Indiana mortgage laws explained: from closing to foreclosure
Federal law sets the floor everywhere; Indiana sets the rest. Indiana is a low-cost recording state with no mortgage or transfer tax and a split licensing regime, where the most important consumer protection is the pre-suit foreclosure notice and settlement-conference right created by Indiana Code 32-30-10.5.
| Closing practice | Title company closing state |
|---|---|
| Community property | No — common-law (separate property) state |
| Mortgage recording tax | Indiana charges no mortgage tax, intangible tax or documentary stamp on the note, and no transfer tax on the deed. |
| Transfer tax (deed) | 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. |
| Usury ceiling | Indiana places no usury cap on business-purpose loans, and its consumer credit code governs only consumer loans; hard money loans to entities or for documented business purposes are rate-unrestricted, with criminal loansharking limits applying only at very high rates on consumer credit. |
| Foreclosure | Judicial · 5 to 12 months to sale · deficiency: allowed |
How a Indiana closing is conducted
Indiana closings are run by title insurance agencies and their escrow departments, and no statute requires an attorney at the table. Lawyers prepare deeds and review documents when a party hires one, but the title agent handles the settlement statement, disbursement and recording. Indiana is a wet-funding state and its good-funds law (Indiana Code 27-7-3.7) requires wired or otherwise collected funds before a title agent may disburse; buyer-side costs typically run about 2 percent to 3 percent of the price.
Spouses, community property and the homestead
Indiana is a separate-property state, and a married couple taking title together holds it as tenants by the entirety unless the deed says otherwise (Indiana Code 32-17-3-1). A spouse who is not on title does not have to sign the mortgage, because dower and curtesy were abolished long ago; a spouse who is on title must sign, and entireties property cannot be mortgaged by one spouse alone. FHA and VA underwriting in Indiana uses only the borrower’s own debts, since no community-property rule pulls in the other spouse’s obligations.
Indiana’s creditor homestead exemption is modest: a fixed dollar amount of equity in a residence (set in Indiana Code 34-55-10-2 and adjusted every six years, currently in the low twenty-thousands), which is why Chapter 7 filers with real equity often lose it. On the tax side, the standard homestead deduction (the lesser of a fixed dollar figure or a percentage of assessed value) plus a supplemental deduction remove a large share of an owner-occupied home’s assessed value, and the Indiana Constitution’s circuit-breaker caps a homestead’s tax bill at 1 percent of gross assessed value. The exemption never stops a purchase-money mortgage, a property tax sale or a mechanic’s lien; the deduction must be claimed once, usually at closing through the sales disclosure form.
Recording, intangible and transfer taxes
Indiana charges no mortgage tax, intangible tax or documentary stamp on the note, and no transfer tax on the deed. The county recorder collects a flat statutory recording fee per mortgage (currently a few tens of dollars, set by Indiana Code 36-2-7-10) plus a small fee for the sales disclosure form that accompanies every conveyance. The absence of both taxes keeps Indiana among the cheapest states to record a lien.
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.
Can a Indiana lender charge a prepayment penalty?
Indiana limits prepayment penalties on home loans through its Home Loan Practices law (Indiana Code 24-9-3) and bars them entirely on high-cost home loans, while the Uniform Consumer Credit Code (Indiana Code 24-4.5-3-209) sets the general right to prepay consumer credit. The exact window and percentage a first-lien lender may still charge depend on the loan type and date, so any penalty clause should be checked against the current text with the Department of Financial Institutions. Federal QM limits apply on top.
Indiana’s anti-predatory lending law
Indiana’s Home Loan Practices Act (Indiana Code 24-9, enacted in 2004) defines a high-cost home loan by an APR trigger modeled on federal HOEPA and a points-and-fees trigger of roughly 5 percent of the total loan amount for larger loans (a higher percentage for small ones). High-cost loans may not carry balloon payments, negative amortization, prepayment penalties or financed credit insurance, and lenders must reasonably believe the borrower can repay; the Act also prohibits deceptive acts in any home loan and lets the Attorney General enforce it. A bona fide purchaser of the home generally takes free of the Act’s remedies, which keeps the title chain clean.
Indiana places no usury cap on business-purpose loans, and its consumer credit code governs only consumer loans; hard money loans to entities or for documented business purposes are rate-unrestricted, with criminal loansharking limits applying only at very high rates on consumer credit.
Checking a Indiana lender’s license
Indiana splits mortgage oversight between two agencies: the Department of Financial Institutions licenses first-lien mortgage lenders under Indiana Code 24-4.4 and subordinate-lien and consumer lenders under the Uniform Consumer Credit Code (Indiana Code 24-4.5), while the Secretary of State’s Securities Division licenses loan brokers under the Loan Broker Act (Indiana Code 23-2-5). Both regimes run through NMLS, and individual originators need an NMLS license from whichever agency covers their employer. Exemptions cover depository institutions and a small number of seller-financed sales per year; NMLS Consumer Access shows which agency issued a license.
State disclosures beyond TRID
Indiana adds no rescission period beyond federal TILA, but its foreclosure statute front-loads notices: before filing, the creditor must send a pre-suit notice at least 30 days in advance that explains the borrower’s right to a settlement conference and lists foreclosure-prevention contacts (Indiana Code 32-30-10.5). The borrower may then demand a conference with the lender, which the court supervises, before judgment. Indiana also requires a mortgagee to record a release promptly after payoff and imposes damages for failing to do so (Indiana Code 32-29-6), and the sales disclosure form filed at recording doubles as the homestead deduction claim.
Foreclosure in Indiana, briefly
The state’s foreclosure path is judicial; budget 5 to 12 months to a sale in an ordinary case, longer if contested. The settlement conference right, the three-month waiting period, and the ability to raise defenses in court are Indiana’s core protections. The full timeline, redemption and mediation rules are on foreclosure in Indiana; the investor view — usury, licensing exemptions, recovery speed — on hard money in Indiana.
Frequently asked questions
Do I need a lawyer to close a mortgage in Indiana?
Indiana closings are run by title insurance agencies and their escrow departments, and no statute requires an attorney at the table. The answer depends on local practice more than on a single statute; the Loan Estimate will show who is expected to conduct the settlement and what it costs.
Does Indiana allow prepayment penalties on home loans?
Indiana limits prepayment penalties on home loans through its Home Loan Practices law (Indiana Code 24-9-3) and bars them entirely on high-cost home loans, while the Uniform Consumer Credit Code (Indiana Code 24-4.5-3-209) sets the general right to prepay consumer credit. Whatever the state permits, the federal Closing Disclosure must state plainly whether the loan has a penalty.
What does Indiana charge to record a mortgage?
Indiana charges no mortgage tax, intangible tax or documentary stamp on the note, and no transfer tax on the deed. 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.
Who licenses mortgage lenders in Indiana?
Indiana splits mortgage oversight between two agencies: the Department of Financial Institutions licenses first-lien mortgage lenders under Indiana Code 24-4.4 and subordinate-lien and consumer lenders under the Uniform Consumer Credit Code (Indiana Code 24-4.5), while the Secretary of State’s Securities Division licenses loan brokers under the Loan Broker Act (Indiana Code 23-2-5). Licensing is verified through NMLS Consumer Access; a company or person who cannot produce an NMLS number should not be originating a consumer mortgage.
Federal layer: TILA / Reg Z · RESPA · TRID disclosures · ECOA · Fair Housing Act · all federal regulations. Buying here: first-time buyer programs in Indiana.