Buying A House In Kentucky: Facts & Tips

From world-famous horse racing to endless natural beauty and a huge bourbon scene, Kentucky has a lot to offer current and prospective residents.

So if you’re thinking of moving to the Bluegrass State, it’s time to consider your options and begin your research into the best places to live in Kentucky. Here’s everything you need to know about buying a house in Kentucky, including real estate tips, listings and market trend reports.

Why Buy A House In Kentucky?

Kentucky real estate can be a great investment, whether you’re looking to settle down or you’re planning to rent out your home. With a population of 4.7 million residents, a Fortune 500 company, and dozens of universities, there are plenty of job opportunities here. It’s also a wonderful place to buy an investment property, as nearly a third of the state’s residents rent their homes.

Top 5 Real Estate Cities In Kentucky

Factors like affordability, location and culture all play a part when you’re deciding where to live. To help you in your decision, we’ve curated the five top real estate cities and neighborhoods to buy a home in Kentucky. Check out these top spots:

Cherokee Seneca

Cherokee Seneca is a neighborhood in Louisville with a population of nearly 2,300. It’s consistently ranked as one of the best places to live in Kentucky, making it a terrific neighborhood to either purchase a home for your family or buy a rental property. The area is mostly residential with a young professional vibe featuring plenty of bars, restaurants and coffee shops to liven things up. The median listing price in Cherokee Seneca was $165,000 in March.

Cherokee Seneca Real Estate Listings

Cherokee Seneca Trend Report

Louisville

With nearly 618,000 residents, Louisville is the most populous city in Kentucky and boasts the fastest-growing rental market in the state. You might know it as home to the Kentucky Derby and the University of Louisville. Some of the city’s main industries include package delivery, health care services, automotive production and retail. The median list price of homes in Louisville is $206,649, which has increased 14.9% year over year.

Louisville Real Estate Listings

Louisville Trend Report

Lexington

If you’re looking to set down roots in a city with a rapidly growing real estate market and plenty of job opportunities, look no further than Lexington, the second-largest city in Kentucky with a population of 323,150. The city is home to the University of Kentucky and offers many job opportunities in education, government and manufacturing. It’s been named the Horse Capital of the World and boasts a 734-acre nature sanctuary, which are major draws for outdoor lovers. The median list price of homes in Lexington is $252,500, which has increased 7.4% since last February.

Lexington Real Estate Listings

Lexington Trend Report

Fort Thomas

Fort Thomas is a smaller city, with a population of 16,325. Half of its population are renters, so it could be an ideal place to buy a rental property. Popular industries here include educational services, health care, and scientific and technical services. These industries, as well as the city’s steady economic growth, are attracting many new residents and steadily increasing the housing demand. The median list price of homes in Fort Thomas is $259,950, which has increased 1% since last year.

Fort Thomas Real Estate Listings

Fort Thomas Trend Report

Paducah

Paducah is a town in western Kentucky with a population of nearly 25,000. The largest industries here are health care and social assistance, while the highest-paying industries are mining, quarrying, and oil and gas extraction. But the arts scene is also strong in this town, which was named a UNESCO Creative City in 2013. The median listing price in Paducah is $139,933, which is a 29.7% decrease over last year. That means it’s a good time to get a good deal on an investment property.

Paducah Real Estate Listings

Paducah Trend Report

Things To Know About Buying A House In Kentucky

Kentucky’s laws make it easy to buy property in this state. Here are some important rules and regulations you should be aware of.

Dual Agency Is Permitted

Kentucky is one of the few states that allows dual agency, which means home buyers and sellers can be represented by the same agent.

You May Need Additional Tornado Insurance

Kentucky sees about 21 tornadoes a year on average, which is something to consider when you’re buying homeowners insurance. Most policies cover tornado damage, but it’s best to double-check. You’ll need to buy a separate policy if your homeowners insurance excludes this type of natural disaster.

30- To 45-Day Escrow Is The Norm

When a seller accepts an offer you make on a home, you’ll typically deposit earnest money into an escrow account. Your money will be held here until the sale is finalized (or canceled, if your contract allows you to back out of the sale). The escrow process in Kentucky usually takes 30 – 45 days.

Seller Disclosure Reports Are A Must

In Kentucky, home sellers are required to submit an extensive Closing Disclosure before a purchase agreement is signed. This form includes questions about the home’s major systems, building structure, land boundaries and environmental concerns in order to uncover defects that could impair the home’s value.

Property Taxes Are Super Low

Kentucky residents save big-time on property taxes, which average just $1,257 annually (around half the national median). The state’s effective property tax rate averages just 0.83%.

Winter Is Often The Cheapest Time To Buy

Most people sell their homes in the spring and summer, which means sellers who put their houses on the market in the winter are more likely to be doing so out of necessity. As a result, winter is often the best time to score a deal.

Requirements For Buying A House In Kentucky

Buying a house in Kentucky isn’t too different from buying anywhere else, save for a few location-based factors. Let’s take a closer look at how to buy a house in Kentucky.

• Good credit: When you apply for a mortgage, the lender wants to be sure you can make your mortgage payments. One way to measure their risk is by pulling your credit history to see how you’ve managed debt in the past. As for the necessary credit score to buy a house in Kentucky, you may qualify for a conventional loan with a score of 620 or higher. The rules are a bit looser for FHA loans, which require a score of at least 500 or 580, depending on the size of your down payment.
• Low debt-to-income ratio: This ratio helps lenders measure how much of your income goes toward debt payments every month. The requirements vary with each mortgage program, but a low debt-to-income ratio – around 43% or less – can help you qualify for a home loan.
• Financial documentation: Lenders will ask for your most recent pay stubs, W-2 forms, bank statements and tax returns to make sure you have enough income to cover your monthly mortgage bill. They’ll also check that you’ve saved enough for the down payment and closing costs.
• Appraisal: During the underwriting process, your lender will order an appraisal to determine the market value of the property you want to buy. They’ll want to make sure you’re not borrowing more than the home is worth.
• Down payment: When you close on a home loan, you’ll need to put down a certain percentage of the home’s listing price as a down payment. This represents your investment in the property. Generally, you’ll need a down payment of around 3% for a conventional loan and 3.5% for an FHA loan. If you can put down 20% on a conventional loan, you’ll avoid paying private mortgage insurance.

The Bottom Line: Buying A House In Kentucky Has Its Perks

Kentucky is the perfect blend of natural beauty and big-city life, making it a great place for many people to buy a home. If you’re ready and meet the requirements, then you can start your house hunt today.

Looking for a real estate agent to make the home buying process go smoothly? See how to find the best real estate agent for your needs.