Unbridled Spirit

Home Mortgage Rates in Kentucky

Big South Fork River.

Kentucky is a state of extreme contrasts. It has some of the highest mountain peaks of the Appalachian range, as well as some of the lowest altitudes where the Mississippi flows; it is the birthplace of both the haute monde of the Kentucky Derby and the gun-toting Hatfields and McCoys; it is rural and urban in almost equal measure. Moreover, it stands precisely in the middle of the fifty states in population count and is close to the top in the number of people who have lived there since birth. In other words, “My Old Kentucky Home” is a true theme song to its four million residents.

Kentucky Real Estate Info

Average Kentucky Real Estat Prices Compared to National Median

The price of that home is considerably lower than the national average. In urban areas like Louisville, the median cost of an existing single-family home is $133,000, as opposed to the national average of $172,900.

In rural areas, which comprise more than half the state, the average sale price is $69,000. Overall, single-family home prices also swing to both extremes: from the low five figures to upward of five million. Within the state, the city of Florence is listed as having the highest median price of $212,720, compared to the lowest average in Lexington, which lists at $188,017.

Most Popular Cities

Louisville, Richmond and Lexington are the most popular of the large cities. Of the three, Louisville is probably the best-known, being the site of Churchill Downs, where the Kentucky Derby is run every May. Named by the U.S. Council of Mayors as “America's Most Livable Large City”, Louisville calls itself “Possibility City” and boasts of its small-town warmth and hospitality in the midst of full scale urban amenities and a cost of living that is considerably lower than the national average. As noted, home prices are moderate compared to those in cities of comparable size in other states.

Downtown Louisville Skyline.

Rapidly-growing Richmond is Madison County's county seat and the home of Eastern Kentucky University. As the work and shopping hub for south central Kentucky, it's the sixth largest city in the state with a population expected to top 35,000 this year. Here again one will find a large gap between high and low prices for homes: anywhere from $15,000 for a three-bedroom single family residence to five million for a multi-room mansion, bringing the median price to about $140,000. Among the many historic attractions of the region is the restored commercial district of downtown Richmond, which has been returned to its original 19th century grandeur and attracts tourists and locals for year-round visits. Richmond lies twelve miles to the south of the original settlement established by Daniel Boone in 1775.

Lexington, which is officially known as “Lexington-Fayette Urban County” after the merge of city and county in 1974, is Kentucky's second-largest city, with a population of more than 450,000. Nicknamed both “Horse Capital of the World” and “Thoroughbred City”, it sits in the center of Kentucky's famous bluegrass region. It was also once called “The Athens of the West”, having attracted architects and artists from both North and South who added a distinct flavor to the region.

Downtown Lexington.

Lexington has been fortunate in that, compared to other major American cities, the housing market has remained relatively stable. At a median price of $164,000, single family homes have held steady at about a 3% increase in both sales and value. Although unemployment rates have risen throughout the country, Fayette County is better off than most, being the main headquarters of Lexmark, as well as Toyota's largest American facility and the University of Kentucky, all of which offer employment opportunities to both blue and white collar workers. The rate of foreclosure is considerably lower than the national average since, according to the director of the Center of Business and Economic Research at the university, “Housing remains fairly affordable, so it is possible for the typical person to purchase a home without exotic financing... and local banks tend to be more conservative.

Fastest growing city

Berea, the home of Berea College, is the fastest-growing city in Kentucky. Located in Madison County, the population has increased by more than 43% since 2000. The city boasts the highest number of arts and crafts in the state, hosting several craft festivals during the year that attract thousands of visitors., many of whom become residents. Single family homes in Berea currently sell for a median price of $132,000.

Types of Mortgages in Kentucky

Moonrise at Horse Farm.

Kentucky offers both fixed and adjustable rate mortgage loans, as well as interest-only and LIBOR loans. Adjustable Rate Mortgages (ARMs) are available in 5/5 and 5/1 formats, meaning that payment and interest rates remain the same for the first five years, then are adjusted either every year (5/1 ARM) or every five years (5/5 ARM) thereafter until the mortgage is paid off. Currently, thirty-year fixed mortgages are lower than they have been in years and are probably the best bet for buyers today.


It is possible to refinance or get a second mortgage on your home, assuming your credit score is acceptable. At this time, the average score in Kentucky is 675, compared to the national average of 677. Although many factors will determine the interest rates charged on all mortgages, refinancing and home equity loans, by far the most important is the borrower’s credit score.

All told, Kentucky has been as affected by the recession to the same extent as the rest of the country, but is by no means at the bottom of the heap in terms of recovery. The housing market is beginning to bounce back, with mortgage rates holding steady between a four and five percent.

Foreclosure Process

The State of Kentucky recognizes only Judicial Process foreclosure, meaning that the holder of the mortgage must go to court and prove that the homeowner is in default of the loan. The mortgage company's attorney then tries to resolve the problem and, failing that, files a lawsuit against the homeowner. This process can take up to a year, giving the homeowner time to refinance or otherwise take care of the debt.

Kentucky foreclosures are non-recourse, so that the lender can only seize the collateral (the home) and the borrower has no further obligation to the mortgage holder, once the property has been taken by the lender.

Grandstand Crowd at the Kentucky Derby.