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Hoosier Homes Guide

What Is the Maximum Debt-to-Income (DTI) Ratio Allowed?

Hoosier Homes is structured as a second loan — not a grant. It carries 0% interest, no monthly payments, and monthly forgiveness over 7 years if you remain in the home as your primary residence.

Second Lien First — Then Forgiveness

Marketing often calls down payment assistance a "grant," but Hoosier Homes is documented as a subordinate second mortgage behind your FHA, VA, USDA, or HFA conventional first loan. That legal structure sets clear rules for forgiveness, occupancy, sale, and refinance.

The second lien carries 0% interest and requires no monthly payment on the assistance layer. Each month you remain in the home as your primary residence, 1/84th of the principal is forgiven.

Stay all 7 years (84 months) as primary resident and the second lien can be fully forgiven — meaning you owe nothing on the assistance. Exit early and the remaining unforgiven balance comes due.

Structure Snapshot

Legal formSecond mortgage / DPA
Not a cash giftLien recorded at closing
Interest rate0% on assistance layer
Monthly paymentNone on second lien
Forgiveness1/84th per month over 7 years
Full forgivenessAfter 7 years as primary resident

Why the Distinction Matters

Calling Hoosier Homes a grant vs. a loan changes how you plan exits and long-term occupancy.

Cash to close

4% or 5% assistance reduces what you bring to closing — but terms still apply: occupancy, forgiveness timeline, and possible payoff on sale or refinance.

Monthly budget

No payment is due on the Hoosier Homes second lien. Your monthly housing cost is your first mortgage, taxes, insurance, and HOA — not a separate DPA payment.

Sale or refinance

A remaining second-lien balance is due if you exit within 7 years. Ryan and Steve model this payoff before you close so there are no surprises.

Long-term plan

If you expect to stay 7+ years, the forgivable structure can mean you never repay the assistance. Shorter timelines require planning for the unforgiven balance.

7-Year Forgiveness Timeline

How principal forgiveness accumulates month by month.

Time in homeForgiven (approx.)Remaining balance (approx.)
Year 1 (12 months)~14.3%~85.7%
Year 3 (36 months)~42.9%~57.1%
Year 5 (60 months)~71.4%~28.6%
Year 7 (84 months)100%$0 — fully forgiven

Example on $12,000 assistance: after 3 years, roughly $5,140 could remain unforgiven if you sell or refinance at that point.

Want the Structure Explained in Plain English?

Ryan & Steve will show you exactly how the Hoosier Homes second lien appears on your Loan Estimate and what forgiveness means for your timeline.

Program guidelines, income limits, and Targeted Area maps change. This page is educational — final eligibility is confirmed when your file is underwritten against current Hoosier Homes rules. This website is not directly affiliated with or endorsed by any government agency.

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The 2 Mortgage Guys

Ryan Minick and Steve DeLon — Branch Managers & Senior Loan Officers at Luminate Bank. Based in Kokomo, Indiana. Lending nationwide since 2005.

Contact

(765) 450-8933

[email protected]

Ryan Minick NMLS# 203249

Steve DeLon NMLS# 202876

Luminate Bank NMLS# 1281698

Kokomo's Mortgage Team. Lending Nationwide.

1221 Appletree Lane, Kokomo, IN 46902

NMLS Consumer Access

Luminate Bank NMLS 1281698 Bank Headquarters 2523 S. Wayzata Blvd., Suite 100 Minneapolis, MN 55405 (952) 939-7200. This is not an offer to enter into an agreement. Information provided is outlining the minimum down payment requirements as allowed by specific loan program and product guidelines and any information, rates and programs are subject to change without prior notice and may not be available in all states. All loans are subject to credit and property approval. Luminate Bank is not affiliated with any government agency. All rights reserved.

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