In Indiana, no statute assigns closing costs to the buyer or the seller, so every fee on the settlement statement is negotiable. By local custom, sellers cover the real estate commissions, the owner’s title insurance policy, the recording fees needed to release existing liens, and a prorated credit for property taxes. Buyers typically pay the lender’s charges, the appraisal, the lender’s title policy, inspections, and the recording fees for the new deed and mortgage. The question of who pays closing costs in Indiana comes down to custom and negotiation rather than law, with buyers generally spending 2 to 5 percent of the purchase price and sellers 8 to 10 percent once commissions are included.
What the Seller Customarily Pays
The commission is almost always the seller’s largest line item. Historically it ran 5 to 6 percent of the sale price, split between the two agents. That arrangement changed in 2024, and the current rules are covered further down.
Beyond commission, Indiana sellers customarily pay for the owner’s title insurance policy that protects the buyer against defects in title. On a home priced between $200,000 and $250,000, the premium generally falls in the $500 to $700 range, though rates vary by insurer. The Indiana Department of Insurance publishes a comparison tool for filed premiums.1IN.gov. Title Insurance Rate Comparison Tool
Sellers also handle the recording fees required to release any existing mortgage or lien from the public record. Indiana’s standard recording fee is $25 per document, with an additional $5 for any page that exceeds legal size.2Starke County Government. Indiana County Recorder Fee Schedule A $20 sales disclosure filing fee is due to the county auditor whenever the property changes hands.3Indiana General Assembly. Indiana Code 6-1.1-5.5-4 – Filing Fee; Exceptions; Distribution of Revenue Both parties complete the sales disclosure form, and the fee is paid by whoever files it, which in practice happens at the closing table.
And then there’s the tax proration, which in Indiana usually means a substantial credit flowing from the seller to the buyer. It gets its own section below.
What the Buyer Customarily Pays
Buyers absorb most of the lender-related costs. The appraisal, which the lender orders to confirm the home’s value supports the loan, generally runs $350 to $500. A credit report fee is collected early in the process; it is the only fee a lender can charge before issuing the Loan Estimate.4Consumer Financial Protection Bureau. How Much Does It Cost to Receive a Loan Estimate? A tri-merge report for a single borrower can now run well above $50, with joint applications costing more.
The buyer also pays for the lender’s title insurance policy, which protects the bank’s interest in the property, and for loan origination charges. At settlement, lenders collect an initial escrow deposit to cover upcoming property taxes and homeowners insurance. Federal rules cap that deposit at the amount needed to bring the escrow account to a zero target balance, plus a cushion of no more than one-sixth of the estimated annual escrow payments.5Consumer Financial Protection Bureau. 12 CFR 1024.17 – Escrow Accounts
Recording fees for the new deed and mortgage document run $25 each under Indiana’s standard schedule.2Starke County Government. Indiana County Recorder Fee Schedule Notary fees are capped by Indiana law at $10 per signature.6Indiana General Assembly. Indiana Code 33-42-14-1 – Notary Public Fees With multiple documents to sign, those add up.
Inspections are optional but almost always worth it. A standard home inspection runs $300 to $500 depending on size. Indiana has elevated radon levels in much of the state, and radon testing adds $150 to $250. Termite inspections run $75 to $150, and a sewer camera scope costs $200 to $400, which is money well spent on an older home with clay or cast-iron drain lines.
How Indiana’s Tax Proration Shifts Money from Seller to Buyer
Indiana collects property taxes in arrears. The bills due in May and November of a given year cover the prior year’s taxes.7Department of Local Government Finance. Property Tax Terms That lag means the seller has been living in the home accumulating a tax liability that hasn’t been billed yet, and the buyer will eventually get the bill for that period.
At closing, the title company calculates how many days of the current tax year the seller occupied the property and credits that amount to the buyer, who then uses the credit to pay the tax bill when it arrives. Close in August on a home with a $3,000 annual tax bill, and roughly $2,000 flows from seller to buyer at the table. The math is straightforward, but the number is large enough that it belongs at the top of any seller’s cost estimate.
Commission Rules After the 2024 NAR Settlement
The 2024 NAR settlement changed how buyer-agent commissions are handled. Offers of compensation can no longer appear on the MLS, which ended the old practice where a listing effectively locked the seller into paying both agents.8National Association of Realtors. National Association of Realtors Reminds Members and Consumers of Real Estate Practice Change
Sellers can still agree to pay the buyer’s agent through off-MLS negotiation, and many do to keep their listing competitive. Buyers, meanwhile, now sign a written agreement with their agent spelling out exactly what they will owe. If the seller doesn’t cover it, the buyer does. So commission allocation is a true negotiation point in every Indiana deal, not a default.
How Much the Seller Can Pay Toward the Buyer’s Costs
Buyers often ask sellers to cover part of their closing costs, especially in a slower market. Loan rules put a ceiling on how much the seller can contribute, designed to prevent inflated sale prices that hide seller-funded concessions:
- Conventional loan with 10 percent down or less: up to 3 percent of the purchase price.
- Conventional loan with 10 to 25 percent down: up to 6 percent.
- Conventional loan with 25 percent or more down: up to 9 percent.
- FHA loan: up to 6 percent regardless of down payment.
- VA loan: up to 4 percent, plus the seller can pay normal closing costs on top of that cap.
In a competitive market, asking for a seller concession can weaken an offer. Experienced Indiana agents often suggest raising the purchase price and asking for an equivalent closing cost credit, which keeps the seller focused on the net rather than the line items.
HOA Charges at Closing
If the property sits in a homeowners association, a few more charges enter the picture. The seller needs to obtain a statement showing any unpaid assessments or dues. Starting in 2026, Indiana law caps the fee an HOA or its management company can charge for that statement at $50, and the association cannot charge a homeowner anything for producing a basic account statement.9Indiana General Assembly. 2026 Digest of Enactments
Some HOA governing documents include a transfer fee covenant that triggers a charge when the property sells. Indiana law now limits these covenants to actual sales, so they cannot apply to gifts or other non-sale transfers. The transfer fee amount is set by the HOA’s documents; there is no statewide cap. Who pays it is whatever the purchase contract says, so ask for the governing documents early and settle the question in writing.
Don’t Forget the Homestead Deduction
One post-closing step affects the buyer’s real cost of owning the home. If you buy a home in Indiana and use it as your primary residence, you qualify for the homestead deduction, which reduces your assessed value and lowers your property tax bill. The application goes to your county auditor and must be filed by January 15 of the year in which property taxes on the home are first due and payable. Miss the deadline and you pay the higher tax bill for the entire year with no retroactive fix. The form asks for the last five digits of your Social Security number, and your spouse’s if applicable.