What first-time home buyer programs are available in Indiana?

Buying your first home is a major life moment. It's an opportunity to build a space that’s all your own. If you're looking to buy in Indiana, you’ll be happy to know there are many programs designed to make home ownership more accessible. The process can seem complicated, but we're here to guide you through your options and empower you with the knowledge you need.

This guide breaks down the key first-time home buyer programs in Indiana, from federal loans to state-specific support. Let’s explore the path to your new front door.

First-time home buyer programs make purchasing a home more affordable. They typically offer benefits like:

• Lower down payments
• Help with closing costs
• Flexible credit score requirements

These programs are a great resource for people with a steady income who haven't saved enough for a traditional 20% down payment.

The definition is broader than you might think. You are often considered a first-time home buyer if you have not owned your main home in the last three years. This means even if you've owned a home in the past, you could be eligible for these programs again. Always check the specific rules for each program you consider.

Indiana residents can use several popular federal loan programs. Because these loans are backed by the government, lenders can offer better terms to borrowers.

FHA loans are insured by the Federal Housing Administration and are a top choice for first-time buyers. They are designed for people who may have lower credit scores or smaller savings.

• What are the benefits? The main advantage is the low down payment, which can be as little as 3.5% of the home's price.
• Who is eligible? You typically need a credit score of at least 580 to qualify for the 3.5% down payment. You will also have to pay mortgage insurance premiums (MIP).
• How do I apply? You can apply through any FHA-approved lender, including most banks and local credit unions.

If you want to buy a home in a suburban or rural area, a USDA loan is an excellent option. These loans are backed by the U.S. Department of Agriculture to encourage home ownership outside of large cities.

• What are the benefits? USDA loans offer 100% financing, meaning you might not need a down payment at all.
• Who is eligible? The home must be in an eligible rural area, and your household must meet certain income limits. A lender can help you confirm if you and the property qualify.
• How do I apply? You can apply for a USDA loan through a participating lender.

VA loans are a powerful benefit for active-duty service members, veterans, and eligible surviving spouses. The U.S. Department of Veterans Affairs guarantees these loans, which come with very favorable terms.

• What are the benefits? VA loans often require no down payment and have no private mortgage insurance (PMI) requirement, saving you money on your monthly payment.
• Who is eligible? You will need a Certificate of Eligibility (COE) from the VA. While the VA doesn’t set a minimum credit score, most lenders do, often starting in the low 600s.
• How do I apply? You can get your COE and apply for a VA loan through a VA-approved lender.

The Indiana Housing and Community Development Authority (IHCDA) is the primary resource for state-level help. IHCDA works with lenders to offer programs that make owning a home more affordable for Hoosiers. These can often be used with federal loans like FHA or VA loans.

The First Place program is for first-time home buyers. It offers a 30-year, fixed-rate mortgage with down payment assistance.

• What are the benefits? It provides down payment assistance up to 6% of the purchase price. This comes as a second mortgage that is forgiven after you make all your payments on the main mortgage.
• Who is eligible? You must be a first-time home buyer, meet credit and income limits, and complete a home buyer education course.

The Next Home program is for both first-time and repeat buyers. It works like the First Place program, offering down payment assistance.

• What are the benefits? It offers down payment assistance up to 3.5% of the purchase price as a forgivable second mortgage.
• Who is eligible? The income and purchase price limits are different from the First Place program. A home buyer education course is also required.

The Mortgage Credit Certificate (MCC) is a federal tax credit that saves you money every year. It directly reduces the amount of federal income tax you owe.

• What are the benefits? The MCC lets you claim a tax credit for part of the mortgage interest you pay each year, up to $2,000. This is a dollar-for-dollar reduction of your tax liability.
• Who is eligible? The MCC is for first-time home buyers who meet specific income and purchase price limits. You must apply for it before you close on your home.

1. Review your finances: Look at your budget, savings, and credit score to know what you can afford.
2. Get pre-approved: A pre-approval letter from a lender shows you are a serious buyer and gives you a clear borrowing limit.
3. Find a trusted lender: Look for a loan officer or credit union that takes the time to understand your goals and explain your options.
4. Complete a home buyer education course: Many programs require it, but these courses are a great idea for any new buyer. They provide valuable information about the entire home-buying journey.

Buying your first home in Indiana is an achievable dream. With a range of federal and state programs available, you have a strong support system ready to help. By doing your research and partnering with a trusted financial institution, you can move forward with confidence. We’re here to support you every step of the way.