First Time Home Buyer - Down Payment Assistance Programs
Down Payment Assistance Programs (DPA)

Through the Homeownership Opportunity Network(HON), the primary objective of the First Time Homebuyer Program is to improve and revitalize neighborhoods, restore function, character and pride by providing homeownership opportunities. This program makes HOME program funds available in the form of forgivable loans for down payment, principal reduction, and closing costs associated with the purchase of a home. Assistance will be made to eligible individuals and families on a first-come, first-serve and one-time basis, purchasing a single-family structure home in the City of Gary. Applicants must provide total household and financial information prior to a formal approval for assistance. *The program will use 95% of the current FHA basic standard mortgage limit for a single-family dwelling as a ceiling for down payment processing

Income Requirements

Maximum Income Level for 2013
Persons in Household Income
1 $35,250
2 $40,250
3 $45,300
4 $50,300
5 $54,350
6 $58,350

The above income limits are subject to change annually at the discretion
of the Department of Housing and Urban Development (HUD).
Assistance Determination

The maximum amount of assistance will be limited to 10% of the purchase price or $10,000, whichever is less. Down payment assistance will be provided to qualified applicants based on the following criteria:

80% to 70% of area median income 4% of purchase price or $5,460 whichever is less.
69% to 60% of area median income. 5% of purchase price or $6,825 whichever is less.
59% to 50% of area median income. 6% of purchase price or $8,000 whichever is less.
Property located in the Empowerment Zone 10% of purchase price or $10,000 whichever is less.

Any property located in the Empowerment Zones and Target Areas must be New Construction in order to received the maximum amount of 10% or $10,000 whichever is less of the purchase price. Also, all applicants must successfully complete the City of Gary Homeownership Opportunity Network Homebuyer Education Workshop and Counseling session(s). Contact the Community Development Department at (219) 881-5075 for information on scheduled dates. Certificates accepted from other HUD-certified and approved agencies (dated within 12 calendar months of application).

Lead Based Paint Inspection

All properties built pre-1978 must have a visual inspection for defective surfaces. If lead is found, no DPA funds can be used until stabilized, to be completed by Homebuyer/Seller before close of sale.

Recapture Provision

HOME regulations state that the homebuyer maintains the PROGRAM assisted property as a principal residence during the affordability period. Since the primary goal of this program is the revitalization of neighborhoods, this residency requirement will be enforced and evidenced by the recording of the appropriate document. The down payment assistance must be returned to the PROGRAM if the following conditions occur:

  • A home buyer receiving down payment assistance must repay the funds to the PROGRAM if the property is sold during the affordability period or if the property is transferred during the affordability period. Temporary subleasing of the property is not allowed.

  • A home buyer fails to provide proof annually of primary residence on assisted property as requested.

A recorded Down Payment Assistance Agreement, with the City of Gary assuming a junior lien position, will be used as the enforcement vehicle for this program. This lien shall be duly recorded in the appropriate office of county government. Recapture provisions shall be pro-rated as follows:

Sale After Year % of Funds to be Recovered
1 80%
2 60%
3 40%
4 20%
5 0
Affordability Period

The periods of affordability for this program will range from five (5) to fifteen (15) years, commencing on the day of the signing of the down payment assistance agreement and/or closing on the property, for the amounts listed below:

Amount of
Under $15,000 5
$15,000 - $40,000 10
Over $40,000 15

First Time Home Buyer:
The applicant must not have owned a home as their principal residence within a period of 3 years prior to applying for assistance.

Principal Residence:
The home purchased must be the place where the applicant lives and not a second home.

Recapture Provision:
The owner who is subject to recapture is required to repay all or a portion of the down payment if the property is sold or transferred during the affordability period.

Affordability Period:
Restrictions for certain lengths of time, depending upon the amount of assistance invested.

Empowerment Zone and Target Areas:
The Gary area declared as Empowerment Zones by the federal government include the following (specific boundaries in these areas also apply):

  • Brunswick
  • Central/Midtown
  • Emerson
  • Horace Mann
  • Pulaski
  • Small Farms
  • Tolleston

The Gary area declared as Target Areas include the following:

  • Midtown
  • Horace Mann/Downtown West
  • Aetna
  • University Park (IUN/IVY Tech)
Down Payment Assistance Secure (20%)

This program provides mortgage assistance to qualifying first time homebuyers. Maximum assistance is 20% of the purchase price, up to $15,000, of an existing home, based on the strength of applicant's credit history. *In response to the tightening credit market and access difficulties for other-wise credit-worthy moderate-income buyers.

Download PDF for the First Time Home Buyer Brochure