IHCDA finances one parcel of one acre — and Indiana has a lot of bigger ones
Program and regulatory figures verified October 5, 2026. Details change; confirm your scenario with us.
Indiana has a great many houses sitting on two, three and five acres. This is the eligibility rule most likely to end a file that looked fine on income and credit.
Where does the one-acre limit come from?
Federal tax law, not an IHCDA preference. The programme guide explains it directly: "Federal regulations prohibit IHCDA from financing a residence located on land in excess of that which is needed to 'reasonably maintain basic livability'. This has been interpreted to mean one (1) acre. Any property over 1 acre will require zoning ordinance or appraiser comment attesting to livability."
The STEPS Lender Matrix compresses it to "1 parcel/1 acre properties only," with a footnote that exceptions are available with supporting documentation.
The reasoning is that bond-financed programmes are for buying a home, not land. Acreage beyond what the home needs starts to look like an investment in dirt, which these programmes are not allowed to subsidise.
What happens if the property is bigger?
You document it rather than abandon it. Two routes, and either one can carry the file:
- A local zoning ordinance showing the minimum lot size in that zone. If the county requires two acres per dwelling, a two-acre parcel is the smallest legal lot and plainly is not surplus land.
- An appraiser comment attesting to livability — a statement that the acreage is what the residence reasonably needs, which is commonly the case where septic fields, wells or site topography are involved.
Mike's view: the zoning route is the stronger of the two and it is worth pulling the ordinance before the appraisal is ordered rather than after. Indiana townships outside the cities frequently carry minimum lot sizes above an acre, and in those townships this question answers itself.
Why does "one parcel" matter separately?
Because two legal parcels can total well under an acre and still fail. If the seller owns the house on one parcel and the side yard on another, financing both through IHCDA is a problem even though nothing about the acreage looks unusual.
This comes up more than you would expect on older Indiana town lots, where parcels were split and never recombined. The fix is usually a lot combination with the county assessor before closing, which takes time — so it is worth checking the parcel count early rather than discovering it in underwriting.
What property types are eligible?
The programme guide lists five:
| Type | Condition |
|---|---|
| Single-family detached | — |
| Townhome | — |
| Planned Unit Development (PUD) | — |
| Condominium | Must be warrantable and approved by U.S. Bank, FHA/HUD, Fannie Mae or Freddie Mac. The STEPS matrix adds that LTV varies. |
| Manufactured home | HUD plated, double-wide, permanently affixed, and agency approved |
The manufactured housing rules in full, including the separate and surprising first-time-buyer question.
What else disqualifies a property?
Anything that is not genuinely your home. The guide excludes property intended as an investment, a rental or a recreational home, and the STEPS matrix states that all homes must remain owner-occupied primary residences. A place used on a regular basis in a trade or business does not qualify as a principal residence either.
On bond products the purchase price cannot exceed fair market value, meaning the appraised value. And acquisition cost is broader than the contract price — it includes the reasonable cost of completing an unfinished residence, settlement and financing costs beyond the usual and reasonable, unprorated property taxes, and the cost or appraised value of the land where that was acquired separately. How acquisition cost is calculated.
Frequently asked questions
Can I use Indiana down payment assistance on a property over one acre?
Usually yes, with documentation. IHCDA's program guide interprets the federal livability rule as one acre, and states that any property over one acre requires a zoning ordinance or an appraiser comment attesting to livability. It is a documentation requirement rather than an automatic decline.What property types does IHCDA allow?
Single-family detached homes, townhomes, planned unit developments, warrantable condominiums approved by U.S. Bank, FHA/HUD, Fannie Mae or Freddie Mac, and manufactured homes that are HUD plated, double-wide, permanently affixed and agency approved.Can I buy a rental or investment property with IHCDA assistance?
No. IHCDA programs require the property to be the mortgagor's principal residence. The program guide excludes residences intended as investment property, rental property or a recreational home, and all homes must remain owner-occupied.What does the one parcel requirement mean?
The home and its land must sit on a single legal parcel. Two adjoining parcels can total less than an acre and still fail the requirement, which commonly affects older town lots that were split and never recombined. A lot combination through the county assessor before closing usually resolves it.Mike Certo · NMLS #260555 · Cornerstone First Mortgage NMLS #173855 · Equal Housing Lender. Educational content about financing, not a loan commitment and not legal or tax advice. IHCDA program terms, income limits and acquisition limits are set by the Indiana Housing and Community Development Authority and change; figures here carry the date we verified them against IHCDA's published documents. IHCDA down payment assistance is a non-forgivable second mortgage repayable in full, not a grant. Federal recapture tax may apply on bond-funded loans; consult a tax advisor. Loans are subject to borrower and property qualification.