Indiana Mortgage Guide 2026

Buying a Home in Indiana

Indiana punches well above its weight for housing affordability. The state carries one of the more modest property tax burdens in the Midwest, no state real estate transfer tax, and median home prices that remain firmly below the national average. For buyers relocating from coastal markets or neighboring Illinois — where property taxes run two and a half times higher — the difference in monthly carrying costs can be several hundred dollars.

That said, "affordable" doesn't mean uncomplicated. Property tax rates vary county to county, IHCDA's assistance programs come with income and purchase-price caps that shift annually, and closing costs still run 2%–3% of the purchase price. The sections below lay out the verified numbers so you can build a realistic budget before you start touring homes.

Indiana Property Taxes

Indiana's average effective property tax rate on owner-occupied housing is 0.77%, according to the Tax Foundation's 2026 state rankings — placing the state 27th nationally, well below the U.S. average of roughly 1.1%. Property taxes here are levied entirely at the local level; the state sets the framework through Indiana Code, but county assessors set millage rates based on local budgets and school funding needs.

Indiana also caps property taxes for homesteads under IC 6-1.1-20.6. Residential properties assessed as a primary residence are generally capped at 1% of gross assessed value, which means the effective rate rarely climbs above that threshold for owner-occupants in most counties — even where nominal millages are higher.

County rate estimates derived from Tax Foundation county-level data (2022 ACS data, published 2024). Your county assessor is the definitive source for any specific parcel.

Marion County (Indianapolis) is not included in the table above because effective rates there shift meaningfully by taxing district. The homestead cap applies, but homeowners in some Indianapolis neighborhoods should verify their assessed value and applicable millage directly with the Marion County Assessor's office before closing.

Closing Costs in Indiana

Indiana buyers typically pay 2%–3% of the purchase price in closing costs — on the lower end of the national range, primarily because Indiana imposes no state real estate transfer tax. Most neighboring Midwestern states do levy some form of conveyance or transfer fee; Indiana does not.

What Indiana does require is a Sales Disclosure Filing Fee. Under Indiana Code IC 6-1.1-5.5, a county assessor must review a Sales Disclosure Form (SDF) for any transfer of residential property for valuable consideration. The filing fee paid to the county auditor is typically $10 per form — $20 in Marion County. That's not a tax in any meaningful sense; it's an administrative charge that adds nominal cost to closing.

On a $240,000 purchase with a 5% down payment ($12,000), expect buyer closing costs to land between roughly $4,500 and $7,200 — all figures are estimates. Your Loan Estimate, which lenders are required by federal law to provide within three business days of application, will show your actual numbers line by line.

First-Time Buyer & Down Payment Assistance Programs

The Indiana Housing and Community Development Authority (IHCDA) runs Indiana's primary homebuyer assistance programs through a network of approved lenders statewide. All programs pair a 30-year fixed-rate first mortgage (FHA, VA, USDA, or conventional) with down payment or tax assistance. Income limits and purchase price caps apply to every program and are updated periodically by county — confirm current figures with an IHCDA-approved lender or directly at in.gov/ihcda before planning your budget around any specific assistance amount.

First Place (FP)

IHCDA's flagship first-time buyer program. First Place delivers a 30-year fixed-rate mortgage at a competitive rate, bundled with a forgivable second mortgage covering up to 6% of the purchase price for down payment and closing cost assistance. The assistance is forgiven over time as long as the home remains your primary residence. Minimum credit score requirements apply (typically 640+). This is one of Indiana's most comprehensive packages for buyers who haven't owned a home in the past three years.

Next Home

Unlike First Place, Next Home is available to both first-time and repeat buyers — making it useful for anyone who's owned before but wants assistance on their next purchase. Down payment assistance is 3% of the purchase price on conventional loans or 4% on FHA loans, structured as a forgivable second mortgage that cancels after two years of on-time payments on the first mortgage. The lower DPA percentage compared to First Place is offset by the broader eligibility pool.

Helping To Own (H2O)

H2O targets buyers using FHA financing. The program provides a grant of up to 3.5% of the purchase price — enough to cover the FHA minimum 3.5% down payment entirely. The grant is non-repayable in most circumstances, though recapture provisions can apply if the home is sold within a specified period. It's a straightforward option for buyers whose primary barrier is the upfront cash, not the qualifying income.

Mortgage Credit Certificate (MCC)

IHCDA's MCC converts a portion of your annual mortgage interest into a direct federal income tax credit — a dollar-for-dollar reduction in your tax bill, not just a deduction. The credit applies each year you hold the loan, not just at purchase. MCCs can be paired with certain IHCDA loan programs and also re-issued if you refinance. For buyers who expect to hold a home for ten-plus years, the cumulative tax savings from an MCC can rival the value of upfront DPA.

Sample Monthly Payment

The figures below are estimates only, intended to illustrate how Indiana-specific costs stack up in a real payment. They are not a quote. Your actual payment depends on your credit score, lender, loan type, exact county, and insurance premium.

Assumptions: $240,000 purchase price (near the Indiana statewide median estimate as of 2025–2026); 5% down ($12,000); $228,000 loan; 30-year fixed; 6.9% interest rate (illustrative, not a rate quote); Indiana statewide average property tax rate (0.77%); homeowners insurance at $1,200/year (Indiana sits in a moderate-risk zone for severe weather relative to coastal and Gulf states).

All figures are estimates for illustration only. Rate and payment will vary. Use the calculator below for your specific inputs.

That $154/month property tax figure reflects the statewide average rate applied to the $240,000 purchase price. Buyers in Boone County, where the effective rate runs closer to 0.83%, would see the tax component rise to about $166/month — a modest difference. Compare that to a similar home in Illinois, where Cook County's effective rate above 2% would push the property tax portion past $400/month on the same price point.

If you're using IHCDA's First Place program at 6% DPA, the $12,000 down payment requirement drops to zero out of pocket — shifting the PMI calculation (and potentially the loan amount) depending on how the assistance is structured. Run those numbers with an IHCDA-approved lender before assuming the payment above applies to an assisted purchase.