FHA Home Loans in Indiana
Indiana charges no transfer tax and no mortgage tax, has a homestead deduction and a 1 percent tax cap that keep the escrow low, and a 2026 limit of $541,287 that covers nearly every home from Indianapolis to Fort Wayne, Evansville and South Bend. We hold an Indiana DFI Mortgage Lending License and are licensed statewide, in all 92 counties.
Indiana-DFI Mortgage Lending License 59609. NMLS #1925352.
FHA in Indiana, 2026
Limit in every Indiana county
$541,287
Down payment
3.5% with a 580 score
Transfer and mortgage tax
None
Homestead tax cap
1% of gross assessed value
Closing
Title company near you
$541,287
FHA limit in every Indiana county
3.5%
Down payment from a 580 credit score
$0
Indiana transfer and mortgage tax
92
Indiana counties, licensed statewide
Why FHA and Indiana suit each other.
Indiana’s median home price sits well under the 2026 FHA limit of $541,287, which applies in every one of the state’s 92 counties, so FHA covers nearly the whole market: a first home in Indianapolis, Carmel, Fishers, Fort Wayne, Evansville, South Bend, Bloomington or Lafayette. With 3.5 percent down from a 580 credit score and a documented gift from family allowed for the down payment, it is the loan most first-time Indiana buyers end up using.
Indiana also keeps the closing cheap. There is no transfer tax on the sale and no tax on recording the mortgage; closings run through a title company; and the homestead deduction plus the constitutional 1 percent cap on owner-occupied property taxes keep the escrow portion of an FHA payment among the lowest in the Midwest. Property taxes are paid a year in arrears, in two halves on May 10 and November 10, which changes how the seller’s share is credited at closing.
This page covers FHA as it works in Indiana. For the state as a whole, including closing customs and every loan we offer here, see our Indiana page; for the program itself, see the FHA hub. Veterans should read VA loans in Indiana first; with Naval Support Activity Crane, Grissom and Camp Atterbury, and more than 300,000 veterans in the state, many Indiana FHA applicants qualify for the better program.
Three ways to use FHA in Indiana.
Buying, lowering the payment on an FHA loan you already have, or pulling equity out. With no mortgage tax, each of them costs less to close here than in most states.
Buying
FHA purchase
3.5 percent down from a 580 score, or 10 percent from 500, with a documented gift from family allowed for the down payment. Sellers can pay up to 6 percent of the price toward closing costs, which in Indiana can cover title insurance, the title company’s fee and prepaid taxes and insurance.
Lower payment
FHA Streamline refinance
Replace an existing FHA loan at a lower rate with no appraisal and, in most cases, no income verification, as long as the new loan passes HUD’s net tangible benefit test. Indiana charges no tax on the new mortgage, so the break-even is shorter here than almost anywhere.
Use equity
FHA cash-out refinance
Borrow up to 80 percent of the home’s value and take the difference in cash on FHA credit terms. Indiana owners use it for a roof, a furnace or a kitchen, or for debt consolidation, and with no mortgage tax the closing costs are mostly the lender’s fees.
FHA rules, and how they play out in Indiana.
HUD sets the program rules; lenders add overlays; Indiana adds very little cost and a few customs. Your pro tells you where your file lands. The loan limits on this page are HUD’s 2026 figures; they vary by county and unit count and are updated each year.
| Item | FHA rule | In Indiana |
|---|---|---|
| Minimum down payment | 3.5% with a 580 credit score; 10% from 500 to 579 | A documented gift from family can supply all of it |
| Upfront mortgage insurance | 1.75% of the loan, usually financed into it | Usually financed; with no mortgage tax, financing it costs nothing extra at closing |
| Annual mortgage insurance | 0.55% a year on a 30-year loan with less than 5% down (0.50% with 5% or more); for the life of the loan below 10% down, 11 years otherwise | Escrowed monthly with Indiana property taxes, paid a year in arrears on May 10 and November 10, and homeowners insurance |
| Debt-to-income ratio | Up to about 50% with compensating factors | HOA dues in newer Hamilton County and suburban Indianapolis subdivisions count in the ratio; we ask for them on the first call |
| Down payment source | Savings or documented gift funds from family | Gift funds need a gift letter and a paper trail before closing |
| Seller contributions | Up to 6% of the price toward closing costs | Indiana sellers customarily pay the owner’s title policy, so concessions go further toward your other costs |
The 2026 one-unit FHA limit is $541,287 in every Indiana county, including Marion, Hamilton, Allen, Lake, St. Joseph and Vanderburgh. Two-unit homes are capped at $693,050, three-unit at $837,700 and four-unit at $1,041,125.
Indiana’s tax caps, and what they do to an FHA payment.
Indiana’s constitution caps the property tax on an owner-occupied home at 1 percent of its gross assessed value, and the homestead deduction takes a large slice off the assessed value before the rate is even applied. For an FHA buyer, that means the tax line in the escrow is often a few hundred dollars a month less than the same house would carry across the border in Illinois or Michigan, which raises what you can qualify for.
The deduction is not automatic on a purchase: you file the homestead claim with the county auditor after closing, and until the next bill the escrow may be set on the seller’s figures. We set the escrow on the homestead numbers from the start so the payment you are approved on is the one you keep.
Statewide, remotely
FHA loans closed at an Indiana title company near you, wherever in the state the home is.
Six Indiana details that decide an FHA approval.
None of these are in the national FHA guide. All of them come up on Indiana files.
01
No transfer or mortgage tax
The deed records for a flat county fee and the sales disclosure form filed with it is paperwork, not a tax. FHA closing costs in Indiana are mostly the lender’s and the title company’s fees.
02
Taxes a year in arrears
The bill you pay in May and November covers the previous year. At closing the seller credits you for the taxes that accrued while they owned the home, and the escrow is yours after that.
03
The homestead deduction
File it with the county auditor after closing. It removes a large share of assessed value and triggers the 1 percent cap, which lowers the tax escrow in your FHA payment.
04
The FHA appraisal
FHA appraisers check condition as well as value: roof life, working systems, peeling paint on homes built before 1978, safety items. On older Indianapolis, Fort Wayne and South Bend housing that often means the roof, the furnace and the electrical; we tell sellers what to expect.
05
Title company closing
Indiana closings run through a title company, which issues the title insurance and disburses the funds. We work with title companies across the state and can recommend one near you.
06
Mortgage insurance for life
With less than 10 percent down the annual premium stays for the life of the loan. The usual exit is a conventional refinance at 20 percent equity, and with no mortgage tax that refinance is cheap in Indiana.
What would an FHA payment be in Indiana?
Choose FHA as the loan type and set the down payment to 3.5 percent. Use a tax rate near 1 percent for a homestead, add insurance and any HOA dues; the mortgage insurance line is the cost you are weighing against buying now.
The U.S. FHA market right now.
National average rates from the Federal Reserve Bank of St. Louis FRED database: the Freddie Mac survey for conventional and the Optimal Blue indices for FHA and VA, shown as third-party market benchmarks, not MortgagePros pricing. FHA note rates often look lower than conventional, but mortgage insurance is part of the real payment, so compare the whole payment rather than the rate.
FHA 30-year fixed, U.S. average
7.18%
Conventional 30-year fixed, U.S. average
7.40%
VA 30-year fixed, U.S. average
7.09%
Sources: Freddie Mac Primary Mortgage Market Survey (conventional, 30-year national average, week of Oct 8, 2026) and Optimal Blue Mortgage Market Indices (FHA and VA, 30-year national averages as of Oct 8, 2026), distributed through FRED, Federal Reserve Bank of St. Louis; the figures and dates refresh automatically from the source. These are third-party market benchmarks, not MortgagePros rates and not an offer of credit. Your rate and APR depend on your credit, loan type, property and lock date.
How an FHA loan works with us in Indiana.
Four steps, one licensed pro, and a closing at an Indiana title company near you.
1
Check the fit
A short call about your credit, savings and where you are buying. We tell you whether FHA, a conventional 3 percent down loan or a VA loan is the better route.
2
Pre-approval with real numbers
Income, assets and credit verified, with the homestead tax rate, insurance and HOA dues already in the payment.
3
Property checks
We flag likely FHA appraisal items early and confirm any condo is on HUD’s approved list, so nothing stalls after you are under contract.
4
Close at the title company
Signing happens at an Indiana title company near you or with a mobile notary. The sales disclosure is filed with the deed, and the statement matches the quote.
Ready to see what FHA gets you in Indiana?
A licensed pro quotes your FHA options with the homestead tax rate, insurance and HOA dues already in the numbers. Free, and it starts without a hard credit pull.
FHA in Indiana, answered.
The questions Indiana buyers ask us about FHA loans most. If yours is not here, a licensed pro will answer it directly, with no obligation.
What is the FHA loan limit in Indianapolis and Fort Wayne?
$541,287 for a one-unit home in 2026, the national floor, which applies in every Indiana county: Marion, Hamilton, Allen, Lake, St. Joseph, Vanderburgh, Tippecanoe, Monroe and the rest. Two-unit homes are capped at $693,050, three-unit at $837,700 and four-unit at $1,041,125.
Are there any Indiana taxes on an FHA loan?
No. Indiana has no transfer tax on the sale and no tax on recording the mortgage; you pay a flat county recording fee and file a sales disclosure form with the deed. It is one of the reasons an FHA Streamline refinance pays for itself faster in Indiana than in most states.
How does the homestead deduction affect my FHA payment?
Once you file it with the county auditor after closing, the deduction removes a large share of your home’s assessed value and the constitutional 1 percent cap applies to what is left. The tax escrow in your payment drops accordingly. We set the escrow on the homestead figures from the start rather than on the seller’s old bill.
Why does the seller credit me for taxes at closing?
Indiana property taxes are paid a year in arrears: the bill due in May and November covers the previous year. The seller credits you at closing for the taxes that accrued while they owned the home, and you pay the bill when it arrives, from the escrow your lender collects.
Does the mortgage insurance ever go away?
With 10 percent or more down, after 11 years. With less than 10 percent down, no: it stays for the life of the loan. The usual exit is refinancing into a conventional loan once you have 20 percent equity, and in Indiana that refinance costs little to close.
Do I have to come to Michigan?
No. Your licensed pro handles the loan by phone, email and e-signature, and the closing runs through an Indiana title company near you or with a mobile notary. Our Indiana DFI licence is what allows us to lend here.
Talk to a Indiana-licensed pro about FHA.
Tell us what you are looking to do and where in Indiana. A licensed pro will call back, usually the same business day. Asking does not start a loan or require a hard credit pull.
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