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Compare mortgage rates in Indiana.
Key Points
• Indiana mortgage rates have trended close to the national average over the last few decades, often a bit higher but occasionally lower.
• Factors affecting mortgage rates in Indiana include economic conditions, consumer behavior, and government policies.
• Indiana offers various mortgage types, including fixed-rate mortgages, adjustable-rate mortgages (ARMs), FHA, VA, USDA, and jumbo loans.
• Homebuyers can secure competitive mortgage rates by comparing interest rates and fees, getting preapproved, growing their credit score, making a larger down payment, keeping their debt-to-income ratio low, applying for preapproval with multiple lenders, and considering discount points.
• Indiana offers various resources to support homebuyers and homeowners, including first-time homebuyer programs, down payment assistance, tools and calculators, and refinancing options.
Introduction to Mortgage Rates
Even small changes in interest rates can significantly impact a homeowner’s monthly mortgage payments and overall borrowing costs. Mortgage rates are calculated using a complex combination of factors that can be categorized into two buckets: the state of the economy and the borrower’s financial status.
Understanding mortgage rates and the factors that influence them is essential for making informed decisions about homeownership in Indiana. This comprehensive guide explains all you need to know about mortgage rates in California, including the factors that influence them, historical trends, and available home loan types.
Where Mortgage Rates Come From
The Federal Reserve, also known as the Fed, sets the short-term interest rates that banks use as a benchmark for lending. Although home loan rates are not directly tied to Fed rates, they generally follow the same economic trends. When the Fed’s interest rate is high, chances are mortgage rates will be too.
How Interest Rates Affect Home Affordability
Mortgage rates have a significant impact on home affordability, often more than people realize. Even small changes in interest rates can put homeownership out of reach for middle-income Americans. For instance, a one-percentage-point increase in interest rate on a $400,000 home — just a little less than the U.S. median sale price — can add over $200 to the monthly payment, making it harder to qualify for a loan or afford a home.
However, it’s over the long term that interest really has the opportunity to add up. Over the 30-year lifetime of the loan, you’ll pay approximately the following amount in total interest:
• 7.00%: $446,426
• 6.50%: $408,140
• 6.00%: $370,683
Should Homebuyers Wait for Interest Rates to Drop?
Many first-time homebuyers wonder if they should buy now or wait for interest rates to come down. But waiting for a drop in rates could mean missing out on the opportunity to build equity. After all, homeowners can always refinance their mortgage after rates come down.
Mortgage refinance allows homeowners to secure a lower interest rate on their existing loan, potentially saving tens of thousands in interest over the life of the loan. Therefore, buying a home now and refinancing later may be a more advantageous strategy than waiting for rates to drop.
Indiana Mortgage Rate Trends
Indiana mortgage rates have trended close to the national average over the last few decades, often a bit higher but occasionally lower. Indiana experienced its recent high rate of 8.13% in 2000. Rates fell steadily thereafter, hitting a low of 3.71% in 2012 and settling at 4.75% in 2018. (The FHFA stopped reporting the data after that year.) You can expect Indiana rates to follow the same pattern going forward.
| Year | Indiana Rate | U.S. Rate |
|---|---|---|
| 2000 | 8.13 | 8.14 |
| 2001 | 7.08 | 7.03 |
| 2002 | 6.67 | 6.62 |
| 2003 | 5.97 | 5.83 |
| 2004 | 5.89 | 5.95 |
| 2005 | 5.97 | 6.00 |
| 2006 | 6.67 | 6.60 |
| 2007 | 6.55 | 6.44 |
| 2008 | 6.14 | 6.09 |
| 2009 | 5.39 | 5.06 |
| 2010 | 5.01 | 4.84 |
| 2011 | 4.97 | 4.66 |
| 2012 | 3.71 | 3.74 |
| 2013 | 4.05 | 3.92 |
| 2014 | 4.24 | 4.24 |
| 2015 | 4.01 | 3.91 |
| 2016 | 3.86 | 3.72 |
| 2017 | 4.19 | 4.03 |
| 2018 | 4.75 | 4.57 |
Historical U.S. Mortgage Rates
To put Indiana’s current mortgage rates in perspective, it’s helpful to compare them to historical U.S. mortgage rates. Over the past 50 years, mortgage rates have ranged from a low of around 3.00% in the early 1970s to a high of over 18% in the early 1980s. The current rates are significantly lower than the historical highs, indicating a relatively favorable environment for homebuyers.
Factors Affecting Mortgage Rates in Indiana
Numerous factors influence mortgage rates in Indiana and nationwide. Some of these are economic, while others are entirely within the homebuyer’s control. Understanding these influences can help borrowers make informed decisions about their mortgage options.
Economic Factors
From one perspective, mortgage rates are totally beyond the control of the average homebuyer. Blame the economy, market conditions, and the government:
• The Fed: As noted above, the federal funds rate serves as a benchmark for other interest rates, including mortgage rates. When the Fed raises the federal funds rate, it becomes more expensive for banks to borrow money, which can lead to higher mortgage rates. Conversely, when the Fed lowers the federal funds rate, it becomes cheaper for banks to borrow money, which can lead to lower mortgage rates.
• Inflation: When inflation rises, the purchasing power of money decreases, making it more expensive for lenders to lend money. As a result, interest rates may be raised to compensate for the loss in purchasing power. When inflation stabilizes at acceptable levels (typically around 2%), rates will drop.
• Unemployment rate: A lower unemployment rate can result in higher mortgage rates. A low unemployment rate indicates a strong economy, which typically leads to increased demand for housing. This increased demand puts upward pressure on home prices and, not surprisingly, mortgage interest rates.
Consumer Factors
On the other hand, there’s a lot that consumers can do to set themselves up to receive the most competitive mortgage rates available:
• Credit score: A higher credit score generally results in a lower mortgage interest rate. Credit scores are a measure of a borrower’s creditworthiness and ability to repay debts. Borrowers with higher credit scores are considered less risky by lenders, who are willing to offer them lower interest rates. Conventional loans may require a credit score of 620 or above.
• Down payment: Increasing the down payment can reduce the mortgage interest rate. A larger down payment means the borrower is taking on less debt, which reduces the risk for the lender. As a result, lenders may offer lower interest rates to borrowers who make larger down payments — 20% or more.
• Income and assets: A steady income is important to lenders, who will check your employment history as well as your salary. Assets like investments and emergency savings also reassure lenders that you could still pay your mortgage in the case of a job loss or other financial setback. Somewhat ironically, borrowers with higher incomes and more assets are generally offered lower mortgage interest rates.
• Type of mortgage loan: Certain types of mortgage loans tend to have lower rates. For instance, adjustable-rate mortgages (ARMs) typically offer lower initial rates than fixed-rate mortgages. Some government-backed loans, like VA mortgages, can also have lower rates. And a shorter loan term usually comes with a lower rate than longer terms.
Types of Mortgages Available in Indiana
Various mortgage types — including fixed-rate, adjustable-rate, and several government-backed loans — are available to meet the needs of different homebuyers in Indiana. Conventional loans can be fixed-rate or adjustable.
Fixed Rate Mortgage
Fixed-rate mortgages maintain the same interest rate throughout the life of the loan, ensuring that the principal and interest payments remain constant. Fixed-rate mortgages are available in terms of 10, 15, 20, or 30 years.
Adjustable Rate Mortgage (ARM)
Adjustable-rate mortgages (ARMs) initially offer a lower rate than fixed-rate loans. However, after an initial fixed-rate period, typically 5, 7, or 10 years, the interest rate can adjust periodically based on a specified index. ARMs can be beneficial for borrowers who plan to sell their home before the fixed-rate period ends or who expect interest rates to remain low.
FHA Loan
FHA loans are backed by the Federal Housing Administration and typically have more lenient eligibility requirements than conventional loans. Also, FHA loans often have lower down payment requirements and may be a good option for first-time homebuyers or borrowers with less-than-perfect credit.
VA Loan
VA loans are available to veterans, active-duty military members, and some Reserve and National Guard members. These loans are backed by the Department of Veterans Affairs and offer competitive interest rates and flexible terms. One of the primary benefits of VA loans is that they do not require a down payment.
USDA Loans
USDA loans are designed for low-income borrowers looking to purchase a home in a rural area. These loans are backed by the U.S. Department of Agriculture (USDA) and offer competitive interest rates and flexible terms. USDA loans have income and property location restrictions, but they can be a good option for eligible borrowers who are struggling to afford a home.
Jumbo Loans
Jumbo loans are conventional mortgage loans that exceed the conforming loan limit set by the Federal Housing Finance Agency (FHFA). In Indiana, the conforming loan limit for a single-family home is $766,550. Jumbo loans are typically used to finance more expensive homes and may have different interest rates and terms than conforming loans.
Popular Places to Get a Mortgage in Indiana
Securing a mortgage often depends on choosing the right location, where home prices are affordable and mortgage terms are favorable. Some popular places to get a mortgage in Indiana, along with the average home value there, include:
• Indianapolis: $228,378
• Fort Wayne: $232,179
• South Bend: $181,965
• Evansville: $190,649
• Bloomington: $309,461
Besides looking at the average home value, homebuyers should research the cost of living in the U.S. and how their target neighborhoods compare. Cost of living, which refers to the average monthly expenses for one person, varies widely across and within states.
For more information, check out our guide to the Cost of Living in Indiana.
Least Expensive Locations
For homebuyers looking for more affordable options, some of the least expensive places to get a mortgage in Indiana include:
• Anderson: $130,662
• Muncie: $143,030
• Kokomo: $166,408
• Terre Haute: $152,615
These cities offer lower home prices and cost of living, and may be a good option for first-time homebuyers or those on a tight budget.
Most Expensive Locations
On the other hand, some of the most expensive places to get a mortgage in Indiana include:
• Carmel: $530,820
• Zionsville: $606,978
• Fishers: $422,662
• Westfield: $445,836
These cities are known for their affluent neighborhoods and higher home prices.
Recommended: Best Affordable Place in the United States
Tips for Securing a Competitive Mortgage Rate in Indiana
Getting a competitive mortgage rate can save you tens of thousands of dollars over the life of your loan. When you think of it that way, taking extra time to improve your credit score or go through the mortgage preapproval process is well worth it. Here are some tips to help you secure the best possible rate:
Compare Interest Rates and Fees
Take the time to compare interest rates and fees from multiple lenders. Be sure to ask about any upfront costs or closing fees associated with the loan.
Get Preapproved
Getting preapproved for a mortgage strengthens your position as a buyer and allows you to move quickly when you find the right property.
Consider a Shorter Loan term
Shorter loan terms typically come with lower interest rates than longer terms. If you can afford the higher monthly payments, a shorter loan term can save you money in interest over the life of the loan.
Improve Your Credit Score
A higher credit score — say, 740 or above — can lead to a lower mortgage interest rate. Take steps to improve your credit score, such as paying bills on time, reducing debt, and disputing any errors on your credit report.
Make a Larger Down Payment
Increasing your down payment can reduce your mortgage interest rate. A larger down payment reduces the loan amount, which lowers the lender’s risk and may result in a lower interest rate. In 2024, borrowers’ median down payment is 15%. With a down payment of 20% or more, though, you’ll also save money by avoiding private mortgage insurance.
Indiana Mortgage Resources
Indiana offers various resources and programs to assist homebuyers, particularly first-time buyers and those with limited financial resources. Two of these resources are:
• Indiana Housing and Community Development Authority (IHCDA): The IHCDA offers a variety of programs to help Hoosiers afford homes, including down payment assistance, closing cost assistance, and mortgage credit certificates.
• Community Action Program (CAP) Homeownership Education and Counseling: Available in Benton, Fountain, Montgomery, Parke, Vermillion, and Warren counties, the CAP program provides free homebuyer education and counseling services to help Hoosiers make informed decisions about homeownership.
First-Time Homebuyer Programs
Indiana offers programs to help first-time homebuyers get into a home. (To qualify as a first-time homebuyer usually means you haven’t owned a primary residence within the last three years.) These programs are worth a look:
• First-Step: This IHCDA program offers down payment and closing cost assistance of up to 6% in the form of a non-forgivable second mortgage.
• Mortgage Certificate: The IHCDA provides an annual federal income tax credit for up to $2,000 of mortgage interest paid per year. Homebuyers can apply for the certificate through a participating lender when they apply for their mortgage. There’s an $800 fee, but the lifetime savings usually outweigh the fees.
Down Payment Assistance
Down payment assistance programs help homebuyers afford a down payment on a home. The Next Home program in Indiana offers 3.5% of a home’s value for a down payment to homebuyers using a 30-year FHA loan.
Find out more on the IHCDA website, or visit our Indiana First-Time Home Buying Assistance Programs guide.
Tools & Calculators
There are many online tools and calculators available to help users calculate their mortgage payments and determine how much they can afford to borrow. Here are SoFi’s top three calculators:
Run the numbers on your home loan.
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Mortgage calculator
Punch in your home loan amount and a new interest rate, and we’ll estimate your payoff date.
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Down payment calculator
Enter a few details about your home loan and we’ll provide your monthly mortgage payment.
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Home affordability calculator
Provide us with a few details and see how much you can afford to spend on a home purchase.
Using the free calculators is for informational purposes only, does not constitute an offer to receive a loan, and will not solicit a loan offer. Any payments shown depend on the accuracy of the information provided.
Refinancing Options in Indiana
Refinancing your mortgage can be a good way to lower your monthly payments, get a lower interest rate, or cash out some of your home equity. Some of the refinancing options available in Indiana include:
FHA Streamline Refinance
The FHA Streamline Refinance allows FHA-insured homeowners to refinance into current mortgage rates with minimal hassle.
VA Interest-Rate Reduction Refinance Loan
The VA Interest-Rate Reduction Refinance Loan can reduce the monthly payments on VA loans by adjusting the APR.
Conventional Refinance
Conventional refinance loans are available to homeowners who do not have FHA or VA loans. Conventional refinance loans may offer lower interest rates than FHA or VA loans, but they may also have higher fees.
Closing Costs, Taxes, and Fees in Indiana
Buyers in Indiana can expect to pay between 2% and 5% of the home’s purchase price in closing costs. These costs include:
• Loan origination fee: Charged by the lender for processing the loan application.
• Appraisal fee: Paid to an appraiser to determine the value of the home.
• Credit report fee: Paid to a credit bureau for obtaining your credit report.
• Title insurance: Protects the lender against losses if there is a problem with the title to the home.
• Recording fee: Paid to the county recorder to record the mortgage.
The Takeaway
Indiana offers a range of affordable homes and mortgage options for homebuyers. By staying informed about current mortgage rates, exploring assistance programs, and carefully considering refinancing options, individuals can make strategic decisions that align with their financial goals and achieve successful homeownership in Indiana.
Looking for an affordable option for a home mortgage loan? SoFi can help: We offer low down payments (as little as 3% - 5%*) with our competitive and flexible home mortgage loans. Plus, applying is extra convenient: It's online, with access to one-on-one help.FAQ
Will mortgage rates drop in Indiana?
Predicting the direction of mortgage rates is challenging, and there is no guarantee that rates will drop in the future.
Will mortgage rates ever go back to normal?
The definition of “normal” mortgage rates can vary over time. Mortgage rates have fluctuated throughout history and are influenced by various economic factors.
Will Indiana home prices ever drop?
Home prices are influenced by supply and demand dynamics, economic conditions, and local market factors. Predicting future price trends with certainty is difficult.
Is it a good time to buy a house in Indiana?
The decision of whether to buy a house depends on individual circumstances, financial readiness, and long-term goals. There is no one-size-fits-all answer, and market conditions can change rapidly.
How does mortgage interest rates work?
Mortgage interest rates represent the cost of borrowing money from a lender to finance a home purchase. They are influenced by various economic factors and impact the monthly mortgage payments made by borrowers.
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SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.
*SoFi requires Private Mortgage Insurance (PMI) for conforming home loans with a loan-to-value (LTV) ratio greater than 80%. As little as 3% down payments are for qualifying first-time homebuyers only. 5% minimum applies to other borrowers. Other loan types may require different fees or insurance (e.g., VA funding fee, FHA Mortgage Insurance Premiums, etc.). Loan requirements may vary depending on your down payment amount, and minimum down payment varies by loan type.
Non affiliation: SoFi isn’t affiliated with any of the companies highlighted in this article. Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.
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More home loan resources.
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First-Time Homebuyer Guide
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First-Time Homebuyer Programs and Loans
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Mortgage Preapproval Process