Indiana’s Top Homebuyer Assistance Programs: IHCDA Grants, Down Payment Help, and How to Qualify

What Is IHCDA, and Why Does It Matter for Buyers?

The Indiana Housing and Community Development Authority (IHCDA) is the state agency that runs Indiana's homebuyer assistance programs, working through a network of approved participating lenders rather than lending directly to buyers. If you're short on down payment cash, or want a slightly better rate than you'd get on your own, these programs are worth understanding before you start shopping for a mortgage, since not every lender offers them and the paperwork works differently than a standard loan.

Program 1: First Step

First Step is IHCDA's primary down payment assistance program for first-time buyers. As of IHCDA's current lender guidelines, it provides 5% of the purchase price as down payment assistance, structured as a non-forgivable second mortgage at 0% interest with no monthly payment. That means you don't pay it back monthly, but you do owe the balance when you sell, refinance, or otherwise pay off your first mortgage; it's assistance, not a grant.

Who qualifies: First-time buyers, generally defined as not having owned your primary residence in the past three years, unless you're purchasing in a designated targeted census tract or are a qualified veteran, in which case the first-time buyer requirement may be waived.

Loan types: FHA or conventional, 30-year fixed.

Credit and income: Subject to IHCDA's credit score, debt-to-income, and county-specific income and purchase price limits, detailed below.

Program 2: Step Down

Step Down doesn't provide down payment assistance. Instead, it offers a reduced interest rate on your first mortgage, which can be useful if you already have your down payment covered but want a lower monthly payment. Eligibility criteria mirror First Step's in most respects, including the first-time buyer requirement, credit score, and income limits.

Program 3: Next Home

Next Home is IHCDA's program for buyers who don't qualify as first-timers, as well as those who do. It provides down payment assistance of 2.5% or 3.5% of the purchase price, depending on the specific loan scenario, as a non-forgivable second mortgage. Unlike First Step and Step Down, Next Home doesn't require you to be a first-time buyer, and it's subject to income limits only, with no separate purchase price cap.

Program 4: Next Step

Next Step isn't a purchase program, it's a one-time refinance option for people who already have a First Step or Step Down mortgage through IHCDA (or, historically, a First Place mortgage; that program ended December 31, 2023, and existing First Place borrowers are still eligible to use Next Step). If that's not your situation, this program won't apply to your purchase.

Mortgage Credit Certificate (MCC)

IHCDA has historically offered a Mortgage Credit Certificate, a federal tax credit worth a percentage of the mortgage interest you pay each year, on top of other programs. Current program guidance has been inconsistent about whether new MCCs are being issued, so treat this as something to ask a participating lender about directly rather than assume is currently available.

Eligibility at a Glance

Based on IHCDA's current lender guidelines:

•  Minimum credit score: 660 for First Step, Step Down, and Next Home.

•  Maximum debt-to-income ratio: 45%.

•  First-time buyer requirement: Required for First Step and Step Down (with exceptions for targeted areas and qualified veterans); not required for Next Home.

•  Income and purchase price limits: Vary by county and household size, so there's no single statewide number. First Step and Step Down have both income and purchase price limits; Next Home has an income limit only. Check IHCDA's income-and-acquisition-limits table (in.gov/ihcda/homebuyers/income-and-acquisition-limits) for your specific county.

•  Homebuyer education: A completion certificate from an approved course, Credit Smart or HomeView, is required across all three programs.

•  Reservation fee: IHCDA charges a $250 reservation fee across its down payment assistance products.

•  Lender fee limits: Participating lenders are capped at 1% origination plus $1,600 in additional lender fees on these programs.

Credit score minimums, assistance percentages, income limits, and fees are set by IHCDA and its participating lenders and are updated periodically. Confirm current terms directly with an IHCDA-participating lender or at in.gov/ihcda/homebuyers before budgeting around a specific number.

How to Apply, Step by Step

1.  Find an IHCDA-participating lender. Not every mortgage lender offers these programs, so confirm upfront rather than assuming your preferred lender participates.

2.  Get pre-screened. Your lender reviews your credit, income, and debt-to-income ratio against the specific program's requirements before moving forward.

3.  Your lender reserves your loan. Once you're a fit, the lender commits to your interest rate and loan type by reserving your mortgage in IHCDA's online system, which also triggers the $250 reservation fee.

4.  Complete homebuyer education. You'll need a completion certificate from Credit Smart or HomeView before closing.

5.  Move through standard mortgage processing. From here, the loan largely follows the same path as any other mortgage: underwriting, appraisal, and final approval, with the down payment assistance layered in as a second mortgage at closing.

A local buyer's agent who regularly works with first-time and IHCDA-eligible buyers, like Dave Brough's team at Anthony REALTORS, can point you toward vetted lending partners who handle this paperwork often, rather than leaving you to find an IHCDA-participating lender cold.

Quick Facts

•  First Step provides 5% down payment assistance for first-time buyers as a non-forgivable second mortgage at 0% interest.

•  Next Home provides 2.5% or 3.5% down payment assistance and is open to repeat buyers as well as first-time buyers.

•  The minimum credit score across IHCDA's main programs is currently 660.

•  IHCDA's maximum debt-to-income ratio is 45%.

•  The First Place program, once part of this lineup, ended December 31, 2023; existing First Place borrowers can still use the Next Step refinance program.

•  Homebuyer education (Credit Smart or HomeView) is required for First Step, Step Down, and Next Home.

Frequently Asked Questions

Do I have to be a first-time buyer to get IHCDA help?

Not always. First Step and Step Down require first-time buyer status (with exceptions for targeted areas and veterans), but Next Home is open to repeat buyers too.

Is IHCDA down payment assistance forgivable?

Generally no. Current IHCDA guidance describes First Step and Next Home assistance as non-forgivable, meaning you repay the balance when you sell, refinance, or pay off your first mortgage.

What credit score do I need?

IHCDA's current minimum is 660 across First Step, Step Down, and Next Home, though your lender's own overlays could be stricter.

How do I know if I qualify on income?

Income and purchase price limits vary by county and household size. Check IHCDA's income-and-acquisition-limits table or ask a participating lender to run your specific numbers.

Can I apply directly through IHCDA?

No. You apply through an IHCDA-approved participating lender, who handles the pre-screening, reservation, and processing on IHCDA's behalf.

The Bottom Line

Indiana's IHCDA programs can meaningfully reduce what you need to bring to closing, particularly First Step's 5% assistance for first-time buyers and Next Home's option for repeat buyers. None of them are free money; most come as a second mortgage you'll eventually repay. The eligibility rules, credit thresholds, and income limits are specific enough that it's worth working with a lender who handles these programs regularly, and a local agent who knows which lenders that includes can save you a few wrong turns early in the process.

Figuring out which IHCDA program fits, and finding a lender who actually works with them regularly, can be the hardest part of getting started. Dave Brough's team can connect you with vetted lending partners who handle First Step, Next Home, and similar programs often, so you're not navigating the paperwork alone.

Book a Virtual Consultation with a Fort Wayne Real Estate Expert

A virtual consultation with Dave Brough of Anthony REALTORS® is a one-on-one video call where you can ask about buying or selling a home in Fort Wayne, Indiana, including neighborhoods, pricing, timelines, and next steps. Choose the option that fits your goal and pick a time that works for you.

Who is the virtual consultation for?

It's for anyone buying or selling a home in Fort Wayne and the surrounding area, whether you're a first-time buyer, moving up, downsizing, relocating, or just starting to explore your options.

What can we talk about on the call?

Buyers can ask about neighborhoods, budgets, the buying process, and what to check before closing. Sellers can ask about pricing, preparing a home for the market, and what to expect during the inspection and negotiation.

How do I schedule a virtual consultation?

Select the home buying or home selling button above, choose an open time on the calendar, and you're set. You can also call or text (260) 308-4335.

Sources

• Indiana Housing and Community Development Authority, HOD Universal Program Guide and STEPS Lender Matrix (in.gov/ihcda) — program structure, eligibility criteria, application steps, and fees
• Indiana Housing and Community Development Authority, Income and Acquisition Limits table (in.gov/ihcda/homebuyers/income-and-acquisition-limits) — county-specific limits