First-Time Homebuyer Guide for Indiana

Clubhouse RE, brokered by eXp Realty | Equal Housing Opportunity

Last reviewed: September 1, 2026

Helping hardworking Hoosiers become homeowner-ready.

1. Start with a plan you understand

Buying your first home can feel like learning a new language while making a major financial decision. You do not need to know everything on day one. You do need a clear starting point, room to ask questions, and a plan that fits your life.

This resource takes you from preparing your finances to receiving the keys. Read it in order if you are starting from scratch, or return to a section when that step becomes relevant. Keep a notebook nearby and write down anything you want explained before moving forward.

Three numbers to know before you shop

Your comfortable monthly housing budget: What can you pay while still meeting everyday needs and saving?
Your estimated purchase funds: What can you use for the purchase after protecting an emergency cushion?
Your lender's assessment: What financing could be available after your income, debts, credit and funds are reviewed?

These numbers answer different questions. A lender's approval amount should inform your search, while your own budget helps you decide what feels sustainable. 5

Your reading route

If you need help with...	Start here
Affordability, credit and paperwork	Sections 2-3
Pre-approval, loans and assistance	Sections 4-5
Down payment and closing cash	Section 6
Representation, home search and offers	Sections 7-8
Inspections, underwriting and closing	Sections 9-10
Life after closing and common questions	Section 11
Your own plan and lender comparison	Sections 12-13
Unfamiliar words and official information	Glossary and sources

Your first action: Finish this sentence: "Before I buy, I need to understand ________." Start with that question. You do not have to wait until you feel fully prepared to ask for guidance.

2. Your budget and buying power

Start with money you actually take home. Review recent spending and include groceries, transportation, childcare, debt payments, insurance, savings and expenses that occur only a few times a year. Convert annual expenses into monthly amounts so they do not disappear from your plan. 2

The mortgage's principal and interest are only part of housing cost. Ask for estimates of property taxes, homeowners insurance, mortgage insurance and any association dues. Check which amounts are included in the lender's payment estimate and which you pay separately. 29

Add your own allowance for utilities, maintenance and repairs. A house that fits the lender's calculation can still stretch your household if you overlook these costs.

A household example

This illustration is a budgeting exercise, not a mortgage quote or qualification standard.

Monthly item	Example
Take-home household income	$6,000
Proposed housing payment, including estimated taxes and insurance	-$2,200
Existing debt payments	-$650
Other living costs, including utilities	-$1,900
Planned savings and maintenance reserve	-$500
Remaining cushion	$750

Ask what would happen if insurance increased, a car needed repairs, or overtime stopped. If the remaining cushion feels thin, adjust the target before touring. You can also practice saving the difference between your current housing cost and your proposed budget to see how it feels.

Understand debt-to-income ratio

Lenders use debt-to-income ratio, or DTI, to compare qualifying monthly debt obligations with gross monthly income, before taxes and deductions. Different lenders and programs have different limits. 3

Illustration: If qualifying gross income is $8,000, proposed housing expense is $2,200, and other counted debts total $650, estimated DTI is ($2,200 + $650) / $8,000 = 35.6%. This is a math example, not an approval cutoff. A lender determines the qualifying income and obligations used in your actual calculation.

Ask your lender: "Which payments are included in my DTI, and what changes would make the biggest difference to my application?" Do not confuse the lender's gross-income calculation with your take-home spending plan.

3. Credit and documents

Review credit before it becomes urgent

Obtain your credit reports through AnnualCreditReport.com, the authorized source identified by the Federal Trade Commission. Review all three nationwide credit bureaus because the information may differ. Check unfamiliar accounts, incorrect balances and payment histories. 1

Checking your own credit does not hurt your scores. Pay obligations on time and discuss a sensible debt-reduction plan. Avoid opening new accounts or taking on major debt during mortgage preparation. Be cautious about anyone promising an instant credit fix. 2

There is no single score in this guide that promises approval. Ask the lender which program standards apply, what credit information was used and what specific issue needs attention. If an error is present, work through the proper dispute process rather than paying someone to hide accurate information.

Organize a secure document folder

The lender's exact list depends on your situation. Common requests include identification, recent pay statements, W-2s, tax returns when required, complete bank statements, and records showing where purchase funds came from. Self-employment or irregular income can require additional documentation. 4

Your situation	Question to ask before applying
Hourly pay, overtime or commission	How will you evaluate income that changes?
Self-employed or business owner	Which returns, business records and current financial statements do you need?
New job or recent employment gap	What history and explanation should I provide?
Gift toward the purchase	Is this gift permitted, and how must it be documented?
Student loans or other repayment arrangements	Which monthly payment will you use in qualification?

Use the lender's verified secure upload method. A public website contact form is suitable for requesting a conversation; it is not the place for Social Security numbers, bank statements or tax returns.

If you are not ready yet

Ask for a written next-step list: the issue, the action to take, the person who can help and a realistic date to review progress. HUD-participating housing counseling agencies can assist with budgeting, credit and homebuying preparation. Available services vary by agency. 24

Your next action: Identify one missing document and one unanswered financial question. Resolve those before adding more tasks.

4. Pre-approval and lender comparisons

A pre-approval is a lender's conditional indication that you may qualify up to a stated amount. It is not a guaranteed loan. Ask what the lender actually verified, what conditions remain and when the letter expires. Getting pre-approved does not commit you to that lender. 5

Terms such as "prequalified" and "pre-approved" can be used differently. A useful question is: "Have you reviewed my supporting documents, or is this estimate based mainly on information I reported?"

Ask every lender the same questions

Which loan options fit my circumstances, and why?
What is the estimated total housing payment, including taxes, insurance and mortgage insurance?
How much cash would I need, and what funds must remain afterward?
Are there points, lender credits or other fees affecting the quoted rate?
Is the rate locked? When does the lock expire, and what would an extension cost?
Who will update me, and can your team meet the purchase contract's dates?

Use the Loan Estimate

Compare official Loan Estimates using the same purchase price, down payment, loan type and term, obtained as close together as practical. Compare the interest rate, lender charges, credits, projected payment and cash needed at closing. A worksheet or verbal quote may not be the standardized Loan Estimate. 6 25

For most covered mortgages, the lender must provide a Loan Estimate within three business days after receiving the six application items: name, income, Social Security number to obtain credit, property address, estimated property value and requested loan amount. Receiving the form does not mean the loan is approved. 25

The interest rate is the rate charged on the loan balance. APR reflects interest and certain additional borrowing costs as an annual rate. Use APR alongside fees and other terms when comparing similar loans. 21

Discount points can trade a higher upfront cost for a lower rate; lender credits often trade a higher rate for reduced upfront costs. Ask how either choice affects the cost over the time you expect to keep the loan. 30

Check the payment structure

A fixed-rate loan keeps its interest rate fixed. An adjustable-rate mortgage can change after its initial period, subject to its terms. The loan term also affects payments and total interest. Ask for an explanation you can repeat in your own words. 7

Your next action: Use the comparison worksheet in section 13. Record the date of every quote so you know what you are comparing.

5. Loan options and Indiana assistance

You do not need to choose a program before speaking with a lender. Ask for a comparison of the options for which you may qualify. The smallest down payment does not automatically produce the lowest overall cost.

Option	What to understand	Ask the lender
Conventional	A mortgage outside the government-insured or guaranteed programs. Mortgage insurance is commonly required with a smaller down payment. 8	What down payment options and mortgage-insurance costs apply to me?
FHA	Private lenders make loans insured by the Federal Housing Administration. FHA loans permit lower down payments and require mortgage insurance. 9	How do the payment, upfront costs and mortgage insurance compare with conventional financing?
VA	Eligible veterans, service members and certain surviving spouses may qualify. A purchase loan may require no down payment; credit, income, occupancy and other rules still apply. A funding fee can apply unless exempt. 10	What do my Certificate of Eligibility, entitlement and property value mean for my cash requirement?
USDA Guaranteed	Financing for eligible households buying a primary residence in an eligible rural area; qualifying purchases can receive full financing. 11	Are this specific address and our household income eligible? What fees and closing funds remain?

These are educational descriptions, not loan offers. Program eligibility, lender requirements, property standards and available terms must be checked for your application. Full financing does not mean every purchase expense disappears.

Indiana down payment assistance

IHCDA lists purchase programs including First Step, Step Down and Next Home. They serve different needs; Step Down is a rate-only option. Availability and eligibility must be confirmed with an IHCDA participating lender. 12

Treat assistance as a financial agreement you need to understand. The IHCDA guide reviewed for this resource describes down payment assistance secured by a second mortgage, with repayment provisions, including certain sales, refinancing or changes in occupancy. Your signed documents and the current program requirements control. 13

Before you count assistance as available cash

Is it a grant, forgivable loan, deferred loan or repayable loan?
What would I owe if I sell, refinance, move out or use a home equity line?
Does assistance change my first-mortgage rate or fees?
What income, purchase-price, credit, education and occupancy rules apply?
What approval or reservation is still needed, and when does it expire?

Your next action: Request two written scenarios if available: one with assistance and one without. Compare upfront cash, monthly cost and future obligations.

6. Your cash-to-close plan

Plan for four separate uses of money: your down payment; closing costs and prepaid items; expenses paid during the buying process; and the cushion you keep after moving.

Closing costs can include lender and settlement charges. Prepaid items and initial escrow funding can include insurance, interest and funds for future bills. Your Closing Disclosure separates these categories. 21

Earnest money is a deposit handled according to the purchase agreement. When properly credited at closing, it reduces the amount still due; it does not create an extra down payment on top of itself. The Loan Estimate's cash-to-close calculation accounts for deposits, credits and other adjustments. 6

An illustrative cash plan

These figures are invented solely to explain the calculation. They are not quoted costs, loan terms or typical local charges.

Item	Example
Planned down payment	$12,500
Estimated closing costs, prepaids and initial escrow	+$7,500
Total purchase contribution before deposits or credits	$20,000
Earnest money already paid and credited	-$2,500
Remaining cash to close in this simplified example	$17,500

If you also want to retain $5,000 after closing, plan for $25,000 before paying the earnest money, plus any separate inspection, moving or other expenses omitted from the example. The $2,500 deposit is part of the $20,000 purchase contribution. It should not be counted twice.

Ask for a timing breakdown

Some costs arise before closing. Ask which fees are due when ordered, which will appear as already paid, and which remain due at settlement. Have the lender and closing agent explain any difference between your worksheet and the final cash-to-close figure.

Do not assume a requested seller credit will be accepted or that every expense can be covered by it. Have your lender check the proposed credit against the chosen loan's rules before relying on it.

Your next action: Write down three amounts: what you have saved, what you expect to spend on the purchase and move, and what you want left afterward. Discuss any gap early.

7. Representation and your home search

Understand the agreement before signing

Indiana requires written agreements to formalize buyer representation, including a definite expiration date. This requirement comes from state law. The Indiana Association of REALTORS® also explains the more specific agreement requirements that apply before MLS home tours with a REALTOR®. 14 15

Review the services, duration, covered properties or area, exclusivity, compensation, termination terms and any obligations that continue after expiration. Broker compensation is negotiable. Ask what you could owe if a seller or listing broker does not cover the amount in your agreement. 15

The listing agent represents the seller unless a different lawful arrangement is established. Ask who represents you before discussing confidential negotiating information. If one brokerage is involved on both sides, request a clear explanation of the agency arrangement and required consent. 15 26

Turn your wish list into a decision tool

Create three columns: must have, would like, and willing to change. Examples include a maximum total payment, accessibility needs, commute, number of rooms, outdoor space, maintenance workload and move-in timing.

For every home, ask:

Can the total ownership cost fit my budget?
Does the layout work for how I live today and reasonably expect to live?
Which repairs would need attention soon?
What association fees, restrictions or special assessments should I review?
What should I independently verify about the address and surrounding area?

Check the factors that matter to you using appropriate public sources and direct visits. Confirm school assignments with the district, proposed property uses with the relevant local office, and association restrictions in the actual documents.

Keep decisions grounded

After each showing, record one strength, one concern and one unanswered question before viewing the next home. Photos can help you remember rooms, but a short decision log helps you remember why a property did or did not fit.

Your next action: Decide your maximum comfortable payment and three must-haves before your first serious tour. Revisit them before increasing an offer.

8. Offers, conditions and earnest money

An offer combines price with other terms: financing, deposit, dates, included items, requested credits and conditions. Ask your representative to explain the whole proposal before you sign. The strongest choice for your household is one whose obligations you understand and can meet.

Understand contingencies

A contingency makes the purchase dependent on a stated condition. Financing and inspection conditions can provide protection when written into the contract. The wording and required actions matter. 26

Issue	Question before signing
Financing	What happens if the selected loan is not approved, and what notice is required?
Inspection	What may I inspect, what can I request, and when must I respond?
Appraisal	What happens if the appraised value does not support the agreed price?
Sale of another home	If relevant, does this purchase depend on that sale closing?
Closing and possession	When is signing planned, and when may I actually move in?

Waiving a protection means accepting the risk it addressed. Before agreeing, ask: "If the problem happens, could I still close, and what money or other obligations would be at risk?"

Earnest money is not automatically refundable

Before depositing funds, confirm the amount, deadline, authorized recipient, holding arrangement and contract conditions for release. If you withdraw or fail to close, the contract may put the deposit at risk, and the seller may have other rights. Seek legal advice promptly if a dispute develops. 28

Put the important details in writing

Ask for the agreed appliances, repairs, credits and possession arrangements to be clearly documented. If a seller promises to address an issue, clarify the scope, timing and evidence of completion. Do not rely on an informal conversation when the written agreement says something different.

For new construction, review the builder's contract, deposit terms, completion provisions and lender incentives carefully. You can compare financing even if the builder has an associated lender. 26

Your next action: Build a contract calendar with your representative as soon as an offer is accepted. Record each deadline, responsible person and required delivery method. An inspection appointment alone may not satisfy a contractual response deadline.

9. Inspections, title and insurance

Four separate checks answer different questions. Completing one does not automatically resolve the others.

Check	Main question
Home inspection	What does the inspection reveal about accessible systems and condition?
Appraisal or lender valuation	Does the value support the financing, subject to lender requirements?
Title review	What ownership claims, restrictions or recorded interests need attention?
Insurance review	Can I obtain suitable coverage at a cost I can afford?

Inspection: learn what you are buying

Arrange the inspection promptly within your contract's schedule. Attend if possible and ask the inspector to explain significant findings. An inspection and appraisal serve different purposes. Repairs may affect both negotiations and loan approval; the seller's response and your choices depend on the contract. 16

Ask what the inspection includes and excludes. Depending on the property, discuss additional evaluation of radon, sewer lines, a well or septic system, pests, roof concerns or structural issues. Obtain specialist estimates for material problems before deciding whether a requested credit is enough.

For most homes built before 1978, federal lead disclosure requirements apply. Buyers should receive specified information about known lead hazards and an opportunity for a lead evaluation, subject to the applicable rules. Ask about this before signing the purchase contract. 19

Title: understand what transfers

The lender's title policy protects the lender's interest. An owner's title policy provides different protection for the homeowner against covered prior title claims. Ask the title professional to explain policy exceptions and any unresolved issues. 17

If a fence, shared drive, easement or boundary matters to your use of the property, ask whether a survey or further document review is appropriate. A visible fence alone does not answer a legal boundary question.

Insurance: price it early

Homeowners insurance and mortgage insurance are different. Obtain property-specific quotes and ask about deductibles, exclusions and any additional coverage you need. 18 Flood history and other disaster risks deserve attention before you commit to a home. 26

Your next action: Keep an issue list with three columns: finding, professional who can explain it, and decision deadline. Resolve significant questions before the relevant protection expires.

10. Underwriting and closing

Keep the lender informed

Underwriting is the lender's detailed review of the loan file. Expect requests for updated records or explanations. Provide complete documents through the verified process and keep copies. Large deposits may require evidence of their source. 27

Before changing jobs, making a major purchase, opening credit, co-signing or moving substantial funds, ask the lender how the change could affect your pending application. Do not hide a change because closing seems close.

Keep track of the financing deadline, appraisal progress, insurance arrangement and rate-lock expiration. If something is delayed, raise it early so the appropriate people can discuss options before a deadline passes.

Review documents before signing

For most covered mortgages, you must receive the Closing Disclosure at least three business days before closing. Compare it with your latest Loan Estimate and request other closing documents in advance. Ask about discrepancies while there is time to resolve them. 20

Review the borrower information, loan amount, interest rate, payment structure, closing costs, credits, deposits and cash to close. Ask who will collect the first mortgage payment, when it is due and how any escrow account works. 21

If you do not understand or accept a term, ask for an explanation or correction. Stopping a closing can have contract consequences, so involve the appropriate professionals promptly. 28

Protect your closing funds

Save trusted contact information for the settlement team early. Before sending money, independently confirm the recipient and instructions using a previously verified number. Treat a last-minute change by email or text as a reason to stop and verify. If funds may have been diverted, contact your bank immediately and report the incident to the FBI's Internet Crime Complaint Center. 22

Check the property and possession arrangements

Use the final walkthrough to check the agreed condition, included items and completed work. Tell your representative promptly if something is wrong. Confirm when possession is authorized under the agreement before arranging entry or moving deliveries.

Your next action: Ask the closing team for a short written checklist of what to bring, acceptable payment methods, signing logistics and the steps required before you receive possession.

11. After the keys: what comes next

Set reminders for the first payment, insurance renewal and routine maintenance. Keep your closing documents, insurance policy, inspection report, warranties and repair records in a secure, organized place.

Indiana property taxes deserve a separate check

Do not assume the seller's tax bill predicts yours. Verify the property's assessment and the deductions or credits that apply to your ownership and occupancy. Indiana DLGF directs taxpayers to the county auditor for deduction and credit eligibility; a sale or title change can require reapplication. 23

Ask what paperwork was completed at closing, whether you need to file anything else, and the current deadline. For new construction, ask whether the estimate reflects the completed home. Keep proof of any filing and review the bill when it arrives.

A fixed mortgage interest rate does not freeze every housing expense. Taxes, insurance and other components can change your total payment. 7 Build a review of these expenses into your annual household planning.

Common first-time buyer questions

Do I need to be debt-free? No blanket debt-free requirement applies to every mortgage. Lenders evaluate qualifying debts against income and other program criteria. Ask how your own obligations affect the application. 3

Should I wait until I have a very large down payment? Compare the options available to you. Ask how a larger contribution changes payment, mortgage insurance and cash left for emergencies. The best decision depends on your budget and actual loan offers. 7 8 9 10 11

Does pre-approval mean I can safely waive financing protection? Pre-approval is conditional. Before waiving a condition, understand what you would owe or need to do if the loan fails. 5 28

Can someone help with my purchase funds? Possibly. Ask your lender which gifts or assistance are allowed and how to document them. Tell the lender before moving money. 13 27

What if I need several months to prepare? Use that time to build a specific plan. A lender or HUD-participating counselor can help identify the next useful step. Preparation is still progress. 5 24

A conversation when you are ready

Bring your questions and your worksheet to Kayode Kosemani, REALTOR®, PMP, with Clubhouse RE, brokered by eXp Realty. We can discuss your homebuying goals, the process and the professionals who can help with your next decisions.

Call: 317-488-0021 Email: kayode.kosemani@exprealty.com Website: chervilllc.com

12. Your homeowner-readiness worksheet

Use these prompts privately. You do not need to enter sensitive financial information into a public website form. Approximate amounts are fine for your first planning conversation.

My goal

Preferred move timeframe: ______________________________________

My main reason for buying: _____________________________________

Three must-haves: _____________________________________________

One thing I am willing to compromise on: __________________________

My monthly comfort level

Planning item	My amount
Take-home income	$________________
Existing monthly debt payments	$________________
Everyday living costs	$________________
Savings, maintenance and irregular expenses	$________________
Comfortable total housing budget	$________________
Remaining monthly cushion	$________________

Check that your housing budget includes taxes, insurance, any mortgage insurance and association costs. Keep utilities and maintenance somewhere in your plan without counting the same expense twice.

My cash plan

Available savings: $__________ Purchase and moving budget: $__________

Emergency cushion to keep: $__________ Funding gap to discuss: $__________

Assistance or gift still awaiting approval: ___________________________

My next three actions

Action	Who can help?	Target date
1. __________________________	______________	__________
2. __________________________	______________	__________
3. __________________________	______________	__________

My most important unanswered question: __________________________

This is a planning worksheet, not a loan application or qualification result.

13. Lender comparison and checklists

Ask lenders to use the same assumptions. Enter the purchase price and proposed down payment once, then note any differences in their offers.

Purchase price: $__________ Down payment: $__________

Item to compare	Lender A	Lender B	Lender C
Quote date	__________	__________	__________
Loan type and term	__________	__________	__________
Fixed or adjustable	__________	__________	__________
Interest rate and APR	__________	__________	__________
Points and lender charges	__________	__________	__________
Lender credits	__________	__________	__________
Mortgage insurance	__________	__________	__________
Total estimated payment	__________	__________	__________
Taxes / insurance assumptions	__________	__________	__________
Estimated cash to close	__________	__________	__________
Rate lock and expiration	__________	__________	__________
Assistance / repayment terms	__________	__________	__________

Before serious shopping

[ ] I have a comfortable monthly budget and a cash plan.
[ ] I have reviewed my credit and gathered the requested records.
[ ] I understand what my pre-approval does and does not establish.
[ ] I understand representation, compensation and my agreement.

Before closing

[ ] I have addressed inspection, title and insurance questions.
[ ] I know the status of financing and contract conditions.
[ ] I have reviewed the Closing Disclosure and questioned differences.
[ ] I have independently verified payment instructions.
[ ] I understand the walkthrough, signing and possession arrangements.
[ ] I have a plan for my first payment and Indiana tax follow-up.

Use this as a conversation aid. Your signed agreements and lender's instructions determine the steps and deadlines for your transaction.

14. A plain-language glossary

Term	What it means in this guide
APR	An annual measure of interest and certain borrowing costs; compare alongside other loan terms.
Appraisal	A professional opinion of property value used in the lending process.
Cash to close	The amount still due from you at closing after deposits, credits and adjustments.
Closing costs	Charges associated with financing and completing the transaction, separate from the down payment.
Closing Disclosure	The form showing final mortgage terms and closing-cost information for covered loans.
Contingency	A contract condition affecting the obligation to complete the purchase.
DTI	Qualifying monthly debt payments divided by qualifying gross monthly income.
Earnest money	A deposit governed by the purchase agreement and accounted for in the transaction.
Equity	The portion of a property's value remaining after debts secured against it are considered.
Escrow account	In a mortgage payment context, an account used to collect and pay specified expenses such as taxes and insurance. A transaction escrow can instead hold purchase funds.
Loan Estimate	A standardized disclosure of estimated mortgage terms and costs for a covered application.
Mortgage insurance	Coverage protecting the lender or loan program against certain losses; different from homeowners insurance.
Points	Upfront charges paid for a lower interest rate; compare their cost with the expected benefit.
Pre-approval	A lender's conditional indication of potential financing, subject to further requirements.
Principal	The amount owed on the loan, apart from interest.
Title	Legal ownership interests in property.
Underwriting	The lender's review of whether the loan file meets approval requirements.

Definitions summarize the concepts explained above; see sources 3, 5-7, 16-18, 21, 26-27 and 29-30.

About this resource

Published by Chervil LLC for general buyer education. Real estate services are provided by Kayode Kosemani, REALTOR®, PMP, with Clubhouse RE, brokered by eXp Realty. Equal Housing Opportunity.

This resource does not establish an agency relationship or offer mortgage credit. Examples are hypothetical. Loan approval, assistance, costs and transaction rights depend on your circumstances, current requirements and signed documents. Consult your lender and appropriate legal or tax professional for individual advice. Official program information may change after the review date.

15. Official sources and further reading

Reviewed September 1, 2026. Source numbers connect to the explanations in this guide. Program pages may change; use the issuing agency's current information and confirm terms with the responsible professional.