Overview of Kentucky Mortgages
Framed by the Ohio River and the Appalachian Mountains, Kentucky is home to the famous Kentucky Derby, world-class bourbon, bluegrass and a multitude of historical events. Homebuyers will find that Kentucky mortgage rates have historically been a bit higher than the national average. The Bluegrass State’s counties’ conforming loan limits are consistent, as are their FHA limits.
| Product | Today | Last Week | Change |
|---|---|---|---|
| 30 year fixed | 6.75% | 7.13% | -0.38 |
| 15 year fixed | 6.88% | 7.00% | -0.13 |
| 5/1 ARM | 4.63% | 2.00% | +2.63 |
| 30 yr fixed mtg refi | 6.75% | 6.75% | 0.00 |
| 15 yr fixed mtg refi | 6.38% | 6.88% | -0.50 |
| 7/1 ARM refi | 5.25% | 5.13% | +0.13 |
| 15 yr jumbo fixed mtg refi | 3.05% | 3.10% | -0.05 |
National Mortgage Rates
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Historical Mortgage Rates in Kentucky
Kentucky Mortgage Rates Quick Facts
- Median Home Value: $173,300 (U.S. Census Bureau)
- Loan Funding Rate: 58.76% (CFPB)
- Homeownership Rate: 72.1% (St. Louis Fed)
- Median Monthly Homeownership Costs: $1,241 (U.S. Census Bureau)
Kentucky mortgage rates are typically just above or around the national average.
A financial advisor in Kentucky can help you plan for the homebuying process. Financial advisors can also help with investing and financial plans, including tax, retirement and estate planning, to make sure you are preparing for the future.
*The FHFA stopped reporting new data in 2018.
Kentucky Mortgages Overview
Property in the Bluegrass State is cheaper overall than in the rest of the nation. The median home value is $173,300, more than $100,000 below the nation’s $281,400 median home value, according to the U.S. Census Bureau.
The conforming loan limit for every Kentucky county is at the standard of $726,200. All FHA loan limits are $472,030.
Disclosure laws in Kentucky require that sellers disclose plumbing or electrical problems, roof details, conditions like termites or radon gas, homeowners’ association fees and other property information. Even with those seller disclosures, a home inspection is still the best way for a buyer to feel confident in a property purchase. A quality home inspection will help you attend your closing with confidence, knowing you’re not about to move into a major money pit.
30-Year Fixed Mortgage Rates in Kentucky
If you are in the market for a home loan in Kentucky, you will likely choose a 30-year fixed-rate mortgage, the most common type of home loan. You have 30 years to pay off the loan and your monthly payments will remain the same for the duration of that time as the interest rate stays steady. You generally also have the option of choosing a 15-year or 20-year term in which case you will pay off your loan in less time and your interest rate will be lower, but your monthly payments will be higher.
Kentucky’s average rate for a 30-year fixed mortgage is 5.92% (Zillow, Jan. 2023).
Kentucky Jumbo Loan Rates
Kentucky conforming loan limits are uniform at $726,200, which is a reflection of the mostly affordable real estate in the state. If your dream home in Kentucky leads you to take out a loan that is greater than $726,200 be aware that you will have what is considered a jumbo loan. Jumbo loans are loans that exceed the conforming limit in that county.
Conforming loan limits are in place because issuing a loan beyond that price is riskier for lenders, as more money is at stake. To offset that risk, jumbo loans can come with higher interest rates. This might be a reason to stick with a home and a mortgage that fits comfortably within your budget.
The average jumbo loan rate in Kentucky is 6.25% (Zillow, Jan. 2023).
Kentucky ARM Loan Rates
An adjustable-rate mortgage (ARM) has an interest rate that can change. ARMs are attractive because they usually offers a lower initial interest rate as compared to a fixed-rate mortgage. That lower rate is offered for one, three, five, seven or 10 years, depending on the loan’s terms. Once that period ends, the rate can increase or decrease, but it will generally go up.
Fortunately, the interest rate is capped a certain level in the loan’s term, meaning you will know from the get-go the maximum possible interest rate.
The average rate for a 5/1 ARM in Kentucky is 5.56% (Zillow, Jan. 2023).
Kentucky Mortgage Resources
You have resources to choose from if you need assistance purchasing a home in the Bluegrass State. The Kentucky Housing Corporation offers a few different programs for homebuyers:
- Down Payment and Closing Cost Assistance - Down payments and closing costs can prevent many people from buying a home. The Regular DAP offers assistance via loans up to $6,000, which is repayable over the course of 10 years. This is available to all Kentucky Housing Corporation first-mortgage loan recipients. The Affordable DAP provides assistance up to $4,500 at a lower term rate. Borrowers must meet certain household income limits.
- Housing Counseling and Education - Counseling and education courses are available for pre-purchase and home buying, preventing mortgage delinquency, improving mortgage terms and home improvement, reserve mortgage and homelessness assistance.
The United States Department of Agriculture Rural Development offers nationwide programs in rural communities that provide aid for safe, affordable housing. Kentucky is eligible as well. Loans and grants are available for people looking to purchase a new home or repair their current home. Check at the start of your home search to see if you qualify for the USDA rural development offers.
Kentucky Mortgage Taxes
Homeowners are allowed to deduct the mortgage interest they pay when they file their federal income taxes. Homeowners in certain states can also include that mortgage interest deduction on their state income taxes. Kentucky is one of those states as its itemized deductions rules follow federal rules closely.
It’s important to note that Kentucky charges a 0.1% real estate transfer tax. This fee is generally paid by sellers.
Kentucky Mortgage Refinance
Kentucky homeowners looking to refinance their mortgage have the option of using a program through the Kentucky Housing Corporation or Fannie Mae.
If you don’t qualify for a state or government program, you can shop for the best refinance lender. Remember, you aren’t obligated to work with the lender who issued your current mortgage. You are free to look around and compare the rates of other lenders to find a new loan that works for your current situation.
