Compare mortgage rates in Nebraska.

Introduction to Mortgage Rates

Nebraska’s mortgage landscape offers a range of options for homebuyers in search of a home loan. By staying informed about current mortgage rates, taking good care of their personal finances, and exploring homebuyer assistance programs, would-be homeowners can achieve successful homeownership in this friendly Midwestern state.

Where Mortgage Rates Come From

Mortgage rates are not set in stone but rather calculated using a complex combination of factors drawn from the state of the general economy and the borrower’s personal financial status.

How Interest Rates Affect Home Affordability

Mortgage rates have a noticeable impact on home affordability. For example, let’s say you’re looking to buy a $425,000 home with a 30-year fixed-rate mortgage and a down payment of 20%. If the interest rate is 5.50%, your monthly payment will be $1,930. But if the interest rate rises to 6.00%, your monthly payment will jump to $2,038. Over the life of the loan, you’ll pay almost $39,000 more interest for that half-percentage-point increase. That’s a significant amount of money that could be used for other things.

Should Homebuyers Wait for Interest Rates to Drop?

Particularly if you’re buying your first home, you may be wondering if you should buy now or wait for interest rates to come down. There’s no easy answer to this question. If you’re not in a hurry to buy a home, it may make sense to wait and see if interest rates drop. However, there’s no guarantee that rates will go down, and either interest rates or home prices (or both!) could even go up in the meantime.

If you’ve found a home that you love, it may be best to go ahead and buy it, even if the interest rate is a little higher than you’d like. You can always do a mortgage refinance later if rates come down.

Nebraska Mortgage Rate Trends

Understanding historical mortgage rates in the Cornhusker state can provide valuable insights. While rates nationwide have risen in recent years, they remain below historical highs. The average rate in Nebraska is sometimes slightly above the national average and sometimes below it, but it rarely deviates far from the national number. (The Federal Housing Finance Agency stopped tracking the state averages after 2018.)

Historical Interest Rates in Nebraska

Historical U.S. Mortgage Rates

For a broader perspective, it’s beneficial to examine historical U.S. mortgage rates. Over the past several decades, mortgage rates have experienced periods of both highs and lows, influenced by the various economic factors we explained above.

Factors Affecting Mortgage Rates in Nebraska

Economic Factors

•   The Federal Reserve:. The federal funds rate, governed by “the Fed”, serves as a benchmark for other interest rates, including mortgage rates. When the Fed’s interest rate is high, chances are mortgage rates will be too, as banks and other lenders use the federal funds rate as a benchmark when setting their own interest rates.

•   Inflation: When inflation rises, the Fed purchasing power of money decreases, making it more expensive for lenders to lend money. As a result, they may increase interest rates to compensate.

•   Unemployment: When unemployment is low, the Fed might raise its benchmark rate to help prevent inflation. Mortgage rates then tend to rise. (A low unemployment rate may also lead to increased demand for housing, which puts upward pressure on home prices, further complicating things for buyers.)

Consumer Factors

•   Credit score: A higher credit score generally results in a lower mortgage interest rate.

•   Down payment: Increasing the down payment can reduce the mortgage interest rate.

•   Income and assets: A steady income is important to lenders, who will check your employment history as well as your salary. Assets like investments and emergency savings also reassure lenders that you could still pay your mortgage in the case of a job loss or other financial setback. To secure a borrower with solid income and assets, a lender might offer its most attractive rate.

•   Type of mortgage loan: Certain types of mortgages tend to have lower rates. For instance, adjustable-rate mortgages typically offer lower initial rates than fixed-rate mortgages. Some government-backed loans, like VA mortgages, can also have lower rates. And shorter loan terms usually come with lower rates than longer terms (although the monthly payment may be higher with a shorter term).

Recommended: Average Monthly Expenses for One Person

Types of Mortgages Available in Nebraska

Various mortgage types — including fixed-rate, adjustable-rate, and government-backed loans — are available to meet the needs of different homebuyers in Nebraska.

Fixed-Rate Mortgage

Fixed-rate mortgages maintain the same interest rate throughout the life of the loan, ensuring that the principal and interest payments remain constant. Fixed-rate mortgages are available in terms of 10, 15, 20, or 30 years.

Adjustable-Rate Mortgage (ARM)

Adjustable-rate mortgages (ARMs) initially tend to offer a lower rate than fixed-rate loans. This can be beneficial if you’re planning to sell before the fixed-rate period ends, or if you can handle the uncertainty associated with a rate that might rise after the first few years.

An ARM is labeled with two numbers, such as a 5/1 ARM. The first is the number of the years in the introductory period (5, 7, and 10 year ARMS are the most common). The second is the period when the interest rate will reset. So a 5/1 ARM has a 5-year introductory period, followed by one adjustment per year. A 7/6 ARM has a 7-year introductory period, followed by interest rate adjustments every 6 months.

FHA Loan

Backed by the Federal Housing Administration, FHA loans typically have more lenient eligibility requirements than conventional loans because the FHA’s backing helps reduce the risk to lenders.

VA Loan

VA loans, backed by the U.S. Department of Veterans affairs, are available to qualifying veterans, active-duty military members, Reserve and National Guard members, as well as surviving spouses. One of the most attractive things about VA loans is that they do not require a down payment.

USDA Loan

USDA loans are designed for borrowers who earn below a specific income limit and who are looking to purchase a home in a rural area. These loans are backed by the U.S. Department of Agriculture. If you are eligible, one perk of these mortgages is that private mortgage insurance (PMI) is not required.

Jumbo Loan

Conventional mortgage loans have a cap of $832,750 for a single-family home. Jumbo loans are conventional loans that exceed this amount. In very expensive markets, such as Hawaii, the conventional loan cap can be up to $1,249,125, but throughout Nebraska it is $832,750.

Popular Places to Get a Mortgage in Nebraska

Securing a mortgage often depends on choosing the right location, where home prices are affordable, the cost of living is low, mortgage terms are favorable — or all of the above. In recent years, Nebraska has seen a growing population in the “exurbs” of large cities such as Omaha and Lincoln. Population growth was significant in Plattsmouth, Valley, Fremont, and Ashland, for example. Here are some of the least and most expensive places to get a mortgage in the state:

Least Expensive Locations

Nebraska’s place in the cost of living in the U.S. rankings is on the affordable side. The following are some of the least expensive places to get a mortgage in Nebraska:

•   Kearney, with a cost of living 14 points below the national average, is also a good choice for those looking for an affordable home purchase.

•   Lexington is not far from Kearney and is one of the most affordable places in the state, with a cost of living 20 points below the U.S. average.

Small cities tend to offer lower home prices and more affordable mortgage rates than the larger cities in Nebraska. However, they may have fewer housing options and less diverse economies.

Most Expensive Locations

The following are some of the most expensive places to get a mortgage in Nebraska:

•   Omaha ranks near the top of priciest cities in Nebraska but it is still below the U.S. national average cost of living.

•   Lincoln, like Omaha, is more expensive by Nebraska standards but cheaper than the national average.

•   Bellevue is the most expensive city in Nebraska.

These cities offer higher home prices and more expensive mortgage rates than the rest of the state. However, they also have strong economies and job markets, which makes them attractive places to live and work.

Recommended: Best Affordable Places in the U.S.

Tips for Securing a Competitive Mortgage Rate in Nebraska

A competitive mortgage rate is crucial for saving money over the life of a loan. Here are a few tips for securing a competitive mortgage rate in Nebraska:

Compare Interest Rates and Fees

Take the time to compare interest rates and fees from multiple lenders. Be sure to ask about any upfront costs or closing fees associated with the loan and factor those into your calculations.

Get Preapproved

Going through the mortgage preapproval process and getting an approval letter from a lender strengthens your position as a buyer and allows you to move quickly when you find the right property. If you’re worried about interest rates rising, you can pay a fee to the lender to lock in your rate for up to 90 days.

Nebraska Mortgage Resources

Nebraska offers various resources and programs to assist homebuyers, particularly first-time buyers and those with limited financial resources.

First-Time Homebuyer Programs

The First Home
program can help those who qualify as a first-time homebuyer in Nebraska. The state’s Welcome Home program can help both first-time and repeat buyers who fall within certain income limits. First-timers will be required to take a homebuyer education program before the closing.

Down Payment Assistance

Down-payment assistance programs can give homebuyers in Nebraska a leg up as well. Check into the Nebraska Homebuyer Assistance Program
.

Tools & Calculators

The following tools and calculators can help homebuyers in Nebraska:

Refinancing Options in Nebraska

A mortgage refinance can be a smart way to lower your interest rate, reduce your monthly payments, or cash out some of your home equity. Here are a few refinancing options available in Nebraska:

FHA Streamline Refinance

The FHA Streamline Refinance allows FHA-insured homeowners to refinance into current mortgage rates with minimal hassle. This type of refinance does not require a new appraisal or credit check, making it a quick and easy way to lower your interest rate.

VA Streamline Refinance

This interest-rate reduction refinance loan (IRRRL) can reduce the monthly payments on VA loans by adjusting the APR. IRRRLs do not require a new appraisal or credit check, making them a convenient option for VA loan holders looking to lower their interest rate.

Cash-Out Refinance

With a cash-out refi, you take out a new mortgage for a larger amount than what you have left on your current mortgage and receive the excess as cash. You can use the cash for remodeling, debt consolidation, or paying for college costs.

Closing Costs, Taxes, and Fees in Nebraska

Buyers in Nebraska can expect to pay between 2%-6% of the home’s purchase price in closing costs. Closing costs include a variety of fees, such as the loan origination fee, appraisal fee, title insurance, and recording fees. These costs vary depending on the lender, the loan amount, and the property location.

The Takeaway

Nebraska’s mortgage landscape offers a range of options for homebuyers. By staying informed about current mortgage rates, exploring assistance programs, and carefully considering refinancing options, individuals can make informed decisions that align with their goals and feel comfortable about their finances while settling into a new home.

FAQ

Will mortgage rates drop in Nebraska?

It is difficult to predict whether mortgage rates will drop in Nebraska. Mortgage rates are influenced by a variety of factors, including the federal funds rate, inflation, and the unemployment rate — not to mention a borrower’s personal financial profile.

Will mortgage rates ever go back to normal?

Don’t focus on “normal” — just look for a home and a mortgage you can afford. Normal is a relative term, and mortgage rates have fluctuated significantly over the years.

Will Nebraska home prices ever drop?

It is difficult to predict whether Nebraska home prices will drop — so much depends on the local housing market, both supply and demand. If you truly need to move and you feel prices are high, search out a trusted real estate agent to ask for the inside scoop on the market you’re interested in.

Is it a good time to buy a house in Nebraska?

Whether it is a good time to buy a house in Nebraska depends on your individual circumstances. If you are financially stable and have a good credit score, you may be able to get a good interest rate on a mortgage. However, if you are not sure about your financial future, it may be best to wait before buying a house.

How do I lock in a mortgage rate?

You can lock in a mortgage rate by getting a mortgage rate lock from a lender. A mortgage rate lock guarantees that you will get a specific interest rate on your mortgage for a certain period of time. This can protect you from rising interest rates.

How do mortgage interest rates work?

Mortgage interest rates are determined by a variety of factors, including the federal funds rate, inflation, and the unemployment rate. When these factors change, mortgage interest rates could also change. Mortgage interest rates are also affected by the borrower’s credit score, down payment, and loan amount, among other personal factors.

SoFi Mortgages
Terms, conditions, and state restrictions apply. Not all products are available in all states. See SoFi.com/eligibility-criteria for more information.

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

*SoFi requires Private Mortgage Insurance (PMI) for conforming home loans with a loan-to-value (LTV) ratio greater than 80%. As little as 3% down payments are for qualifying first-time homebuyers only. 5% minimum applies to other borrowers. Other loan types may require different fees or insurance (e.g., VA funding fee, FHA Mortgage Insurance Premiums, etc.). Loan requirements may vary depending on your down payment amount, and minimum down payment varies by loan type.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.

SOHL-Q324-082

Compare mortgage rates in South Carolina.

Introduction to Mortgage Rates

If you’re on the hunt for a home loan in South Carolina, you’ll have a range of options. Making the smartest pick requires an understanding of current mortgage rates and available homebuyer assistance programs. This comprehensive guide delves into the factors influencing mortgage rates in South Carolina, explores various mortgage types, and provides tips for securing a competitive mortgage rate in the Palmetto State.

Mortgage rates are determined by both your personal financial status and larger economic factors. Economic factors that influence mortgage rates include the Federal Reserve’s interest rate decisions, inflation, and the unemployment rate. On the borrower’s side, credit score, down payment, income and assets, and the type of mortgage loan all play a role in determining the interest rate offered.

Where Mortgage Rates Come From

The Fed, formally known as The Federal Reserve, sets short-term interest rates that serve as benchmarks for other interest rates, including mortgage rates. When the Fed lowers interest rates, mortgage rates typically follow suit, making it more affordable for homebuyers to borrow money. And when the Fed raises rates, you can probably guess what happens next.

How Interest Rates Affect Home Affordability

If you’re buying your first home and it feels like a lot is riding on mortgage interest rates, you’re not wrong. A small interest rate shift can significantly affect the monthly mortgage payment and the overall cost of a home loan. For instance, a $200,000 loan with a 30-year term and a 4.00% interest rate would result in a monthly payment of $954. If the interest rate increases by just 1% to 5.00%, the monthly payment jumps to $1,073, adding an extra $42,774 in interest paid over the life of the loan.

Should Homebuyers Wait for Interest Rates to Drop?

First-time homebuyers, especially, often face the dilemma of whether or not to wait for interest rates to drop before purchasing a home. Rates can fluctuate, but waiting too long may result in missing out on a desirable property or facing rising home costs (or rising rents). If it feels like the time is right to buy and you can afford to do so, remember that you can explore a mortgage refinance if rates drop in the future.

South Carolina Mortgage Rate Trends

Looking at historical mortgage rate trends in South Carolina, shown below, might give prospective homeowners a sense of what’s in store. While rates have experienced fluctuations over the years, they currently hover around the 50-year average. (The Federal Housing Finance Agency stopped reporting state averages in 2018.)

Historical U.S. Mortgage Rates

As you’ll see below, rates have generally trended downward since the early 1980s. Although today’s homebuyers may be concerned about interest rates, the current rates are relatively low compared to historical averages.

Factors Affecting Mortgage Rates in South Carolina

As noted above, some of these factors affecting mortgage rates are economic, while others are wholly within the homebuyer’s control. Let’s have a closer look:

Economic Factors

•   The benchmark rateset by the Federal Reserve has an impact on other interest rates, including those charged by companies offering mortgages. When the Fed raises the federal funds rate, it becomes more expensive for banks to borrow money, leading to higher mortgage rates.

•   Inflation, which increases the cost of living, can make it more expensive for lenders to lend money and devalue the money they do lend. To make up for this, lenders may increase interest rates.

•   The unemployment rate, in turn, is a factor that may indirectly affect mortgage rates because when unemployment is high, the Fed often reduces its benchmark rate to try to spark job creation. Mortgage rates then tend to fall.

Consumer Factors

•   Credit score is a numerical representation of an individual’s creditworthiness and one of the things a lender will examine during the mortgage preapproval process. Your score is based on factors such as payment history, credit utilization, and length of credit history. A higher credit score indicates a lower risk of default, and individuals with higher credit scores typically qualify for lower mortgage interest rates.

•   The down payment is the upfront payment made by the homebuyer. A larger down payment reduces the loan amount that the borrower needs to secure, making the loan less risky for the lender. As a result, lenders may offer lower interest rates to borrowers who make larger down payments.

•   Income and assets are other factors lenders examine to determine your ability to repay the mortgage. Borrowers with stable employment and a healthy financial cushion are more likely to secure favorable mortgage rates.

•   The type of mortgage loanyou select can impact the interest rate offered. Adjustable-rate mortgages (ARMs) often start with lower initial rates compared to fixed-rate mortgages, for example. The Consumer Financial Protection Bureau notes that shorter loan terms typically have lower interest rates, although the monthly payment amounts may be higher.

Recommended: Average Monthly Expenses for One Person

Types of Mortgages Available in South Carolina

South Carolina offers a diverse range of conventional and government-backed mortgages to cater to the needs of different homebuyers. Here are the most common types of mortgage loan:

Fixed Rate Mortgage

Fixed-rate mortgages provide peace of mind with a consistent interest rate throughout the entire loan term. This stability allows homebuyers to accurately budget their monthly mortgage payments and plan for the future without worrying about fluctuating rates.

Most people sign up for a 30-year loan term, although shorter terms are available. A 10- or 15-year term will result in higher monthly payments than a 30-year loan, but allow for faster payoff of the loan and lower total interest paid.

Adjustable Rate Mortgage (ARM)

Adjustable-rate mortgages (ARMs) are characterized by an initial period of lower interest rates, followed by periodic adjustments based on a predetermined index. This initial period, known as the fixed-rate period, can range from one to 10 years.

The lower initial interest rate of ARMs can be advantageous for homebuyers who plan to sell their property before the fixed-rate period ends. However, it’s important to carefully consider the potential for future rate increases and ensure that the ARM aligns with long-term financial goals.

FHA Loans

FHA loans, backed by the Federal Housing Administration, are designed to make homeownership more accessible to borrowers with less-than-perfect credit or limited down payment funds. FHA loans typically have more lenient eligibility requirements compared to conventional loans, making them a viable option for first-time homebuyers or underwhelming credit scores.

The Federal Housing Administration insures FHA loans, providing lenders with a safety net in case of borrower default. This insurance reduces the risk for lenders and allows them to offer FHA loans with more favorable terms, such as lower down payment requirements and potentially lower interest rates.

VA Loans

One of the most significant advantages of VA loans is the elimination of the down payment requirement. This feature makes homeownership more attainable for those who may not have the funds for a substantial down payment.

USDA Loans

USDA loans, provided by the United States Department of Agriculture, are tailored to borrowers whose household income falls below a certain level and who are seeking to purchase a home in a rural area. These loans offer favorable terms, including no down payment requirement, competitive interest rates, and flexible credit guidelines.

Jumbo Loans

Conventional mortgage loans typically have a maximum lending limit set by the Federal Housing Finance Agency (FHFA). For 2026, the conforming loan limit for a single-family home in most parts of the country (and all of South Carolina) is $832,750. Loans that exceed this amount are considered jumbo loans.

Recommended: The Best Affordable Places in the U.S.

Popular Places to Get a Mortgage in South Carolina

When searching for a home, location plays a crucial role in the cost of living in the U.S. — including home prices and mortgage costs. South Carolina offers a diverse range of cities and towns that cater to different budgets and preferences.

The cost of living in an area significantly impacts housing affordability. The Cost of Living Index (COLI) provides a comparison of the cost of living in different states relative to the national average. South Carolina has a relatively low COLI, making it an attractive option for homebuyers seeking affordability.

Least Expensive Locations

Some of the most affordable places to purchase a home in South Carolina include:

•   Spartanburg: The average home value here is $221,227, according to Zillow, well below the national average, which tops $360,000.

•   Beaufort: Homes average $401,750 in this island locale near Charleston.

•   Fountain Inn: A historic town not far from the larger Columbia, Fountain Inn has an average home value of $291,785.

•   Batesburg-Leesville: Average home value here is just over $155,000, very reasonable — especially given the proximity to the larger city of Columbia.

•   Georgetown: This is a welcoming beach community with an average home value of $263,243.

Most Expensive Locations

The most expensive places to purchase a home in South Carolina tend to be beach communities, including Kiawah Island, where the average home value is $1,943,246 and Hilton Head, where homes average $765,077.

Tips for Securing a Competitive Mortgage Rate in South Carolina

Obtaining a competitive mortgage rate can significantly reduce the overall cost of borrowing. As we’ve seen, even a small difference in interest rate can result in substantial savings over the life of the loan.

Compare Interest Rates and Fees

Shopping around for mortgage rates is essential to ensure you’re getting the best deal. Don’t settle for the first offer you receive. Compare multiple lenders to find the most competitive option, and make sure to include upfront costs and closing fees in your comparison.

Get Preapproved

Obtaining preapproval for a mortgage puts you in a stronger position when making an offer on a property. It demonstrates to sellers that you’re a serious buyer and can secure financing. Preapproval (not to be confused with prequalification, an earlier step in the process) also allows you to move quickly when you find the right property, as you’ll already have a clear understanding of your borrowing power.

Take Advantage of South Carolina Mortgage Resources

South Carolina provides a range of programs to support homebuyers, especially first-time buyers and those facing financial constraints. These resources include:

First-Time Homebuyer Programs

South Carolina offers several programs tailored to first-time homebuyers, including:

•   The South Carolina Housing Finance and Development Authority (SCHFADA) offers a variety of loan programs, including the First-Time Homebuyer Program, which provides low-interest loans and down payment assistance.

•   The USDA Rural Development Guaranteed Rural Housing Loan Program provides no-down-payment loans to eligible borrowers in rural areas.

•   The Federal Housing Administration (FHA) offers FHA loans with flexible credit requirements and low down payment options.

Down Payment Assistance Programs

South Carolina offers forgivable down payment assistance to all qualified homebuyers. The home must be occupied for 15 years before the payment is fully forgiven.

Tools & Calculators

Before you get serious about a home search in South Carolina, take advantage of these helpful tools to help set your home-buying budget, determine your down payment amount, and get a sense of what your monthly mortgage payment might be.

Refinancing Options in South Carolina

In addition to conventional refinancing options, homeowners with FHA-insured loans may benefit from the FHA Streamline Refinance program. This program allows borrowers to refinance their existing FHA loan into a new loan with a lower interest rate without the need for a new credit check or appraisal.

VA loan holders may consider the Interest-Rate Reduction Refinance Loan (IRRRL) to lower their monthly payments. This program allows eligible borrowers to refinance their VA loan into a new loan with a lower interest rate without the need for a new credit check or appraisal.

Closing Costs, Taxes, and Fees in South Carolina

Closing costs associated with purchasing a home in South Carolina typically range between 3% and 6% of the purchase price. These costs may include loan origination fees, appraisal fees, title insurance, and other administrative charges.

The specific closing costs in South Carolina can vary depending on the value of the property and its location. Higher-priced properties and those located in certain areas may incur higher closing costs.

The Takeaway

South Carolina’s mortgage market provides a diverse range of options for homebuyers, catering to different financial situations and preferences. By staying informed about current mortgage rates, exploring assistance programs, and carefully considering refinancing options, individuals can make strategic decisions that align with their financial goals and achieve their dream of homeownership in the Palmetto State.

FAQ

Will mortgage rates drop in South Carolina?

Predicting future mortgage rate movements is challenging. Your best bet is to keep in close contact with a mortgage lender you trust, who is likely to be watching the rates even more closely than you are.

Will mortgage rates ever go back to normal?

The only thing “normal” about mortgage rates is that they are ever-changing. Mortgage rates have fluctuated throughout history because they are influenced by economic factors, and there isn’t really a specific level considered normal.

Will South Carolina home prices ever drop?

Real estate markets are subject to many factors that influence home prices. While prices in South Carolina have generally appreciated over time, there can be periods of market fluctuation or correction. Predicting future price movements is difficult, however.

Is it a good time to buy a house in South Carolina?

The best time to buy a home is when it feels right for you. There is no one-size-fits-all answer. Examine the inventory (and prices) of available homes, consider your personal financial situation, and weigh your long-term goals to make an informed decision.

How do I lock in a mortgage rate?

Locking in a mortgage rate involves securing a commitment from a lender to provide a specific interest rate for a certain period. This can be done by obtaining a rate lock agreement, which sometimes means paying a fee. The length of the rate lock can vary and should be discussed with the lender.

How do mortgage interest rates work?

Mortgage interest rates represent the cost of borrowing money from a lender to finance a home purchase. Lenders determine interest rates based on various factors, including the borrower’s credit score and loan term; however, rates are also guided by prevailing economic conditions. Your interest rate governs both your monthly mortgage payment amount and the total amount of interest you’ll pay over the life of the loan.

SoFi Mortgages
Terms, conditions, and state restrictions apply. Not all products are available in all states. See SoFi.com/eligibility-criteria for more information.

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

*SoFi requires Private Mortgage Insurance (PMI) for conforming home loans with a loan-to-value (LTV) ratio greater than 80%. As little as 3% down payments are for qualifying first-time homebuyers only. 5% minimum applies to other borrowers. Other loan types may require different fees or insurance (e.g., VA funding fee, FHA Mortgage Insurance Premiums, etc.). Loan requirements may vary depending on your down payment amount, and minimum down payment varies by loan type.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.

SOHL-Q324-095

Compare mortgage rates in Delaware.

Introduction to Mortgage interest Rates

As you may know, mortgage interest rates are not set in stone. But do you know how they’re determined? Mortgage rates are set via a complex mix of economic factors and the borrower’s financial status. Understanding the factors that influence mortgage rates can help homebuyers make informed decisions and secure the most competitive rate for their situation.
Here, we’ll do a deep dive into home loan rates, as well as homebuyer assistance programs, tools and calculators, and closing costs.

Where Mortgage Rates Come From

The Federal Reserve, often referred to as the Fed, holds the key to mortgage rates. The Fed sets short-term interest rates, which serve as a benchmark for other interest rates, including mortgage rates.

When the Fed raises short-term interest rates, it becomes more expensive for banks to borrow money. As a result, they pass on this increased cost to borrowers in the form of higher mortgage rates. Conversely, when the Fed lowers interest rates, mortgage rates typically follow suit, making it more affordable for borrowers to secure a home loan.

A homebuyer’s financial profile also figures into mortgage rates. We’ll get into that below.

How Interest Rates Affect Home Affordability

Many homebuyers underestimate the significant impact that mortgage rates have on home affordability. Even a small change in the interest rate can make a substantial difference in the monthly mortgage payment and the overall cost of the loan. For middle-income Americans, even half-a-percentage increase in the interest rate can put homeownership out of reach.

Say you’re going to buy a $400,000 home, just a little less than the U.S. median sale price right now. You’ve saved up a 20% down payment, or $80,000, and plan on taking out a 30-year mortgage.

With a fixed interest rate of 7.00%, your monthly payment would be about $2,128 per month, before additional costs like homeowners insurance and property taxes. At 6.50%, that payment goes down to $2,022, and at 6.00% it drops to $1,918. So in this scenario, a full percentage point drop equates to $210 per month in savings, or $2,520 per year.

However, it’s over the long term that interest really has the opportunity to add up. Over the 30-year lifetime of the loan, you’d pay approximately the following amount in total interest:

•   7.00%: $446,426

•   6.50%: $408,140

•   6.00%: $370,683

Should Homebuyers Wait for Interest Rates to Drop?

Whether to buy a home now or wait for interest rates to drop is a common dilemma for first-time homebuyers. It’s important to consider the opportunity cost of waiting. Home prices tend to appreciate over time, and waiting may mean missing out on potential gains in home equity — or seeing home prices rise out of reach.

Remember, homeowners have the option to refinance their mortgage in the future if interest rates decrease. Mortgage refinance allows homeowners to secure a lower interest rate on their existing loan, potentially saving tens of thousands in interest over the life of the loan. Therefore, buying a home now and refinancing later may be a more advantageous strategy than waiting for rates to drop.

Delaware Mortgage Rate Trends

Examining historical mortgage rate trends can offer valuable insights into the housing market. While mortgage rates rose in recent years, they remained below historical highs. In fact, current rates are hovering around the 50-year average, indicating a relatively stable mortgage environment compared to past decades. (The FHFA stopped reporting this data after 2018.)

While rates may continue to drop in the short term, the long-term trend suggests that current rates are already relatively favorable compared to historical averages.

Historical U.S. Mortgage Rates

For further context, let’s check out historical U.S. mortgage rates. In the early 1980s, mortgage rates reached unprecedented highs, peaking at over 18%. Since then, rates have generally trended downward, with occasional periods of increase. The current rates, hovering around 5%, represent a significant decline from those historical peaks.

Factors Affecting Mortgage Rates in Delaware

Many factors influence mortgage rates in Delaware and across the country. Some of these are economic, while others are within the homebuyer’s control. Understanding these factors can help borrowers make informed decisions and position themselves for the best possible mortgage rate.

Economic factors that impact mortgage rates include the Fed’s interest rate decisions, inflation, and unemployment rates. Borrower-specific factors such as credit score, down payment, income, assets, and type of mortgage loan also play a role in determining the interest rate offered.

Economic Factors

•   The Fed: As noted above, the Fed sets short-term interest rates, which serve as a benchmark for other interest rates, including mortgage rates. Although mortgage rates are not directly tied to Fed rates, they tend to follow the same economic trends.

•   Inflation: Inflation, the general increase in prices and fall in the purchasing power of money, affects mortgage rates. When inflation rises, the purchasing power of money decreases, making it more expensive for lenders to lend money. As a result, they may increase interest rates to compensate for the reduced value of their loans.

•   Unemployment rate: The unemployment rate, an indicator of economic health, influences mortgage rates. A lower unemployment rate generally signifies a strong economy, which leads to increased demand for housing. This increased demand puts upward pressure on home prices and, consequently, mortgage interest rates.

Consumer Factors

•   Credit score: A credit score represents an individual’s credit history and debt repayment behavior. A higher credit score indicates a lower risk of default, making borrowers more attractive to lenders. As a result, individuals with higher credit scores typically qualify for lower mortgage interest rates.

•   Down payment: The down payment, the upfront payment made by the borrower toward the purchase of a home, impacts mortgage rates. A larger down payment reduces the loan amount required from the lender, lowering the risk associated with the loan. Consequently, borrowers who make a larger down payment may be offered a lower mortgage interest rate.

•   Income and assets: Lenders carefully evaluate a borrower’s income and assets to assess their ability to repay the loan. A steady income, a stable employment history, and sufficient assets provide reassurance to lenders. Borrowers with strong income and asset profiles may be rewarded with lower mortgage interest rates.

•   Type of mortgage loan: The type of mortgage loan a homebuyer chooses can influence the interest rate. Adjustable-rate mortgages (ARMs) often come with lower initial rates compared to fixed-rate mortgages. Additionally, government-backed loans, such as VA mortgages, may offer more favorable rates. And a shorter loan term typically corresponds with a lower interest rate.

Types of Mortgages Available in Delaware

Delaware offers a diverse range of mortgage types to cater to the needs of different homebuyers. Each has its own set of features, eligibility requirements, and interest rate structures.

Conventional loans, offered by private lenders and not backed by the government, provide flexibility in terms of interest rate options. They can be fixed-rate or adjustable-rate. Conventional loans may require a credit score of 620 or higher.

Fixed-Rate Mortgage

Fixed-rate mortgages offer stability and predictability in terms of monthly payments. The interest rate remains the same throughout the entire loan term, providing peace of mind to borrowers who prefer a consistent payment schedule. Fixed-rate mortgages are available in terms of 10, 15, 20, or 30 years.

The choice of loan term depends on the borrower’s financial situation and preferences. Shorter loan terms, such as 10 or 15 years, may come with higher monthly payments but result in significant interest savings over the life of the loan. Longer loan terms, such as 20 or 30 years, offer lower monthly payments but ultimately lead to paying more interest.

Adjustable-Rate Mortgage (ARM)

Adjustable-rate mortgages (ARMs) provide an initial period of lower interest rates, often referred to as the “teaser rate.” This lower rate can be attractive to borrowers looking to secure a lower monthly payment in the short term. However, after the initial period (often 5 or 7 years), the interest rate can adjust periodically, potentially leading to higher monthly payments in the future.

ARMs can be a suitable option for borrowers who plan to sell their home before the fixed-rate period ends or who are comfortable with the potential for fluctuating interest rates. It’s important to carefully consider the terms and potential risks associated with ARMs before committing to this type of mortgage.

FHA Loans

FHA loans, backed by the Federal Housing Administration, are designed to make homeownership more accessible to borrowers who may not meet the strict requirements of conventional loans. FHA loans typically have more lenient eligibility requirements, including lower credit score thresholds and lower down payment requirements.

VA Loans

VA loans, backed by the Department of Veterans Affairs, are exclusively available to veterans, active-duty military members, and certain members of the Reserve and National Guard. These loans offer competitive interest rates and do not require a down payment, making them an attractive option for eligible borrowers.

USDA Loans

USDA loans are tailored to low-income borrowers seeking to purchase a home in a rural area. These loans feature competitive interest rates and do not require a down payment, making them an excellent option for eligible individuals and families. The U.S. Department of Agriculture backs USDA loans, providing lenders with a guarantee against default. This makes homeownership more attainable for some borrowers.

Jumbo Loans

Jumbo loans are conventional loans that exceed the conforming loan limit set by the Federal Housing Finance Agency (FHFA). In Delaware, the conforming loan limits for single-unit residences is $832,750. Jumbo loans typically require a larger down payment and may have higher interest rates than conforming loans.

Popular Places to Get a Mortgage in Delaware

When searching for a mortgage, location plays a crucial role. Homebuyers should consider areas where home prices are within their budget and mortgage terms are favorable. Delaware, the second-smallest state in the nation, offers a range of cities and small towns, each with its own unique housing market and mortgage landscape.

The cost of living in a particular area can impact mortgage affordability. The Cost of Living Index (COLI) provides a valuable tool for comparing the cost of living across different locations. COLIs above 100 are more expensive than the average cost of living in the U.S., and those below 100 are less expensive. By considering the COLI, homebuyers can assess whether their income can comfortably support housing costs in a desired area.

Least Expensive Locations

For those seeking more affordable housing options, Delaware offers several locations with a lower cost of living. These areas include Milford (COLI: 95), Seaford (108.1), and Georgetown (108.1), where home prices tend to be more budget-friendly compared to other parts of the state.

Most Expensive Locations

On the other hand, areas such as Wilmington, Newark, and Rehoboth Beach are known for their higher cost of living. The average monthly expenses for one person will be higher in these areas. Home prices also tend to be higher, and mortgage rates may reflect the increased demand for housing.

Recommended: Best Affordable Places in the U.S.

Tips for Securing a Competitive Mortgage Rate in Delaware

Securing a competitive mortgage rate can make a substantial difference in the overall cost of a home. As shown above, even a slight variation in the interest rate can lead to significant savings or added expenses over the life of the loan. Therefore, it’s essential for homebuyers to take steps to secure the best possible mortgage rate.

Compare Interest Rates and Fees

Shopping around for mortgage rates is crucial to finding the best deal. Lenders offer different interest rates and fees, so it’s important to compare multiple options before making a decision. Online mortgage comparison tools can simplify this process by allowing homebuyers to quickly compare rates from different lenders.

In addition to the interest rate, inquire about any upfront costs or closing fees associated with the loan. These fees vary among lenders and can add to the overall cost of the mortgage. Be sure to factor these fees into your comparison when choosing a mortgage lender.

Get Preapproved

Getting preapproved for a mortgage is a valuable step in the homebuying process. It demonstrates to sellers that you’re a serious buyer and strengthens your position when making an offer. Preapproval also allows you to move quickly when you find the right property, as you’ll already have a clear understanding of your borrowing power.

The mortgage preapproval process involves a thorough review of your credit history. The lender will then issue a letter showing that you qualify for a certain loan amount at a specific interest rate. The letter is an offer, but not a commitment.

Delaware Mortgage Resources

Delaware recognizes the challenges that homebuyers face and offers various resources and programs to assist them, particularly first-time buyers and those with limited financial resources. These programs can provide financial assistance, education, and counseling to help individuals achieve their dream of homeownership.

To qualify as a first-time homebuyer, you typically must not have not owned a principal residence in the past three years.

First-Time Homebuyer Programs

The Delaware State Housing Authority offers several programs specifically designed for those buying their first home. These programs may provide down payment assistance, reduced interest rates, and other incentives to make homeownership more affordable for first-time buyers.

The Delaware First-Time Homebuyer Tax Credit allows eligible first-timers to claim up to 35% of their annual mortgage interest in the form of a federal tax credit of up to $2,000 a year. Learn more on the DSHA website.

Down Payment Assistance

Down payment assistance programs can help homebuyers overcome the challenge of saving for a down payment. These programs may provide grants, loans, or other forms of assistance to help cover the upfront costs of purchasing a home.

Home Sweet Home is a limited fund for up to $12,000 for down payment and closing costs on a primary residence with a maximum sales price of $285,000. Delaware Diamonds is another limited fund, for up to $10,000 for down payment and closing costs, that is forgivable after 10 years. And First State Home Loan offers 3% of the final loan amount for down payment and closing costs.

Tools & Calculators

SoFi offers a range of tools and calculators to help Delaware homebuyers make informed decisions. These tools can assist in calculating mortgage payments, determining affordability, and comparing different loan options.

Refinancing Options in Delaware

Homeowners in Delaware have the opportunity to refinance their existing mortgage to secure a lower interest rate. The FHA Streamline Refinance program, available to FHA-insured homeowners, offers a simplified process for refinancing with minimal documentation and appraisal requirements.

VA loan holders may also benefit from refinancing options. The Interest-Rate Reduction Refinance Loan (IRRRL) allows VA loan borrowers to refinance their existing loan to obtain a lower interest rate, potentially reducing their monthly payments.

Closing Costs, Taxes, and Fees in Delaware

Closing costs associated with purchasing a home in Delaware typically range between 2% and 5% of the home’s purchase price. These costs may include appraisal fees, title insurance, loan origination fees, and other administrative charges.

The specific closing costs in Delaware can vary depending on the value of the property and its location. Higher-priced homes and properties in certain areas may incur higher closing costs.

The Takeaway

Delaware presents a diverse range of options for homebuyers, catering to different financial situations and preferences. By staying informed about current mortgage rates and exploring assistance programs, individuals can make strategic decisions that align with their financial goals and achieve successful homeownership in the First State.

Remember, homeownership is a significant financial decision, and it’s essential to consult with a qualified mortgage professional to assess your individual situation and explore all available options. With careful planning and informed choices, you can navigate the Delaware mortgage market and realize your dream of homeownership.

FAQ

Will mortgage rates ever go back to normal?

“Normal” mortgage rates can be subjective and vary over time. The current rates may be considered normal relative to historical averages, but they can still fluctuate based on economic conditions. It’s essential to stay informed about market trends and consult with a mortgage expert to understand the current mortgage environment.

Will Delaware home prices ever drop?

Home prices are influenced by many factors, including supply and demand, economic conditions, and location. It’s advisable to consult with a real estate professional who can provide insights into the local housing market and help you make informed decisions.

Is it a good time to buy a house in Delaware?

The decision of when to buy a house involves personal circumstances, financial readiness, and market conditions. There is no one-size-fits-all answer. It’s important to assess your financial situation, consider long-term goals, and consult with a real estate professional to determine if buying a house in Delaware aligns with your current circumstances and future plans.

How do mortgage interest rates work?

Mortgage interest rates are determined by a combination of economic factors, including the Federal Reserve’s interest rate decisions, inflation, unemployment rates, and borrower-specific factors such as credit score, down payment, income, assets, and type of mortgage loan. Lenders use these factors to assess the risk associated with a loan and set the interest rate accordingly.

SoFi Mortgages
Terms, conditions, and state restrictions apply. Not all products are available in all states. See SoFi.com/eligibility-criteria for more information.

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

*SoFi requires Private Mortgage Insurance (PMI) for conforming home loans with a loan-to-value (LTV) ratio greater than 80%. As little as 3% down payments are for qualifying first-time homebuyers only. 5% minimum applies to other borrowers. Other loan types may require different fees or insurance (e.g., VA funding fee, FHA Mortgage Insurance Premiums, etc.). Loan requirements may vary depending on your down payment amount, and minimum down payment varies by loan type.

†Veterans, Service members, and members of the National Guard or Reserve may be eligible for a loan guaranteed by the U.S. Department of Veterans Affairs. VA loans are subject to unique terms and conditions established by VA and SoFi. Ask your SoFi loan officer for details about eligibility, documentation, and other requirements. VA loans typically require a one-time funding fee except as may be exempted by VA guidelines. The fee may be financed or paid at closing. The amount of the fee depends on the type of loan, the total amount of the loan, and, depending on loan type, prior use of VA eligibility and down payment amount. The VA funding fee is typically non-refundable. SoFi is not affiliated with any government agency.

¹FHA loans are subject to unique terms and conditions established by FHA and SoFi. Ask your SoFi loan officer for details about eligibility, documentation, and other requirements. FHA loans require an Upfront Mortgage Insurance Premium (UFMIP), which may be financed or paid at closing, in addition to monthly Mortgage Insurance Premiums (MIP). Maximum loan amounts vary by county. The minimum FHA mortgage down payment is 3.5% for those who qualify financially for a primary purchase. SoFi is not affiliated with any government agency.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.

SOHL-Q324-064

Compare mortgage rates in Indiana.

Introduction to Mortgage Rates

Even small changes in interest rates can significantly impact a homeowner’s monthly mortgage payments and overall borrowing costs. Mortgage rates are calculated using a complex combination of factors that can be categorized into two buckets: the state of the economy and the borrower’s financial status.

Understanding mortgage rates and the factors that influence them is essential for making informed decisions about homeownership in Indiana. This comprehensive guide explains all you need to know about mortgage rates in California, including the factors that influence them, historical trends, and available home loan types.

Where Mortgage Rates Come From

The Federal Reserve, also known as the Fed, sets the short-term interest rates that banks use as a benchmark for lending. Although home loan rates are not directly tied to Fed rates, they generally follow the same economic trends. When the Fed’s interest rate is high, chances are mortgage rates will be too.

How Interest Rates Affect Home Affordability

Mortgage rates have a significant impact on home affordability, often more than people realize. Even small changes in interest rates can put homeownership out of reach for middle-income Americans. For instance, a one-percentage-point increase in interest rate on a $400,000 home — just a little less than the U.S. median sale price — can add over $200 to the monthly payment, making it harder to qualify for a loan or afford a home.

However, it’s over the long term that interest really has the opportunity to add up. Over the 30-year lifetime of the loan, you’ll pay approximately the following amount in total interest:

•   7.00%: $446,426

•   6.50%: $408,140

•   6.00%: $370,683

Should Homebuyers Wait for Interest Rates to Drop?

Many first-time homebuyers wonder if they should buy now or wait for interest rates to come down. But waiting for a drop in rates could mean missing out on the opportunity to build equity. After all, homeowners can always refinance their mortgage after rates come down.

Mortgage refinance allows homeowners to secure a lower interest rate on their existing loan, potentially saving tens of thousands in interest over the life of the loan. Therefore, buying a home now and refinancing later may be a more advantageous strategy than waiting for rates to drop.

Indiana Mortgage Rate Trends

Indiana mortgage rates have trended close to the national average over the last few decades, often a bit higher but occasionally lower. Indiana experienced its recent high rate of 8.13% in 2000. Rates fell steadily thereafter, hitting a low of 3.71% in 2012 and settling at 4.75% in 2018. (The FHFA stopped reporting the data after that year.) You can expect Indiana rates to follow the same pattern going forward.

Historical U.S. Mortgage Rates

To put Indiana’s current mortgage rates in perspective, it’s helpful to compare them to historical U.S. mortgage rates. Over the past 50 years, mortgage rates have ranged from a low of around 3.00% in the early 1970s to a high of over 18% in the early 1980s. The current rates are significantly lower than the historical highs, indicating a relatively favorable environment for homebuyers.

Factors Affecting Mortgage Rates in Indiana

Numerous factors influence mortgage rates in Indiana and nationwide. Some of these are economic, while others are entirely within the homebuyer’s control. Understanding these influences can help borrowers make informed decisions about their mortgage options.

Economic Factors

From one perspective, mortgage rates are totally beyond the control of the average homebuyer. Blame the economy, market conditions, and the government:

•   The Fed: As noted above, the federal funds rate serves as a benchmark for other interest rates, including mortgage rates. When the Fed raises the federal funds rate, it becomes more expensive for banks to borrow money, which can lead to higher mortgage rates. Conversely, when the Fed lowers the federal funds rate, it becomes cheaper for banks to borrow money, which can lead to lower mortgage rates.

•   Inflation: When inflation rises, the purchasing power of money decreases, making it more expensive for lenders to lend money. As a result, interest rates may be raised to compensate for the loss in purchasing power. When inflation stabilizes at acceptable levels (typically around 2%), rates will drop.

•   Unemployment rate: A lower unemployment rate can result in higher mortgage rates. A low unemployment rate indicates a strong economy, which typically leads to increased demand for housing. This increased demand puts upward pressure on home prices and, not surprisingly, mortgage interest rates.

Consumer Factors

On the other hand, there’s a lot that consumers can do to set themselves up to receive the most competitive mortgage rates available:

•   Credit score: A higher credit score generally results in a lower mortgage interest rate. Credit scores are a measure of a borrower’s creditworthiness and ability to repay debts. Borrowers with higher credit scores are considered less risky by lenders, who are willing to offer them lower interest rates. Conventional loans may require a credit score of 620 or above.

•   Down payment: Increasing the down payment can reduce the mortgage interest rate. A larger down payment means the borrower is taking on less debt, which reduces the risk for the lender. As a result, lenders may offer lower interest rates to borrowers who make larger down payments — 20% or more.

•   Income and assets: A steady income is important to lenders, who will check your employment history as well as your salary. Assets like investments and emergency savings also reassure lenders that you could still pay your mortgage in the case of a job loss or other financial setback. Somewhat ironically, borrowers with higher incomes and more assets are generally offered lower mortgage interest rates.

•   Type of mortgage loan: Certain types of mortgage loans tend to have lower rates. For instance, adjustable-rate mortgages (ARMs) typically offer lower initial rates than fixed-rate mortgages. Some government-backed loans, like VA mortgages, can also have lower rates. And a shorter loan term usually comes with a lower rate than longer terms.

Types of Mortgages Available in Indiana

Various mortgage types — including fixed-rate, adjustable-rate, and several government-backed loans — are available to meet the needs of different homebuyers in Indiana. Conventional loans can be fixed-rate or adjustable.

Fixed Rate Mortgage

Fixed-rate mortgages maintain the same interest rate throughout the life of the loan, ensuring that the principal and interest payments remain constant. Fixed-rate mortgages are available in terms of 10, 15, 20, or 30 years.

Adjustable Rate Mortgage (ARM)

Adjustable-rate mortgages (ARMs) initially offer a lower rate than fixed-rate loans. However, after an initial fixed-rate period, typically 5, 7, or 10 years, the interest rate can adjust periodically based on a specified index. ARMs can be beneficial for borrowers who plan to sell their home before the fixed-rate period ends or who expect interest rates to remain low.

FHA Loan

FHA loans are backed by the Federal Housing Administration and typically have more lenient eligibility requirements than conventional loans. Also, FHA loans often have lower down payment requirements and may be a good option for first-time homebuyers or borrowers with less-than-perfect credit.

VA Loan

VA loans are available to veterans, active-duty military members, and some Reserve and National Guard members. These loans are backed by the Department of Veterans Affairs and offer competitive interest rates and flexible terms. One of the primary benefits of VA loans is that they do not require a down payment.

USDA Loans

USDA loans are designed for low-income borrowers looking to purchase a home in a rural area. These loans are backed by the U.S. Department of Agriculture (USDA) and offer competitive interest rates and flexible terms. USDA loans have income and property location restrictions, but they can be a good option for eligible borrowers who are struggling to afford a home.

Jumbo Loans

Jumbo loans are conventional mortgage loans that exceed the conforming loan limit set by the Federal Housing Finance Agency (FHFA). In Indiana, the conforming loan limit for a single-family home is $832,750. Jumbo loans are typically used to finance more expensive homes and may have different interest rates and terms than conforming loans.

Popular Places to Get a Mortgage in Indiana

Securing a mortgage often depends on choosing the right location, where home prices are affordable and mortgage terms are favorable. Some popular places to get a mortgage in Indiana, along with the average home value there, include:

•   Indianapolis: $228,378

•   Fort Wayne: $232,179

•   South Bend: $181,965

•   Evansville: $190,649

•   Bloomington: $309,461

Besides looking at the average home value, homebuyers should research the cost of living in the U.S. and how their target neighborhoods compare. Cost of living, which refers to the average monthly expenses for one person, varies widely across and within states.

For more information, check out our guide to the Cost of Living in Indiana.

Least Expensive Locations

For homebuyers looking for more affordable options, some of the least expensive places to get a mortgage in Indiana include:

•   Anderson: $130,662

•   Muncie: $143,030

•   Kokomo: $166,408

•   Terre Haute: $152,615

These cities offer lower home prices and cost of living, and may be a good option for first-time homebuyers or those on a tight budget.

Most Expensive Locations

On the other hand, some of the most expensive places to get a mortgage in Indiana include:

•   Carmel: $530,820

•   Zionsville: $606,978

•   Fishers: $422,662

•   Westfield: $445,836

These cities are known for their affluent neighborhoods and higher home prices.

Recommended: Best Affordable Place in the United States

Tips for Securing a Competitive Mortgage Rate in Indiana

Getting a competitive mortgage rate can save you tens of thousands of dollars over the life of your loan. When you think of it that way, taking extra time to improve your credit score or go through the mortgage preapproval process is well worth it. Here are some tips to help you secure the best possible rate:

Compare Interest Rates and Fees

Take the time to compare interest rates and fees from multiple lenders. Be sure to ask about any upfront costs or closing fees associated with the loan.

Get Preapproved

Getting preapproved for a mortgage strengthens your position as a buyer and allows you to move quickly when you find the right property.

Consider a Shorter Loan term

Shorter loan terms typically come with lower interest rates than longer terms. If you can afford the higher monthly payments, a shorter loan term can save you money in interest over the life of the loan.

Improve Your Credit Score

A higher credit score — say, 740 or above — can lead to a lower mortgage interest rate. Take steps to improve your credit score, such as paying bills on time, reducing debt, and disputing any errors on your credit report.

Make a Larger Down Payment

Increasing your down payment can reduce your mortgage interest rate. A larger down payment reduces the loan amount, which lowers the lender’s risk and may result in a lower interest rate. In 2024, borrowers’ median down payment is 15%. With a down payment of 20% or more, though, you’ll also save money by avoiding private mortgage insurance.

Indiana Mortgage Resources

Indiana offers various resources and programs to assist homebuyers, particularly first-time buyers and those with limited financial resources. Two of these resources are:

•   Indiana Housing and Community Development Authority (IHCDA): The IHCDA
offers a variety of programs to help Hoosiers afford homes, including down payment assistance, closing cost assistance, and mortgage credit certificates.

•   Community Action Program (CAP) Homeownership Education and Counseling: Available in Benton, Fountain, Montgomery, Parke, Vermillion, and Warren counties, the CAP program provides free homebuyer education and counseling services to help Hoosiers make informed decisions about homeownership.

First-Time Homebuyer Programs

Indiana offers programs to help first-time homebuyers get into a home. (To qualify as a first-time homebuyer usually means you haven’t owned a primary residence within the last three years.) These programs are worth a look:

•   First-Step: This IHCDA program offers down payment and closing cost assistance of up to 6% in the form of a non-forgivable second mortgage.

•   Mortgage Certificate: The IHCDA provides an annual federal income tax credit for up to $2,000 of mortgage interest paid per year. Homebuyers can apply for the certificate through a participating lender when they apply for their mortgage. There’s an $800 fee, but the lifetime savings usually outweigh the fees.

Down Payment Assistance

Down payment assistance programs help homebuyers afford a down payment on a home. The Next Home program in Indiana offers 3.5% of a home’s value for a down payment to homebuyers using a 30-year FHA loan.

Find out more on the IHCDA website, or visit our Indiana First-Time Home Buying Assistance Programs guide.

Tools & Calculators

There are many online tools and calculators available to help users calculate their mortgage payments and determine how much they can afford to borrow. Here are SoFi’s top three calculators:

Refinancing Options in Indiana

Refinancing your mortgage can be a good way to lower your monthly payments, get a lower interest rate, or cash out some of your home equity. Some of the refinancing options available in Indiana include:

FHA Streamline Refinance

The FHA Streamline Refinance allows FHA-insured homeowners to refinance into current mortgage rates with minimal hassle.

VA Interest-Rate Reduction Refinance Loan

The VA Interest-Rate Reduction Refinance Loan can reduce the monthly payments on VA loans by adjusting the APR.

Conventional Refinance

Conventional refinance loans are available to homeowners who do not have FHA or VA loans. Conventional refinance loans may offer lower interest rates than FHA or VA loans, but they may also have higher fees.

Closing Costs, Taxes, and Fees in Indiana

Buyers in Indiana can expect to pay between 2% and 5% of the home’s purchase price in closing costs. These costs include:

•   Loan origination fee: Charged by the lender for processing the loan application.

•   Appraisal fee: Paid to an appraiser to determine the value of the home.

•   Credit report fee: Paid to a credit bureau for obtaining your credit report.

•   Title insurance: Protects the lender against losses if there is a problem with the title to the home.

•   Recording fee: Paid to the county recorder to record the mortgage.

The Takeaway

Indiana offers a range of affordable homes and mortgage options for homebuyers. By staying informed about current mortgage rates, exploring assistance programs, and carefully considering refinancing options, individuals can make strategic decisions that align with their financial goals and achieve successful homeownership in Indiana.

FAQ

Will mortgage rates drop in Indiana?

Predicting the direction of mortgage rates is challenging, and there is no guarantee that rates will drop in the future.

Will mortgage rates ever go back to normal?

The definition of “normal” mortgage rates can vary over time. Mortgage rates have fluctuated throughout history and are influenced by various economic factors.

Will Indiana home prices ever drop?

Home prices are influenced by supply and demand dynamics, economic conditions, and local market factors. Predicting future price trends with certainty is difficult.

Is it a good time to buy a house in Indiana?

The decision of whether to buy a house depends on individual circumstances, financial readiness, and long-term goals. There is no one-size-fits-all answer, and market conditions can change rapidly.

How does mortgage interest rates work?

Mortgage interest rates represent the cost of borrowing money from a lender to finance a home purchase. They are influenced by various economic factors and impact the monthly mortgage payments made by borrowers.

SoFi Mortgages
Terms, conditions, and state restrictions apply. Not all products are available in all states. See SoFi.com/eligibility-criteria for more information.

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

*SoFi requires Private Mortgage Insurance (PMI) for conforming home loans with a loan-to-value (LTV) ratio greater than 80%. As little as 3% down payments are for qualifying first-time homebuyers only. 5% minimum applies to other borrowers. Other loan types may require different fees or insurance (e.g., VA funding fee, FHA Mortgage Insurance Premiums, etc.). Loan requirements may vary depending on your down payment amount, and minimum down payment varies by loan type.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.

SOHL-Q324-069