Indiana first-time home buyer | 2022 programs and grants


What to Know About Buying a Home in Indiana

If you’re a first-time home buyer in Indiana, you should probably consider yourself lucky. Because home prices are lower in Hoosier State than the national average – and they’re rising more slowly. Of course, that’s probably not the case if you’re saving for a down payment.

But Indiana has generous help for first-time buyers. This is because if you qualify, you may be able to get down payment assistance that could allow you to buy a new home much sooner than you expected.

Check your eligibility to buy a home in Indiana. Start here (January 6, 2022)


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Indiana Home Buyer’s Overview

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

These numbers are well below the national average. But a 13% price hike can still make it difficult to raise enough money for a down payment.

So read on for more details on down payment assistance programs that could, if you qualify, provide financial assistance.

Indiana Buyer’s Overview
Average selling price of a house in IN $ 217,000
Minimum deposit in IN (3%) $ 6,510
20% deposit in IN $ 43,400
Average credit score in IN1 707
Maximum grant for the purchase of an IN house2 IHCDA grant loan up to 6% of the sale price

Down payment amounts are based on the state’s most recent average selling price. The “minimum” down payment assumes a 3% down payment on a conventional mortgage with a minimum credit score of 620.

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

Check your eligibility to buy a home in Indiana. Start here (January 6, 2022)

Loans for buying a first home 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 a 20% down payment. But the good news is, you don’t need a lot of them. Not by far.

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

  • Conventional 97 – From Freddie Mac or Fannie Mae. 3% down payment and minimum FICO score of 620. You can usually stop paying mortgage default insurance after a few years once you reach 20% of your home equity.
  • FHA loan – Supported by the Federal Housing Administration. 3.5% less and a minimum credit score of 580. But you are obligated to take out mortgage loan insurance until you refinance with another type of mortgage, move out or pay off your loan.
  • VA loan – Only for veterans and military. No deposit is required. Minimum credit score varies by lender, but is often 620. No mortgage insurance outstanding after closing. These are arguably the best mortgages available, so apply if you qualify.
  • USDA loan – For low to moderate income people who shop in designated rural areas. No deposit required. Credit score requirements vary by lender, but are often 640. Low mortgage insurance rates
  • IHCDA loans – May include competitive interest rates and down payment assistance. More info below

Note that government loan programs (including FHA, VA, and USDA home loans) require you to purchase a primary residence. This means that you cannot use these loans for a vacation home or investment property.

Depending on the mortgage you choose, you could potentially move into your new home with minimal cash out of pocket.

These programs even allow you to use donated cash or down payment assistance (PAD) to cover the down payment and closing costs.

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

Find the best first-time buyer credit for you (January 6, 2022)

Programs for First-Time Home Buyers in Indiana

The Indiana Housing and Community Development Authority (IHCDA) has special offers on FHA loans and conventional mortgages. These are primarily available to first-time home buyers, although there are exceptions in some target areas.

As usual with state-run mortgage programs, you must choose a lender from an approved list published by the IHCDA. And there are caps on the price of the house you can buy as well as household income limits.

You will also need a minimum credit score of 640. Or 680 if you have a lot of other outstanding debt.

If you are interested in any of these FHA loans or conventional mortgages, you can find out more by clicking on these links. Each contains all the information you need.

IHCDA home loans can sometimes be accompanied by Mortgage Certificates (CMCs), which give you tax breaks on your payments. And these programs also allow you to benefit from attractive down payment assistance.

Indiana First-Time Home Buyers Grants

IHCDA’s Down Payment Assistance (DPA) programs are more generous than those offered by many states, provided you want to stay in your next home for at least nine years.

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

  • Deposit
  • Closing costs
  • “Prepayments” (things like home insurance premiums, property taxes, and mortgage interest you prepay at closing)

Best of all, you don’t make any monthly payments on this PAD loan and pay no interest. And, after living in your home for nine years (without refinancing), your loan is canceled in full.

But if you sell, move, or refinance in those nine years, you’ll have to pay back every penny you borrowed. So think carefully about your long-term home ownership plans before signing up.

If IHCDA’s home buying assistance doesn’t seem right for you, you may have other options. Talk to your loan officer or real estate agent about local grants and down payment loans to learn more.

Check your eligibility to buy a home in Indiana. Start here (January 6, 2022)

Buying a Home in Big Cities in Indiana

Indianapolis is the toughest city for a first-time home buyer in Indiana. Its prices are higher than those in Fort Wayne or Evansville. And they grew much faster.

However, in addition to the IHCDA offer, each of these cities has its own down payment assistance program. So you can queue for help if you want to buy a house in one of them.

First-time home buyers in Indianapolis

In November 2021, the median list price for homes in Indianapolis was $ 215,000. This is a 15% increase year over year according to Realtor.com.

If you want to buy a home at this mid-point price, your down payment options may be between:

  • $ 6,450 for 3% deposit
  • $ 43,000 for 20% deposit

The Indianapolis Neighborhood Housing Partnership offers eligible borrowers up to $ 14,999 in down payment assistance. The eligibility requirements can be found on this web page and you can complete an online assessment for further assistance.

First-time home buyers in Fort Wayne

As of November 2021, the median list price for homes in Fort Wayne was $ 184,900. This is an 8.8% year-over-year increase according to Realtor.com.

If you want to buy a home at this mid-point price, your down payment options may be between:

  • $ 5,550 for 3% deposit
  • $ 36,980 for 20% deposit

The City of Fort Wayne website is sparse. But it says it has a city-wide down payment assistance program for “households whose income is 80% or less 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.

First-time homebuyers in Evansville

As of November 2021, the median list price for homes in Evansville was $ 159,900. This is a 7.3% year-over-year increase according to Realtor.com.

If you want to buy a home at this mid-point price, your down payment options may be between:

  • $ 4,800 for 3% deposit
  • $ 31,980 for 20% deposit

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

  1. Program for Homebuyers in the Town of Evansville – A forgivable loan (similar to that of the IHCDA) based on “the purchase price plus closing costs less the maximum authorized by the main lender”. Your loan can be canceled after 5, 10 or 15 years, depending on how much you borrow. Loans are capped at $ 40,000. Click on the link for more details
  2. Hope of Evansville – You will need 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 on the link for more details

Explore these and IHCDA programs to see which one is right for you.

Where to Find Help Buying a Home in Indiana

All of the organizations we’ve listed above should provide free advice to any first-time home buyer in the state of Indiana or its area.

In addition to our selection, the US Department of Housing and Urban Development (HUD) provides a few statewide, regional, and local resource listings:

Resources for State and Area First-Time Home Buyers in Indiana

Resources for First-Time Home Buyers in Indiana by City

What are the mortgage rates today in Indiana?

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

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

Don’t just look at the rates advertised online; apply for pre-approval and compare the interest rates and fees available to you. This is the only way to know that you are getting the best possible deal on your new home loan.

Show me today’s rates (January 6, 2022)

1 Source: Experian.com 2021 study on 2020 data

2Based on a review of available DPA grants from the state at the time of writing this article

The information on The Mortgage Reports website is provided for informational purposes only and does not constitute an advertisement for any products offered by Full Beaker. The views and opinions expressed herein are those of the author and do not reflect the policy or position of Full Beaker, its officers, its parent company or its affiliates.