Indiana Mortgage Rates

Living in Indiana

Nicknamed the Hoosier State, Indiana is home to the fast-paced Indianapolis 500, as well as some of the nation’s most beautiful farmlands. With a strong economy that sets job growth at 2.8% and a cost of living that is 10% lower than the national average, it’s also a booming place to buy a home.

According to an April 2019 market report by the Indiana Association of Realtors, home prices in the state are continually trending upward. The median sales price is up to $165,000 as of April 2019, after increasing for the 89th month in a row. From April 2018, that marks a 6.5% increase in median sales price.

Though prices are rising, available inventory indicates that there is hope for buyers to hold their own in this strong sellers’ market. Inventory in the state has risen to 22,682 as of April 2019, a 0.7% increase over the last year. In addition, the number of new listings on the market has increased by 1.5% since April 2018.

The rules and costs of buying a home in Indiana

There are a variety of rules and regulations that regulate the real estate market in Indiana. We’ve laid out some of the most prominent ones below:

Home seller and buyer laws

Indiana law requires that sellers fill out a Seller’s Residential Real Estate Sales Disclosure form when they put their homes on the market. The form inquires about features, such as the home’s appliances, heating system, water and sewer systems and roof.

It is also important to note that Indiana is a judicial foreclosure state, which means that the lender must go through the court system in order to foreclose on the home. Deficiency judgements, which allow the lender to sue after the foreclosure to recoup any losses, are also permitted. However, the lender sometimes will waive this right in exchange for the homeowner waiving their right to a presale waiting period.

Where divorce is concerned, Indiana is an equitable distribution state, meaning that marital assets must be divided fairly. However, “fairly” doesn’t necessarily mean a 50/50 split like you would see in a community property state. In a divorce, the division of property will be defined by the extent to which the property was acquired by each spouse and the economic circumstances of each spouse.

Finally, Indiana is an escrow state, meaning that state law does not require buyers to hire an attorney to close on a home. Instead, buyers are allowed to use a representative from an escrow or title company.

Taxes

Unlike many other states, Indiana does not charge real estate transfer taxes. In 2011, legislation was passed to prohibit state and local governments from imposing such a tax.

However, once you own your home, property taxes are allowed to be charged. On average, counties in Indiana charge 0.85% of the property’s value in taxes per year, according to Tax-Rates.org. This comes out to $1,015 in taxes on a home worth the median value of $123,100. At that rate, Indiana has one of the lowest median tax rates in the country.

If paying those property taxes is an issue, there are property tax exemptions available for senior citizens, veterans and people with disabilities. You can check your eligibility for these exemptions at the Indiana Department of Local Government Finance website.

Conforming loan limits

Throughout Indiana, the conforming loan limit for single-unit properties is $484,350. This is the limit in place for most areas across the country.

The conforming loan limit represents the maximum loan amount that government-sponsored enterprises Fannie Mae and Freddie Mac will purchase. Anything above that amount is considered a jumbo loan. While jumbo loans are available, they’re considered by lenders to be a bigger risk than a conforming loan. As such, jumbo loans often come with higher interest rates and stricter credit score requirements.

Programs for homebuyers in Indiana

Fortunately, prospective buyers interested in buying a home in Indiana have access to several homebuying programs. Here are a few that we’ve laid out for you to consider.

Helping to Own (H2O)

A program offered by the Indiana Housing and Community Development Authority, Helping to Own (H2O) offers first-time homebuyers the opportunity to get up to 3.5% of their home’s purchase price in down payment assistance when used in conjunction with an FHA 30-year, fixed-rate loan.

Who qualifies

To qualify, buyers must meet the following requirements:

  • Must be a first-time homebuyer, unless purchasing in a targeted area
  • Program income limits apply
  • Minimum credit score of 660

Learn More

Next Home Advantage

Another program offered by the Indiana Housing and Community Development Authority, Next Home Advantage is open to all buyers with low to moderate incomes. Borrowers do not have to be first-time homebuyers. It is a 30-year, fixed-rate mortgage.

The program offers down payment assistance in the form of a grant that is equal to 3% of the home’s purchase price. The grant is forgiven as long as the homeowner lives in the home for at least two years.

Who qualifies

To qualify, buyers must meet the following requirements:

  • Program income limits apply
  • Minimum credit score of 640

Learn More

Honor Our Vets

Honor Our Vets is an Indiana Housing and Community Development Authority program designed to help eligible veterans and surviving spouses with relocation costs by offering up to $5,000 in assistance. These funds can be used to cover a down payment, closing costs or other expenses associated with moving.

This program also offers a 30-year mortgage using VA financing, which allows buyers to finance up to 100% of the home’s purchase cost. First-time buyers may combine it with a mortgage credit certificate.

Who qualifies

To qualify, buyers must meet the following requirements:

  • Must be an eligible service member, veteran or surviving spouse
  • Must meet program income limits, which vary by county
  • Must be employed by a participating Indiana employer
  • Home must serve as a primary residence

Learn More

Rate shopping tips

Shopping around for a mortgage rate is one of the best financial choices you can make when you’re buying a home. Check out the tips on how to find the best rate for you:

Contact at least 3 lenders on the same day

Mortgage interest rates change daily. With that in mind, it’s best to make sure you talk to multiple lenders on the same day. This way, you can ensure that each lender is using the same base interest rate. By doing so, you can better make an apples-to-apples comparison between rates.

Give each lender the same information

Another way to ensure a fair comparison is to give each lender the exact same information. You should be prepared to provide each lender with your employment information and credit score, as well as statements for all of your other debts and assets.

Add up all lender fees to determine the total cost of your loan

If you’re serious about buying a home, you should know that you’ll have to pay various fees when you close on your home. Though every lender has a unique fee structure, these fees might include an application fee, an origination fee, a fee to record your mortgage or a fee for any discount points you take on in exchange for a lower interest rate. It’s important to take all of these fees into account when determining your total cost so you can make sure you’re truly choosing the best option.

Know when to lock in the rate

Once you’ve decided which loan program best meets your needs, make sure the lender locks in the interest rate — and be sure to get it in writing. This will ensure that you’ll be protected if interest rates go up before you close on your home. Conversely, once you lock in a rate, you also won’t be able to benefit if interest rates drop.

The information in this article is accurate as of the date of publishing.