Updated: July 2026 | Source: IHCDA (in.gov) · FHFA · HUD · Freddie Mac PMMS

Indiana Home Loans 2026 — Complete Guide

From 3.5% down FHA to genuine state down payment assistance — here is what home buyers in Indiana can access in 2026.

Indiana pairs some of the most affordable home prices in the country with a constitutional 1% cap on homestead property tax that protects new buyers from day one. This guide covers loan limits, current rates, that cap, and the IHCDA programs available to general buyers this year.

$280,055

IN median home price (May 2026)

6.55%

Avg. 30-yr conventional rate

Up to 6%

IHCDA down payment assistance

$541K / $833K

FHA / conforming limit — flat statewide

The number people miss: Indiana's homestead property tax cap is written into the state constitution — your annual bill cannot legally exceed 1% of your home's gross assessed value, full stop. Unlike some states where protections only build up over years of ownership, this cap applies to new buyers immediately.

Indiana Down Payment Assistance — IHCDA Programs

The Indiana Housing and Community Development Authority (IHCDA) offers down payment assistance as a second mortgage, structured differently depending on whether you are a first-time or repeat buyer.

IHCDA Down Payment Programs

First Step (first-time buyers)Up to 6% of purchase price

Next Home (first-time & repeat buyers)Around 3–3.5% of purchase price

Interest rate0% — no monthly payment

ForgivenessVaries by program and funding cycle

Verify current terms before relying on any specific number: IHCDA's exact assistance percentages and forgiveness periods have changed more than once in recent years, and published guides — including this one — can lag behind the latest program guide. Confirm the current First Step and Next Home terms directly with an IHCDA-approved lender or at IHCDA's official program page before budgeting around a specific figure.

First Step vs. Next Home — the basic difference: First Step generally offers more assistance but is limited to first-time buyers (no ownership in the past 3 years, with exceptions for veterans and targeted areas). Next Home offers a smaller amount but is open to repeat buyers too, making it the option for move-up buyers who still need help with the down payment.

Eligibility & Income Limits

Both programs require using an IHCDA-approved lender, completing homebuyer education, and meeting county-specific income and purchase price limits.

Confirm your exact county limit and current program terms at IN.gov/IHCDA before applying.

Current Rates

Product	Rate	Source
30-yr Conventional	6.55%	Freddie Mac PMMS, week of July 16, 2026
15-yr Fixed	5.93%	Freddie Mac PMMS, week of July 16, 2026
IHCDA first mortgage	Below market	Confirm current rate with an IHCDA-approved lender

2026 Loan Limits — Flat Statewide

Indiana has no FHA or conforming high-cost counties in 2026 — the same limit applies whether you are buying in Indianapolis, Fort Wayne, or a rural county.

Loan Type	Limit (Statewide, All 92 Counties)
FHA	$541,287
Conventional (Conforming)	$832,750
VA	No county limit for buyers with full entitlement

Confirm current limits at HUD.gov, though Indiana has held flat statewide limits for several years running.

Property Tax in Indiana — The 1% Circuit Breaker

What Buyers Should Budget For

Statewide average effective rate~0.74%–0.85%

Constitutional homestead cap1% of gross assessed value, hard ceiling

Homestead Standard Deduction$48,000 off gross assessed value

New 2026 Supplemental CreditAutomatic 10% credit, up to $300/year

Indiana's Article 10, Section 1 caps annual property tax at a fixed percentage of gross assessed value: 1% for owner-occupied homesteads, 2% for other residential and agricultural property, and 3% for commercial property. Unlike some states' assessment caps, this protection applies to your bill directly and starts immediately when you become the owner — there is no waiting period and no reset penalty for new buyers the way there is in some neighboring states. On top of the Homestead Standard Deduction ($48,000 off gross assessed value) and Supplemental Deduction (40% of what remains), Senate Enrolled Act 1 (2025) added an automatic 10% Supplemental Homestead Credit worth up to $300 a year starting with 2026 bills, applied by the county auditor with no application required.

Pick Your Loan Type

FHA3.5% down, flexible credit ConventionalSkip MIP with 20% down USDA$0 down in eligible areas VA$0 down for veterans

Try the Loan Calculator Compare FHA, Conventional, USDA & VA with Indiana prices and current rates

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Are you a teacher, nurse, firefighter, police officer, EMT, or veteran? Indiana may run additional hero-specific loan programs on top of the general IHCDA options covered here. Browse the Hero Home Loan Programs hub and select Indiana for profession-specific options.

Frequently Asked Questions

Does Indiana's 1% cap mean I'll never pay more than 1% of my home's value?

Yes, for your gross assessed value on an owner-occupied homestead — this is a hard constitutional ceiling, not a growth-rate cap. It caps the bill itself, though your assessed value can still be appealed if you believe it is inaccurate.

Is Indiana's property tax cap the same as California's Prop 13?

No, and the difference matters for buyers. California caps how fast assessed value can grow for existing owners, then resets it at sale. Indiana caps the final bill at 1% of assessed value directly, and that protection applies to you as a new buyer immediately rather than only building up over years.

Should I use First Step or Next Home?

First Step generally offers more assistance but is limited to first-time buyers. Next Home offers less but is open to repeat buyers too. An IHCDA-approved lender can confirm current terms and help you pick based on your situation.

Do I automatically get the new 10% Supplemental Homestead Credit?

Yes, if your property already qualifies for the standard homestead deduction. The county auditor applies the credit automatically starting with 2026 tax bills — no separate application is needed.

Bottom Line: Indiana offers a genuinely strong combination for buyers — below-average home prices, a constitutional property tax ceiling that protects you from day one, and IHCDA down payment assistance that stretches further given the state's affordability. Confirm the exact current DPA terms with a lender since IHCDA's programs have shifted more than once in recent years.

Disclaimer: This post is for informational purposes only and does not constitute financial, legal, or mortgage advice. Program terms, rates, income limits, and availability change frequently — verify all details directly with official program sources before making any financial decisions. StatewiseFinance is not affiliated with any government agency or lender listed in this post.