First-time home buyer programs in Indiana: assistance, loans and real costs
Before the program names: indiana’s 1% property tax cap for homesteads, no transfer tax and a median price around $240,000 make it one of the cheapest states in which to both buy and hold a first home.
| State housing agency | Indiana Housing and Community Development Authority (IHCDA) |
|---|---|
| Median home price (approx.) | $240,000 — statewide order of magnitude; metros differ |
| 3.5% / 5% / 20% down | $8,400 / $12,000 / $48,000 on the median |
| Property tax (effective) | about 0.83% — roughly $1,992 a year on the median |
| Mortgage credit certificate | Yes — mortgage credit certificate offered |
| Transfer tax | Indiana has no real estate transfer tax; counties charge only recording fees and a small sales disclosure fee, keeping government closing costs among the lowest in the country. |
State programs for first-time buyers in Indiana
The Indiana Housing and Community Development Authority offers First Place (FHA first mortgage with down payment assistance), Next Home (FHA or conventional, for repeat buyers too), and the Helping to Own (H2O) grant; IHCDA also issues Mortgage Credit Certificates.
How the assistance money works
First Place provides down payment assistance of up to 6% of the price as a forgivable second (forgiven after nine years); Next Home provides up to 3.5%, forgiven after two years; H2O is a grant of 3.5% for FHA buyers with no repayment.
Read the lien type before the dollar figure: grant (no repayment), forgivable second (repaid only if you leave early), deferred second (repaid at sale or refinance), or repayable second (a monthly payment that counts in your debt-to-income ratio). See how down payment assistance programs work.
Mortgage credit certificate (tax credit)
IHCDA’s Mortgage Credit Certificate offers a federal tax credit on a portion of annual interest, combinable with Next Home but not with First Place’s bond-funded first mortgage.
Eligibility limits
Income and purchase price limits vary by county and program (First Place uses federal bond limits, higher in targeted areas); a 640 minimum credit score (higher for some conventional options) and homebuyer education are required.
Transfer taxes and closing costs in Indiana
Indiana has no real estate transfer tax; counties charge only recording fees and a small sales disclosure fee, keeping government closing costs among the lowest in the country.
Indiana buyer closing costs typically total 2% to 3% of the price, almost entirely lender, title and prepaid items; property taxes are paid a year in arrears, which affects prorations and escrow setup. The closing costs guide shows what is negotiable; seller concessions shows how much a seller may contribute on each loan type.
What the payment looks like on a $240,000 home
On a home at Indiana’s rough median of $240,000, here is what the three standard first-time structures look like at an illustrative 6.5% rate — principal and interest only, before homeowners insurance and any mortgage insurance. The tax column uses the state’s approximate effective rate of 0.83% (about $1,992 a year on this price). Neither number is an offer; both are the right order of magnitude for a budget.
| Structure | Down payment | Loan amount | P&I at 6.5% (30 yr) | Property tax / mo (est.) |
|---|---|---|---|---|
| FHA, 3.5% down | $8,400 | $231,600 | $1,464 | $166 |
| Conventional, 5% down | $12,000 | $228,000 | $1,441 | $166 |
| Conventional, 20% down (no PMI) | $48,000 | $192,000 | $1,214 | $166 |
Illustrative rate and approximate state figures — not an offer or a quote. Full payment tables cover $150,000 to $800,000 at 5% to 8%; the affordability guide explains how lenders size the loan.
Frequently asked questions
Does Indiana have down payment assistance for first-time buyers?
First Place provides down payment assistance of up to 6% of the price as a forgivable second (forgiven after nine years); Next Home provides up to 3.5%, forgiven after two years; H2O is a grant of 3.5% for FHA buyers with no repayment. The agency publishes the current limits and amounts; a lender approved for the program will know them.
Is there a first-time home buyer tax credit in Indiana?
IHCDA’s Mortgage Credit Certificate offers a federal tax credit on a portion of annual interest, combinable with Next Home but not with First Place’s bond-funded first mortgage. The credit is worth a percentage of the mortgage interest you pay each year, up to a federal cap, and can be combined with many first-mortgage programs.
What are typical closing costs when buying a house in Indiana?
Indiana buyer closing costs typically total 2% to 3% of the price, almost entirely lender, title and prepaid items; property taxes are paid a year in arrears, which affects prorations and escrow setup. Indiana has no real estate transfer tax; counties charge only recording fees and a small sales disclosure fee, keeping government closing costs among the lowest in the country.
Related guides
- How much house can I afford? The math lenders actually use
- FHA vs conventional for a first-time buyer: which loan wins, and when
- 3% down conventional loans: HomeReady, Home Possible and Conventional 97
- Pre-approval vs pre-qualification: what sellers actually respect
Also for this state: hard money rules in Indiana · foreclosure in Indiana.