Illinois, Indiana, Tennessee, and Alabama each have a state housing finance agency that administers down payment assistance and affordable mortgage programs for eligible buyers. Here is what buyers in each state need to know.
IHDA — Illinois Housing Development Authority
Illinois Housing Development Authority
IHDA is the state housing finance agency for Illinois. It offers several mortgage and assistance programs designed to help eligible Illinois buyers purchase a home with lower upfront costs. IHDA programs may provide assistance toward the down payment and closing costs for qualifying buyers.
IHDA programs are generally available throughout Illinois, including the Chicago suburbs, Cook County, Will County, Kendall County, Grundy County, and surrounding communities. Popular areas served include Naperville, Joliet, Plainfield, Oswego, Yorkville, Tinley Park, Romeoville, Channahon, Minooka, Morris, and many others.
Key IHDA Program Features
- Assistance may be structured as a forgivable loan or deferred loan depending on the program
- Income limits apply based on household size and county
- Purchase price limits apply and vary by area
- Minimum credit score requirements apply
- Must work with an IHDA-approved lender
- Homebuyer education may be required
- Occupancy as primary residence required
- May be paired with FHA, conventional, VA, or USDA loans depending on the program
Illinois-specific note: Illinois requires an attorney at closing. Chicago and Cook County have additional municipal transfer taxes. Property taxes in Illinois are among the highest in the nation and are paid in arrears, making the timing of tax proration important at closing.
IHCDA — Indiana Housing & Community Development Authority
Indiana Housing & Community Development Authority
IHCDA is Indiana's state housing finance agency, providing down payment assistance and affordable mortgage programs to eligible Indiana buyers. IHCDA programs may help buyers who have the income to support a monthly mortgage payment but need help with the upfront costs of buying.
IHCDA programs are available throughout Indiana, including Indianapolis, Carmel, Fort Wayne, Lafayette, Bloomington, Greenwood, Valparaiso, Terre Haute, Frankfort, Dyer, and statewide.
Key IHCDA Program Features
- Down payment assistance may be structured as a forgivable or repayable second mortgage
- Income limits apply by county and household size
- Purchase price limits apply and vary by county
- Minimum credit score requirements apply
- Must work with an IHCDA-participating lender
- Homebuyer education may be required
- First-time buyer requirement applies to some programs (not all)
Indiana-specific note: Indiana has no state real estate transfer tax, which can make closing costs slightly lower than in some other states. Property taxes are paid in arrears and vary significantly by county.
THDA — Tennessee Housing Development Agency
Tennessee Housing Development Agency
THDA is Tennessee's state housing finance agency, offering programs including the Great Choice Home Loan and related assistance for eligible Tennessee buyers. THDA programs may help buyers with down payment and closing costs through a second mortgage structure.
THDA programs are available statewide in Tennessee, including Nashville, Memphis, Knoxville, Chattanooga, Franklin, Jackson, Cookeville, and surrounding communities.
Key THDA Program Features
- Great Choice assistance is typically structured as a second mortgage
- Income limits apply by household size and county
- Purchase price limits apply statewide
- Minimum credit score requirements apply
- Must work with a THDA-approved lender
- Homebuyer education required for all Great Choice borrowers
- First-time buyer requirement applies to most THDA programs
Tennessee-specific note: Tennessee requires attorney involvement in closings. Tennessee has no state income tax. Property taxes in Tennessee are among the lowest in the nation, which keeps monthly escrow payments lower than in many other states.
AHFA — Alabama Housing Finance Authority
Alabama Housing Finance Authority
AHFA is Alabama's state housing finance agency, offering programs including Step Up that may help eligible Alabama buyers with down payment assistance. AHFA programs are designed for buyers who have the income to support a mortgage payment but need help with the upfront costs.
AHFA programs are available statewide in Alabama, including Birmingham, Huntsville, Montgomery, Mobile, Athens, and surrounding communities.
Key AHFA Program Features
- Step Up assistance is typically structured as a second mortgage at a low interest rate
- Income limits apply based on household size and county
- Purchase price limits apply statewide
- Minimum credit score requirements apply
- Must work with an AHFA-participating lender
- Homebuyer education may be required
- Available to both first-time and repeat buyers in some programs
Alabama-specific note: Alabama requires an attorney to conduct closings. Property taxes in Alabama are among the lowest in the nation. The transfer tax is typically seller-paid, which benefits buyers.
How to Use State Programs Strategically
State DPA programs are tools — not guaranteed benefits. The right approach is to:
- Review income limits for your household size and county before assuming you qualify
- Understand whether the assistance is a grant, forgivable loan, deferred loan, or repayable second mortgage
- Confirm the loan type the program pairs with (FHA, conventional, etc.)
- Understand what happens if you sell, refinance, or move before the program's required occupancy period
- Work with a lender who is approved and experienced with the specific program
The most important question is not "How much assistance can I get?" The most important question is: "What program creates the right loan, with a payment I can live with, and terms I actually understand?" Kim Dobyns has helped buyers navigate IHDA, IHCDA, THDA, and AHFA programs for buyers across all four states.
Let's Find the Right State Program for You
Whether you're buying in Illinois, Indiana, Tennessee, or Alabama — let's review your income, purchase price, loan type, and eligibility so you know exactly what programs fit before you start shopping.
Educational Disclaimer: This content is for informational purposes only. Program availability, income limits, purchase price limits, credit requirements, and guidelines are subject to change. Contact Kim Dobyns directly for a personalized review. Kim Dobyns, NMLS #204859 · Union Home Mortgage Corp., NMLS #2229 · Licensed in IL · IN · TN · AL · Equal Housing Lender.