing Homes…………….$349,525

KHC’s Homebuyer Tax Credit…………………………………$349,525

Home Buyer Tax Credit

If you plan on buying a home, then consider taking advantage of KHC’s Home Buyer Tax Credit. The tax credit provides a dollar-for-dollar reduction of your federal income taxes, every year you occupy the home. The Tax Credit is equal up to 20 percent of the annual mortgage interest paid in a calendar year.  


  • All first-time home buyers. If not a first-time home buyer then contact Option Financial to see if eligible.
  • Purchase price and income limits apply.


We’ve compiled a list of frequently asked questions (FAQs) to answer most of your concerns, but if you would like to know more about the Tax Credit, please consult? a tax professional.


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