Buying a house in Indiana can be both an exciting and confusing process, especially for first-time home buyers. Our guide breaks down how to buy a house in Indiana in eight steps, with practical tips to help you navigate Indiana’s real estate market.
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Key steps to buying a house in Indiana
Step 1: Save for a down payment. » A 20% down payment on a typical house in Indiana can be about $47,398. You can choose a mortgage that requires less, but you might have to pay mortgage insurance and more interest over the life of your loan.
Step 2: Find an agent. » A knowledgeable Indiana real estate agent can help you understand state requirements for down payments, determine your borrowing capacity, and identify where you want to buy. Interview and vet realtors to find someone experienced and communicative.
Step 3: Get pre-approved. » Pre-approval helps you set your budget before looking for houses and shows sellers that you're a serious buyer.
Step 4: Find the right location. » Consider your lifestyle, financial situation, and which areas are likely to increase in value as you choose where to buy a home.
Step 5: Go house hunting. » Work with your agent to find houses within your price range, personal preferences, and preferred locations. Be clear about your must-haves and be flexible about the rest.
Step 6: Make an offer. » Work with your agent to determine contingencies and concessions ahead of time so you can put forward a reasonable, strong, yet competitive offer.
Step 7: Get an inspection and appraisal. » These professional assessments will confirm the property's value and help you better understand its condition — including any potential issues — before you finalize your Indiana home purchase.
Step 8: Close on your home. » Do a final walk-through of the property with your agent to ensure your house in Indiana is in reasonable condition before closing the sale.
Step 1: Save for a down payment
Your down payment is the first part of your home's purchase price that you pay at closing. Your mortgage lender pays the remaining balance.
A down payment can be up to 20% of the home's final price. In Indiana, that could mean paying up to $47,398 for a $236,990 home.
If you put less money down, your mortgage lender will typically require you to get private mortgage insurance (PMI) on the loan. That can save you money upfront but increase your monthly mortgage payment and total interest costs over the life of the loan.
However, if you can't afford to put that much down at closing, or want to hold onto more of your cash to cover other home-buying expenses, some government-backed loans have lower down payment mortgage options.
Minimum down payment on a house in Indiana
| Mortgage type | Minimum down payment (%) | Down payment ($) |
| Conventional loan | 20%, or <20% + PMI | $7,110 |
| Federal Housing Administration (FHA) loan | 3.5% | $8,295 |
Indiana down payment assistance programs
Across the country, there are numerous down payment assistance programs that offer financial aid to first-time and low-income buyers. In the state of Indiana, eligible homebuyers can choose from an array of programs to offset the cost of a down payment.
Here are some programs in Indiana that you might be eligible for:
IHCDA First Place
The Indiana Housing and Community Development Authority (IHCDA) offers two programs for residents: the First Place program and the Next Home program.
The First Place program is a second mortgage offered to first-time homebuyers. Borrowers may receive up to 6% of the purchase price or 6% of the home's appraised value (whichever is lower) to cover the down payment or closing costs. Eligible participants must have a credit score of at least 640 if their debt-to-income ratio is below 45% or 680 if their debt-to-income ratio is 45% to 50%.
IHCDA Next Home
The Next Home program offers up to 3.5% of a home's purchase price to first-time homebuyers. This program can be combined with the Mortgage Credit Certificate (MCC).
Eligible borrowers must have a credit score of at least 640 with a debt-to-income ratio of less than 45% or 680 with a debt-to-income ratio between 45% and 50%.
U.S. Department of Housing and Urban Development
More about low down payment home loans
Government-backed loans, like FHA loans, allow a minimum down payment of 3.5% toward your home's purchase. Even conventional loans allow for down payments as low as 3–5%, though the minimum varies by lender.
But making a down payment of less than 20% comes with some risks:
- Because you're borrowing more money, you'll have higher monthly payments and pay more in interest over the life of your loan.
- Putting less than 20% down means you'll pay additional PMI, which protects the lender from potential losses.
Based on a 6.84% interest rate for a 30-year loan on a median $236,990 home.
Down payment
Monthly mortgage payment
Total interest
Total cost
5%
$1,474
$305,410
$542,400
20%
$1,241
$257,187
$494,177
Mortgage insurance costs around 1% of your annual mortgage balance and is added to your mortgage payment each month. However, rates vary based on your down payment, credit score, and loan type:
- Conventional loans require PMI until you've built up 20% equity in the home (for example, until you owe $360,000 on a $450,000 home). Some lenders require proof that your home has increased in value enough to cancel the PMI.
- FHA loans require a mortgage insurance premium (MIP) for the life of your loans, regardless of your home equity.
- VA loans don't charge mortgage insurance. Instead, you'll pay a one-time VA loan funding fee at closing, which can range from 1.4% to 3.6% of the purchase price. VA loans are available only to veterans, active service members, and eligible surviving spouses.
» LEARN MORE: Everything you need to know about low-income home loans
Step 2: Find a great real estate agent in Indiana
Whether you're actively house hunting or just starting to browse homes on Zillow, it's never too early to find a great Indiana realtor to guide you in your search. An experienced agent can help you navigate a tricky housing market, explore your financial options, and negotiate the best deal possible.
In addition to finding and showing you properties, your agent will help you make offers, negotiate contracts, and navigate the closing process. Plus, they can recommend other service providers (like title companies and inspectors) to help you buy your house in Indiana — just remember you can always shop around!
Best of all, hiring the right real estate agent comes at no extra cost to you — sellers typically pay all realtor fees from the home sale — and can get you the best price on a house in Indiana.
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When finding and choosing a Indiana realtor, consider their local knowledge and proximity to the specific neighborhoods you're interested in.
You can start your search by looking up a brokerage or realty, but don't stop there. Take the time to research and interview multiple real estate agents, paying attention to their:
- Years of experience (the median is 8 years)
- Number of home buyers helped in the last year — the more the better!
- Expertise in your target neighborhood and price range
- Online reviews and complaints
- Licensing and certifications, such as an Accredited Buyer's Representative
- Membership in local real estate boards, such as the Bloomington Board of REALTORS® and Northwest Indiana REALTOR® Association
Step 3: Get pre-approved for a mortgage
Mortgage pre-approval is a lender's conditional offer to lend you a maximum amount of money to buy a home.
Most sellers in Indiana will ask for a mortgage pre-approval letter before showing you their home. It demonstrates that you're financially qualified to make an offer and can give you an advantage over buyers who don't have one.
Pre-approval can be as simple as a 40-minute phone call with your lender or mortgage broker, a credit check, and sending them your proof of funds. Once you make an offer on a house in Indiana, you'll start the initial mortgage application.
Pre-approval vs. pre-qualification
Pre-approval is a more in-depth analysis of your finances than pre-qualification and serves as a more formal commitment from a lender. It usually requires a hard credit check and supporting documentation, such as paycheck stubs and W-2s.
Pre-qualification gives you a basic idea of what you might be able to borrow based on a quick look at your finances.
✍️ Tip: If you get pre-approved with multiple lenders within a 45-day window, it will only count as one credit inquiry, minimizing the impact on your score. The savings you'll gain from shopping around for a mortgage pre-approval will likely far outweigh any minor, short-term impacts to your credit.Does pre-approval hurt my credit score?
What do mortgage lenders review?
To figure out if they can pre-approve you for a mortgage loan, mortgage companies usually check the following:
- Credit report
- Credit score
- Payment history
- Monthly income
- Debt-to-income ratio
- Employment
(Note: These are the same factors that determine the loan's interest rate.)
You're evaluating lenders, too.
Consider each lender's quoted mortgage interest rate, estimated closing costs and fees, reputation and online reviews, customer service quality, and responsiveness to your questions.
Although you don't have to decide on a lender now, you should compare interest rates and pre-approval amounts from several lenders to make sure you're getting the absolute best rate and terms when you buy your Indiana home.
A local lender:
- Might provide you with more market-specific information, such as typical home values in your desired area
- Likely has a better understanding of lending regulations in Indiana
- Can connect with you other real estate professionals (realtors, contractors, inspectors, etc.)
You don't necessarily need to use a Indiana-based lender when buying a house in Indiana. Many national and online lenders are licensed to provide mortgage loans in Indiana and may provide better rates and terms.
Step 4: Choose the right location
Start zooming in on the best neighborhoods where home prices fall within your budget, and consider what you want out of your home.
If home equity is most important to you, search where home values are rising the most. But don't forget about local culture and amenities that fit your lifestyle.
Indiana home prices
Currently, the median home price in Indiana is $236,990, but prices vary dramatically from city to city and even from neighborhood to neighborhood!
Also, look at past home value trends. This will give you an idea of how much your home's value could go up over the next few years.
To give you an idea of how appreciation could impact what your house is worth in the future, consider these examples from three neighborhoods in Indianapolis:
Home value appreciation in Indianapolis
| Neighborhood | 2015 | Current | Appreciation |
|---|---|---|---|
| Far Eastside | $72,195 | $165,323 | 56.3% |
| Near Eastside | $57,747 | $164,633 | 64.9% |
| Chapel Hill-Ben Davis | $111,644 | $233,399 | 52.2% |
Lifestyle
Working with a local realtor can be enormously helpful when buying a home, especially in Indiana’s competitive market. They'll provide a unique perspective, with in-depth knowledge of neighborhoods and their potential for appreciation over time.
A good local agent can also provide tailored housing recommendations based on your lifestyle, such as information on the best schools, local amenities, and traffic patterns, giving you a clearer picture of what it’s like to reside there.
» MORE: The best real estate investment markets in Indiana
Step 5: Start house hunting in Indiana
📊 Key local data:
- Median mortgage interest rate: 6.84%
- Median home value: $236,990
- Best month for looking for houses (highest inventory): June
Searching for homes in Indiana is the fun part of the home buying process! You'll get to look at a variety of available listings and discover what you really want in a home.
Make a list of everything you want in a home and prioritize them by must-haves (such as proximity to work or your children's school) versus your nice-to-haves (like a spacious garage or backyard).
Consider the full costs of owning a home, not just the mortgage payment. Other potential costs of owning the home include maintenance and repairs, property taxes, homeowner's insurance, and HOA fees.
Your realtor can help you understand which of your needs and wants fit your budget and favorite neighborhoods and adjust where possible.
You should also decide whether you'll only visit homes in person or if you trust your agent to visit the properties on your behalf. This can be useful if you work demanding hours and can't always be available to see a house.
Next, your agent will search for homes on your local MLS and bring you top picks, and you'll schedule viewings and tours.
» LEARN: When’s the best time to buy a house in Indiana?
Step 6: Make an offer
Once you find a house in Indiana that you love, it's time to make an offer. Your real estate agent will help you write a compelling offer that will give you the best shot at convincing the homeowner to sell.
Talk to your real estate agent to work out all your contingencies and concessions so you can act quickly and make a strong offer that gives you a good chance of winning the home.
Part of your offer could include an earnest money deposit, which may be 1–2% of the purchase price. It's an incentive for the sellers to take the home off the market until closing. If the sale goes through, the earnest money goes toward your down payment, so you won't be anything additional out of pocket.
Note: When housing inventory is high, so is demand. So if you're house-hunting in June, you may have less time to make an offer than in December.
Average time homes spend on the market in Indiana
Source: Realtor.com (March 2024)
Annual average
60
January
69
February
65
March
50
April
43
May
40
June
39
July
40
August
42
September
43
October
45
November
52
December
61
Step 7: Inspections, appraisals, and financing
Once the seller accepts your initial offer, you have to do due diligence before officially purchasing the home. Inspections let you better evaluate the home's condition, and lenders use appraisals to determine value and decide how much your final loan amount will be.
If something unexpected pops up or if the home's appraisal comes in below the purchase price, you could have an opportunity to renegotiate the terms of your contract.
Underwriting
This is also the period that your lender will verify that you can afford your mortgage. They may ask for proof of income, pay stubs, and letters of explanation for income that doesn't come from wages, and other loan statements (like for student debt).
Delays could lead to postponed closing, so start collecting this information early so that you can be ready to submit documents when your lender asks.
Home inspections in Indiana
Having your house in Indiana inspected by a licensed inspector gives you peace of mind about the condition of the property before you commit thousands of dollars to purchase it. A licensed professional checks the house for any unseen, unexpected, or potential issues.
Your inspector should check out the following parts of the property:
- Roof
- Foundation
- Electrical system
- HVAC system
- Plumbing
A home inspection costs around $300 to $600, depending on factors like the home's location, condition, and age.
If the home has a septic system, you should also pay for a septic inspection to make sure it doesn't have any problems that wouldn't be covered in a typical home inspection
Indiana-specific inspections
Sellers in Indiana are required to fill out a property disclosure form, but this may not reveal all potential problems. Before closing on a home, it's recommended to have the following tests done, in addition to a general home inspection:
- Radon testing: Radon is prevalent in Indiana, so it's important to make sure radon levels are within safe limits. If the seller hasn't done a radon test in the past year, consider doing a test prior to closing.
- Termite and pest inspection: Damage caused by termites and pests might not be immediately noticeable, but it can decrease the value of a property over time. It's a good idea to have a pest inspection completed to ensure that the home is structurally sound and safe for you and your family.
Appraisals
Appraisals determine the value of the property. If you're using a mortgage to buy your new house in Indiana, your lender will order an appraisal to make sure the home is worth the money that it's loaning you.
» LEARN: 3 options for buyers after a low appraisal
Step 8: Close on your new home!
Final walk-through
Before you close on your new home, you and your agent will do a final walk-through of the property to ensure that it's still in the expected condition. You'll want to check to make sure:
- The appliances are in working order.
- Any agreed-upon repairs were handled by the seller.
- There was no damage to the home when the seller moved out.
Closing day
On the closing date, you’ll meet at the title company to review lots of important paperwork. You'll need to read and sign several documents, including:
- The final loan application
- The deed transfer
- Various disclosures
Before signing anything, ask your agent or closing attorney about any questions you have to make sure you fully understand each document.
After completing the paperwork, you'll have to pay for closing costs. The title company will collect the total amount you owe for various services and pay each party on your behalf.
Typically, a buyer's closing costs can be separated into four categories:
- Prepaid costs: Ongoing costs of homeownership, such as property taxes and homeowners insurance. Mortgage lenders often require buyers to pay these monthly fees upfront.
- Title and escrow charges: Charges for the title company's services, such as title searches and title insurance.
- Lender fees: Fees for the mortgage company to originate and underwrite your loan. Lender fees might include other expenses associated with your loan, such as appraisal fees or mortgage points.
- Other closing costs: Miscellaneous costs unique to each buyer. Other closing costs can include pest inspection fees, natural disaster certification fees, and other variable expenses.
Buyers in Indiana typically pay 3%–5% of the purchase price in closing costs. For a $236,990 home — the typical home value in Indiana — that's between $7,110 and $11,850!
After signing all of the paperwork, you'll get the keys and can move into your new house in Indiana. Congrats!
Start of mortgage payments
If you took out a mortgage to purchase the home, your first loan payment is likely due within a month after closing.
Ask your lender for more specific details about the payment schedule, how to make the first payment, and how to set up automatic payments (if desired).
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Frequently asked questions
Do I need a real estate attorney in Indiana?
Indiana doesn’t require you to hire a real estate attorney to buy a home. However, depending on your circumstances, you might consider hiring one anyways. If you do, treat the process similarly to hiring an agent. Interview multiple attorneys and proceed with the one that best meets your needs.
Does Indiana have a first-time home buyer program?
Yes! The Indiana Housing and Community Development Authority offers down payment assistance to eligible buyers through its First Place program. Program participants can receive a second mortgage of up to 6% of their home purchase price, and the mortgage is forgiven after 9 years.
Qualified applicants must have an FHA first mortgage and be a first-time buyer or a buyer in a target county. A minimum credit score of 640 is required, and your debt-to-income ratio cannot exceed 50%. Income and purchase price limits also apply and vary by county.
