Step Down

Step Down is a deferred second loan for homebuyers in Statewide, Indiana. Step Down is IHCDA's lower-cost alternative DPA tier, structured as an interest-only 30-year fixed first mortgage with optional ~3% deferred 0% interest non-forgivable second-mortgage DPA. Designed to reduce initial monthly housing costs. Available to first-time homebuyers (waived in targeted areas). 660 FICO Conventional / 640 FICO FHA. County-specific income and acquisition limits. Cannot be combined with any other IHCDA program. Step Down is an IHCDA mortgage product offering an interest-only 30-year fixed-rate FHA or Conventional first mortgage, which can be paired with a smaller (up to 3%) deferred 0% interest non-forgivable second-mortgage DPA tier. The interest-only first-mortgage structure is designed to lower initial monthly payments — making Step Down a 'lower-cost alternative' to First Step. The DPA second is deferred with no monthly payments until sale, refinance, or payoff. Available to first-time homebuyers and buyers in IHCDA-designated targeted areas. Funding comes from State, HFA, and Bond.

Step Down is deferred, so no payments are due until the home is sold, refinanced, or the first mortgage is paid off. Repayment is triggered by Deferred and second-mortgage balance due on sale, refinance, payoff, or transfer of title. The assistance is recorded in 2nd Lien position. Forgiveness and repayment terms are set by the program and can change — confirm them on the official program page before applying.

Step Down is open to first-time homebuyers and homebuyers who will live in the home as their primary residence. "First-time" has exceptions here: First-time-homebuyer rule waived in IHCDA-designated federally targeted areas and for qualifying veterans. On credit, the program states: 660 minimum FICO for Conventional; 640 minimum FICO for FHA. A homebuyer education course is required, through IHCDA-approved homebuyer education (Framework, eHome America, or HUD-approved counseling); required for first-time homebuyers prior to closing. Residency requirement: Property must be located in Indiana and used as borrower's primary residence. Citizenship or immigration status: U.S. citizen, permanent resident, or qualifying non-permanent resident alien per first-mortgage product overlays. First-time homebuyer required (waived in IHCDA-designated federal targeted areas). Minimum 660 FICO for conventional, 640 for FHA. Max 45% DTI. Property must be primary residence. Household income at or below IHCDA published county limits (top tier ~$156,520). Purchase price at or below IHCDA county-specific acquisition limit. CANNOT be combined with First Step, Next Home, or any other IHCDA DPA program.

Step Down limits household income to $156,520. The limit applies to total household income, not only the borrower’s. Area median income figures are published by HUD and updated annually, so check the current table for the county before relying on a number.

Step Down caps the purchase price at $594,770. Eligible property types include Single-family detached, condominium, townhouse, PUD. New construction is eligible. Manufactured homes are not eligible.

Step Down names veterans, active-duty service members, reservists and National Guard members, and surviving spouses among the groups it serves. Being named here means the program mentions the group, not that membership alone qualifies an applicant — the rest of the eligibility rules still apply.

Step Down serves homebuyers purchasing in Statewide, Indiana. The program targets specific areas: IHCDA designates federally qualified target areas where income/acquisition limits and FTHB rules are relaxed.

Applications for Step Down go through the administering agency, which publishes the current terms and the application steps on its own site. Funds are reserved through IHCDA-approved lender reserves funds via IHCDA Online Lender Portal (OLP) at time of loan reservation; subject to bond/program funding availability. Hey Prescott is not a lender and does not accept applications; this page describes the program so a homebuyer can take it to a lender or housing counselor.