The four IHCDA programs, as they stand today

Program and regulatory figures verified October 5, 2026. Details change; confirm your scenario with us.

By Mike Certo, Cornerstone First Mortgage · NMLS #260555 · Updated October 5, 2026

Four programmes, two of which pay down payment assistance. Everything else you may have read about Indiana assistance either belongs to one of these or has been retired.

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First Step

The flagship, and the successor to First Place. Bond-funded, so it carries the federal rules that come with bond money.

• 5% of the purchase price as non-forgivable down payment assistance.
• First-time homebuyer required, unless the property is in a HUD-designated targeted census tract or the applicant has verifiable military status.
• FHA, Freddie Mac or Fannie Mae, 30-year fixed.
• Subject to federal recapture tax.
• Income and acquisition limits both apply.
• No manual underwriting. Credit report copy and AUS findings required.
• Lender fees capped at 1% origination plus $1,600.

IHCDA holds title to the second mortgage as evidence. On termination of the first mortgage, or the home no longer being your primary residence, the full amount is repaid.

Next Home

TBA-funded rather than bond-funded, which removes two restrictions that catch people on First Step.

• 2.50% or 3.50% down payment assistance, based on the purchase price and not exceeding the appraised value.
• ★ No first-time homebuyer requirement — first-time and repeat buyers both.
• ★ Not subject to recapture tax.
• ★ On the conventional table, no acquisition limit at all.
• Credit report copy and AUS findings not required.
• Property eligibility exception reviews are available case by case.

Still a non-forgivable second mortgage. Why the conventional version reaches buyers First Step cannot.

Step Down

The rate-only option. Bond-funded, first-time buyer required with the same targeted-tract and military exceptions, 30-year fixed through FHA, Freddie Mac or Fannie Mae, and subject to recapture tax. It provides no down payment assistance — there is no second mortgage, so nothing to repay later.

It suits a buyer who has their down payment handled and wants the agency's first mortgage without taking on a second lien. Income and acquisition limits still apply, and like First Step it does not allow manual underwriting.

Next Step

A refinance, not a purchase programme. It is a one-time opportunity for people currently in a First Place, First Step or Step Down mortgage held by IHCDA who want to refinance their first mortgage.

The useful part: a borrower with an existing IHCDA lien can apply for a new assistance second matching their current IHCDA lien amount, rather than paying off the old second out of pocket. Since IHCDA will not subordinate its second to an outside refinance, this is the route that keeps assistance in place.

Next Step appears on both limit tables — Next Step Conventional and Next Step FHA share the conventional income table with its N/A acquisition column.

What applies to all four?

Assistance may be used for down payment, closing costs, prepaid items and Realtor compensation. Layering with other assistance is allowed if U.S. Bank stays in first lien, IHCDA's second stays in second, and any additional lien takes third position.

What is no longer offered?

First Place ended on 12/31/2023, stated by IHCDA in its own current guide. The Mortgage Credit Certificate survives only in archived program guides, the newest dated 8/15/2023. Neither is something an Indiana buyer can apply for today. The detail, with the source.

Frequently asked questions

What down payment assistance programs does Indiana offer?

IHCDA offers four: First Step, which provides 5% of the purchase price; Next Home, which provides 2.50% or 3.50%; Step Down, a rate-only option with no assistance; and Next Step, a one-time refinance for existing IHCDA borrowers. All are 30-year fixed, FHA or Conventional, in all 92 counties.

How much is the IHCDA reservation fee?

$250, and it is non-refundable. It applies to all IHCDA products and may be paid by the mortgagor or the participating lender.

Can IHCDA assistance be combined with other down payment help?

Yes, if the layering rules are met. The file must satisfy the other program's guidelines, U.S. Bank must remain in first lien position, IHCDA's assistance must remain in second, and any additional funding requiring a lien takes third position.

What can IHCDA down payment assistance be used for?

Down payment, closing costs, prepaid items and Realtor compensation, per Section 1 of IHCDA's Homeownership Program Guide dated 02/2026. The assistance cannot exceed the property purchase price on bond products, or the appraised value on Next Home.

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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.