Are you wondering how to buy your first home in Crestwood without a big down payment? You are not alone. Many first-time buyers in Oldham County want clear answers on loan options, cash to close, and the best time to speak with a lender. In this guide, you will learn about the most common first-time buyer loans, down payment assistance to consider in Kentucky, typical closing costs at Crestwood price points, and the documents you need to move fast. Let’s dive in.
First-time buyer loan options in Crestwood
Conventional loans (including HomeReady/Home Possible)
Conventional loans can be a strong first-time option, especially if you have solid credit. Many lenders offer 3 percent down through Conventional 97 or programs tied to HomeReady or Home Possible. These programs often include income limits and occupancy rules, so you will want to verify details with your lender.
- Pros: Lower long-term mortgage insurance cost for higher credit scores. Private mortgage insurance can be canceled when you reach 20 percent equity.
- Cons: Stricter credit and debt-to-income guidelines than FHA. HomeReady and Home Possible may have income limits.
- What to check: Availability through local lenders, income and purchase price limits, and any neighborhood or occupancy rules.
FHA loans
FHA is known for flexible credit standards and a low minimum down payment. If your credit score is 580 or higher, the minimum down payment is typically 3.5 percent. Gift funds are allowed, and underwriting is often more forgiving on credit history.
- Pros: Flexible credit and down payment sources. More lenient debt-to-income and credit history guidelines.
- Cons: Upfront and annual mortgage insurance apply. If your down payment is less than 10 percent, annual mortgage insurance can remain for the life of the loan.
- What to check: Current FHA insurance rates and upfront premium, property condition standards, and any lender overlays.
VA loans
If you are a veteran, active-duty service member, or an eligible spouse, a VA loan can be a powerful option with no down payment in most cases. VA loans do not require private mortgage insurance and come with limits on certain closing costs.
- Pros: 0 percent down for eligible buyers and favorable terms. No PMI.
- Cons: A funding fee may apply, though some buyers are exempt. You must meet service eligibility.
- What to check: Your VA entitlement, possible funding fee exemptions, and a lender experienced with VA loans.
USDA Rural Development loans
USDA loans offer 0 percent down for eligible buyers purchasing in approved rural areas. Portions of Oldham County may qualify, but property and income rules apply.
- Pros: No down payment and typically lower monthly insurance cost than FHA.
- Cons: Property must be in a USDA-eligible area and you must meet income limits and use rules.
- What to check: Whether a specific Crestwood address qualifies and the current household income limit for Oldham County.
Kentucky Housing Corporation (KHC) programs
KHC administers statewide mortgage programs and down payment assistance for Kentucky buyers through participating lenders. Program options can include second-mortgage assistance, forgivable grants, and Mortgage Credit Certificates.
- Common assistance types:
- Deferred second mortgages with no monthly payment that are repaid at sale or refinance.
- Forgivable grants that may be forgiven after a set occupancy period.
- Mortgage Credit Certificates that provide a federal tax credit on a portion of mortgage interest.
- What to check: Current program availability, income and purchase price limits for Oldham County, and timing requirements for applying with a participating lender.
Local and nonprofit options
Some municipalities and nonprofits offer down payment help or incentives for completing homebuyer education. Availability changes, so check for programs in Oldham County and reach out to HUD-approved counseling agencies in the Louisville area for guidance.
How these programs compare
Down payment requirements
- FHA: Typically 3.5 percent if your credit score is 580 or higher.
- Conventional: As low as 3 percent for eligible HomeReady, Home Possible, or Conventional 97. Many conventional loans require 5 to 20 percent.
- VA: 0 percent for eligible buyers with sufficient entitlement.
- USDA: 0 percent for eligible properties and qualifying borrowers.
- State assistance: KHC can reduce or cover part of your down payment and closing costs.
Mortgage insurance behavior
- FHA: Upfront and annual mortgage insurance. With less than 10 percent down, the annual charge can last for the life of the loan.
- Conventional: PMI cost varies by credit score and loan-to-value. It can be canceled at 20 percent equity and is automatically removed at 22 percent under certain rules.
- VA: No PMI. A funding fee may apply unless you are exempt.
- USDA: Uses a guarantee fee structure that is usually lower than FHA insurance costs.
Credit and income rules
- FHA: More forgiving on credit history. Lenders may apply their own overlays.
- Conventional 3 percent down: Higher credit scores and tighter debt ratios are common.
- VA and USDA: Program-specific credit and residual income rules apply. USDA also has household income limits by county.
- KHC: Income and purchase price limits often apply, and the first-time buyer definition can vary. Confirm the current definition and rules.
What a Crestwood starter home might cost
Crestwood offers a range of starter-friendly homes that balance suburban living with access to the Louisville metro. Based on typical entry-level ranges for small Oldham County towns:
- Lower entry: 180,000 to 230,000 dollars
- Mid entry: 230,000 to 320,000 dollars
- Upper starter: 320,000 to 400,000 dollars
Typical closing costs
Plan for about 2 to 5 percent of the purchase price for standard buyer closing costs. This includes lender fees, title, appraisal, recording, and prepaid taxes and insurance. The lower end is more likely if you receive seller concessions or a lender credit.
- On a 200,000 dollar purchase: about 4,000 to 10,000 dollars
- On a 300,000 dollar purchase: about 6,000 to 15,000 dollars
You may also need initial escrow funds for property taxes and homeowners insurance. This often equals one to three months of premiums plus a prorated share of property tax.
Example mortgage math at a 6.5 percent sample rate
These examples are illustrative only. Your actual rate and payments will vary based on your credit, program, and fees.
Scenario A — FHA at 3.5 percent down on 250,000 dollars
- Down payment: 8,750 dollars
- Estimated closing costs at 3 percent: about 7,500 dollars
- Upfront FHA mortgage insurance may be financed into the loan.
- Estimated principal and interest: roughly 1,200 to 1,400 dollars per month, plus monthly mortgage insurance and escrow.
Scenario B — Conventional HomeReady at 3 percent down on 250,000 dollars
- Down payment: 7,500 dollars
- Estimated closing costs at 3 percent: about 7,500 dollars
- PMI depends on your credit score and can be lower than FHA insurance.
- Estimated principal and interest can be slightly lower than FHA in this scenario.
Scenario C — USDA or VA at 0 percent down on 250,000 dollars
- Down payment: 0 dollars
- Closing costs: often 5,000 to 12,500 dollars unless covered by seller credits or lender credits
- A VA funding fee or USDA guarantee fee may apply.
- Upfront cash is lower without a down payment, but your monthly total still includes insurance or guarantee fees and escrow.
Tip: Closing costs vary widely by lender and title company. Request Loan Estimates from at least two local lenders and compare total costs, not just the rate. Seller concessions and lender credits can reduce cash to close but may raise the interest rate or require negotiation.
When to talk to a lender
Speak with a lender before you start touring homes. A preapproval helps you set a realistic price range and makes your offer stronger. For many assistance programs, you must apply through an approved lender early, sometimes before or alongside your offer.
- If you plan to use KHC or other assistance: Connect with a participating lender right away so they can confirm eligibility and reserve funds if needed.
- If you are a veteran or exploring USDA: Confirm VA entitlement and USDA property eligibility early in your search.
- If credit needs a boost: Meet with a lender or a HUD-approved housing counselor to map quick updates that could lower your costs.
Documents to prepare
Get digital copies ready. Having these on hand can help you move faster once you find the right home.
- Government photo ID and Social Security number
- Recent pay stubs covering about 30 days
- W-2s for the past 2 years, or 1099s if you are a contractor
- Federal tax returns for 2 years if self-employed or if requested
- Bank statements for the past 2 to 3 months for all accounts
- Statements for retirement and investment accounts
- Gift letter, if any funds are a gift
- Proof of other income you plan to use, such as bonuses or support payments
- Employment history and contact information, and a hire letter if you recently changed jobs
- Divorce decree or separation agreement if applicable
- Bankruptcy discharge and letters of explanation for any credit issues if applicable
Ways to lower cash to close
You have options to make your upfront costs more manageable. Each path comes with tradeoffs, so review the details with your lender and agent.
- Down payment assistance: KHC programs can help with down payment and closing costs. You will need to meet income and purchase price limits.
- Seller concessions: You can ask the seller to cover some of your closing costs as part of the purchase agreement.
- Lender credits: A lender can offset closing costs in exchange for a higher interest rate.
- Gift funds: FHA allows gift funds from approved sources, which can help cover your 3.5 percent down payment and some costs.
Your next steps in Crestwood
- Get preapproved with a local lender that works with FHA, VA, USDA, and KHC. Program experience matters.
- Confirm eligibility for any assistance program you plan to use, and apply early if required.
- Gather your documents and compare at least two Loan Estimates so you understand total costs.
- Partner with a local agent who knows Oldham County and can guide you through negotiation, inspections, and closing timelines.
If you are ready to map your path to a first home in Crestwood, reach out to a trusted local advisor. With neighborhood insight and vetted lender connections, you can move from research to keys in hand with confidence. Connect with Dee Amber Anderson to start your plan today.
FAQs
Can I buy a home in Crestwood with 0 percent down?
- Yes, if you qualify for VA or USDA. VA requires military service eligibility, and USDA requires the property to be in an eligible area and that you meet income limits.
How much cash should a first-time buyer in Crestwood bring to closing?
- Plan for your down payment plus 2 to 5 percent of the price for closing costs, plus initial escrow for taxes and insurance. Assistance and seller credits can reduce this.
Do I have to be a first-time buyer to use an FHA loan in Kentucky?
- No. FHA is open to all eligible buyers. Some state assistance programs focus on first-time buyers and may define that as no ownership in the past 3 years.
What happens to Kentucky down payment assistance if I sell the home?
- Terms vary. Forgivable grants may forgive over time, while second mortgages are usually repaid at sale or refinance. Review your program agreement.
When should I contact a lender if I want to use KHC assistance in Oldham County?
- As early as possible, ideally before house hunting. You may need to apply through a participating lender to confirm eligibility and secure funds in time.
