Today's mortgage and refinance rates in Indiana

Buying a home in Indiana

According to Zillow, the median home value in Indiana is much lower than the US national average. The median home value in Indiana is $166,556, and Zillow expects the value to increase to $178,000 by September 2021.

First-time homebuyer programs in Indiana

You may qualify for the following assistance from the Indiana Housing and Community Development Authority:

  • Down payment assistance: Receive 6% of the home purchase price for down payment assistance
  • Mortgage credit certificate: Claim interest paid on your mortgage on your federal taxes

Or you can get up to $8,000 for down payment/closing cost assistance through the FHLBank Indianapolis' Homeownership Opportunities Program.

Historic mortgage rates for Indiana

By looking at the average mortgage rates in Indiana since 2010, you can see trends for 30-year fixed mortgages, 15-year fixed mortgages, and 5/1 adjustable mortgages:

Seeing how today's rates compare to historic Indiana mortgage rates may help you decide whether you'd be getting a good deal by getting a mortgage or refinancing now.

30-year fixed mortgage rates

You'll pay a higher interest rate on a 30-year fixed mortgage than on a shorter-term fixed-rate mortgage. The 30-year fixed rates used to be higher than adjustable rates, but recently 30-year terms have been the better deal.

Monthly payments are relatively low for a 30-year term, because you're spreading payments out over a longer period of time than you would with a shorter term.

You'll ultimately pay more in interest with a 30-year term than you would for a 15-year mortgage, because a) the rate is higher, and b) you'll be paying interest for longer.

15-year fixed mortgage rates

A 15-year fixed-rate mortgage is more affordable than a 30-year term in the long run. The 15-year rates are lower, and you'll pay off the loan in half the amount of time.

However, your monthly payments will be higher on a 15-year term than a 30-year term. You're paying off the same loan principal in half the time, so you'll pay more every month.

Adjustable mortgage rates

With an adjustable-rate loan, your rate stays the same for the first few years, then changes periodically. For example, your rate is locked in for the first five years on a 5/1 ARM, then your rate increases or decreases once per year.

ARM rates are at all-time lows right now, but a fixed-rate mortgage is still the better deal. The 30-year fixed rates are comparable to or lower than ARM rates. It could be in your best interest to lock in a low rate with a 30-year or 15-year fixed-rate mortgage rather than risk your rate increasing later with an ARM.

If you're considering an ARM, you should still ask your lender about what your individual rates would be if you chose a fixed-rate versus adjustable-rate mortgage.

Refinancing your mortgage in Indiana

Mortgage rates are at all-time lows right now, so it might be a good time to switch your current mortgage for one with a lower rate — especially if the new rate would be significantly lower.

You can refinance with the same lender that gave you the initial mortgage, but you dont have to. Another company may offer you a lower rate the second time around. Search for a lender who will offer the best rate based on your credit score and debt-to-income ratio, and the one that charges relatively low fees.

How to get a low interest rate on your mortgage

Here are some tips for landing a good interest rate on your mortgage:

  • Save for a down payment. With a conventional loan, you may be able to put down as little as 3%. But the higher your down payment, the lower your rate should be. Rates should stay low for a while, so you probably have time to save more.
  • Increase your credit score. Many lenders require a minimum credit score of 620 to receive a mortgage. But the higher your score, the better your rate will be. The most important factor for boosting your score is to pay all your bills on time.
  • Lower your debt-to-income ratio. Your DTI is the amount you pay toward debts each month, divided by your gross monthly income. Most lenders want to see a DTI of 36% or less, but an even lower DTI can land you a lower rate. To improve your DTI, pay down debts or consider opportunities to increase your income.
  • Choose a USDA or VA loan. If you're eligible, you might consider a USDA loan (for low-to-moderate income borrowers buying in a rural area) or a VA loan (for military members and veterans). These mortgages typically have lower rates than FHA or conventional loans — and you don't need a down payment.

Improving your financial situation and choosing the right type of mortgage for your needs can help you get the best interest rate possible.

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