Indiana Among Top 10 States with Most Affordable Home Mortgages

Your home is one of the biggest purchases you will ever make. For many Americans finding the perfect place to settle down that won't break the bank can be a challenge. According to one recent study, Indiana might be a good option for prospective home buyers.

How Much House Can You Afford?

When it comes to the size of your mortgage, there are several things to consider and one of those is how much can you afford to pay monthly for a mortgage payment. The experts at NerdWallet recommend that you follow what is known as the "28/36 rule."

<div class="_3VJt4n"><p class="DFVVwC _3-to_p"><span class="DFVVwC _3-to_p">To calculate 'how much house can I afford,' a good rule of thumb is using the 28/36 rule, which states that you shouldn’t spend more than 28% of your gross, or pre-tax, monthly income on home-related costs and no more than 36% on total debts, including your mortgage, credit cards and other loans, like auto and student loans.</span></p></div><div class="_3VJt4n"><p class="DFVVwC _3-to_p"><span class="DFVVwC _3-to_p">Example: If you earn $5,500 a month and have $500 in existing debt payments, your monthly mortgage payment for your house shouldn’t exceed $1,480.</span></p></div><div class="_3VJt4n"><p class="DFVVwC _3-to_p"><span class="DFVVwC _3-to_p">The 28/36 rule is a broadly accepted starting point for determining home affordability, but you’ll still want to take your entire financial situation into account when considering how much house you can afford. - NerdWallet</span></p></div>

Get our free mobile app

The Rates Game

Of course, how much you spend on your monthly mortgage payment can vary depending on a lot of factors, including the interest rate at the time of the mortgage. The average home price in late 2023 is just over $416,000, according to RocketHomes. That same home will cost you significantly more per month with 7% interest than it would at say 3.5%.

As of the second quarter of 2023, the median home price in the U.S. was $416,100, according to the Federal Reserve Bank of St Louis. This is a significant drop from the end of 2022, when the median price in the fourth quarter was $479,500. However, it is still high compared to the end of 2020, when median prices were at $358,700. - RocketHomes

Canva

Which States Spend the Least on Their Mortgages?

In the study shared by SelfStorage.com, the website analyzed the data to determine which states are spending the least amount of their monthly income on mortgage payments calculated on 30-year mortgages at 7% interest.

With the nationwide average monthly payment coming in at $2,036, and nationwide monthly earnings of $5,770.23 the average percentage of income spent on mortgage payments comes in at 35%. - SelfStorage.com

How Does Indiana Rank?

Indiana holds the number ten spot for spending the least of their monthly income on mortgage payments. The data shows that the average loan value in Indiana is almost $194,000 with the average monthly payment falling just under $1,300. That equates to Hoosiers spending just 24.66% of their monthly income.

Nearby in Illinois & Kentucky

Illinois ranks as the fifth most affordable mortgage payments nationwide. The average loan amount in Illinois is $212,000 in Illinois with residents spending an average of 23.46% of the average monthly income of $6,017. Kentucky takes the number 7 spot on the list. Mortgage loans in Kentucky are relatively lower that the rest of the country, with the average mortgage at just $165,000, or approximately $1,100 per month, accounting for 23.56% of the average monthly income.