Your Guide to Buying a Home in Indiana

The Buying Process: A Summary

• In the state of Indiana, most real estate transactions are closed by a title agency or an attorney. 
• Although a contract has been signed, you and the seller need to negotiate inspections, repairs, and upgrades. 
• If an issue has been disclosed by the seller, it cannot be used as grounds to terminate the contract. 
• You will need to finalize the mortgage by sending information and working with the lending agent. 
• The closing generally takes place with both parties at the same table. 
• The entire state of Indiana uses the base limits for conforming loans. As of this writing, the base limit is $647,200 for a single-family home. 

Buying a Home, Phase 1: Negotiating Repairs and Updates to the Indiana Property

Once you have an offer accepted, the work is not done. There are still details that need to be worked out before your purchase is complete.

1. When an offer is accepted, you and the seller will sign a contract.
2. You will need to deliver “earnest money” to an attorney or broker who will keep the payment in escrow. This acts as a show of good faith and demonstrates your full intention to make the purchase. If you back out of the contract, the payment is given to the seller; if the transaction is completed, the earnest money is used towards the purchase or returned.
3. The signed contract is sent to an attorney or title agency and a title search will be launched. 
4. You will now receive disclosures from the seller. These are statements of known issues with the property. They may include past repairs, as well as known problems like a seeping basement or damaged shingles. You’ll want to review these carefully, as items listed in the disclosures cannot be used as grounds for ending the contract later.
5. You can now complete inspections on the property. These will need to be completed by a certain date, which is outlined in the contract. A general inspection is recommended, and you may choose inspections for radon, mold, or pests like termites.
6. If any major defects are discovered during the inspections, you can request changes to the contract. You may ask for a lower price or request that the seller fix the problem. You and the seller will negotiate until an agreement is reached.
7. You can also request a home warranty, which covers the cost of appliance replacements or repairs for a certain period. 

Phase 2: The Mortgage Process in Indiana

If you are using a mortgage loan to make the purchase, you’ll need to work with a lending professional to complete the transaction. This phase takes time, so it’s best to start as early as possible. 

1. To launch the mortgage process, you’ll need to make a formal application with the help of a mortgage professional. (If you want, you can complete this phase on your own.) 
2. The lender will send a “good faith estimate,” which is a rough calculation of the final costs to complete the loan and purchase the property. 
3. You will now need to deliver a variety of documents to the lending professional: 

• Pay stubs for the last two pay cycles. 
• Tax returns from at least the past two years. 
• Bank statements on all accounts you own. 
• Loan documents for any debts you have, including car loans and student loans. 
• Disclosures that impact your financial situation. Whether you pay them or receive them, this should include child support, alimony, and legal judgments. 
• An explanation on any recent credit inquiries.
• Information on any large deposits that are not part of your regular income. This especially includes gifts used for a downpayment. 
• Gift letters for any cash gifts that will be used for a downpayment or mortgage costs. 
• Your lending agent may also ask for repeat or updated information on any of the above points. This is a normal part of the process, as they need to be as detailed as possible. 

4. The lender will eventually issue a final decision. Assuming you are approved for a mortgage, you will receive a loan commitment letter that states their willingness to support your purchase. There will be conditions, including the completion of an appraisal. 

5. An appraisal will be ordered and completed. If the appraisal comes in low, changes to the purchase may be required. If the appraisal comes back with a strong number, the purchase can move forward as planned. 

6. Homeowner’s insurance will need to be ordered at this time. Proof of this insurance should be delivered to the lending office. 

Remember, this process is long and can seem arbitrary. But if you work with the lender and avoid changes to your financial situation, it’s usually straightforward and simple. 

Phase 3: The Final Closing for Indiana Real Estate

Now that the details have been finalized and the mortgage is ready, you can move to the final phase of your closing!

1. The closing attorney or lender will calculate the final cash figure you need to complete the purchase. This should be brought to the closing in a cashier’s check. 
2. You will complete a final walkthrough of the property to make sure everything is in good order.
3. You and the seller will sign all documents to complete the purchase. 
4. You’ll pay the remaining funds of the downpayment to the attorney or escrow agent. 
5. A representative from the title company, or the attorney, will record the transaction with the appropriate city or county. 
6. You can now receive the keys to your new Indiana home!

Conforming Loan Limits in Indiana

Across the country, the limits for conforming loans are set by the Federal Housing Finance Agency. Taking into account home prices, they set limits on a county-by-county basis. Most of the nation is under the base limits, although higher-cost areas are allowed higher limits.

The entire state of Indiana is under the base limits. This means the conforming loan limit for a single-family home in Indiana is $647,200. The limit for a two-unit property is $828,700, while  the limit for a three-unit is $1,001,650. If you want to purchase a four-unit property in Indiana, the limit is $1,244,850.

These are the limits for all counties and cities in Indiana. From Indianapolis to the smallest rural communities, if you are using a conforming loan to purchase a single-family home, you can borrow no more than $647,200. These limit apply from Lake County, which is considered part of the Chicago metro area, to Posy County, which borders the state of Kentucky. From the Ohio border to the border with Illinois, these are the limits for a conforming loan in Indiana.

But these limits are only for conforming loans like VA and FHA loans, as well as loans backed by Fannie Mae. There are other options available, including Indiana jumbo loans. 

Note: Conforming limits are always changing and these numbers may be inaccurate. For up-to-date information, please contact our team or your local lending professional.

Indiana Downpayment Assistance Programs

If you are purchasing a home in the state of Indiana, you may need help generating a downpayment. While there are plenty of national programs, there are also state and local options for Indiana homebuyers. 

Statewide DPA Programs

The Indiana Housing and Community Development Authority (IHCDA) helps homebuyers all throughout the state. This organization, which is a branch of the state government, has two programs that offer downpayment assistance.

For Indiana buyers, available assistance depends on whether or not you have owned a home in the past. 

First Place
Unless you are purchasing a property in a select area, this program is only available to first-time homebuyers. The program can provide up to 6% of the purchase price, which can help you overcome the significant barrier of a downpayment. 

Next Home
The IHCDA also provides the Next Home program, which is similar to First Place. However, this program provides 3.5% for the downpayment and other expenses. This may seem like less, but 3.5% is the downpayment requirement for certain FHA loans, so it could cover all or most of your downpayment, depending on the loan you use. 

Major Local Programs

While statewide programs offer a high amount of support, buyers in certain areas can find support from local programs through non-profit organizations, as well as city and county governments. 

First Time Home Buyer, Down Payment Assistance Program (Gary)
Seeking to improve and revitalize neighborhoods in Gary, this program offers forgivable loans that can be used for a downpayment or closing costs. Assistance is limited and available on a first-come, first-serve basis, so you need to act quickly if you are making a purchase in Gary, Indiana. 

INHP (Indianapolis) Down Payment Assistance
Buyers in Indiana can take advantage of this program, which offers downpayment funds approaching nearly $15,000. This is a high amount of support, and it’s available to buyers in Indiana’s largest city. 

LPTFA First Time Homebuyers Program
The Lafayette Public Trust Financing Authority offers downpayment loans that can close the financing gap and eliminate expensive mortgage insurance. This comes as a loan of up to $8,000 that can be used for closing fees or the downpayment.

Common Requirements for Indiana Downpayment Assistance

Most programs have some requirements, especially limits on income. If you earn a salary that is near or below the area’s median, you are likely eligible for downpayment support. Other requirements include minimum credit scores or homebuyer education. Many will also require that you are a first-time homebuyer.

DPA programs are constantly changing. Old programs are fazed out and new programs are created. For up-to-date information on available assistance and requirements, contact our team right away.