First-time buyer guide
Closing Costs for First-Time Buyers in Indianapolis
Closing costs run 2% to 5% of the price. See each line, who pays it, what Indiana charges and how a seller credit or IHCDA can cover part of it.
Plan on closing costs of 2% to 5% of the purchase price. That range comes from Freddie Mac, and on the $320,000 median sale price MIBOR reported for September 2026 it works out to $6,400 to $16,000. That cash is on top of your down payment. Below I go through each line, who gets paid, what Indiana does and does not charge, and how a seller credit or IHCDA assistance can cover part of it.
I am Ian DeFelice, a realtor with Roots Realty Co. at @properties. If you are earlier in the process, start with my guide to buying your first home in Indianapolis and come back here when you are ready to budget your cash. This post is general information. The Loan Estimate from your lender has the real numbers for your loan.
What are closing costs?
The Consumer Financial Protection Bureau (CFPB) defines them this way in its Loan Estimate explainer: "Closing costs, or "settlement costs," are the upfront costs you will be charged to get your loan." Your lender sends a Loan Estimate when you apply. It sorts these costs into origination charges, services you cannot shop for, and services you can shop for. Of that last group the CFPB says, "The services in this section are required by the lender, but you can save money by shopping for these services separately."
Closing costs line by line
Freddie Mac's closing cost guide (last reviewed February 26, 2026) lists the main categories. I added the Indiana pieces I could trace to a source.
Line | Who gets paid | What to know | |
|---|---|---|---|
Loan origination fee, application and credit report fees | Your lender | Freddie Mac says the origination fee is "typically between 0.5% and 1% of the total loan amount." On a $304,000 loan that is $1,520 to $3,040. | |
Appraisal | An independent appraiser | The CFPB says "The lender uses an appraisal to decide how much your home is worth." You have a right to a copy. The Loan Estimate shows the fee. | |
Title insurance and settlement services | A title company | Freddie Mac describes the title company as the one that checks county records for liens or other claims on the property. Whether you can shop for them depends on your lender, and the Loan Estimate shows which section they fall in. | |
Home inspection | Your inspector | Freddie Mac says an inspection is "highly recommended." I tell buyers to keep it, and I explain why in my post on what a first-time buyer can ask for. | |
County recording and sales disclosure fees | County recorder and county auditor | State base fees are $25 for a deed and $55 for a mortgage. A $10 sales disclosure filing fee applies when the form's sales conditions call for it. Counties can add fees. More on this below. | |
Prepaid interest | Your lender | The CFPB says this covers "interest on your loan between the time you close and the end of that month." | |
First year of homeowners insurance | Your insurance company | The CFPB says "It's also common to pay your first year's homeowner's insurance premium in advance at closing." Get a quote early, because the premium depends on the home. | |
Initial escrow deposit | Your lender's escrow account | Freddie Mac lists escrow payments as an initial deposit "to pay future homeowners insurance and property taxes." | |
FHA upfront mortgage insurance premium (FHA loans only) | FHA | HUD sets it at 1.75% of the base loan amount. On an FHA loan with 3.5% down on $320,000, the base loan is $308,800 and the premium is $5,404. Ask your lender how it is paid on your loan. |
County recording fees in Indiana
Your closing statement will also show county fees to record the deed and mortgage. The state's 2025 recorder manual lists the base recording charges: "Any Deed or Other Instrument (other than mortgage) is $25.00" and "Mortgage is $55.00." It also lists a $10 affordable housing fee that a county council can adopt, and a housing trust fund fee that applies to a county with a consolidated city. Marion County is the one that applies to Indianapolis. Your Closing Disclosure shows the exact total for your county.
The Indiana sales disclosure form
Indiana requires a sales disclosure form, State Form 46021, for a sale. The Department of Local Government Finance (DLGF) instructions (revised July 20, 2021) say it "must be completed whenever a "conveyance document" is filed." The county assessor reviews it, and the county auditor "may not accept a conveyance if" the form is missing. The same page sets a fee of "ten dollars ($10.00)" paid to the county auditor for forms marked with the sales conditions it lists. Your closing agent will tell you whether it applies and who pays it.
The form asks for the sale price and for any "Seller Paid Points or Closing Costs," which the instructions describe as "An incentive is provided by the seller to acquire a buyer." So a seller credit you negotiate gets reported there. The instructions also say the buyer or the seller is responsible for completing the form in full. Your closing agent will walk you through signing it. You can read the form and instructions on the DLGF sales disclosure page.
A worked example: a $320,000 home with 5% down
I built this example from public numbers. The price is the September 2026 median sales price MIBOR reported for single-family homes in 17 central Indiana counties, Marion County among them. The rate is the Freddie Mac weekly average for a 30-year fixed loan, 7.18% as of November 5, 2026. With 5% down, the loan is $304,000.
Item | Example amount | Where the number comes from |
|---|---|---|
Down payment (5%) | $16,000 | $320,000 times 5%. This is not a closing cost. |
Loan origination fee | $1,520 to $3,040 | 0.5% to 1% of $304,000, per Freddie Mac |
Recording and sales disclosure fees | About $90 before county add-ons | $25 deed plus $55 mortgage, plus the $10 sales disclosure fee where it applies |
Prepaid interest | About $897 | $304,000 times 7.18% divided by 365 days, times 15 days, if closing falls 15 days before month end |
Appraisal, title, inspection, insurance and escrow deposit | Get quotes | These vary by home and company. Your Loan Estimate lists them. |
Total closing costs | $6,400 to $16,000 | 2% to 5% of $320,000, per Freddie Mac |
Down payment plus closing costs | $22,400 to $32,000 | $16,000 plus the closing cost range |
I leave out dollar amounts for the appraisal, title work and insurance. I could not tie those to a source I can link, and they change from home to home. The Freddie Mac range already includes them. A lower interest rate or a different loan type changes the picture, so ask your lender for your own Loan Estimate.
Who pays what?
Freddie Mac puts it this way: "As the homebuyer, you typically pay most of the closing costs. However, you may be able to negotiate, as part of your offer, to have the seller cover certain fees." Your purchase agreement sets who pays what, and the Closing Disclosure shows the final split. The CFPB says "Lenders are required to provide your Closing Disclosure three business days before your scheduled closing." Use those days to check every line.
One line on that form surprises people. The CFPB calls it Adjustments for Items Unpaid by Seller, and describes it as "Prior taxes and other fees owed by the seller that you will pay in the future. The seller is reimbursing you now to cover these expenses." That one is a credit to you, so it lowers your cash to close. See the CFPB's Closing Disclosure explainer.
How a seller credit can cover closing costs
You can ask the seller to pay part of your closing costs in your offer. For loans sold to Fannie Mae, the Selling Guide says these concessions are acceptable toward "Borrower closing costs, including prepaids." The limit depends on your down payment and is figured on the lower of the sales price or the appraised value:
- Down payment under 10% (loan-to-value above 90%): 3%
- Loan-to-value from 75.01% to 90%: 6%
- Loan-to-value of 75% or less: 9%
On the $320,000 example with 5% down, 3% is $9,600, if the home appraises at $320,000 or more. The guide also says the credit must be "equal to or less than the sum of the borrower's closing costs." FHA, VA and USDA loans have their own limits, so ask your lender. I wrote about this ask and the others in What Can a First-Time Buyer Ask For in Indianapolis Right Now?.
How IHCDA assistance can cover closing costs
The Indiana Housing and Community Development Authority (IHCDA) publishes a program guide for lenders. It says: "DPA may be used for down payment, closing costs, pre-paid items and/or realtor compensation." DPA means down payment assistance. For First Step, the program guide dated 10.30.26 says the program "provides five percent (5%)" in non-forgivable assistance, and on the $320,000 example that is $16,000. IHCDA's homebuyer page still lists First Step at up to 4%, so I used the guide, and your lender confirms the figure for your loan.
The assistance is a second mortgage, and you repay it in full. Income and purchase price limits apply. I explain the details and the differences between programs in IHCDA First Step vs Next Home: Which One Fits You?.
What I check before closing day
- Put the Loan Estimate and the Closing Disclosure side by side. The CFPB tells buyers to check that "Services Borrower Did Not Shop For" are similar to the Loan Estimate.
- Ask your lender for your Estimated Cash to Close as soon as you have a Loan Estimate. The CFPB's Loan Estimate guide asks, "Do you have enough cash on hand to pay your Estimated Cash to Close?"
- Compare the services you can shop for. Title and some other fees can differ by company. My post on how much down payment you need in Indiana covers the other costs people forget.
- Keep money in the bank after you close. I explain how to pick a payment you can carry in Pre-Approval Is Not a Budget.
Sources
- Freddie Mac, What Are Closing Costs and How Much Will I Pay? (last reviewed February 26, 2026)
- CFPB, Loan Estimate explainer
- CFPB, Closing Disclosure explainer
- Fannie Mae Selling Guide B3-4.1-02, Interested Party Contributions (the page lists a date of May 7, 2025)
- Indiana DLGF, Sales Disclosure Form Instructions (revised July 20, 2021)
- Indiana State Board of Accounts, County Recorders manual, issued November 12, 2025
- IHCDA Homeownership Program Guide, dated 10.30.26
- HUD Mortgagee Letter 2023-05, Appendix 1.0 upfront premium
- MIBOR Market Insights, September 2026
- Freddie Mac Primary Mortgage Market Survey, week of November 5, 2026
Common questions
- How much are closing costs for a first-time buyer in Indianapolis?
- Freddie Mac says to be prepared to pay between 2% and 5% of the home purchase price. On the $320,000 median sale price MIBOR reported for September 2026, that is $6,400 to $16,000. The final number depends on your loan, the title company, your insurance and the date you close. Your lender's Loan Estimate shows it.
- What county fees show up at closing in Indianapolis?
- The state recorder manual lists $25 to record a deed and $55 to record a mortgage, and Marion County can add its own housing fees. A $10 sales disclosure filing fee can also apply. Your Closing Disclosure shows the totals.
- Can the seller pay my closing costs in Indiana?
- You can ask for it in your offer, and the seller can accept, counter or decline. For loans sold to Fannie Mae with a down payment under 10%, the limit is 3% of the lower of the sales price or appraised value. On a $320,000 home that is $9,600. FHA, VA and USDA loans have their own limits.
- Can IHCDA down payment assistance pay closing costs?
- Yes. IHCDA's program guide says assistance may be used for down payment, closing costs, pre-paid items and realtor compensation. It is a second mortgage that you repay in full, and income and purchase price limits apply.
- What is the Indiana sales disclosure form?
- It is State Form 46021, required whenever a conveyance document is filed. The county assessor reviews it and the county auditor collects a $10 filing fee when one applies. It lists the sale price and any seller paid points or closing costs. The instructions put the buyer or the seller in charge of completing it in full.
- Are closing costs part of my down payment?
- No. The down payment goes toward the price of the home. Closing costs pay for the loan and the transfer. On a $320,000 home with 5% down, the down payment is $16,000, and closing costs of 2% to 5% would add $6,400 to $16,000.
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