Published · Mike Certo, NMLS #260555
Indiana's down payment help is a loan you repay, not a grant. Here is what actually exists in 2026.
A lot of Indiana homebuyer pages are out of date, and the mistakes matter. They describe a 3.5% grant that never repays, or programs that no longer exist. Here is the real IHCDA lineup for 2026, and why the assistance is a second mortgage you pay back.
The mistake that costs people
Here is the correction that matters most. Indiana's current down payment assistance is not a grant. IHCDA runs two assistance programs today, First Step and Next Home, and both are non-forgivable second mortgages. You make no monthly payment on the assistance while you own the home, but the full amount comes due when you sell, refinance, or stop using the home as your primary residence. There is no five-year or ten-year forgiveness clock. If you plan on this money as free, a future closing will surprise you.
What actually exists
The 2026 IHCDA lineup is short. First Step gives 5% of the purchase price toward your down payment, for first-time buyers, unless you are in a target area or have military status. Next Home gives 2.5% or 3.5%, and it is open to repeat buyers as well as first-timers. Step Down is a rate-focused option with no assistance attached. Next Step is a refinance program for people who already have an IHCDA loan. Lenders typically look for around a 640 credit score, and your county sets the income and price limits.
What is gone
Two names still float around Indiana homebuyer articles that you can cross off. The Helping To Own program, often written as H2O and described as a 3.5% grant, is no longer on IHCDA's list. And the First Place program ended on December 31, 2023. If a page is pointing you at either one, it has not been updated. There is also no new Indiana Mortgage Credit Certificate being issued; IHCDA keeps only a re-issuance process for people who already hold one.
The good news
Two things still work in an Indiana buyer's favor. First, the assistance is real money toward your down payment even though you repay it, and for many buyers it is the difference between renting and owning now. Second, Indiana charges no state transfer tax, so your closing is cheaper than in most states. The down payment assistance page lays out the programs, and the closing-cost page covers the rest.
Indiana IHCDA FAQ
Is IHCDA down payment assistance a grant?
No. Indiana's current IHCDA assistance, First Step and Next Home, are non-forgivable second mortgages. You pay no monthly payment while you own the home, but you repay the full amount when you sell, refinance, or stop using it as your primary residence. Neither is a grant, and neither is forgiven over time. Websites calling it a grant are describing programs that no longer exist.
Does Indiana still have the H2O grant or First Place program?
No. The Helping To Own, or H2O, grant is no longer on IHCDA's program list, and the First Place program ended on December 31, 2023. The current 3.5% option is Next Home, which is a repayable second mortgage, not a grant. Always check the live IHCDA lineup before relying on an older program name.
How much does IHCDA First Step give?
5% of the purchase price, as a second mortgage repaid when you sell or refinance. It is for first-time buyers, unless you are in a HUD-designated target area or have verifiable military status. The older 6% figure some sites show is out of date. Lenders typically look for around a 640 credit score, and your county sets the income and price limits.
Figures verified against IHCDA's 2026 program guide and Indiana Code, August 2026. Program terms change; confirm current details at in.gov/ihcda. This is not a commitment to lend.