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First Time Home Buyer Grants Indiana
First time home buyer grants Indiana important information and resources you need to know.
If you’re in the market for your first house in Indiana, you’re following a well-worn path: Indiana ranked sixth on U-list Haul’s of most-moved-to states in 2021.
Whether you’re relocating to Indianapolis or a smaller community in the Crossroads of America, there are several choices for making house ownership more reasonable.
Begin with the Indiana Housing & Community Development Authority (IHCDA), the state’s housing finance agency. IHCDA collaborates with banks, credit unions, and other mortgage lenders to assist low- and moderate-income residents in purchasing homes.
Programs for first-time homebuyers in Indiana
There are numerous mortgage options available to first-time homebuyers in Indiana, including FHA, VA, and USDA loans, which need a smaller down payment and often have lower credit requirements.
Numerous mortgage lenders also provide conventional loans with as low as 3% down and private mortgage insurance, which may be an attractive choice for certain borrowers.
These are accessible directly from lenders; at the moment, the IHCDA does not provide a first-mortgage program. However, the government does provide aid with down payments.
Indiana down payment assistance
IHCDA First Place program
For first-time homeowners, the down payment and closing costs might be a barrier.
The IHCDA’s First Place program is aimed to make coming up with that large lump of cash much more bearable by providing help in the form of a second mortgage of up to 6% of the purchase price.
There are no additional monthly payments or interest charges on this second mortgage, and after nine years of residence in the home purchased and compliance with all other homeowner responsibilities, it will be forgiven.
However, if you sell or refinance the house during those years, you will be required to repay the second mortgage.
Assure that you have a detailed explanation of the “forgiveness term” from your loan officer so that you understand how long you must remain in the home.
If you’re taking out a 30-year FHA loan, you may qualify for the IHCDA First Place program.
Additionally, you must be a first-time buyer, defined as someone who has not owned a house in the last three years, or purchasing in a “Targeted Area,” or a veteran to qualify.
Borrower requirements:
➣ Minimum credit score of 680 with a debt-to-income ratio of greater than 45 percent (but no more than 50 percent)
➣ Must meet IHCDA income requirements, which vary from $73,300 to $119,560, depending on the location and number of occupants.
Prerequisites for property:
➣ Must be a single-family dwelling, condominium, townhome, planned unit development (PUD), or manufactured home permanently attached to a foundation.
➣ Must be a resident of Indiana
➣ The property must be used as a principal residence (investment properties and rental properties do not qualify)
➣ Must adhere to IHCDA purchase price limits (alternatively referred to as “acquisition cost” limits), which vary from $311,980 to $406,066 in each of the state’s 92 counties.
IHCDA Next Home program
Next Home is another program offered by the IHCDA that aims to make home ownership more accessible, although it is open to all homebuyers, not only first-time purchasers.
In comparison to the First Place program, the down payment aid is less generous: up to 3.5 percent of the purchase price.
Borrower qualifications, income limitations, and property cost limitations, on the other hand, are identical to those of the First Place program.
Other lending options for first-time homebuyers
Mortgage Credit Certificate (MCC)
Along with obtaining assistance with the purchase of a home, you can investigate Indiana’s mortgage credit certificate (MCC) program, which may help you save money on your tax payment.
An MCC is a federal income tax credit that is equal to 25% of the amount borrowed in Indiana, up to a maximum of $2,000 per year.
The credit may have a significant impact on your tax burden over the course of your 30-year mortgage.
It may be utilized in conjunction with the IHCDA’s Next Home program and is subject to the same income and purchase price constraints. However, there is a $800 program cost.
Local aid programs for first-time homebuyers
Depending on the area in Indiana where you wish to call home, you may be eligible for additional local down payment aid programs.
For example, in Bloomington, Indiana, the HAND Down Payment and Closing Cost Assistance program can provide up to $10,000 in assistance to first-time homebuyers who earn up to 80% of the area’s median income.
It’s a second mortgage, but after five years, it’s fully forgiven. In Fort Wayne, a similar program enables first-time buyers to get up to $8,000 in assistance if they contribute at least $1,000 toward the purchase and complete a homebuyer education course.
Grants for first-time home buyers in Indiana
The IHCDA’s down payment assistance (DPA) programs are more generous than those granted by many states, provided you intend to stay in your new house for a minimum of nine years.
These programs allow you to borrow up to 6% of the sale price and can be used for the following purposes:
➣ Down payment
➣ Closing costs
➣ Homeowners insurance premiums, real estate property taxes, and mortgage interest that you pay upfront on closing
Even better, you will not be required to make monthly payments on the DPA loan and will not be charged interest.
Additionally, after nine years of continuous residence in your house (without refinancing), your debt is fully forgiven.
However, if you sell, move, or refinance during those nine years, you will be required to repay every cent borrowed.
Therefore, consider your long-term homeownership goals carefully before signing on.
If the IHCDA’s home buyer assistance program does not appear to be a suitable fit for you, you may have additional options.
To discover more about local down payment grants and loans, speak with your loan officer or real estate agent.
First Time Home Buyer Grants Indiana Summary
Begin by completing this questionnaire on the IHCDA’s website to determine your eligibility for assistance.
After determining the amount of assistance available, compare mortgage rates and possibilities from the numerous mortgage lenders that participate in the agency’s programs.
Certain institutions may also provide further aid to specific types of workers, first responders and teachers, for example, so be sure to examine all possible programs that fit your position.
As you begin the home-buying process, bear in mind that mortgage rates are likely to climb this year, so locking in a low rate now may be advantageous.