11+ Best Indiana First-Time Homebuyer Programs of 2022

Amidst Indiana’s vast state, six million mid-westerners live in every kind of household you could think of–legacy ranches, cute bungalows, old Victorians, 19th-century high style and vernacular, and Indianapolis’s growing number of new condos. 

When looking to buy your first home in Indiana, the mortgage and loan process can feel intimidating. But it doesn’t have to be this way. You’re not alone, and that’s what we try to remind our clients of here at The Home Loan Expert

Buying your first home is possible–and can be painless! First stop? Knowledge about first-time homebuyer programs in Indiana. 

Indiana’s first-time homebuyer programs offer down payment assistance and other benefits designed to make purchasing your first home a breeze. 

Ready to jump into real estate with the support of a warm community behind you? Walk with us as we discuss everything you need to know about first-time homebuyer programs Indiana offers.

What is a homebuyers program? 

Mortgage loan companies implement homebuyer programs to help eligible people purchase a home when they would otherwise face financial obstacles or disadvantages through conventional loan or mortgage programs. First-time buyers, veterans, or lower-income families may be eligible to apply.  

Indiana has a hot real estate market, with average home prices increasing 14% this year. Experts predict that first-time buyers will outlay more to join the market, including overpaying for a home. 

Any good mortgage lender will advise you against paying above the appraised value; however, we know how hard it is to break into a market if you don’t have substantial funds saved up. Luckily, the state housing authority offers first-time homebuyer’s programs that can help. 

Benefits of first-time homebuyer programs in Indiana

A first-time homebuyer program can vary in characteristics, depending on the type of program and the company offering the program. Most first-time homebuyer programs are guaranteed by the federal government, allowing the participating lender to compensate you with much better interest rates than if you were purchasing a home through conventional loans

First-time homebuyer programs allow people who meet eligibility requirements to obtain a loan with better-than-average terms, which can include:

  • Down payment assistance or a lower minimum down payment requirement
  • Better interest rates 
  • Longer loan terms

These benefits are great for people with a minimal credit history or younger folks struggling to meet eligibility requirements or produce the proper financial documentation to support a conventional loan.

First-time homebuyer assistance programs improve buyers’ chances of owning homes in particular regions or help borrowers in certain professions (like first responders, active-duty military and veterans, or educators).  

Some government agencies help implement first-time homebuyer programs to give first-time American homebuyers better economic opportunities in a competitive and challenging real estate market.

State housing authorities create homebuyer programs that combine closing cost and down payment assistance programs with mortgages with favorable interest rates. Some states even offer tax credits you can use on your federal tax return.  

It’s usually much easier to get pre-approved for a first-time homebuyer program than a conventional loan. These programs include a lower minimum down payment and more flexible documentation to determine your interest rate. 

To review, Indiana first-time homebuyer programs offer the following benefits:

  • Down payment assistance
  • Lower down payment requirements
  • Better interest rates
  • Longer loan terms
  • More lenient eligibility requirements
  • Focused support for veterans, first-responders, military personnel, and educators
  • A chance to participate in Indiana’s booming real estate market!

The Best Indiana First-Time Homebuyer Programs 

ProgramMin. Credit Score
FHA Loans500-580Learn More
USDA620Learn More
IHCDA First Place640-680Learn More
IHCDA Next Home640-680Learn More
IHCDA Next Home Conventional640-680Learn More
VA LoansVariesLearn More
Mortgage Credit CertificateVariesLearn More
Chenoa Down Payment
Assistance
600-640Learn More
HomeReady®620-680Learn More
Home Possible® 620-660Learn More
Conventional 97 Varies Learn More

The Home Loan Expert 

While The Home Loan Expert doesn’t offer specific first-time homebuyer programs, we help first-time homebuyers find their dream home with our wide variety of affordable loan options. Boasting a seamless online experience and a plethora of options for mortgages and home loans, we have the entire mortgage loan process contained under one roof, allowing us to quickly and efficiently close your loan.

We understand that the process can be a little bit overwhelming, so we offer same-day pre-approvals you can rely on through our 5-Minute Loan Approval* application. Ensuring that the process is as personal as it is professional, we always work to put the customer and the community first. 

Loans & Services:

  • Adjustable-Rate Mortgages
  • Bank Statement Mortgages
  • Cash-Out Refinance
  • Conventional Loans
  • Debt Consolidation
  • FHA Loans
  • First Responder Loan Program
  • Fixed-Rate Loans
  • Home Purchase Loan
  • Jumbo Home Loans
  • Union Loans
  • USDA Loans
  • VA Loans
  • Zero Dollar
  • No Income Verification Loans

Pros: 

  • Personalized and hands-on service
  • Best in class closing costs
  • Variety of loan and mortgage options
  • Robust down payment assistance options
  • Access to the newest mortgage loan products and in-house underwriting

Cons: 

  • Given the number of loan choices available, some prior homework might be necessary in order to zero in on the best loan for you. 

Minimum down payment: Options available with down payments as low as 3%

Start the approval process at The Home Loan Expert today!

Federal Housing Administration Loans 

FHA Loans are loans insured by the Federal Housing Administration (FHA). The FHA’s loan guarantee helps mortgage lenders offer prospective buyers a chance to obtain a mortgage on better terms than conventional mortgages provide. 

FHA loans often require lower down payments and better interest rates. Criteria for applying for a Federal Housing Administration Loan might include:

  • A minimum down payment of 3.5%, though a lower credit score may require a larger down payment
  • A credit score of at least 580, though these vary by lender. You might even get away with a score of 500, but you’ll need to shell out a more significant down payment (10%). 
  • A debt-to-income ratio of 43% or less
  • The purchased or refinanced property must meet the Federal Housing Administration’s minimum property requirements.
  • Mortgage insurance, including an upfront mortgage insurance payment
  • Occupancy; you can’t access FHA loans for investment properties

If you fulfill the financial eligibility criteria, you can obtain an FHA loan through approved FHA lenders such as The Home Loan Expert, which offers excellent down payment assistance ($0!).

Best for: Individuals looking to purchase a home with a lower credit score.

U.S. Department of Agriculture

Almost two-thirds of Indiana is farmland. But for farmland to prosper, it needs community. In other words, families that are thriving and working the land. The United States Department of Agriculture (USDA) offers homebuyer programs to populate the Hoosier State’s farmlands and promote USDA rural development. 

USDA Loans can take the form of guaranteed conventional loans through a private lender like The Home Loan Expert, or directly through the USDA. 

USDA loans typically require no down payment and very little interest, making them a financially superior option for first-time homebuyers seeking rural homes. But there are a couple of different kinds. First, the USDA offers the Direct Home Loan, a subsidy to help make mortgage payments more manageable for eligible rural Indiana residents. 

But the Single-Family Housing Guaranteed Home Loan Program is the primary mortgage loan offered by the USDA. This loan offers 100% financing (talk about down payment assistance!) to low- to moderate-income households to purchase, improve, or build a home in a rural area. 

Here are the criteria: 

  • Be either an American citizen or a qualified non-citizen
  • Plan to occupy the purchased property without using it for income-generating purposes
  • Earn less than 115% of the median household income of the county where the property sits
  • Property is in a rural area as defined by the USDA

While many certified lenders offer USDA loans, the best lender, financially speaking, to go through for your USDA loan is The Home Loan Expert. The Home Loan Expert offers zero down payments and low fixed interest rates and accepts credit scores as low as 620.

Best for: Low- to medium-income individuals or families looking to purchase a property in a rural area.

IHCDA First Place Program  

First-time homebuyers or Indiana residents purchasing property in targeted areas can apply for The Indiana Housing and Community Development Authority’s (IHCDA) First Place Program. The program’s most notable feature is its generous down payment assistance of 6% of the purchase price, seen as a forgivable second mortgage after nine years. 

Here are some eligibility requirements for the IHCDA First Place Program: 

  • A credit score of at least 640, along with a debt-to-income ratio less than 45%, or a credit score of at least 680, with a debt-to-income ratio between 45-50%. 
  • You must be a first-time homebuyer, or a homebuyer seeking a property in a targeted area
  • The buyer intends to live on the property.

Best for: Low-income individuals that need focused support with the down payment.

IHCDA Next Home Program 

The IHCDA also offers the Next Home Program to Indiana residents seeking to purchase a single-family home. Like the First Place Program, the Next Home Program offers down payment assistance, albeit a lower amount (3.5% of the purchase price), depending on the appraisal. 

You’re still eligible for this program if you’re a second-time homebuyer!  But, you may not be able to combine it with other IHCDA programs. Here are a few other requirements: 

  • A credit score of at least 640, along with a debt-to-income ratio less than 45%, or a credit score of at least 680, with a debt-to-income ratio between 45-50%. 
  • The buyer intends to live on the property
  • Buyer must meet specific income requirements as determined by the IHCDA

Best for: Second-time homebuyers looking for down payment assistance or first-time homebuyers that would like to combine multiple program benefits.

IHCDA Next Home Conventional Program

The IHCDA offers the Next Home Conventional Program is similar in assistance (3.5% of purchase price or appraised value for down payment assistance) and eligibility requirements to the plain Next Home Program. The main difference is in the property eligibility criteria. 

While the Next Home Program allows for manufactured homes, the Next Home Conventional disqualifies manufactured homes from eligibility. 

Here’s a quick recap of the Next Home requirements, which are identical for the Next Home Conventional Program: 

  • A credit score of at least 640, along with a debt-to-income ratio less than 45%, or a credit score of at least 680, with a debt-to-income ratio between 45-50%. 
  • The buyer intends to live on the property
  • Buyer must meet specific income requirements as determined by the IHCDA

Best for: Individual looking for support in purchasing a manufactured home. 

U.S. Department of Veteran Affairs 

Private lenders provide VA Loans, but because the U.S. Department of Veteran Affairs guarantees a portion of the loan, veterans enjoy unique financial benefits and advantages through the VA Loan Program. Eligible recipients include: 

  • Service members
  • Veterans
  • Eligible surviving spouses

The loans help eligible applicants with home loans to buy, build, or improve the home in which they intend to reside. Like the FHA, Veteran Affairs guarantees the loan to help mortgage lenders offer more favorable loan terms and interest rates. Eligible buyers can use the loan for the entirety of their life, and they don’t need a down payment because VA guarantees 100% of the loan. Finally, you don’t need to purchase mortgage insurance with a VA loan. 

Criteria for applying for a U.S Department of Veteran Affairs Loan include:

  • Be a U.S. Veteran, service member, National Guard member, or Reserve member
  • Specific benefits depend on your service commitment, character of service, and duty status

Hero Loan is a VA mortgage lender servicing active-duty military, veterans, and their families. They underwrite all VA Loans in-house, meaning they offer lower mortgage rates and no upfront or out-of-pocket costs—including the appraisal. As a direct-endorsed VA Lender, Hero Loan can close VA Loans in as little as 14 days—compared to most lenders that take up to 60 days.

And you can apply for your Hero Loan using the 5-Minute Loan Approval* application process online. 

Best for: U.S. veterans, eligible surviving spouses, service members, National Guard members, or Reserve members looking to purchase a home.

Mortgage Credit Certificate 

State and local Housing Finance Agencies issue mortgage Credit Certificates (MCC) to help lower-income families and individuals afford a new home. 

MCCs are tax credits issued to eligible persons equal to between 10 and 50 percent of that household’s mortgage, plus the interest rate. For Indiana residents, the MCC credit is worth up to 25%of the amount you borrowed, with a limit of $2,000 each year. 

Criteria for applying for a Mortgage Credit Certificate include:

  • File taxes in the United States
  • First-time homebuyers 
  • Meet income and purchase price restrictions
  • Intend to live in the home as their primary residence

Best for: Lower-income families who have a mortgage but could use relief in the form of cash support.

Chenoa Down Payment Assistance Program

The Chenoa Down Payment Assistance program is specifically a national down payment assistance program. Administered by the CBC Mortgage Agency, the program offers down payment assistance of up to 5%. 

The fund also supports 18 months of counseling for homebuyers post-purchase and initiatives to support minorities and underserved communities in building wealth. 

Here’s what you need to be eligible: 

Best for: Members of minority groups looking to purchase a new home.

HomeReady Program Indiana 

Fannie Mae, an independent agency chartered by Congress, administers the HomeReady Mortgage Program. The program offers mortgages for low-income individuals or families that may require assistance to secure a mortgage for either new home purchase or refinancing. 

Eligible buyers can secure the loan with as little as a 3% down payment and enjoy flexible funding, with no requirements for personal funds. Finally, the program offers discounted mortgage insurance, with the option to cancel once the buyer reaches 20% equity. 

Criteria for applying for the HomeReady Program include:

  • Low income
  • A credit score of at least 620 (680 is best), though credit score requirements vary on the lender. 
  • First-time or repeat homebuyer 
  • The buyer intends to reside in the purchased home
  • Must be purchasing either a single-family home, condominium, townhouse, or planned unit development

Best for: Low-income families with good credit purchasing a residential home.

Home Possible Program 

Freddie Mac’s Home Possible Program offers flexibility for new homebuyers looking for their dream home. Some benefits include down payments as little as 3%, generous income limits, and low credit fees. The program’s also an excellent fit for buyers seeking their next home (not limited to first-time homebuyers). 

Criteria for applying for the Home Possible Program include:

Best for: Low-income borrowers seeking a mortgage with a low down payment.

Conventional 97 Loan

Conventional 97 loans help you purchase property with 3% down (leaving 97% for the loan). Many mortgage lenders and agencies offer the Conventional 97 loan, such as Fannie Mae and Freddie Mac. Criteria vary depending on the participating lender. 

Best for: Low-income individuals that don’t have the resources to produce a 5% or higher down payment.

What is the Best Indiana First-Time homebuyer Program?

All the above first-time homebuyer programs Indiana offers are excellent opportunities to obtain a mortgage. The VA, USDA, and FHA Loans (offered through The Home Loan Expert) offer lenient eligibility requirements, along with 100% financing–meaning no down payment required! Chenoa Fund loans also stand out with their community building programs through post-purchase counseling and minority-group initiatives. 

First-time homebuyers shouldn’t feel stressed about finding a home. We hope to comfort you with valuable educational resources and a sense of community through our unique loan offerings at The Home Loan Expert. With a tight-knit team that’s stuck around since the company’s inception, we take pride in our years of experience helping first-time homebuyers like yourself achieve their real estate dreams. 

We offer online tools combined with excellent customer service, a focus on client satisfaction, unwavering community action, and a commitment to serving our neighbors. You can’t go wrong with having The Home Loan Expert on your side. 

To learn more about how we can help you get the home of your dreams, get started with your 5-Minute Loan Approval* application today!

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