Louisville Metro Down Payment Assistance Requirements

October 28, 2022


Free Money

Great News! Metro Money is HERE for those ready to purchase in Louisville, Kentucky! Millions were left over from 2021 and eligible households are now able to receive up to 20% of the purchase price of their home in Down Payment Assistance (DAP). There are maximum household income requirements, but you won’t have to be a first-time buyer to use this program. It will take a cooperating Seller as the process takes 45-60 days to close and the property needs to be ready to occupy. Whether you are a 1st time buyer or not, DON’T WORRY – Even if this isn’t the right program for you, we have other sources for Down Payment Assistance for Jefferson County, Shelby County, Bullitt County, Henry County, Oldham County, Spencer County, Nelson County, Trimble County and Meade County.

Below are features of eligible properties as well as what would make a property ineligible for the Metro Down Payment Assistance Program:

  1. Home Type – Single family units, condominiums, and c0-op units are all acceptable home types. Modular homes are eligible if attached to a permanent foundation and they meet all local building and zoning codes.
  2. Construction Status – Existing homes, homes-to-be-constructed, and rehabilitation project homes are all eligible for down payment assistance. Rehab loans would require a 203k or VA Renovation Loan and is more complex.
  3. Home Value & Purchase Price – Homes eligible for down payment assistance must meet the HUD Home Ownership Value Limits. Homes cannot appraise below the purchase price. Down Payment Assistance will be denied if property does not appraise at or above the contract price.
  4. Property Standards & Inspections – All homes must meet property standards set by the Louisville/Jefferson County Metro Government Code of Ordinances and must pass an inspection by a Louisville Metro Housing Inspector or Louisville Metro Housing Authority. This will be an inspection of lead hazards and all federal code ordinances. Homes that do not pass initial inspection will be notified of the failing components and scheduled for reinspection. Down Payment Assistance will be denied if the necessary repairs are not made.
  5. The Down Payment Assistance Program requires that homebuyers also purchase a private inspection, as the inspection performed by Louisville Metro will inspect for basic code violation, and not for overall elements of construction.
  6. Environmental – An Environmental Review will be performed on all homes submitted to the program to determine their environmental safety and mitigate any potential environmental hazards. Down Payment Assistance will be denied if the home is in a flood plain.

Pretty simple, right? The house needs to be in good shape and move-in ready with a cooperative Seller who is willing to do any required repairs so you can qualify for the assistance. If you are doing a 203k or VA renovation loan, the process is a lot more complex, but possible.

Here are some quick details about a homebuyer’s eligibility:

  1. Income – Homebuyer’s HOUSEHOLD gross income must be 80% or below of the area median income, adjusted for family size, as determined by HUD. The 2022 guidelines will be posted below based on family size.
  2. Credit – Credit report must show no unpaid collections, no unpaid charge-0ffs, and no un-discharged bankruptcies. If the homebuyer has filed bankruptcy, the bankruptcy must be discharged at least 1 year prior to applying for down payment assistance. Metro WILL allow homebuyer(s) to have up to $10,000 in medical collections and still qualify for this program.
  3. Buyer Contribution – The homebuyer must make a minimum contribution of $500, plus a $76 recording fee. Metro encourages the homebuyer to personally provide at least 2% toward their down payment.
  4. Principal Place of Residence – Homebuyer must occupy the home purchased as their primary residence for the term of affordability period. Affordability periods are 5-15 years, depending upon the amount of homebuyer assistance. INVESTORS ARE NOT ELIGIBLE FOR THIS PROGRAM.
  5. Marital Status – Eligible households include all persons, single or married. If married, BOTH parties must apply as co-applicants, both complete homeownership counseling, and both be determined credit eligible to participate in the program. Separated couples are considered married, and both people in the partnership must apply and go through the program together.
  6. Lender Pre-Approval – Homebuyer must be able to obtain pre-approval and first mortgage through a local lender. If lender is not local, they must be FHA approved. CO-SIGNERS ARE NOT ELIGIBLE FOR THIS PROGRAM.
  7. You do NOT have to be a first-time Buyer to be eligible for the down payment assistance, but you cannot own a home when you apply.

Home Purchase Price Limits:

Existing Homes 

1 Unit – $220,000

2 Unit (Duplex) – $249,000

3 Unit (Triplex) – $302,000

4 Unit (Fourplex) – $374,000

New Homes

1 Unit – $257,000

2 Unit (Duplex) – $329,000

3 Unit (Triplex) – $399,000

4 Unit (Fourplex) – $494,000

Remember how I said that Investors weren’t eligible? Well, they technically could (maybe), if they owned a multi-family property, but mathematically, I’m not convinced that anyone can qualify for more than the duplex when you consider that you have to make enough to get financed but not more than their household guidelines for the program. The program only gives assistance on the portion of a property that the homebuyer will occupy and the additional rents count against your household income. If you are thinking about a multi-family property, we need to consult with a mortgage professional and the Metro Down Payment Assistance people very early in the process.

While Metro Money is not the same as Grant Money, the Down Payment Assistance IS a PARTIALLY FORGIVABLE 2nd MORTGAGE AND NOTE. There is NO INTEREST and NO Payments required. You just pay off the remaining portion whenever you decide to sell the house and ONLY from the NET PROCEEDS. The amount approved for your down payment assistance can be used for the down payment, closing costs and/or prepaids (taxes and insurance). No Adjustable Rate or Pre-Payment Penalty Loans are allowed, so you will have a SOLID, FIXED rate for the term of your loan.

Periods of Affordability (POA) – The home purchased must be occupied as the principal, primary residence of the homebuyer for the duration of the POA. The POA is determined by the amount of Down Payment Assistance received:

  • Loans of $14,999 and below: 5 years POA – Fifty percent (50%) of the down payment assistance amount shall be forgiven at the end of the 5th year. The remaining principal is due at sale AND will NOT accrue interest.
  • Loans of $15,000 – $40,000: 10 years POA – After the expiration of 5 years from the date of the Note, 10% of the amount shall be forgiven for each full year from the 6th through the 10th year, with 50% being forgiven after 10 years from the date of the Note. The remaining principal is due at sale AND will NOT accrue interest.
  • Loans more than $40,000: 15 years POA – After the expiration of 5 years from the date of the Note, 5% of the amount shall be forgiven for each full year from the 6th through the 15th year, with 50% being forgiven after 15 years from the date of the Note. The remaining principal is due at sale AND will NOT accrue interest.

As of July 1, 2022

Maximum HOUSEHOLD income based on family size:

  • 1 Person – $47,450
  • 2 People – $54,200
  • 3 People – $61,000
  • 4 People – $67,750
  • 5 People – $73,200
  • 6 People – $78,600
  • 7 People – $84,050
  • 8 People – $89,450

I know that there is a lot of numbers and information contained here. You are in good hands. I’ll get you to a counselor who will walk you through the process of applying for the Metro Money and simultaneously getting pre-approved for your loan. This part of the process takes about 30-45 days. Once you have your approval for the assistance and the mortgage, I’ll be ready to take you shopping! Once we have an accepted offer on the home you LOVE, it takes 45-60 days to close. It is a process but one that could result in up to $51,700 in down payment assistance with 1/2 of that ($25,700) in FREE money (after your POA period)!

Mark Atteberry, Broker

Louisville Market Realtors

mark@louisvillemarket.com / 502.224.1039