Indiana offers some of the most accessible down payment assistance in the Midwest, with state programs through the Indiana Housing and Community Development Authority providing up to 6% of the purchase price as a forgivable second mortgage — meaning the money disappears entirely if you stay in the home. Combined with federal loan programs that allow zero or low down payments and Indianapolis-specific grants through Marion County, first-time buyers in Indiana have multiple paths to homeownership that don’t require years of aggressive saving. Here’s every program worth knowing about in 2026.
IHCDA State Programs
The Indiana Housing and Community Development Authority runs three primary down payment assistance programs, all structured as second mortgages with no interest and no monthly payments. The key differences are forgiveness terms and assistance amounts.
First Place Program
The First Place program provides up to 6% of the purchase price as a forgivable second mortgage. The loan carries zero interest and requires no monthly payments, and it forgives entirely after nine years — provided you don’t sell or refinance the home during that period. If you sell or refinance before the nine-year mark, the remaining balance becomes due.
Eligibility requires a minimum 660 credit score (raised from 640 as of May 1, 2025), and the program targets first-time homebuyers, qualified veterans, and buyers purchasing in targeted Census tracts. Income limits vary by county, ranging from approximately $82,100 to $138,740, and purchase price limits range from $331,650 to $405,350 depending on your county. The home must be your primary residence.
First Place is the strongest IHCDA option for buyers who plan to stay in their home long-term. Nine years of ownership eliminates the entire assistance amount — effectively converting the loan into a grant.
First Step Program
First Step provides up to 5% of the purchase price (reduced from 6% as of May 1, 2025) as a non-forgivable second mortgage. Like First Place, it carries zero interest and no monthly payments, but the balance becomes due when you sell, refinance, or pay off the first mortgage. The program requires a 30-year fixed-rate FHA or conventional mortgage and a minimum 660 credit score.
First Step works best for buyers who may not meet First Place’s targeted-area or veteran requirements but still need substantial assistance. The trade-off is clear: you’ll eventually repay the assistance, but you pay nothing on it until you sell or refinance.
Next Home Program
Next Home provides up to 3.5% of the purchase price as a deferred second mortgage that forgives after just two years — the fastest forgiveness timeline of any IHCDA program. The program requires an FHA loan (which itself requires a 3.5% down payment, making the assistance amount perfectly aligned), a minimum 660 credit score, and is open to both first-time and repeat homebuyers.
The two-year forgiveness window makes Next Home the most flexible option for buyers who are confident they’ll stay in their home for at least 24 months. Repeat buyers who already own a home can use this program, which is unusual among state-level DPA programs.
Mortgage Credit Certificate (MCC)
Indiana’s Mortgage Credit Certificate provides a dollar-for-dollar federal tax credit of up to $2,000 annually on mortgage interest paid. The credit rate in Indiana is 25% of the annual mortgage interest, and the benefit lasts for the life of the original mortgage as long as the home remains your primary residence.
The MCC can be combined with IHCDA down payment assistance programs, creating a stacking effect: you receive help with the down payment upfront and reduce your tax burden every year afterward. For a buyer with a $250,000 mortgage at 7% interest, the first-year tax credit would be approximately $2,000 — real money that compounds over the life of the loan. Eligibility is limited to first-time homebuyers who have not owned a home in the past three years.
Federal Loan Programs in Indiana
FHA Loans
FHA loans require a minimum 3.5% down payment with a 580 credit score, making them the most accessible conventional financing option. Mortgage insurance premiums — 1.75% upfront (typically financed into the loan) plus 0.15% to 0.75% annually — add cost, but the low entry barrier pairs naturally with IHCDA assistance. Gift funds from family and friends are allowed for the down payment.
VA Loans
Veterans, active-duty military, and eligible surviving spouses can access VA loans with zero down payment — 100% financing with no mortgage insurance. Indiana’s military population and proximity to major installations make VA loans a significant factor in the local market. VA loans can be combined with IHCDA programs for additional closing cost assistance.
USDA Loans
USDA loans provide 100% financing in designated rural and suburban areas, with no down payment required. Much of Indiana outside the Indianapolis metro core qualifies for USDA eligibility, making this a powerful option for buyers in communities like Greenfield, Shelbyville, Franklin, and other surrounding areas. Income limits vary by region.
Indianapolis and Marion County Programs
Marion County HOME Investment Partnerships Program
Marion County allocates approximately $382,000 annually through the HOME Investment Partnerships Program for down payment assistance. The program requires completion of a homebuyer training course, and the property must meet HUD quality standards and fall within 95% of the area median home price. Applications are available through the county’s DPA portal.
Indianapolis Neighborhood Housing Partnership (INHP)
INHP offers down payment assistance paired with its own mortgage products. The assistance cannot be accessed independently — buyers must qualify for and use an INHP mortgage. The integrated approach includes housing counseling, homebuyer education, and financial coaching alongside the mortgage and DPA.
Hoosier Homes Program
The Hoosier Homes program provides up to 6% of the purchase price as a forgivable second mortgage that forgives after just three years — faster than IHCDA’s First Place program. Maximum purchase prices reach approximately $450,000, and income limits extend to $114,240 annually. The program covers approved jurisdictions including Marion County, making it available to Indianapolis buyers.
HomeBoost Down Payment Assistance
HomeBoost targets first-generation, first-time homebuyers with household incomes at or below 120% of the Area Median Income. The program operates in Indiana and Michigan and specifically addresses the wealth gap that prevents first-generation buyers — those whose parents did not own a home — from accessing family assistance for down payments.
Programs for Specific Professions
Teacher Next Door
Indiana teachers, administrators, and school staff from Pre-K through 12th grade can access up to $9,000 in non-repayable grants with a minimum of $1,000, plus up to $24,000 in additional down payment assistance. The grants can be combined with state and local programs, creating a substantial total assistance package for educators.
Firefighter and First Responder Programs
Firefighters, EMTs, and support staff who have not owned a home in the past three years qualify for exclusive grants and down payment assistance through the Firefighter Next Door program. Similar programs exist for nurses, police officers, and government employees through the broader Next Door Programs network.
How to Apply
All IHCDA programs require working with an IHCDA-participating lender — you cannot apply directly to the state. The process starts with contacting an approved lender, who will determine which programs you qualify for based on your income, credit score, purchase price, and location. The complete lender list is available on the IHCDA website, and the agency’s homebuyer team can be reached at [email protected] for guidance on current guidelines.
Most programs require homebuyer education — either online or in-person — before closing. The education component covers budgeting, mortgage terms, home maintenance, and foreclosure prevention, and completion certificates are typically valid for one year.
The Bottom Line for Indianapolis Buyers
The combination of IHCDA state programs, Marion County local assistance, and profession-specific grants means that a first-time buyer in Indianapolis can potentially stack multiple programs. A teacher buying in a targeted Census tract could combine First Place (up to 6% forgivable), an MCC tax credit ($2,000 annually), and Teacher Next Door grants (up to $9,000) — reducing the out-of-pocket cost of homeownership dramatically.
The credit score increase to 660 as of May 2025 narrowed eligibility slightly, so buyers with scores in the 640–659 range should work on credit improvement before applying. For everyone else, the programs are available, the money is real, and the path to homeownership in Indiana is more accessible than many first-time buyers realize.
For more on the Indianapolis housing market, explore our housing market update and how much house you can afford in Indianapolis guide.