If you’re an Indiana first-time home buyer, you should consider yourself lucky. That’s because home prices are lower in the Hoosier State than the national average.
Indiana also provides substantial assistance to first-time home buyers. If you qualify, you may be able to get down payment assistance, putting you in a new home sooner than you thought.
Here’s where to begin.
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The median home sale price in Indiana was $266,100 in July 2024, according to Redfin. That increased 2.9% from the year before.
| Average Home Sale Price in IN 1 | $266,100 |
| Minimum Down Payment in IN (3%) | $7,983 |
| 20% Down Payment in IN | $53,220 |
| Average Credit Score in IN 2 | 712 |
| Maximum IN Home Buyer Grant 3 | IHCDA forgivable loan of up to 6% of the sale price |
Down payment amounts are based on the state's most recently available average home sale price. “Minimum” down payment assumes 3% down on a conventional mortgage with a minimum credit score of 620.
If you're eligible for a VA loan (backed by the Department of Veterans Affairs) or a USDA loan (backed by the U.S Department of Agriculture), you may not need any down payment at all.
If you’re a first-time home buyer in Indiana with a 20% down payment, you can get a conventional loan with a low interest rate and no private mortgage insurance (PMI).
Note that government loan programs (including FHA, VA, and USDA home loans) require you to buy a primary residence. That means you can’t use these loans for a vacation home or investment property.
In addition, most programs let you use gifted money or down payment assistance (DPA) to cover your down payment and closing costs. Depending on your mortgage loan, you could potentially get into a new house with minimal cash out of pocket.
If you’re unsure which program to choose for your first mortgage, your lender can help you find the right match based on your finances and home buying goals.
The Indiana Housing and Community Development Authority (IHCDA) offers special deals on FHA loans and conventional mortgages. These are available mostly to first-time home buyers, though there are exceptions in certain target areas.
Indiana Housing offers a Mortgage Credit Certificate program that allows you to claim a federal income tax credit for up to $2,000 in mortgage interest paid each year. A first-time home buyer can ask for the mortgage credit certificate when they apply for a loan through a participating lender.
Even though it costs $800 to apply for the MCC, most people save more than that over the life of the tax credit.
The IHCDA’s down payment assistance programs are more generous than those offered by many states, assuming you intend to stay in your new home for at least nine years.
The First Place Program allows first-time homebuyers, buyers in target areas, and qualified veterans to borrow up to 6% of the purchase price as a down payment or closing costs. You’ll need to use a 30-year FHA mortgage to qualify for this assistance, which comes as a forgivable second mortgage.
The second mortgage has no interest or monthly payments. It’s completely forgiven after nine years as long as the buyer does not sell or refinance the house during that time. The mortgage credit certificate cannot be used in conjunction with the First Place Program.
To be eligible, borrowers must meet the following minimum debt-to-income ratio (DTI) and FICO credit score requirements:
The agency has rules about who can buy a single-family home, condo, townhome, planned unit complex, or mobile home. What’s more, the buyer’s income must also be within the limits set by the agency. It should be noted that the majority of eligible applicants have a moderate to low income.
Indiana Housing may offer Next Home assistance to both first-time and repeat homebuyers. A 30-year FHA loan is required. However, you can use 3.5% of the purchase price as a down payment.
If you don’t sell or refinance your house, the down payment aid is forgiven after just two years. Additionally, the aid and the mortgage credit certificate may be combined.
Visit the website to find out more about borrower requirements and income limits.
The Helping To Own program is a grant of up to 3.5% of the loan amount used cover the down payment requirement for an FHA loan. You must be an Indiana first-time home buyer to qualify.
If the IHCDA’s home buyer assistance doesn’t seem like a good fit, you may have other options. Talk to your loan officer or real estate agent about local down payment grants and loans to learn more.
Fort Wayne is the most challenging city for an Indiana first-time home buyer. It is more expensive than Indianapolis or Evansville. Furthermore, home sale prices have been rising much faster.
The median list price of homes in Indianapolis was $270,000 in June 2024, according to Realtor.com. That held flat year-over-year.
If you want to purchase a home at this median price, your options for a down payment may include:
The Indianapolis Neighborhood Housing Partnership helps people who qualify to pay for their down payments by giving them up to $14,999. Eligibility requirements are listed on that page, and you can get more information by taking an online assessment.
The median list price for homes in Fort Wayne was $289,900 in June 2024, according to Realtor.com. This rose 1.7% from the previous year.
If you want to buy a home at that median price, your down payment options might fall between:
The City of Fort Wayne’s website doesn’t appear to currently offer any citywide down payment assistance programs.
But as late as the first quarter of 2022, first-time home buyers could get help through Community Connections, which is part of Pathfinder Services’ housing department. Call (800) 310-9510 for details about forthcoming assistance.
The median list price for homes in Evansville was $215,000 in June 2024, according to Realtor.com. That fell 4.7% from the year prior.
If you want to buy a home at that median price, your down payment options might fall between:
There appear to be a couple of down payment assistance programs in Evansville:
All the organizations we’ve listed above should provide free advice to any first-time home buyer in the state of Indiana or within their areas.
You can see today’s live mortgage rates in Indiana here. Use a mortgage calculator to see how your down payment, interest rate, homeowners insurance, and property taxes will affect your monthly mortgage payment.
When you’re ready to start the home buying process, get personalized rate quotes from at least three mortgage lenders. Instead of simply looking at advertised rates online, apply for preapproval and compare the interest rates and fees. Because that is the only way to ensure you receive the best possible deal on your new home loan.
3 Based on a review of the state's available DPA grants at the time this was written
Authored By: Peter Warden The Mortgage Reports EditorPeter Warden has been writing for a decade about mortgages, personal finance, credit cards, and insurance. His work has appeared across a wide range of media. He lives in a small town with his partner of 25 years.
Updated By: Ryan Tronier The Mortgage Reports EditorRyan Tronier is a personal finance writer and editor. His work has been published on NBC, ABC, USATODAY, Yahoo Finance, MSN Money, and more. Ryan is the former managing editor of the finance website Sapling, as well as the former personal finance editor at Slickdeals.
Reviewed By: Paul Centopani The Mortgage Reports EditorPaul Centopani is a writer and editor who started covering the lending and housing markets in 2018. Previous to joining The Mortgage Reports, he was a reporter for National Mortgage News. Paul grew up in Connecticut, graduated from Binghamton University and now lives in Chicago after a decade in New York and the D.C. area.