Buyer Guides
How Indiana Down Payment Assistance (IHCDA) Works in 2026
In 2026, IHCDA offers two main down payment assistance programs through approved lenders: First Step, which provides 5% of the purchase price for first-time buyers, and Next Home, which provides 2.5% or 3.5% and is open to repeat buyers. Both pair with a 30-year fixed FHA or conventional loan, generally require a 660+ credit score, have income limits, require a homebuyer education course and charge a $250 reservation fee. The assistance is not forgiven, so it is repaid when you sell or refinance.
By Zach Archer, Independent Broker · · 6 min read
The two programs, side by side
The Indiana Housing and Community Development Authority (IHCDA) does not lend to you directly. You apply through an IHCDA-approved lender, who combines the assistance with your first mortgage.
- First Step: 5% down payment assistance, 30-year fixed FHA or conventional loan, first-time buyers only (or buyers purchasing in a targeted area), income and purchase price limits apply.
- Next Home: 2.5% or 3.5% assistance based on the purchase price, first-time and repeat buyers, income limits apply but no purchase price limit.
- Step Down: no down payment assistance — a rate-only option for first-time buyers who just want IHCDA's interest rate.
Who qualifies
According to IHCDA's May 2026 lender guidelines, buyers generally need a minimum 660 credit score with a debt-to-income ratio up to 45%, or 680+ for a ratio between 45% and 50%. Every program requires a homebuyer education certificate (Credit Smart or HomeView, both online).
A first-time buyer means you have not owned your primary home in the last three years — so many people who owned years ago qualify again. Income and purchase price limits vary by county and household size and were last updated May 25, 2026; your lender will check the current Hendricks or Marion County limits for you.
The catch: it is not free money
IHCDA's current assistance is non-forgivable. It is a second lien that you repay when you sell, refinance or pay off the home. First Step loans can also be subject to federal recapture tax if you sell within nine years and your income rises significantly. Ask your lender to explain both before you commit.
How to use it, step by step
- Talk to an IHCDA-approved lender and get pre-approved for the specific program.
- Complete the homebuyer education course early — it takes a few hours online.
- Shop for homes under your program's purchase price limit (First Step) and within your payment comfort zone.
- Make your offer. Sellers see a normal FHA or conventional pre-approval, so assistance does not make your offer weaker.
- Your lender reserves the assistance ($250 fee) once you are under contract and it is applied at closing.