Indiana First-Time Homebuyer Programs

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Updated on Thursday, February 21, 2019

Buying your first home can seem overwhelming at times. Not only do you have to find a house you love, but you also have to submit an immense amount of paperwork listing every detail of your financial life. And let’s not forget about the enormous expense involved in buying a home — things like closing costs, a down payment, moving expenses and more.

Fortunately, first-time homebuyers in the Hoosier State may qualify for some financial help. The state of Indiana offers an array of programs intended to help qualifying consumers stop renting and transition into homes they can afford.

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Some of the state’s programs come with down payment assistance, while others offer tax credits and mortgages with preferential terms. This guide will go over each of the Indiana homebuyer programs available in 2019, how they work and how you can qualify.

Here’s a quick list of everything we’ll cover:

Indiana first-time homebuyer programs

The Indiana Housing & Community Development Authority (IHCDA) aims to help Indiana residents who qualify find affordable housing throughout the state. The agency works with developers, lenders, nonprofit organizations and investors to create new opportunities and bolster existing opportunities for low- and moderate-income Hoosiers.

The IHCDA’s stated mission is “to provide housing opportunities, promote self-sufficiency, and strengthen communities.” It accomplishes this goal through several different programs, each of which is explained in depth below.

Eligibility for Indiana assistance

Qualifying for one of Indiana’s first-time homebuyer programs starts with making sure your income falls within limits set by the state’s programs. These income limits vary by county and by household size.

Also note that you are typically required to pay a “loan reservation fee,” which is normally $100, and that loan programs offered are for 30-year fixed-rate mortgages.

Individual programs also list more requirements that dictate which Indiana residents may be eligible.

Affordable Home (AH)

The Affordable Home (AH) program aims to help Indiana homeowners secure affordable mortgages in the state’s targeted areas. This loan is eligible for FHA financing, and you’ll have to pay a $100 reservation fee to get started. Please note that loans in this program must fall under acquisition limits — maximum loan amounts — that vary by county.

Features

  • Thirty-year fixed-rate mortgage that uses funds from the Federal Housing Authority (FHA).
  • Does not offer assistance with closing costs.

Eligibility

  • Must be a first-time homebuyer or someone who has not owned a home in three years.
  • If you have owned a home within the last three years, you may be able to use this loan if you are an eligible veteran or buying in a targeted area.
  • Must meet income guidelines based on household size and county.
  • Property can be one to four units.
  • Must plan to live in the home as a principal residence.
  • Must have a credit score of 660 or higher.

How it works

The IHCDA offers a list of participating lenders that cooperate with agency guidelines. The lender will work with you to determine eligibility for the AH program and help you move through the mortgage process.

Helping to Own (H2O)

The H2O program works as a down payment assistance grant that uses FHA financing and is combined with a 30-year fixed-rate mortgage. This program works for homes whose prices fall within acquisition cost limits, which vary by county.

Features

  • Down payment assistance grant that does not need to be repaid, up to 3.5% of the purchase price or appraised value (whichever is lower).
  • Thirty-year fixed-rate FHA mortgage.

Eligibility

  • Minimum credit score of 660 required.
  • Must pay a reservation fee of $100.
  • Must be a first-time homeowner who hasn’t owned a home in three years unless you’re an eligible veteran or purchasing in a targeted area.
  • Must plan to live in the home as a principal residence.
  • Purchase price of the home cannot exceed fair market value.
  • Must meet income guidelines based on household size and county.
  • Price of home must be below acquisition limits, which vary by county.

How it works

Applications for this program must be completed through a participating lender. Once you meet with an IHCDA lender, they can determine your eligibility and advise you on beginning your mortgage application.

Honor Our Vets (HOV)

The Honor Our Vets (HOV) program aims to help eligible veterans afford homeownership by combining the benefits of a VA loan with $5,000 in incentives that can be used toward relocation, a down payment or closing costs.

Features

  • Thirty-year fixed-rate VA mortgage
  • Receive $5,000 in funding for closing costs, a down payment or relocation expenses
  • 100% financing available

Eligibility

  • Loans must meet VA and IHCDA guidelines.
  • Must be an eligible servicemember, veteran or surviving spouse.
  • Must plan to live in the home as a principal residence.
  • Must meet income guidelines based on household size and county.
  • Can be a single-family home or a multi-family home with up to four units.
  • Purchase price cannot exceed fair market value.
  • Must pay a reservation fee of $100.

How it works

Once again, the IHCDA suggests starting the process by contacting an IHCDA-approved lender. Upon locating a lender you want to work with, you will be able to determine eligibility and move forward through the process.

Mortgage Credit Certificate (MCC)

The Mortgage Credit Certificate (MCC) works as a tax credit that varies depending on the cost of your home. The goal of this credit is to make homeownership more affordable and provide funding consumers can use toward their monthly mortgage payment. The maximum tax credit is $2,000, and it can be claimed each year as long as it doesn’t exceed your federal income tax liability after taking credits and deductions into account.

Features

  • Thirty-year fixed rate mortgage
  • A federal tax credit of between 20% and 35% of the annual interest paid and accrued on the mortgage, depending on your mortgage amount.
  • Compatible with conventional financing, FHA loans, USDA loans or VA loans.

Eligibility

  • Must pay $500 reservation fee.
  • Must be a first-time homebuyer (someone who hasn’t owned a home in the last three years), unless you’re purchasing in a targeted area or you’re an eligible veteran.
  • Must meet income guidelines based on household size and county.
  • Home price must be below acquisition costs set by county.
  • Must be a U.S. citizen or eligible noncitizen.
  • Property must be in Indiana and a single- or multi-family home with up to four units.
  • No more than 10% of the residence can be used for business purposes.
  • Must reside in the home as a principal residence.
  • Property can only be one parcel.

How it works

Start the process by reaching out to an IHCDA-approved lender that works with the MCC program in the state of Indiana. Once you locate a lender, they’ll work with you through the approval and loan process.

My Home (MH)

My Home (MH) is a loan program that helps consumers qualify for affordable fixed-rate home loans. This program doesn’t offer down payment assistance, so it’s best for consumers who can fund their own closing costs.

Features

  • Thirty-year fixed rate mortgage
  • Eligible for conventional financing

Eligibility

  • Can be either a first-time or repeat homebuyer.
  • Must meet income guidelines based on household size and on the county of the home.
  • Property can be one- or multi-unit with up to four dwellings.
  • Must be the buyer’s principal residence.
  • Purchase price of the property cannot exceed fair market value.
  • Minimum credit score of 640 with loan-to-value ratio (LTV) of 95% or less.
  • Credit score requirements vary for LTVs over 95%.
  • Must pay a reservation fee of $100.

How it works

You’ll need to speak with an IHCDA-approved lender to determine eligibility for the My Home program. The lender will walk you through eligibility and help you apply for the program.

My Home with Mortgage Credit Certificate (MH/MCC)

The My Home with Mortgage Credit Certificate program (MH/MCC) combines the features of both programs. You’ll get access to a 30-year home loan with a fixed interest rate along with a federal tax benefit that varies based on the price of your home.

Features

  • Thirty-year fixed rate mortgage
  • Federal tax benefit of 20% to 35% of the annual interest paid on the mortgage amount (up to $2,000). Percentage amount depends on the size of your mortgage.
  • Eligible with conventional financing.

Eligibility

  • Must be a first-time homebuyer.
  • Must meet income guidelines based on the county of the home and household size.
  • Property can be one- or multi-unit with up to four dwellings.
  • Must be the buyer’s principal residence.
  • Purchase price of property cannot exceed fair market value.
  • Minimum credit score of 640 with LTV of 95% or less.
  • Credit score requirements vary for LTVs over 95%.
  • Must pay a reservation fee of $100.

How it works

Speaking with an IHCDA-approved lender is key if you hope to apply for the MH/MCC. The lender will help determine whether you qualify for the program and walk you through the process.

Next Home (NH)

The Next Home (NH) program provides down payment assistance that you can pair with a conventional mortgage or an FHA home loan. The down payment assistance cannot exceed 3.5% of the purchase price for FHA loans, or 3% of the purchase price for conventional loans.

Features

  • Thirty-year fixed rate mortgage
  • Minimum credit score of 660 for FHA or 640 for conventional
  • Can be used with conventional or FHA financing
  • Down payment assistance of up to 3.5% for FHA loans, and up to 3% for conventional loans

Eligibility

  • Does not require that you be a first-time homebuyer.
  • Credit score of 660 for FHA loan or 640 for conventional loan.
  • Must meet income guidelines based on county and household size.
  • Home may be single- or multi-family with up to four units.
  • Must live in the home as your primary residence.
  • Purchase price of property cannot exceed fair market value.
  • Down payment assistance can be used for closing costs, down payment or prepaid expenses.
  • Must pay reservation fee of $100

How it works

Contact a participating IHCDA-approved lender to determine eligibility and begin the process. Note that the IHCDA itself does not process home loans.

Next Home with Mortgage Credit Certificate (NH/MCC)

The NH/MCC Program allows you to pair a 30-year fixed rate mortgage with a federal tax credit that varies based on your mortgage amount. This program combines the features of Next Home with the MCC for those who qualify.

Features

  • Thirty-year fixed-rate mortgage
  • Down payment assistance of up to 3.5% for FHA loans, or 3% for conventional loans
  • Federal tax benefit of 20% to 35% of the annual interest paid (up to $2,000)
  • Eligible for FHA or conventional financing

Eligibility

  • Must be first-time homebuyer unless purchasing in a targeted area.
  • Minimum credit score of 660 for FHA and 640 for conventional loans.
  • Must pay a reservation fee of $100.
  • Must fall within income limits based on household size and county where home resides.
  • Home price must be less than acquisition limit, which varies by county.
  • Must live in home as primary residence.

How it works

Since this program combines two different IHCDA programs, you’ll need to work with an IHCDA lender that is knowledgeable about the program guidelines and rules for both. Speak with an IHCDA-approved lender to begin the process.

National first-time homebuyer programs

If you plan to buy a home in Indiana, these first-time homebuyer programs for Hoosiers can provide some financial help. However, it’s important to note that many national programs also exist. Check out LendingTree’s guide to national first-time homebuyer programs to learn more about all the programs that might be available to you.

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