Indiana First-Time Home Buyer: 2022 Programs and Grants

What to know about buying a house in Indiana

If you’re an Indiana first–time home buyer, you should probably count yourself lucky. Because home prices are lower in the Hoosier state than the national average – and they’re rising more slowly. Of course, it probably doesn’t feel that way if you’re saving for a down payment.

But Indiana has generous help for first–time buyers. Indeed, if you’re eligible, you may be able to get down payment assistance that could put you in a new home a lot sooner than you imagined.

Verify your home buying eligibility in Indiana. Start here (Jan 7th, 2022)

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Indiana home buyer overview

According to the Indiana Association of Realtors, the median sales price in the Hoosier state was $217,000 October 2021. And that price had risen 13% over the previous 12 months.

Those figures are well below the national average. But a 13% price hike can still make it difficult to scrape together enough for a down payment.

So read on for details of down payment assistance programs that might, if you’re eligible, provide financial help.

Indiana Home Buyer Overview
Average Home Sale Price in IN	$217,000
Minimum Down Payment in IN (3%)	$6,510
20% Down Payment in IN	$43,400
Average Credit Score in IN1	707
Maximum IN Home Buyer Grant2	IHCDA forgivable loan of up to 6% of the sale price

Down payment amounts are based on the state’s most recently available average home sale price. “Minimum” down payment assumes 3% down on a conventional mortgage with a minimum credit score of 620.

If you’re eligible for a VA loan (backed by the Department of Veterans Affairs) or a USDA loan (backed by the US Department of Agriculture), you may not need any down payment at all.

Verify your home buying eligibility in Indiana. Start here (Jan 7th, 2022)

First–time home buyer loans in Indiana

If you’re a first–time home buyer in Indiana with a 20% down payment, you can get a conventional loan with a low interest rate. And you never have to pay for private mortgage insurance (PMI).

Of course, few first–time buyers have saved enough for 20 percent down. But the good news is, you don’t need that much. Not by a long shot.

Borrowers can often get into a new home with as little as 3% or even 0% down using one of these low–down–payment mortgage programs:

• Conventional 97 – From Freddie Mac or Fannie Mae. 3% down payment and 620 minimum FICO score. You can usually stop paying mortgage insurance after a few years once you reach 20% home equity
• FHA loan – Backed by the Federal Housing Administration. 3.5% down and a 580 minimum credit score. But you’re on the hook for mortgage insurance until you refinance to a different type of mortgage, move home, or pay off your loan
• VA loan – Only for veterans and service members. Zero down payment is required. Minimum credit score varies by lender but often 620. No ongoing mortgage insurance after closing. These are arguably the best mortgages available, so apply if you’re eligible
• USDA loan – For those on low–to–moderate incomes buying in designated rural areas. Zero down payment required. Credit score requirements vary by lender but often 640. Low mortgage insurance rates
• IHCDA loans – May include competitive interest rates and down payment assistance. More information below

Note that government loan programs (including the FHA, VA, and USDA home loans) require you to buy a primary residence. That means you can’t use these loans for a vacation home or investment property.

Depending on the mortgage loan you choose, you could potentially get into your new house with minimal cash out of pocket.

These programs even let you use gifted money or down payment assistance (DPA) to cover the down payment and closing costs.

If you’re not sure which program to choose for your first mortgage loan, your lender can help you find the right match based on your finances and home buying goals.

Find the best first-time home buyer loan for you (Jan 7th, 2022)

Indiana first–time home buyer programs

The Indiana Housing and Community Development Authority (IHCDA) offers special deals on FHA loans and conventional mortgages. These are available mostly to first–time home buyers, though there are exceptions in certain target areas.

As is usual with state–run mortgage programs, you have to choose a lender from an approved list put out by the IHCDA. And there are caps on the price of the home you can buy as well as household income limits.

You’ll also need a minimum credit score of 640. Or 680 if you have a lot of other existing debts.

If you’re interested in one of these FHA loans or conventional mortgages, you can learn more by clicking those links. Each contains all the information you need.

IHCDA home loans can sometimes come with mortgage credit certificates (MCCs), which give you tax breaks on your payments. And these programs put you in line for some attractive down payment assistance, too.

Indiana first–time home buyer grants

The IHCDA’s down payment assistance (DPA) programs are more generous than those offered by many states – providing you wish to stay in your next home for at least nine years.

These programs let you borrow up to 6% of the sale price and you can use that money for:

• Down payment
• Closing costs
• “Prepaids” (things like homeowners insurance premiums, real estate property taxes, and mortgage interest that you pay upfront on closing)

Better yet, you make no monthly payments on that DPA loan and pay no interest. And, after you’ve lived in your home for nine years (without refinancing) your loan is forgiven in full.

But if you sell, move out, or refinance during those nine years, you’ll have to pay back every cent you borrowed. So think carefully about your long–term homeownership plans before signing on.

If the IHCDA’s home buyer assistance doesn’t seem like a good fit, you may have other options. Talk to your loan officer or real estate agent about local down payment grants and loans to learn more.

Verify your home buying eligibility in Indiana. Start here (Jan 7th, 2022)

Buying a home in Indiana’s major cities

Indianapolis is the most challenging city for an Indiana first–time home buyer. Its prices are higher than either Fort Wayne’s or Evansville’s. And they’ve been rising much more quickly.

However, in addition to the IHCDA’s offering, each of these cities has its own down payment assistance program. So you may be in line for help if you want to buy a home in one of them.

Indianapolis first–time home buyers

In November 2021, the median list price of homes in Indianapolis was $215,000. That was an increase of 15% year–over–year according to Realtor.com.

If you want to buy a home at that median price, your down payment options might fall between:

• $6,450 for 3% down payment
• $43,000 for 20% down payment

The Indianapolis Neighborhood Housing Partnership offers eligible borrowers up to $14,999 in down payment assistance. Eligibility requirements are on that webpage and you can complete an online assessment to get more help.

Fort Wayne first–time home buyers

In November 2021, the median list price of homes in Fort Wayne was $184,900. That was an increase of 8.8% year–over–year according to Realtor.com.

If you want to buy a home at that median price, your down payment options might fall between:

• $5,550 for 3% down payment
• $36,980 for 20% down payment

The City of Fort Wayne’s website is short on detail. But it says that it does have a citywide down payment assistance program for “households with incomes at or below 80% of the median income level, which is $49,050 for a family of four or $36,450 for an individual.”

The program is administered by Community Connections, the housing division of Pathfinder Services. Call 1–800–310–9510 for details and assistance.

Evansville first–time home buyers

In November 2021, the median list price of homes in Evansville was $159,900. That was an increase of 7.3% year–over–year according to Realtor.com.

If you want to buy a home at that median price, your down payment options might fall between:

• $4,800 for 3% down payment
• $31,980 for 20% down payment

There appear to be a couple of down payment assistance programs in Evansville:

1. City of Evansville Homebuyer Program – A forgivable loan (similar to the IHCDA’s) based on “the purchase price plus closing costs minus the maximum allowed by the prime lender.” Your loan may be forgiven after 5, 10, or 15 years, depending on how much you borrow. Loans are capped at $40,000. Click the link for details
2. Hope of Evansville – You’ll have to contribute a minimum of $1,000 from your own savings. And Hope will match your contribution, dollar for dollar, up to $10,000. Again, click the link for more details

Explore these and the IHCDA’s programs to see which suits you best.

Where to find home buying help in Indiana

All the organizations we’ve listed above should provide advice freely to any first–time home buyer in the state of Indiana or within their areas.

In addition to our selection, the U.S. Department of Housing and Urban Development (HUD) provides a few lists for statewide, regional, and local resources:

Statewide and regional first-time home buyer resources in Indiana

Indiana first-time home buyer resources by city/town

What are today’s mortgage rates in Indiana?

You can see today’s live mortgage rates in Indiana here.

When you’re ready to start the home buying process, make sure you get personalized rate quotes from at least three mortgage lenders.

Don’t just look at advertised rates online; actually apply for preapproval and compare the interest rates and fees you’re offered. That’s the only way to know you’re getting the best deal possible on your new home loan.

Show me today’s rates (Jan 7th, 2022)

¹ Source: Experian.com 2021 study of 2020 data

²Based on a review of the state’s available DPA grants at the time this was written