First-Time Home Buyer Programs in Indiana: What Applies
First-Time Home Buyer Programs in Indiana: What Applies
Search for first time home buyer programs in Indiana and you will find national listicles, retired program names, and grants that never existed here. This page holds only what I can point to on an official source today: the four live IHCDA programs, the federal loan routes, and the questions I would ask before signing anything.
Why this list is shorter than the ones you have read
Program names change. IHCDA, the Indiana Housing and Community Development Authority, retired its First Place program at the end of 2023 (IHCDA Homeownership Program Guide, 02/2026). Any article that still leads with First Place is out of date. The same guide states that program availability can change without notice.
So this page follows one rule. Every program below appears in a current official source checked in August 2026, and every number carries its date. Where a figure changes on a schedule, such as income limits, you get the schedule and the link instead of a number that will soon be wrong.
Key takeaways
- Indiana's active state programs come from IHCDA: First Step, Step Down, Next Home, and Next Step, offered in all 92 counties (IHCDA, as of August 2026).
- IHCDA down payment assistance is repayable. It rides as a second mortgage and comes due when you sell, refinance outside IHCDA, or move out.
- First-time has a legal meaning here: no ownership interest in a principal residence within three years, with waivers for target areas and verifiable military status.
- Income and acquisition limits vary by county and household size. The current sheets took effect May 25, 2026.
- Federal routes still carry weight: FHA from 3.5 percent down (HUD), VA with no down payment for eligible service, USDA with no down payment on eligible rural addresses.
The four IHCDA programs that exist right now
IHCDA has served Indiana homebuyers since 1978 and runs its mortgage programs through participating lenders (IHCDA Homeownership Program Guide, 02/2026). Four are live as of August 2026. Verify current terms on the IHCDA programs page before you apply.
First Step
Five percent of the purchase price in down payment assistance for qualifying first-time buyers, on a 30-year fixed FHA or conventional loan. The assistance rides as a non-forgivable second mortgage (IHCDA, 02/2026).
Step Down
A rate-focused option for qualifying first-time buyers with no down payment assistance attached, using the same 30-year fixed FHA or conventional structures and the same limits (IHCDA, 02/2026).
Next Home
Down payment assistance of 2.5 or 3.5 percent for first-time and repeat buyers, capped by the lesser of purchase price or appraised value. This lane stays open after your first purchase (IHCDA, 02/2026).
Next Step
A one-time refinance opportunity for households already holding an IHCDA First Place, First Step, or Step Down mortgage, so an IHCDA borrower can pursue a better rate without losing the program (IHCDA, 02/2026).
Who counts as a first-time buyer
The definition is specific. A first-time home buyer in Indiana, for IHCDA purposes, has held no ownership interest in a principal residence within the past three years. The test is waived in designated target areas and for applicants with verifiable military status (IHCDA, 02/2026). Renters who owned years ago often qualify again without realizing it.
The limits, and why I am not quoting them
Every IHCDA program carries income limits, and the bond-funded programs add acquisition limits on the purchase price. Both vary by county and household size, and both are republished on a schedule; the current sheets took effect May 25, 2026 (IHCDA income and acquisition limits). A number printed here would eventually go stale, so pull the current sheet or have a participating lender run your county and household size.
The fine print that changes decisions
Three mechanics in the current program guide matter more than any headline percentage.
The assistance is a loan. IHCDA's current down payment assistance is non-forgivable. It is secured by a second mortgage, and the full amount becomes due when you sell, refinance outside an IHCDA program, or stop using the home as your principal residence (IHCDA, 02/2026). Helpful money, real lien. Plan your exit before you take it.
The money is flexible on the way in. The same guide allows the assistance to cover down payment, closing costs, and prepaid items. For a buyer whose savings cover a down payment and nothing else, that flexibility can outweigh the percentage itself.
The process runs through a participating lender. You cannot apply to IHCDA directly. A participating lender reserves the loan, a non-refundable 250 dollar reservation fee applies, and U.S. Bank acts as master servicer (IHCDA, 02/2026). Credit score minimums are set with the master servicer rather than published as one universal number, so the lender checks your file against current requirements.
The exception worth knowing
Bond-funded IHCDA loans can trigger a federal recapture tax in limited situations tied to an early sale and income growth past set thresholds (IHCDA, 02/2026). Ask the lender to walk through the recapture notice before closing rather than after.
FHA, VA, and USDA still do the heavy lifting
State assistance rides on top of a first mortgage, and for many Indiana buyers the federal loan programs are the real foundation.
FHA: the low-down-payment workhorse
FHA loans, insured by the Federal Housing Administration under HUD, allow a down payment as low as 3.5 percent of the purchase price on one-to-four-unit properties (HUD, as of August 2026). Ask any lender how mortgage insurance works on an FHA loan, because it shapes the monthly payment. HUD also funds free housing counseling at (800) 569-4287, a sensible first call for a nervous first-time buyer.
VA: earned, and often the strongest card
For Veterans, service members, and some surviving spouses, the VA purchase loan requires no down payment as long as the sales price does not exceed the appraised value, and it carries no monthly mortgage insurance (VA.gov, as of August 2026). Eligibility runs through a Certificate of Eligibility, and a one-time funding fee applies for many borrowers.
USDA: no down payment, address by address
The USDA Section 502 Guaranteed Loan Program offers 100 percent financing for low- and moderate-income households buying a primary residence in an eligible rural area, with income capped at 115 percent of median household income (USDA Rural Development, as of August 2026). Eligibility is checked address by address on USDA's eligibility map. On the eastern edge of the Indianapolis metro, in the countryside beyond towns like New Palestine and Greenfield, eligible and ineligible ground can sit close together, so run the specific address.
The mortgage credit certificate question
IHCDA has offered mortgage credit certificates in the past, a federal tax credit tied to mortgage interest, and it still processes re-issuance for existing certificate holders who refinance. Its current published lineup lists only the four programs above, so ask a participating lender what is available before counting on that tax credit (IHCDA, as of August 2026).
New construction: five questions before you sign
Much of my week happens inside model homes and builder contracts, and this is where I watch first-time buyer plans wobble. Builder incentives are frequently tied to the builder's affiliated lender. IHCDA programs must run through an IHCDA participating lender. Those two lists do not always overlap, and nobody in the sales office is paid to mention it. Ask these five questions in writing before you sign:
- Is the builder's affiliated lender an IHCDA participating lender? If yes, the incentive and the program may be able to travel together.
- If I use a participating lender instead, what happens to the incentive? Get the changed number on paper and compare totals.
- Where does this price land against the county acquisition limit on the current sheet? Upgrades and lot premiums move the final figure, so check the contract total.
- How does the program timeline fit the build schedule? The program guide sets a commitment window of 60 days from the rate lock, with an extension fee beyond it (IHCDA, 02/2026). Completion dates move.
- Will it appraise? On bond-funded programs the purchase price cannot exceed the appraised value (IHCDA, 02/2026), so ask how your chosen upgrades tend to appraise.
Carrying a home to sell while you buy is its own sequencing problem. I cover it in Buy Before You Sell.
My take: where these programs earn their keep
The buyers these programs genuinely serve have steady income and thin savings. Five percent of the purchase price in assistance can cover an FHA down payment with room left toward closing costs, and that turns a two-more-years-of-saving plan into a this-spring plan. I recommend the IHCDA route to that buyer without hesitation.
I slow people down in two situations. First, a short timeline. Because the assistance is repayable when you sell, a buyer who expects to move within a few years should price that repayment into the decision. Second, a strong negotiation. A seller credit or a builder incentive can sometimes do the same job with fewer strings, so I ask the lender to run both versions before we commit. The program should win on the numbers or it should sit unused.
What I ask of a first-time buyer in central Indiana is simple. Bring me the address and the lender sheet before you sign, and give me one conversation to check the sequencing. Questions cost nothing at that stage. They get expensive later.
First-time buyer programs in Indiana: FAQ
What first-time home buyer programs does Indiana have right now?
As of August 2026, IHCDA offers four programs statewide: First Step, with 5 percent down payment assistance; Step Down, a rate-focused option; Next Home, with 2.5 or 3.5 percent down payment assistance; and Next Step, a refinance lane for existing IHCDA borrowers. Availability can change without notice, so confirm the current lineup at in.gov/ihcda.
Who counts as a first-time home buyer in Indiana?
For IHCDA purposes, a first-time home buyer is someone who has had no ownership interest in a principal residence within the past three years. That requirement is waived when the property sits in a designated target area or when the applicant has verifiable military status. Next Home is open to repeat buyers as well.
Does IHCDA down payment assistance have to be paid back?
Yes. IHCDA's current down payment assistance is non-forgivable. It is structured as a second mortgage, and the full amount becomes due when you sell, refinance outside an IHCDA program, or stop using the property as your principal residence. Build that repayment into your plans before accepting it.
What are the income limits for Indiana first-time buyer programs?
IHCDA publishes income and acquisition limits that vary by county and household size, with the current sheets effective May 25, 2026. The figures change on a schedule, so check the current limit sheet on IHCDA's website or ask a participating lender to run your county and household size.
Can I use a down payment program on a new construction home in Indiana?
The harder question is usually the lender. IHCDA loans must run through a participating lender, while builder incentives are frequently tied to the builder's affiliated lender, and the two lists do not always overlap. Before signing a builder contract, ask whether the builder's lender participates in IHCDA programs and what happens to the incentive if you switch.
Do I have to use a specific lender for IHCDA programs?
Yes. IHCDA programs are originated through participating lenders, the loans use FHA, Fannie Mae, or Freddie Mac 30-year fixed structures, and U.S. Bank acts as master servicer. A non-refundable 250 dollar reservation fee also applies. Participating lender information lives at in.gov/ihcda.
Is there still a mortgage credit certificate program in Indiana?
IHCDA has offered mortgage credit certificates in the past, and holders of an existing certificate can request re-issuance after a refinance. Its current published lineup lists First Step, Step Down, Next Home, and Next Step, so ask a participating lender whether any certificate option exists for a new purchase before counting on the tax credit.
Program details verified August 2026 against IHCDA (in.gov/ihcda, Homeownership Program Guide 02/2026; limit sheets effective May 25, 2026), HUD, VA.gov, and USDA Rural Development. Programs, limits, and terms change without notice; confirm current terms with an IHCDA participating lender. This page is reviewed and refreshed on a semiannual schedule.
About Jim
Jim Bardes is a REALTOR® with eXp Realty serving central Indiana, based in Hancock County and working across New Palestine, Greenfield, Fortville, McCordsville, and the Indianapolis metro. Much of his practice centers on new construction and helping buyers sequence a purchase well. He is a real estate broker rather than a lender; for loan decisions, work with a licensed lender. His standard, in his own words: "Be Served, Not SOLD!" Reach Jim at 317-442-1698 or jim@bardesrealty.com.
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