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AnswerWhat credit score do you need for Indiana down payment assistance?
IHCDA's First Place program currently asks for a minimum 640 credit score where your debt to income ratio is 45 percent or below, and a 680 where the ratio runs between 45 and 50 percent. Next Home, which repeat buyers can also use, carries its own criteria and is forgiven after two years of on time payments and continuous occupancy. Both programs run through an approved lender, both require homebuyer education, and both apply household income limits that vary by county and household size. Those are program minimums rather than a promise of approval; the loan underneath the assistance still has to be underwritten. IHCDA revises its terms, so the figures are confirmed at application rather than quoted from a page written last year.
The relationship between the two numbers is the part worth understanding. The credit score requirement moves with your debt to income ratio, so a borrower carrying more monthly debt is asked for a stronger score. Reducing a monthly obligation before applying can therefore change which threshold applies to you, which is a more useful lever than most borrowers realize.
The three year rule matters more than the score for a lot of people. For First Place, a first time buyer is generally someone who hasn't owned a primary residence in the past three years, which puts previous owners back in scope. People rule themselves out on this constantly without ever checking.
Homebuyer education is a requirement rather than a suggestion, and it's a reasonable one. Dillon runs homebuyer education classes open to the public and to any agent, covering the same ground.
Because the assistance sits as a second mortgage behind the first, the first loan has to work on its own terms as well. Getting the underlying file right is the actual work; the assistance is the part that happens once the file stands up.
Income limits are the other gate, and they're set by county and household size rather than by a single statewide figure. Hamilton County's limits are not Marion County's. A household can be eligible in one county and over in the next one along, which is a strange fact until you remember the programs are aimed at affordability relative to the local market.
Ask about the repayment shape as well as the eligibility. First Place attaches its help as a second mortgage; Next Home is forgiven after two years of on time payments and continuous occupancy. Those are different commitments, and if there's any chance you'll move inside a couple of years, that difference matters more than the size of the help.
Score thresholds move with your debt to income ratio, so paying off one small balance sometimes changes which door you're standing in front of. That's worth ten minutes of arithmetic before you apply.Dillon Baker, VP of Mortgage Lending at Rate
More questions about this
Not here? Text it to 317-847-6869 and Dillon answers himself.
Do I have to be a first time buyer?
For First Place, generally yes, and the usual definition is that you haven't owned a primary residence in the past three years. Next Home is open to repeat buyers as well.
Is the assistance a grant?
First Place attaches its help as a second mortgage. Next Home is forgiven after two years of on time payments and continuous occupancy. They're different commitments, so ask which one you're signing.
Where do I confirm the current terms?
IHCDA publishes them, and they change. Dillon confirms the current requirement at application rather than quoting a figure from a page written last year.
Ask Dillon about your situation
Text 317-847-6869 with the address or the question. He answers his own phone, evenings and weekends too.
Text 317-847-6869 or call, if you would rather skip the form.
