Indiana First-Time Buyer Programs, Explained

Buying your first home in Indiana can feel overwhelming, especially when the down payment and closing costs seem out of reach. You might be hearing about assistance programs, but it is hard to know which ones fit your situation. The good news is that Indiana offers real options that can lower your upfront costs and help you compete in today’s market. In this guide, you will learn how the main programs work, what to check for eligibility, and how to line up a clean pre-approval for homes in Greenwood and across the state. Let’s dive in.

What “first-time buyer” means in Indiana

Most programs use a simple definition. You are considered a first-time buyer if you have not owned a home in the past three years. Some programs make exceptions for veterans or specific situations, but you should always verify the exact definition with the program and your lender before you apply.

Program types you will see in Indiana

IHCDA statewide mortgage plus down payment assistance

The Indiana Housing and Community Development Authority (IHCDA) offers first mortgages through approved lenders and pairs them with down payment assistance. The second part is usually a separate loan that can be deferred, forgivable over time, or repayable on a schedule. You will see household income limits, purchase price caps by county, and a homebuyer education requirement. You must also work with an IHCDA-approved lender.

Why it matters: IHCDA programs are a primary way many first-time buyers reduce their cash to close. They often come with competitive first-mortgage rates and a defined process that helps you plan.

Federal loan options often paired with assistance

• FHA: Requires a minimum 3.5 percent down payment for most borrowers. Mortgage insurance is required, and many buyers pair FHA with state assistance to cover part or all of the cash needed.
• USDA Rural Development: Offers 0 percent down in eligible rural areas, with income limits. Parts of Johnson County may qualify, so ask your lender to confirm property eligibility.
• VA: Offers 0 percent down for eligible veterans and active duty service members, with specific entitlement and funding fee rules.
• Conventional for first-time buyers: Fannie Mae HomeReady and Freddie Mac Home Possible allow as little as 3 percent down for qualifying borrowers. Borrower education may be required and programs can be paired with DPA.

Local, employer, and nonprofit help

Some cities, counties, employers, and nonprofits offer targeted grants or assistance. Availability changes by year and budget. In Greenwood and Johnson County, check city or county housing offices and local housing counseling agencies for current offerings. You can often stack local support with a state or federal loan, but your lender must confirm compatibility.

Eligibility rules to check first

Before you fall in love with a house, confirm these basics:

• Income limits: Many programs use area median income by county and household size. If your income is above the limit, you may still qualify for FHA, VA, USDA, or conventional loans, just not the DPA.
• Purchase price caps: State and local programs cap maximum purchase price by county. These numbers change, so verify the current chart for Johnson County.
• Credit score and underwriting: Minimum scores depend on the first mortgage. FHA often allows 580 and above with 3.5 percent down. Conventional first-time buyer programs often need at least 620 to 640. Lenders may set higher overlays.
• Debt-to-income ratio: Your lender applies product-specific DTI limits. DPA does not change those limits, it only helps with cash to close.
• Homebuyer education: Many DPA products require a course from an approved provider. Your certificate is usually valid for a set period before closing.
• Property type and condition: Homes must meet basic safety and habitability standards. Condos often require project approval. Manufactured homes and multi-unit properties follow special rules.
• Occupancy and resale: Some assistance is forgivable over time. Selling or refinancing within that period can trigger repayment. Review the timeline before you sign.

How this plays out in Greenwood

Greenwood is a suburban market in Johnson County with a mix of single-family homes, townhomes, and condos. The right program for you depends on three things: your income relative to the program’s limit, your target price range versus the county’s purchase price cap, and your loan product choice.

Here are practical, illustrative examples to show how the math can work:

• Example A, entry-level single-family home: Purchase price of $250,000. A conventional 3 percent down payment is $7,500. FHA at 3.5 percent is $8,750. A DPA that covers 3 to 5 percent would provide $7,500 to $12,500, which could reduce or eliminate your cash to close. FHA requires mortgage insurance, and conventional with 3 percent down typically requires PMI.
• Example B, lower-priced condo or townhome: Purchase price of $190,000. Condos often need project approval for FHA, VA, or certain conventional loans. Even if you qualify for DPA, an unapproved project can block your financing. Confirm condo approval early.
• Example C, higher price or rehab property: If the home price exceeds the county DPA purchase price cap, you may not be able to use IHCDA assistance. If a home needs significant repairs, you may need a rehab loan, and some DPA programs will not allow it.

Property type quick notes

• Single-family detached: Commonly eligible if the home meets condition rules and price caps.
• Condos and townhomes: Check project approval and program-specific restrictions before making an offer.
• Manufactured homes: Often limited or require special underwriting. Many DPA programs exclude them.
• Two to four units: Some programs allow this if you will live in one unit. Verify rules with your lender.

Step-by-step: get pre-approved the right way

Follow this process to position your offer well and keep your timeline on track:

1. Check eligibility: Compare your household income to the county limit. Confirm your first-time buyer status and any special exceptions that may apply to you.
2. Pull credit: Review your score and correct any errors before you apply.
3. Complete homebuyer education: If you plan to use assistance, take an approved course and save your certificate.
4. Choose an IHCDA-approved lender: Ask if they participate in the IHCDA programs you are considering and which DPA options they offer.
5. Gather documents: Photo ID, Social Security numbers, two years of W-2s or tax returns, recent pay stubs, two to three months of bank statements, and statements for any assets.
6. Apply for pre-approval: Request a written letter that shows your loan product and tentative amount. If using DPA, ask the lender to confirm your preliminary eligibility.
7. Confirm property eligibility: Before you write an offer, verify purchase price caps, condo project approvals, and any property condition rules tied to your program.
8. Rate lock and paperwork: Coordinate interest rate timing with your lender and complete all DPA forms promptly.

Smart questions to ask your lender and agent

• Are you an IHCDA-approved lender for the programs I am considering?
• Which DPA options do you frequently use for first-time buyers in Johnson County?
• What are the current purchase price and income limits for my household size?
• Do you have experience closing FHA or conventional loans on condos in Greenwood?
• What lender overlays do you apply beyond the baseline program rules?

Timelines you can expect

• Pre-approval: A few days to a week if your documents are complete.
• Homebuyer education: Often completed in one session or online over several sessions.
• DPA processing: Program paperwork can add time to underwriting and closing. Plan for this with your lender upfront.

Common pitfalls to avoid

• Assuming DPA covers everything: Program caps and income limits apply. Confirm your numbers before you count on assistance.
• Skipping condo project checks: Lack of project approval can stop FHA, VA, or some conventional loans even if you qualify for DPA.
• Using a non-approved lender: IHCDA programs must be originated by approved lenders.
• Missing education certificates: If a course is required, the certificate is part of your file.
• Overlooking property condition: Homes that need major repairs may not qualify for DPA.

Will assistance raise my monthly payment?

It depends on the DPA type. A deferred second mortgage typically does not require a payment while you live in the home, but it can be due if you sell, refinance, or reach maturity. A forgivable second mortgage reduces over time, and you avoid repayment if you stay long enough. A repayable second mortgage adds a scheduled payment. Ask your lender to show you side-by-side monthly payment scenarios for each option.

Make your plan local and practical

If you want to buy in Greenwood, your best advantage is a clear, local plan. Start with a lender who knows IHCDA programs, complete your homebuyer education, and have your documents ready. Confirm that your target neighborhoods and property types fit the purchase price cap, and double-check any condo approval before you write an offer. With the right prep, you can reduce your cash to close and make a strong offer on a home that fits your budget.

Ready to map out your path and shop homes in Greenwood and the Indianapolis metro with a local, hands-on broker who knows the process and the market? Reach out to Kelly Mclaughlin for a quick strategy call and a clean, program-ready plan.

FAQs

What does “first-time buyer” mean for Indiana programs?

• Most programs define a first-time buyer as someone who has not owned a home in the last three years, with limited exceptions that you should verify with your lender.

How do IHCDA income and purchase price limits work?

• Limits are set by county and household size, and they change over time, so ask your lender for the current Johnson County chart before you shop.

Can I use assistance to buy a condo in Greenwood?

• Possibly, but many loans require condo project approval and some DPAs add restrictions, so confirm the project’s status before making an offer.

What credit score do I need to qualify for a first-time buyer loan?

• FHA commonly allows 580 and up for 3.5 percent down, while conventional first-time buyer programs often need 620 to 640, with lender overlays possible.

Does down payment assistance always add a monthly payment?

• No, it depends on the assistance type; some seconds are deferred or forgivable, while others require a monthly payment that your lender will include in your budget.

Can I use DPA on a fixer-upper or a home that needs repairs?

• Many programs exclude properties that need significant repairs, so if you need rehab financing, ask your lender about compatible loan options first.