The Next Home program from IHCDA provides down payment assistance to eligible Indiana buyers — both first-time and repeat buyers — as a forgivable second mortgage. Specifically, the assistance is up to 3.5 percent of the purchase price on FHA loans and up to 3 percent on conventional loans. Furthermore, the second mortgage has no monthly payment requirement and is forgiven after the buyer remains in the home for a minimum required period. Additionally, borrowers must meet income limits that vary by county and household size.

For a $257,500 home in Monticello, 3.5 percent DPA equals approximately $9,012 toward closing costs or down payment — essentially covering the entire FHA minimum down payment. This is a meaningful reduction in the upfront cash required for buyers entering the market.

The Mortgage Credit Certificate from IHCDA converts a portion of annual mortgage interest paid into a direct federal income tax credit. Specifically, Indiana’s MCC provides a credit equal to 25 percent of annual mortgage interest paid — up to $2,000 per year — for the life of the loan. Furthermore, unlike a tax deduction, the MCC is a dollar-for-dollar credit against federal tax liability, which is significantly more valuable.

Additionally, the MCC is available to first-time buyers only — defined as buyers who have not owned a primary residence in the past three years. Moreover, on a $248,000 loan at 7 percent, annual interest in year one is approximately $17,360. The MCC provides a $2,000 direct federal tax credit — real money back each filing year for the life of the loan.

IHCDA programs have income limits that vary by county and household size. Specifically, White County income limits are published by IHCDA and updated periodically — buyers should verify current limits directly at ihcda.in.gov. Furthermore, purchase price limits also apply — the limit for existing homes and new construction in non-targeted areas is published alongside income limits on the IHCDA website.

Additionally, Monticello’s $257,500 median sold price falls comfortably within typical IHCDA purchase price limits for Indiana, making the majority of homes in the market potentially eligible. Buyers accessing IHCDA programs must work through an approved participating lender — the programs are not applied for directly through IHCDA.

Indiana first-time buyer programs can be layered with multiple loan types to maximize assistance. Specifically, the Next Home program works with FHA, VA, and conventional loans. Furthermore, USDA rural housing loans — for which White County qualifies — offer zero-down financing for eligible buyers. Additionally, combining USDA financing with IHCDA closing cost assistance can allow qualified buyers to purchase in Monticello with minimal out-of-pocket expense.

For more on USDA loans in Indiana, see the USDA loans guide. For FHA loan details and mortgage insurance costs, see the FHA loans guide.

Frequently Asked Questions — Indiana First-Time Buyer Programs

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