Indiana's main first-time buyer resource is the state housing authority's down payment assistance, run through IHCDA (the Indiana Housing and Community Development Authority). The most important thing to understand up front: IHCDA's assistance is not free money. It's a 0%-interest, no-monthly-payment second mortgage that comes due when you sell, refinance, or stop living in the home as your primary residence — not a grant, and (contrary to what a few lender blogs still claim) not forgivable.

How IHCDA's Down Payment Assistance Actually Works

IHCDA offers this help through a family of programs it brands STEPS: First Step and Step Down (for buyers using an IHCDA first-mortgage bond program), and Next Home (paired with a conventional or FHA first mortgage). First Step and Step Down provide down payment assistance equal to 5% of the lesser of the sale price or appraised value; Next Home provides 2.5-3.5%. All of it comes structured the same way: a non-forgivable, 0% interest, no-monthly-payment second mortgage, due in full when the first mortgage is paid off, the home sells, it's refinanced, or you stop using it as your primary residence. There's also a $250 non-refundable reservation fee to lock in the assistance.

Note that IHCDA's own older webpages still reference a program called "First Place" with a 6% figure — that's the legacy name for what's now First Step, and it's worth working with a current IHCDA-approved lender rather than an older blog post to get the exact terms for your situation.

Do You Actually Qualify as a "First-Time" Buyer?

IHCDA defines a first-time buyer as someone who hasn't held ownership interest in a primary residence in the past three years — so if you owned a home more than three years ago, you likely still qualify. First Step and Step Down do require first-time buyer status (with exceptions for buyers purchasing in a HUD-designated target area or qualifying veterans); Next Home does not require first-time buyer status at all, so it's worth asking a lender about even if you've owned before.

Credit, Income, and Homebuyer Education Requirements

Lender guidelines call for a minimum 660 credit score if your debt-to-income ratio is 45% or under, or 680 if it's between 45-50%. IHCDA also requires every applicant to complete a homebuyer education course — either Fannie Mae's HomeView or Freddie Mac's CreditSmart — before closing. Income and purchase-price limits also apply and vary by county and household size; because those limits are updated periodically, ask your lender for the current Hamilton County figures rather than relying on a number that may already be out of date.

Other Loan Options Worth Asking About

An FHA loan is commonly paired with IHCDA's down payment assistance and generally allows a lower minimum credit score than a conventional loan. VA loans offer 0% down for eligible veterans and service members, who are also exempt from IHCDA's first-time buyer requirement. USDA Rural Development loans offer 0% down as well, but they're limited to USDA-designated rural areas and income limits — most of fast-growing Westfield and Hamilton County falls outside those boundaries, so eligibility should be checked address-by-address on USDA's own map rather than assumed.

What Else to Plan For

Down payment assistance covers the down payment — it doesn't cover everything else in a purchase. Closing costs and earnest money are two separate pieces first-time buyers should budget for, which we've covered in detail in our guides to what closing costs Indiana buyers should expect and how earnest money works.

FAQ

Is IHCDA's down payment assistance free money?
No. It's structured as a 0%-interest, no-monthly-payment second mortgage, not a grant — it must be repaid in full when you sell the home, refinance, or stop using it as your primary residence.

How much down payment assistance can IHCDA provide?
First Step and Step Down provide 5% of the lesser of the sale price or appraised value; Next Home provides 2.5-3.5%. A current IHCDA-approved lender can confirm which program fits your situation.

Do I have to be a true first-time buyer to qualify?
For First Step and Step Down, generally yes — IHCDA defines a first-time buyer as someone with no ownership interest in a primary residence in the past three years, with exceptions for HUD target areas and qualifying veterans. Next Home does not require first-time buyer status.

Is homebuyer education required for IHCDA assistance?
Yes. Applicants must complete either Fannie Mae's HomeView or Freddie Mac's CreditSmart course before closing.

What credit score do I need for IHCDA down payment assistance?
Lender guidelines generally call for a minimum 660 credit score if your debt-to-income ratio is 45% or under, or 680 if it's between 45-50%, though your specific lender's requirements may vary.

Down payment assistance can make a real difference in getting into your first home, but the details matter, and they're worth walking through with both a lender and an agent before you write an offer. For more on the buying process, see our Hamilton County, IN Real Estate hub, our Buyer's Agent in Westfield, IN page, and our guides to mortgage dos and don'ts, Indiana closing costs, and how earnest money works.

If you're buying your first home in Westfield or anywhere in Hamilton County, I'm happy to help you sort out what you actually qualify for.

Jason Kraus, Broker/Owner, REMAX Advanced Realty — MOVE Group, Hamilton County's dedicated local real estate specialists headquartered in Westfield.