First time buying a home in Indiana? Then look no further! In this post, we'll list down the programs and grants offered to homebuyers in Indiana.
Hoosier housing prices are considerably lower so if you haven't bought a home before, this might be good news. But wait, there's more! Indiana helps first-time homebuyers greatly. You may move into a new home sooner if you qualify for down payment assistance.
Where To Start?
Below are some essential details on buying a home and the home-buying programs and grants they offer.
Overview For Indiana Home Buyers
According to the Indiana Association For Realtors, Indiana's July 2023 median house sale price was $258,700. Over the past year, that price fell 3.8%. However, high housing prices can make down payment savings challenging.
Luckily, there are various financial assistance to choose from:
Loans for Indiana First-Time Home Buyers
At a 20% down payment, first-time homebuyers in Indiana can acquire a conventional loan with a low-interest rate and without PMI. Indeed, few first-time buyers are saving 20%.
Some low-down-payment mortgage programs allow borrowers to buy a property with 3% or even 0% down:
- VA Loan
- USDA Loan
- FHA Loan
- IHCDA Loans
- Conventional 97
FHA, VA, and USDA loans need principal house purchases. Therefore, these loans cannot be used for vacation or investment properties. In most programs, you can use the given money or Down Payment Assistance (DPA) for your down payment and closing costs. Meanwhile, your mortgage loan may allow you to buy a house with little cash. Your lender might recommend a first mortgage program based on your finances and home purchase aspirations.
Indiana Home Buying Programs
The Indiana Housing and Community Development Authority (IHCDA) discounts FHA and conventional mortgages. Though specific target communities offer these, first-time homebuyers are the primary beneficiaries. As with state-run mortgage schemes, you must choose an IHCDA-approved lender. There are also income and housing price constraints. A 640 or 680 credit score is required if you have many debts.
- The IHCDA Mortgage Credit Certificate - With the help of Indiana Housing's Mortgage Credit Certificate program, you may receive a federal income tax credit worth up to $2,000 in yearly mortgage interest. Applicants for a participating lender loan can request the mortgage credit certificate for a first-time home buyer. Despite the $800 MCC application fee, most consumers save more over the tax credit.
Indiana Home Buyer Grants
Assuming you'll live in your new house for nine years, the IHCDA's down payment aid programs are better than many states.
These programs allow you to borrow 3.5% to 6% of the sale cost for:
- Closing Costs
- Prepaid Items
- Down Payment
Better, a DPA loan has no monthly dues or interest; your loans will be forgiven after nine years of home ownership without refinancing. Throughout those nine years, you must repay every cent borrowed if you sell, move, or refinance. Think about the long-term homeownership goals before signing up.
The IHCDA First Place Program
First-time homebuyers, homebuyers in target areas, and veterans who qualify can borrow up to 6% of their purchase price under the First Place Program. This help is a forgivable second mortgage for 30-year FHA mortgages.
The second home loan comes with zero interest and monthly payments. After nine years, if the buyer doesn’t sell or refinance, it’s forgiven. The First Place Program won’t work with the mortgage credit certificate.
Borrowers have to fulfill the following DTI and FICO score requirements:
- DTI under 50% and 680 credit score
- DTI under 45% and a credit score of 640
The agency regulates single-family homes, condos, townhomes, planned unit complexes, and mobile homes. In addition, the buyer’s income must meet agency requirements. Remember that most eligible applicants have moderate to low incomes.
The IHCDA Next Home Program
Indiana Housing may help first-time and return homebuyers via Next Home. However, a 30-year FHA loan is necessary. Still, you can utilize the 3.5% purchase price for your down payment.
The down payment subsidy is forgiven after two years if you don’t sell or refinance. Aid and mortgage credit certificates can be combined.
Helping To Own (H2O)
The Helping To Own Program provides up to 3.5% of the FHA loan down payment; however, only Indiana first-time homebuyers qualify.
There are choices if IHCDA home buyer help did not work for you -- one is to ask your loan officer or two, a realtor for local down payment grants and loans.
How To Get Help When Buying A Home In Indiana
All the organizations mentioned should offer free help to first-time homebuyers in Indiana or their localities. HUD offers statewide, regional, and local resource lists in addition to:
- The homebuyer assistance programs include FHA loans and conventional mortgages.
- Offering homebuyer education classes and both downpayment and closing cost assistance.
- And other programs
Have more questions? Send us an email or call us at 317-316-8224 today!