A Kentucky VA Purchase in the Order It Actually Happens
Program and regulatory figures verified October 10, 2026. Details change; confirm your scenario with us.
Kentucky adds a step most states do not need: before anything else, work out how long you expect to own the house. This year that answer changes the advice.
0. ★★★ Decide how long you are staying, honestly
This comes first in Kentucky and nowhere else in this network, because 13 of 20 Kentucky metros fell over the year to August 2026 and a VA borrower with full entitlement puts nothing down.
★★★ Five or ten years? Good. A soft market is the better side to buy on. Two or three? Price the downside before you fall for a house, and consider 5% down anyway. The market, metro by metro.
1. Get the COE and find out which entitlement you have
This decides whether a loan limit exists for you. Full entitlement: the VA says "you don't have a loan limit". Remaining entitlement: the 25% guaranty arithmetic can bring a deposit back, which here is also a cushion. How to tell.
2. ★★ Settle the funding-fee question before you fix a closing date
The fee runs 2.15% first use and 3.3% subsequent under 5% down, 1.5% at 5% down, or nothing if you are exempt.
★★ The timing trap: a proposed or memorandum rating dated before the closing date is in the VA's own exempt list. ★★★ And in Kentucky this step carries extra weight, because the federal waiver reaches more veterans than the state exemption does. All five exemptions.
3. ★★★ Find out whether you reach Kentucky's exemption at all
This is the step that surprises people, because the answer is often no. Ky. Const. § 170 reaches an owner who is:
- 65 or older; or
- ★★ classified as totally disabled under a US government agency programme or any retirement system.
★★★ There is no service limb. A veteran with a 40%, 60% or 70% rating under 65 gets nothing from the Commonwealth on property tax. The three tests compared.
★★ If you do qualify: $49,100 off assessed value for 2025-2026, applied for at your county PVA by 31 December: and if you are service-connected and totally disabled, you need not re-apply annually. The one veteran rule.
4. ★★ Shop with the right tax figure in the payment
If you are in the common case, a rating below total, under 65, the escrowed property tax in your payment is the full bill. Build the budget on that from the first conversation.
★ If you hold the exemption, it lowers the escrow, lowers the payment, and raises your residual income. How that works.
5. ★ Know what closing costs here, which is little
$0.50 per $500, 0.10%, imposed by KRS 142.050 upon the grantor and collected by the county clerk at recording. ★ Kentucky also requires a sworn, notarized certificate signed by both grantor and grantee as to the full consideration. The detail.
6. ★ Let residual income be run before you are under contract
A VA-only test on what is left in the household after the payment. ★★ In Kentucky it pulls two ways: cheap houses help, a narrow exemption hurts. How it works.
★★ The two sequencing mistakes we see most
- ★★★ Assuming Kentucky has a disabled-veteran exemption and budgeting on it. It does not have one in the form most states do, and the gap shows up at underwriting as a higher escrow than planned.
- ★★★ Treating zero-down as free in a market that is declining. It is the right product for most buyers here; it is the wrong product for a buyer who will be forced to sell in two years in a metro that fell 3.5%. The Fort Knox version
★ Our lane
We are a lender. We underwrite and close the loan. We do not issue your COE, rate your disability, grant your fee exemption, approve a homestead exemption, or advise on purchase-contract terms, tax or law. We are not affiliated with the VA or any Kentucky agency. We publish no forecast of Kentucky house prices.
Mike Certo, NMLS #260555. (480) 296-6513 · mcerto@cfmtg.com. Cornerstone First Mortgage, NMLS #173855.
Frequently asked questions
What order should a Kentucky veteran do things in when buying?
Decide how long you expect to own the house, get the Certificate of Eligibility and establish your entitlement, settle the funding-fee exemption before fixing a closing date, find out whether you reach Kentucky's homestead exemption at all, then shop with the right escrowed tax figure in the payment.What is the most common mistake Kentucky veterans make when buying?
Assuming Kentucky has a disabled-veteran property tax exemption in the form most states do. It does not: section 170 of the Kentucky Constitution reaches owners who are sixty-five or older or classified as totally disabled, so a veteran with a partial rating under sixty-five receives nothing and the gap appears at underwriting as a higher escrow than planned.Should I put money down on a Kentucky VA loan?
It depends on your expected hold. For a buyer staying five or ten years, zero down is usually right. For a buyer expecting to move within two or three years in a market that declined, 5 percent down both halves a subsequent-use funding fee and provides an equity cushion.When do I apply for the Kentucky homestead exemption?
To your county Property Valuation Administrator, by 31 December of the eligible tax year. If you qualify after your tax bills are already paid, KRS 132.810(4)(d) entitles you to a refund of the taxes applicable to the exemption value.Mike Certo · NMLS #260555 · Cornerstone First Mortgage NMLS #173855 · Equal Housing Lender. Educational content about VA home loan financing, not a loan commitment and not legal, tax or financial advice. Cornerstone First Mortgage is a private lender and is not affiliated with, endorsed by or acting on behalf of the U.S. Department of Veterans Affairs or any government agency. VA entitlement, funding-fee exemption and disability ratings are determined by the U.S. Department of Veterans Affairs. Kentucky's homestead exemption is established by section 170 of the Constitution of Kentucky and KRS 132.810 and is administered by county Property Valuation Administrators, not by Cornerstone; the amount is reset every two years by the Kentucky Department of Revenue and the tax effect depends on local rates. Housing market figures describe the twelve months to August 2026 and are not a forecast. Figures here carry the date we verified them against primary sources. All loans are subject to borrower, property and program qualification.