Mortgage Rates in Indiana

Indiana mortgage overview

Indiana is home to approximately 6.7 million residents, and the majority of The Hoosier State lives in homes they own, with a median value of $135,400, according to Census estimates.

The Indiana Housing & Community Development Authority (IHCDA) helps residents in the state find and obtain affordable housing, and works with nonprofits, investors, lenders and developers to serve low- and moderate-income families.

If you’re an Indiana homeowner in danger of foreclosure due to late or nonpayment, the IHCDA can refer you to the Indiana Foreclosure Prevention Network, which oversees the federally funded Hardest Hit Fund program, giving qualifying families up to six months of assistance, or up to $30,000, to help them stay in their homes.

First-time homebuyer programs in Indiana

Qualifying individuals and families in Indiana may have access to a variety of national first-time homebuyer programs and educational opportunities to help them navigate the homebuying process — but there are also first-time homebuyer programs available specifically to residents of Indiana.

First Place (FP) Program

Administered by the IHCDA, the First Place (FP) program is aimed at first-time homebuyers, and also veterans and repeat buyers purchasing in a targeted area. The FP program helps buyers with up to 6 percent in down payment assistance through a 30-year, fixed-rate FHA loan. The down payment assistance is an interest-free second mortgage, with no monthly mortgage payments, and forgivable if the homeowner stays in the home for nine full years from the date of closing.

To be eligible, borrowers must have:

• A minimum credit score of 640 with a debt-to-income ratio (DTI) less than 45 percent; or
• A minimum credit score of 680 with a debt-to-income ratio (DTI) greater than 45 percent, but less than 50 percent

There are also household income and property value limits based on the property’s location.

Helping to Own (H2O) Program

The Helping to Own (H2O) first-time homebuyer program offers borrowers up to 3.5 percent in down payment and closing costs assistance. The assistance, offered by the IHCDA, is a grant and no repayment is required, though applicants must meet the same minimum credit scores as the First Place program, and must not exceed household income limits specified by the family’s geographic location.

In addition to first-time homebuyers, veterans and those purchasing a property in a targeted area are also eligible.

Mortgage Credit Certificate (MCC)

Indiana first-time homebuyers can also save through a mortgage credit certificate (MCC), administered locally by the IHCDA, which converts a portion of their mortgage interest paid into a federal tax credit. The MCC helps reduce the taxes borrowers would otherwise have to pay. The maximum tax credit each year is $2,000.

The MCC is available to low- to moderate-income first-time homebuyers who work with an approved mortgage lender. Minimum credit scores, household income limits and purchase price limits apply.

Indiana mortgage refinancing

If you’re looking to refinance a home in Indiana, private lenders, banks and mortgage brokers are all options. The IHCDA doesn’t offer any programs specifically for refinancing, though for those who have used first-time homebuyer down payment assistance, there may be a penalty for refinancing before the loan term is up.

Regardless, you are not required to refinance with the same lender who holds your current mortgage. Whether your goal of refinancing is to get a lower monthly mortgage payment or a shorter term, it’s smart to do your research and shop around to make sure you’re getting the best possible refinance rate and terms.