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Indiana First-Time Home Buyer Programs of 2018

July 30, 2018
Finding the Right Mortgage, Mortgages
Indiana First-Time Home Buyer Programs
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If you’re a first-time home buyer in Indiana, the state’s housing authority wants to help with what’s likely going to be the biggest purchase you’ve ever made.

The Indiana Housing and Community Development Authority, or IHCDA, offers mortgage programs for qualified first-time home buyers. You’re considered a first-time buyer if you have not owned your primary residence in the last three years.

The requirement to be a first-time home buyer is waived for military veterans and for people who buy in economically disadvantaged “target areas.” Some of the programs are open to repeat buyers who meet income guidelines.

National first-time home buyer programs

Conventional mortgage

National program

Best for

Low down payment

Limited mortgage insurance premiums

What you need to know

First-time home buyers can get a conventional home loan with as little as 3% down if the mortgage meets requirements set by Fannie Mae and Freddie Mac. And if you put at least 20% down, you won’t have to pay mortgage insurance. Most lenders require a minimum credit score of 620 to qualify for a

 

FHA loans

National program

Best for

Low credit score

Low down payment

What you need to know

This is the go-to program for many first-time home buyers with lower credit scores. The Federal Housing Administration allows down payments as low as 3.5% for those with credit scores of 580 or higher. The FHA will insure loans for borrowers with scores as low as 500 but requires a 10% down payment

 

» MORE: Requirements for getting an FHA loan

 

VA loans

National program

Best for

Military

Low down payment

What you need to know

Guaranteed by the U.S. Department of Veterans Affairs, these mortgages are available to military members, veterans and surviving spouses. If you qualify, you’ll see benefits such as no minimum credit score and no down payment or mortgage insurance, but you'll likely have to pay a VA funding fee.

 

USDA loans

National program

Best for

Low down payment

Rural

What you need to know

A USDA home loan is a zero-down-payment mortgage for eligible rural and suburban home buyers. USDA loans are issued by the U.S. Department of Agriculture through the USDA Rural Development Guaranteed Housing Loan Program. There are income limitations, which vary by region. Applicants with credit

 

IHCDA highlights and eligibility requirements

HIGHLIGHTS

  • Some programs offer down payment assistance
  • Loans can be used to buy single-family houses, two- to four-unit dwellings, town houses and condominiums
  • All qualified loans are 30-year fixed-rate mortgages

ELIGIBILITY

  • Income limits vary by county and depend on family size
  • Manufactured homes are not eligible
  • Borrower pays a $100 “reservation fee”

» MORE:  25 tips for first-time home buyers

Indiana first-time home buyer loan programs

Affordable Home

State program

Learn more

at IHCDA

Best for

Low mortgage rates

What you need to know

Affordable Home provides below-market interest rates on FHA loans for low- to moderate-income home buyers who have enough money for their down payment and closing costs. FHA loans are mortgages insured by the Federal Housing Administration. Maximum home prices vary by county. The minimum credit

 

My Home

State program

Learn more

at IHCDA

Best for

Low mortgage rates

What you need to know

My Home is for low- to moderate-income home buyers who provide funds for down payment and closing costs. Borrowers get conventional 30-year fixed-rate mortgages with a minimum down payment of 3%. (Condo loans have a minimum down payment of 5%.) Borrowers pay discounted premiums for mortgage

 

Helping To Own (H2O)

State program

Learn more

at IHCDA

Best for

Down payment assistance

What you need to know

The Helping To Own program offers down payment assistance for low- to moderate-income first-time home buyers who get FHA loans. The assistance is a grant of up to 3.5% that does not have to be repaid. The minimum credit score is 660. H2O cannot be combined with any other IHCDA program.

 

Next Home

State program

Learn more

at IHCDA

Best for

Down payment assistance

What you need to know

Next Home provides down payment assistance in the form of a second mortgage to low- to moderate-income borrowers who get FHA or conventional mortgages. The maximum down payment assistance for FHA loans is 3.5%, and for conventional loans, 3%. The assistance must be repaid if the buyer refinances or

 

Mortgage Credit Certificates

State program

Learn more

at IHCDA

Best for

Tax credits

What you need to know

Under the Next Home and My Home programs, low- to moderate-income first-time home buyers can obtain mortgage credit certificates from IHCDA. Borrowers can receive a credit to offset their federal income taxes, up to $2,000 for each year they own the home.

 

Your next step

Visit the IHCDA’s homeownership programs page for brief summaries of each loan program and related links to dig deeper. Some loan programs have income limits, home price limits or both; links to those can be found on the IHCDA’s income and acquisition limits page. IHCDA maintains a chart that lays out basic features and requirements of each loan program.

The state maintains a list of participating lenders, organized by county. And see a roundup of the best mortgage lenders in Indiana.

» MORE:  Best Indiana mortgage lenders

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