How to buy a home in Kentucky

Kentucky has a generous, neighborly feeling, a rich heritage, and stunning scenery from rolling bluegrass hills and horse farms to lakes, caves, and Appalachian ridgelines. Buying a house in Kentucky is an appealing option if you’re looking for open space, character, and affordability.

Whether you already call Kentucky home or you’re relocating for work, family, or a fresh start, buying a home in the state comes with its own set of considerations. We’ll outline what to know so you can start your home search in the Bluegrass State with confidence.

Kentucky’s housing market: At a glance

Understanding the housing market in Kentucky

Before you start house hunting, it’s a good idea to understand Kentucky’s housing market and how home prices can vary throughout the state.

The median home price is $281,700

In Kentucky, home prices have increased 6.8% compared to October 2024, according to Redfin. However, the median home sale price is significantly lower than the national average, $281,700 compared to $439,917.

You’ll find some areas that are both more and less affordable than Kentucky’s state average. Some cities have additional housing inventory and might be more affordable than those with fewer homes for sale.

• In Louisville, the median home price is $265,000.
• In Lexington, the median home price is $351,187.

Neighborhood, home size, unique features, and nearby amenities also influence home prices in different areas. You can use the Rocket Mortgage home affordability calculator to help compare prices to see which cities may fit your budget best.

Market trends and inventory

Kentucky has seen an 11.2% increase in homes for sale compared to last year, which might make it easier to find homes in your area. Each city in Kentucky differs slightly, so working with an experienced local real estate agent can help you navigate the market.

Spring and summer are peak shopping seasons

During Kentucky’s spring and summer months, more homes tend to hit the market, and buyer demand is higher. Beginning your home search during the fall and winter months may mean fewer competing buyers and the potential for better prices, though inventory could be more limited. Ultimately, the best time to buy a home is when you’re financially and emotionally ready.

How to buy a house in Kentucky

Now that you know about Kentucky’s housing market, we’ll guide you through the steps of buying a house in the state.

Step 1: Check your credit and set a budget

Before beginning your home search, examine your finances, such as your credit score, DTI, and potential budget. You can use the Rocket Mortgage mortgage calculator to see what you could afford each month and how much you should save for your down payment and closing costs.

• Check your credit score
• Find out your debt-to-income ratio
• Save for a down payment
• Plan for closing costs and additional fees
• Finalize your budget

Step 2: Decide on the type of financing you want

There are several loan types to consider, depending on your credit score, down payment amount, and location.

• Conforming conventional loans. These loans typically require a minimum 3% down payment, and are offered by private lenders. You’ll have to pay private mortgage insurance (PMI) if your down payment is lower than 20%.
• Jumbo loans. These are conventional loans that exceed conforming loan limits. They usually require a higher credit score, down payment, and additional cash reserves.
• FHA loans. These are government-backed loans through the Federal Housing Administration. These loans offer lower down payments depending on your credit score.
• VA loans. These loans are for qualifying service members and surviving spouses and require no down payment. They are backed by the Department of Veterans Affairs.
• USDA loans. These loans are for home buyers in qualifying rural areas, with no down payment requirement. They are backed by the U.S. Department of Agriculture.

Step 3: Apply for preapproval

A mortgage preapproval gives you a clear idea of how much you can borrow when buying a home in Kentucky. Getting a preapproval early in your search can help you stand out, especially in competitive areas.

The preapproval process typically takes just a few days. Lenders review your credit score, income, and assets to determine which loans you may qualify for, your potential interest rate in Kentucky, and the loan terms.

Step 4: Find a real estate agent in Kentucky

Choosing a local real estate agent in Kentucky makes the homebuying process smoother, as they have a deep understanding of the area. You can find a great real estate agent through your family and friends or through sites like Redfin.com.

In Kentucky, dual agency is allowed if both parties have written consent. Dual agency allows one agent to represent both buyers and sellers in the transaction. Be sure to ask your agent before signing a buyer's agent agreement.

Step 5: Start house hunting

After finding a few cities that fit your home buying goals, it’s time to look at homes for sale. Work with your real estate agent to look at homes for sale on the MLS and sites like Redfin to narrow down the homes you want to see in person.

Key factors to consider:

• Proximity of the neighborhood to schools, jobs, and amenities
• Public transit, major roads, and highways
• HOA fees and potential costs
• Costs of property taxes in the city

Step 6: Make an offer and negotiate

Your real estate agent will guide you through making an offer on a house in Kentucky. You’ll work together to decide how much to offer, which contingencies to include, and how much to put down as an earnest money deposit. This deposit shows the seller you’re committed to purchasing the home and is typically 1% – 3% of the purchase price, later applied toward your down payment.

Step 7: Begin the closing process

Now that your offer is accepted, you’ll:

• Submit your earnest money
• Officially apply for a mortgage
• Read through the closing documents
• Schedule the appraisal and inspection
• Prepare for closing day
• Have a final walkthrough

In Kentucky, closing costs are typically 3% – 6% of the home’s purchase price. Closing costs can cover loan origination fees, home inspection costs, mortgage points, insurance, property taxes, and escrow fees. 

It’s required that a real estate attorney conduct the closing process and be present on closing day in Kentucky. A real estate attorney typically works for the loan officer and prepares the closing documents. You can also hire a real estate attorney to represent you and help you review the closing documents.

FAQ about home buying in Kentucky

Here are some of the top frequently asked questions about buying a home in Kentucky.

How much are property taxes in Kentucky?

The effective property tax for Kentucky is 0.77%, but local property taxes might differ.

Do I need a real estate agent to buy a home in Kentucky?

A great real estate agent can help you find your dream home and navigate the home buying process, but you technically don’t need one to buy a home in Kentucky. 

How long does it take to close on a house in Kentucky?

In Kentucky, it typically takes 30 to 60 days to close on a home. Loan approval and home could affect this timeline.

Are there any specific factors that could affect the home buying process in Kentucky?

Some regions in Kentucky are high-risk flood zones, so your lender could require you to carry flood insurance.

The bottom line: There’s a home in Kentucky waiting for you

Home prices in Kentucky are still affordable compared to many parts of the country. The state’s location near national forests and the Blue Ridge Mountains, low cost of living, and affordable areas make it an attractive place to live. By working with a trusted real estate agent and preparing your finances, you can feel confident buying a home in Kentucky.

If you’re ready to buy a home in the Bluegrass State, start the mortgage approval process with Rocket Mortgage^® for a personalized plan that fits your financial goals.

Rocket Mortgage is a VA-approved lender, not endorsed or sponsored by the Dept. of Veterans Affairs or any government agency.

Rocket Mortgage is not acting on behalf of FHA or HUD.

The 3% down payment option is only available on certain conventional loan products and is not available in all states. Additional terms and conditions may apply.

This article is for informational purposes only and is not intended to provide financial, investment, or tax advice. You should consult a qualified financial or tax professional before making decisions regarding your retirement funds or mortg