Buying your first home in Indiana? Here are some programs that might help

For Indiana residents buying their first home, there are several state and local programs designed to help with down payments, closing costs, and mortgage terms.

The Indiana Housing & Community Development Authority (IHCDA) runs most of the big programs for first‐time homebuyers. Their programs often involve down payment assistance, rate reductions or tax credits.

To take advantage of these programs, there are common eligibility requirements. These vary somewhat program to program, but here's what is typical in Indiana:

• First‑Time Homebuyer Status: Most programs require you haven't owned a home in a certain time period (often three years), unless you're buying in a "targeted area" or are a qualified veteran.

• Credit Score & Debt‑to‑Income Ratio (DTI): Minimum credit scores typically start around 640 for many programs if your debt-to-income ratio isn't too high. If a buyer's DTI is higher, some programs demand better credit scores.

• Income & Purchase Price Limits: Income must often fall under certain thresholds (relative to area median income). Also, the home's purchase price must be under certain caps. These vary by county and the housing market.

• Loan Type: Many programs require a 30‑year fixed‑rate mortgage (FHA or certain conventional loans). Some programs require specific mortgage types.
   

State programs in Indiana for first‑time homebuyers

Hoosiers can take advantage of several programs designed to make buying a first home more affordable — especially for people who need help with down payments, closing costs or interest rates. Many of these are run by the Indiana Housing & Community Development Authority (IHCDA) or by local jurisdictions.

IHCDA provides several programs specifically targeting first‐time buyers.

The First Step Program offers up to 6% of the home price in down payment assistance (DPA). Buyers must use a 30‐year fixed mortgage and meet credit and income limits. Another IHCDA program is called Next Home, which provides up to 3.5% DPA for a 30-year fixed mortgage.
 

Other local assistance programs

Indianapolis Neighborhood Housing Partnership (INHP) has down payment assistance programs in Marion County. Buyers can qualify for up to $13,300 in assistance.

The IHCDA also offers a Mortgage Credit Certificate program. This federal tax credit helps homebuyers by giving them a portion of their mortgage interest back via a tax credit, not a deduction. It can reduce tax liability in a way that improves monthly affordability for first time buyers.
 

Federal programs for first‑time homebuyers

Federal programs can either work by insuring mortgages, providing tax benefits or helping with special loan programs (especially for rural areas or veterans). Many federal programs are not limited only to first time buyers but have features that particularly help them.

Federal Housing Administration loans are among the most commonly used federal options for first‐time buyers. Key features: lower down payments, which can be as low as 3.5% if credit meets certain standards; more flexible credit requirements than many conventional loans; and the possibility to combine with local or state down payment assistance. The FHA insures the lender against default, which reduces risk for lenders.

For eligible veterans, active duty service members, and sometimes surviving spouses, VA loans can offer 100% financing (meaning no down payment required), no mortgage insurance and competitive interest rates. This is a strong benefit for first‐time homebuyers who qualify.

USDA Rural Development Loans are for people buying in qualifying rural areas. They often allow zero down payment purchases, though income limits and location restrictions apply. These are a good option for those outside major urban centers.
 

HUD single family housing programs

Energy Efficient Mortgage Programs let homebuyers finance energy‐efficient home improvements as part of their FHA insured mortgage. These programs only apply to homes that have certain renewable energy or energy-efficient features.

Good Neighbor Next Door offers significant discounts (often 50%) off list price for eligible public service professionals (e.g. teachers, law enforcement, firefighters, EMTs), for homes in HUD‐designated revitalization areas. Approval for this program requires a commitment to live in the house for a certain period of time.

The HOME Investment Partnerships Program (HOME) is a federal block grant given by HUD to states and local jurisdictions to help with affordable housing, including assistance to homebuyers. States distribute funds for down payment assistance, closing costs, or sometimes favorable loan terms through this program.

Members of certain federally recognized Native American communities can take advantage of the Section 184 Indian Housing Loan Guarantee Program. Borrower applicants can use this program to obtain a 30 year fixed rate mortgage with down payments as low as 2.25% of the home's cost.
 

Contact WFYI Digital Producer and Reporter Jeremy Reuben at jreuben@wfyi.org