Do I Need 20% Down to Buy a Home in Indiana?

Short Answer

No — you do not need 20% down to buy a home in Indiana. Many buyers purchase with as little as 3%–5% down, depending on the loan program, credit profile, and financial situation.

The idea that 20% is required is one of the biggest myths keeping people from buying.

I talk with buyers every week who delay homeownership for years because they think they’re “not ready yet.” In reality, many of them already qualify — they just didn’t know their options.

Understanding down payment requirements early can:

• Open doors sooner than expected

• Help you plan realistically instead of guessing

• Prevent you from over-saving while prices and rates change

Common Down Payment Options in Indiana

1. Conventional Loans (3%–5% Down)

Many conventional loans allow low down payments, especially for first-time buyers.

• Often 3% down for qualified buyers

• Requires solid credit and stable income

• May include private mortgage insurance (PMI), which can be removed later

This is one of the most misunderstood programs — many buyers qualify without realizing it.

2. FHA Loans (3.5% Down)

FHA loans are popular in Indiana because they’re more flexible.

• 3.5% down with qualifying credit

• More forgiving on past credit challenges

• Appraisal and property condition rules are stricter

These loans are often used by first-time buyers and those rebuilding credit.

3. VA Loans (0% Down)

For eligible veterans and active-duty service members:

• No down payment required

• Competitive interest rates

• No monthly mortgage insurance

This is one of the strongest loan options available if you qualify.

4. USDA Loans (0% Down in Rural Areas)

Some areas outside major cities may qualify for USDA loans.

• 0% down

• Income limits apply

• Property location matters

Many buyers are surprised to learn certain Indiana communities qualify.

What Happens If You Put Less Than 20% Down?

Putting less than 20% down is not a problem — it’s normal.

However, you should understand:

• Monthly payments may be higher

• Mortgage insurance may be required

• Cash reserves matter more to lenders

For many buyers, buying sooner with a lower down payment makes more sense than waiting years to save 20%.

What Most Buyers Get Wrong

• They assume low down payment means “bad loan”

• They overestimate how much cash they need

• They don’t explore multiple loan options

• They wait until prices move out of reach

The right loan is about fit, not perfection.

What I Tell Buyers in Indiana

Focus on:

• Monthly comfort, not just down payment size

• Loan flexibility based on your life plans

• Keeping some savings after closing

Buying a home should feel manageable, not stressful.

Next Steps

If you’re unsure what you qualify for, the best first step is a simple conversation — no pressure, no commitment. Understanding your real options usually brings clarity fast.

👤 Author Box

Dennis Scherer

Real Estate Advisor | Northwest Indiana

Dennis Scherer helps buyers and homeowners make confident real estate decisions without pressure or confusion. He specializes in working with seniors, downsizers, and families relocating from Illinois to Indiana, with a focus on clear guidance and long-term planning.