Mortgage Guide for Indiana

Indiana combines a property tax rate of 0.85% with affordable home prices well below the national median, creating favorable conditions for mortgage borrowers. The state does not impose a transfer tax on real estate transactions, keeping closing costs low. The Indiana Housing and Community Development Authority (IHCDA) offers several programs for first-time and qualifying homebuyers, including down payment assistance and below-market rate mortgages.

Mortgage Numbers for Indiana

Median Home Price	$250,000
Baseline Conforming Limit	$806,500
Conforming Limit Ceiling	$806,500 (standard)
FHA Loan Limit (Baseline)	$524,225
Avg. Property Tax Rate	0.85%
Avg. Homeowners Insurance	~0.27% of home value (avg. annual premium)
Transfer Tax	None (No state transfer tax or real estate excise tax.)
High-Cost Counties	No

Data sources: FHFA (conforming limits), HUD (FHA limits), U.S. Census (home values), State Department of Revenue (property tax). Updated annually unless noted. Data as of 2026-02-26.

What This Means for Your Mortgage

Loan Limits and Conforming Thresholds

The 2025 conforming loan limit in Indiana is $806,500 for a single-unit property, matching the national baseline set by the Federal Housing Finance Agency. Indiana has no high-cost counties, meaning this limit applies uniformly across all 92 counties. FHA loan limits in Indiana sit at the national floor of $524,225 for a single-unit property. Borrowers considering government-backed financing through FHA loan programs will find that this floor covers the vast majority of purchase prices across the state, including most properties in the Indianapolis metropolitan area.

Property Taxes and Insurance

Indiana’s effective property tax rate averages approximately 0.85%, which falls below the national median. On a $250,000 home, this translates to roughly $2,125 per year in property taxes. Lenders factor this figure into monthly escrow calculations and debt-to-income ratio assessments, so Indiana’s moderate tax burden can meaningfully expand a borrower’s purchasing power compared to higher-tax states like Illinois or Michigan. Homeowners insurance in Indiana averages around 0.27% of the home’s value annually. While Indiana does experience severe weather, including tornadoes and hailstorms in certain regions, statewide average premiums remain manageable. Borrowers in tornado-prone areas should confirm coverage terms and any weather-related riders with their insurance provider.

Transfer Taxes and Closing Costs

Indiana is one of a limited number of states that imposes no state-level real estate transfer tax. This eliminates a cost that can add thousands of dollars to closing in states like Illinois, Ohio, or Michigan. Buyers and sellers in Indiana benefit from this absence directly at the closing table. Recording fees and other county-level charges still apply, but the lack of a percentage-based transfer tax is a measurable advantage for transactions at all price points.

Private Mortgage Insurance Considerations

Borrowers putting less than 20% down on a conventional loan in Indiana will need private mortgage insurance (PMI). Because Indiana home prices tend to fall well below the conforming limit, many buyers can reach the 20% equity threshold faster than in higher-cost markets. For a $250,000 purchase, the 20% down payment target is $50,000. Borrowers who begin with 10% or 15% down can request PMI removal once they reach 20% equity through a combination of payments and appreciation.

USDA Eligibility and Rural Lending

A significant portion of Indiana’s geography qualifies for USDA Rural Development loans, which offer zero-down-payment financing for eligible borrowers in designated rural and suburban areas. Outside the Indianapolis, Fort Wayne, and Evansville metro cores, many Indiana communities meet USDA geographic requirements. For borrowers with moderate incomes purchasing in smaller cities and towns, USDA financing can eliminate the down payment barrier entirely. Income limits apply and vary by county and household size.

Indianapolis Metro vs. Rural Markets

Indiana’s housing market divides broadly between the Indianapolis metropolitan area (Marion County and surrounding suburbs) and the rest of the state. The Indianapolis metro accounts for the highest concentration of sales volume and tends to have higher median prices than rural Indiana, though prices remain well below national averages. Cities like Fort Wayne, South Bend, Evansville, and Bloomington each have distinct market dynamics influenced by local employers, universities, and regional economic conditions. Rural Indiana offers some of the lowest home prices in the Midwest, but buyers should evaluate property condition, inspection requirements, and appraisal considerations carefully in markets with limited comparable sales.

Market Position Among Neighboring States

Compared to its neighbors, Indiana offers a favorable cost profile for mortgage borrowers. Ohio has similar home prices but imposes transfer taxes. Illinois has significantly higher property taxes and transfer taxes. Michigan’s property taxes vary widely by county but often exceed Indiana’s statewide average. Kentucky offers comparable affordability but has a more limited conforming loan market in certain rural areas. Indiana’s combination of no transfer tax, moderate property tax, and uniform conforming limits creates a straightforward lending environment with fewer cost variables than most adjacent states.

Homebuyer Programs in Indiana

First Place Program Indiana Housing and Community Development Authority (IHCDA) · Down Payment Assistance Available to first-time homebuyers (no ownership in prior three years). Provides down payment assistance as a forgivable second mortgage. Income and purchase price limits apply by county. Must complete homebuyer education. Compatible with FHA, VA, USDA, and conventional first mortgages through participating lenders. Official Program Page → Last verified: 2026-02-26

Next Home Program Indiana Housing and Community Development Authority (IHCDA) · Down Payment Assistance Available to repeat and first-time homebuyers. Offers down payment assistance with no first-time buyer requirement. Income and purchase price limits vary by county. Requires homebuyer education. Works with FHA, VA, USDA, and conventional loan products through IHCDA-approved lenders. Official Program Page → Last verified: 2026-02-26

My Home Conventional Program Indiana Housing and Community Development Authority (IHCDA) · Low-Interest Second Conventional financing option through IHCDA with competitive interest rates. Available to borrowers meeting income and credit requirements. Down payment assistance may be layered with this product. Participating lender origination required. Official Program Page → Last verified: 2026-02-26

Mortgage Credit Certificate (MCC) Indiana Housing and Community Development Authority (IHCDA) · Grant Federal tax credit that allows eligible borrowers to claim a portion of annual mortgage interest paid as a dollar-for-dollar tax credit. Reduces federal tax liability, effectively lowering the cost of homeownership. Income limits and purchase price limits apply. Can be combined with IHCDA first mortgage products. Official Program Page → Last verified: 2026-02-26

Hardest Hit Fund Down Payment Assistance Indiana Housing and Community Development Authority (IHCDA) · Forgivable Loan Forgivable loan for down payment and closing cost assistance in targeted Indiana counties. Borrowers must meet income limits, purchase price caps, and occupy the home as a primary residence. Loan is forgiven over a set period if the borrower remains in the home. Official Program Page → Last verified: 2026-02-26

Calculate Your Indiana Mortgage

Indiana Monthly Payment Calculator Estimate principal, interest, taxes, and insurance for an Indiana mortgage using local property tax and insurance averages. Indiana Home Affordability Calculator Determine how much home you can afford in Indiana based on your income, debts, and Indiana-specific cost factors. Indiana Closing Cost Calculator Estimate total closing costs for an Indiana purchase, reflecting the state's zero transfer tax and standard recording fees. Debt-to-Income Ratio Calculator Calculate your front-end and back-end DTI ratios to evaluate qualification thresholds for Indiana mortgage programs. PMI Cost Calculator Estimate private mortgage insurance costs based on Indiana home values, down payment amounts, and credit score ranges. Down Payment Comparison Calculator Compare down payment scenarios for Indiana purchases, including the impact on monthly payments, PMI, and total interest paid.

Frequently Asked Questions

What are the conforming and FHA loan limits in Indiana?

The 2025 conforming loan limit in Indiana is $806,500 for a single-unit property, which applies uniformly across all 92 counties. Indiana has no high-cost county designations. The FHA loan limit is $524,225 statewide, matching the national FHA floor. Both limits cover the vast majority of Indiana home purchases without requiring jumbo or non-conforming financing.

Does Indiana charge a real estate transfer tax?

No. Indiana does not impose a state-level real estate transfer tax. This distinguishes Indiana from most neighboring states, including Ohio and Illinois, where transfer taxes add a percentage-based fee to closing costs. County recording fees still apply in Indiana, but they are fixed-fee charges rather than percentage-based taxes.

What down payment assistance programs are available in Indiana?

The Indiana Housing and Community Development Authority (IHCDA) administers several down payment assistance programs. The First Place Program serves first-time buyers with forgivable second mortgages. The Next Home Program extends assistance to repeat buyers. Both programs have income and purchase price limits that vary by county and require homebuyer education. Participating IHCDA-approved lenders originate these loans.

How do Indiana property taxes affect mortgage qualification?

Indiana's effective property tax rate averages approximately 0.85%, which is below the national median. On a $250,000 home, this equates to roughly $177 per month in escrow. Lenders include property taxes in debt-to-income calculations, so Indiana's moderate tax rate allows borrowers to qualify for somewhat higher purchase prices compared to states with property tax rates above 1.5%.

Are USDA loans widely available in Indiana?

Yes. A substantial portion of Indiana qualifies for USDA Rural Development financing, particularly outside the Indianapolis, Fort Wayne, and Evansville metropolitan cores. USDA loans offer zero-down-payment terms for eligible borrowers purchasing in designated areas. Income limits apply based on county and household size. Buyers should verify specific address eligibility through the USDA eligibility map before proceeding.

How does Indiana compare to neighboring states for mortgage costs?

Indiana generally offers lower total borrowing costs than its neighbors. It has no transfer tax (Ohio, Illinois, and Michigan all impose transfer taxes). Property taxes average 0.85%, which is lower than Illinois and comparable to or below Ohio and Michigan in most counties. Conforming loan limits are uniform statewide with no high-cost exceptions needed. Combined, these factors produce a relatively straightforward and cost-efficient lending environment.

What should Indianapolis-area buyers know about mortgage planning?

The Indianapolis metropolitan area, including Marion County and surrounding suburbs such as Hamilton, Hendricks, and Johnson counties, represents Indiana's largest and most active housing market. Median home prices in the metro tend to run higher than the statewide average but remain well within conforming loan limits. Buyers should account for property tax variations between Marion County and suburban counties, as effective rates differ. Appraisal turnaround times and inventory levels can also fluctuate more in the metro compared to rural markets.