VA Construction Loans in Kentucky

Kentucky Veterans build on Bluegrass acreage, wooded hillside lots, in the growing suburbs around Louisville and Lexington, and near Fort Knox and Fort Campbell. A VA one-time close construction loan rolls the land, the build and the permanent mortgage into one closing. Shirley Mueller's team handles Kentucky VA construction loans from pre-approval to the final draw. The program is the same one described on this site, with a lender-approved builder, a fixed-price contract and a 12-month construction period.

Building near Fort Knox and Fort Campbell

Fort Knox sits between Louisville and Elizabethtown, and many military families build in Radcliff, Vine Grove, Elizabethtown, Rineyville, Cecilia and Brandenburg. Hardin and Meade counties have a good mix of subdivision lots and small acreage.

Fort Campbell straddles the Kentucky–Tennessee line. On the Kentucky side, families build in Oak Grove, Hopkinsville, Pembroke and Cadiz, and around Lake Barkley. If you're considering the Tennessee side near Clarksville, that's a different state with its own rules. Shirley's team can handle a build there, too.

The Blue Grass Army Depot near Richmond is another employer for Veterans, with building activity in Richmond, Berea and the surrounding Madison County area.

Other places Kentucky Veterans build

Around Louisville, look at Shelbyville, Simpsonville, La Grange, Crestwood, Mount Washington, Shepherdsville and Taylorsville, where Oldham, Shelby, Spencer and Bullitt counties have steady new construction. Around Lexington, Veterans build in Nicholasville, Georgetown, Versailles, Winchester and Paris. Bowling Green and Warren County are growing fast, and Northern Kentucky (Union, Florence, Independence, Alexandria) gives easy access to Cincinnati. In eastern and southern Kentucky, land near Lake Cumberland, London, Somerset and the mountain counties offers privacy, with more site work required.

Land and lot considerations in Kentucky

• Karst and sinkholes. Much of central and south-central Kentucky — including the Bluegrass region and the area around Bowling Green and Mammoth Cave — sits on limestone with sinkholes and underground drainage. A soils or geotechnical review before you buy can save a lot of trouble, and your builder should site the house and septic system away from sinkholes.
• Steep slopes in the east. Hillside lots in Appalachian Kentucky often need grading, retaining walls, long driveways and careful drainage. Those costs belong in the fixed-price contract, so get a site visit with your builder before you finalize the budget.
• Septic and water. Outside sewer service, your local health department must approve the septic system based on a site evaluation. Many rural Kentucky areas are served by water districts, but some lots still need a well. Confirm water access before closing on land.
• Floodplains. Land along the Ohio, Kentucky, Green, Licking and Cumberland rivers, plus mountain creeks, can flood. Check flood maps and expect flood insurance in a mapped flood zone.
• Weather. Kentucky sees severe spring storms and occasional tornadoes, plus freezing winters. A storm shelter or basement can be part of your plans if it's in the contract.

A home on a few acres with room for horses or a big garden is common in Kentucky, but the property has to be your home, not an agricultural business, so working farms aren't eligible. Neither are lots where construction has already started. Land you already own can go into the loan, with any balance paid off at closing; see VA construction loan on land you already own.

Builders and licensing in Kentucky

Kentucky's Department of Housing, Buildings and Construction licenses or certifies specialty trades such as plumbers, electricians, boiler contractors, sprinkler and fire alarm contractors, and building inspectors. Requirements for general home builders and building permits are handled locally, so they vary by city and county. Ask your builder which licenses and permits apply where you're building, and make sure the plumbing and electrical work is done by state-licensed trades.

The builder has to be approved by the lender before closing and must work under a fixed-price contract. VA no longer issues builder IDs, so approval comes from the lender's review. These VA construction loans don't allow owner-builders or DIY work. Point your builder to our builder information page, and read can you be your own general contractor if you were hoping to manage the build yourself.

In Kentucky you can finance a site-built home, barndominium, modular home or new manufactured home (multi-width, or single-width only from select manufacturers), or a 2–4 unit home where you live in one unit. The plans have to meet VA's minimum property requirements.

Kentucky property tax relief for disabled Veterans

Kentucky's main relief is the homestead exemption for homeowners who are 65 or older, or who are classified as totally disabled under a program run or authorized by a U.S. government agency or a retirement system. According to the Kentucky Department of Revenue:

• The exemption removes a set amount from the home's assessed value before taxes are calculated. For the 2025–2026 assessment period, that amount is $49,100. The state adjusts it every two years.
• The homeowner must own and live in the home as of the January 1 assessment date and must have received disability payments for the entire assessment period.
• Veterans with a service-connected disability don't have to reapply every year once they've been approved.
• Applications go to your county Property Valuation Administrator (PVA).

Since your home will be new, ask your PVA when it will first be assessed and when to apply. Details are on the Kentucky Department of Revenue homestead exemption page, and you can compare other states on our property tax exemption by state page. Veterans who receive VA disability compensation are also exempt from the VA funding fee.

Qualifying for a Kentucky VA construction loan

Underwriting starts with residual income: what's left each month after the new house payment, taxes, debts and basic living costs. Kentucky falls in VA's South region for those figures, and a higher DTI is often fine when residual income is strong. VA construction loans start at a 620 minimum credit score, and larger loan amounts may need a higher score. Down payment is $0 on loans up to $1 million and 5% on loans above that, up to $2 million.

Nothing is due while the house goes up, because the interest reserve and construction management fee are built into the loan and paid by the builder. Closing usually takes about 2–3 months, construction runs 12 months, and the loan then converts to a 15- or 30-year fixed rate. See closing costs and eligibility for more.

Kentucky VA construction loan FAQs