Our Indiana DSCR loan page covers the statewide rules, leases and closing costs. This post is about one number on the Indiana rental payment, the property tax, and why it behaves differently here than in almost any other state we lend in.

Every figure was checked on November 9, 2026 against the Indiana Department of Local Government Finance, HUD User's FY2027 Fair Market Rents and Census Bureau QuickFacts.

How the Cap Works on a Rental

A rental house in Indiana sits in the 2% class, so its tax bill cannot run past 2% of its gross assessed value no matter how high the local rate is.

Indiana's circuit breaker caps have been in the state constitution since voters approved them in November 2010. The Department of Local Government Finance describes three tiers: 1% for a homestead, 2% for residential property, long term care property and farmland, and 3% for nonresidential and personal property. Residential property includes a single family dwelling that is not part of a homestead. A homestead has to be your principal place of residence and has to receive the homestead standard deduction, so a rental does not qualify for the 1% tier.

The cap does not change the local rate. It works as a credit: the county figures the bill with the rate, compares it to the cap and credits back anything over the line. The DLGF notes that in most counties the only exceptions are voter approved referendum funds for capital projects, school operating money or public safety, which can sit outside the cap.

Eight Cities, Eight Rates Above 2%

Every city district we checked on the 2026 certified list is above 2.0000 per $100 of assessed value, and some are far above it.

Gary's Calumet Township district carries a 2026 certified rate of 8.1000, more than four times the cap. Muncie's district rate is 4.9549. Even the lowest on the list, Indianapolis Center Township, is certified at 2.7291. These are the gross rates for one district in each city; a city can have several districts, and your parcel's district is on its tax statement.

In Indiana's cities the rate tells you almost nothing about a rental's bill. The cap tells you nearly everything.

What the Cap Saves You

At each city's median value, the cap cuts the rental tax bill by about $1,600 a year in Indianapolis and by about $5,800 in Gary.

For the example we treat each city's Census median home value as the assessed value and assume no deductions, which is typical for a rental. The first column is what the full certified rate would charge; the second is what the 2% cap allows.

The flip side matters just as much. Two percent is still a heavy rate compared with what an owner pays. A homestead in the same house is capped at 1%, so an investor's bill can run about double the seller's before you count the deductions the seller was getting.

Run the DSCR on your deal

The DSCR Math, City by City

With the tax set at the 2% cap, Gary, Anderson and Muncie post the highest ratios at their medians, and Fort Wayne posts the lowest.

The setup: buy at the city's Census median value with 25% down and a 30 year fixed at Freddie Mac's 7.18% average from November 5, 2026, as a reference rate only (a conventional loan average, not a DSCR rate and not a rate we are quoting). Tax is 2% of the median value. Insurance is $1,800 a year, an example number, not market data and not a quote. Rent is HUD's FY2027 three bedroom Fair Market Rent for the city's metro area.

HUD raised the three bedroom benchmark in all eight metros for FY2027, by $149 in Anderson and $153 in Fort Wayne. Gary and Hammond share one rent area that covers Lake, Newton and Porter counties.

Do not read the Gary and Muncie ratios as a recommendation by themselves. A $94,700 median in Gary, where 49.1% of households own, says a lot about condition and turnover. High ratios on low prices usually come with repair budgets, vacancy and appraisal questions. Our Evansville rental property post takes one of these metros district by district.

The Price Ceiling at 1.00

Because the tax is a flat 2% of value, every Indiana city has a clean price ceiling where a three bedroom at the HUD rent stops clearing 1.00.

On the same example terms, that ceiling is about $272,800 in Indianapolis, $236,100 in Anderson, $235,500 in Gary and Hammond, $205,100 in Fort Wayne, $190,900 in Muncie, $188,200 in Kokomo and $183,300 in Evansville. Fort Wayne is the tight one: its $188,900 median already sits close to the line. Indianapolis gets the most room because its metro rent is the highest in the state's big cities, but that rent covers nine counties, including pricier suburbs, so check the street.

Insurance Is the Other Line

Once the tax is pinned at 2%, insurance becomes the line that moves the most from one quote to the next.

Every $100 a month of premium takes about 0.07 off the ratio in Indianapolis or Fort Wayne on our example numbers, and about 0.25 off Gary's, because a cheap house has a small payment to begin with. Get a landlord policy quote, not a homeowners quote, before you offer, and ask about the roof age and the deductible. Our 1% rule and DSCR post shows how rent to price really works across 10 metros, including Indianapolis.

Financing an Indiana Rental

The program is the same in every one of our 35 states, and in Indiana interest only and the first rental path get used the most.

• DSCR as low as 0.50, loans up to $5 million, no tax returns or W2s.
• Interest only: ten years interest only on a 40 year term, or a 30 year term with interest only, up to 70% LTV on a purchase and 65% on a cash out.
• First rental is fine: no primary residence ownership and no VOR required.
• Cash out up to 80% LTV with no ownership seasoning.
• No reserves under $1 million and under 75% LTV, no asset sourcing, and a 100% gift can cover the down payment, closing costs and reserves.

Texas investors face the opposite problem, with no cap and high rates; our Texas property taxes and DSCR post shows the contrast. Our loan programs page lists the rest of what we place.

Where the Cap Fools People

The cap is a ceiling on the bill, not a promise about the assessment.

My Indiana Tax Checklist

1. Find the taxing district on the property record card or tax statement.
2. Check the district rate against 2.0000. Above it, budget 2% of gross assessed value. Below it, budget the rate.
3. Ask the county about referendum levies that sit outside the cap.
4. Ignore the seller's homestead bill.
5. Get a landlord insurance quote and rent comps for the street.
6. Send us the address. We run the DSCR the way the lender will and show you the down payment and the payment.

Sources

All sources checked November 9, 2026. Data changes, so confirm before you rely on it.

1. Indiana Department of Local Government Finance, 2026 Certified Tax Rates by District (February 26, 2026). Certified gross tax rates per $100 assessed value: Marion 101 Indianapolis Center 2.7291; Allen 074 FW Wayne 2.8975; Lake 004 Gary Calumet 8.1000; Lake 023 Hammond 3.7529; Delaware 003 Muncie 4.9549; Madison 003 Anderson City Anderson Township 4.5130; Howard 002 Kokomo City Center Township 3.7234
2. Indiana Department of Local Government Finance, 2026 Budget Order, Vanderburgh County (December 30, 2025). 2026 district rate, Evansville City Pigeon Township 3.5448
3. Indiana Department of Local Government Finance, Fact Sheet: Circuit Breaker Tax Caps (November 2025). Caps of 1% homestead, 2% residential (including a single family dwelling that is not part of a homestead), long term care and agricultural land, 3% nonresidential and personal property, measured against gross assessed value; constitutional since November 2010 (Article 10, Section 1); referendum funds can be exempt; caps do not change the local rate
4. HUD User, FY2027 Fair Market Rents (Indianapolis Carmel, Fort Wayne, Gary, Muncie, Anderson, Kokomo and Evansville areas). 3 bed FY2027 (FY2026): Indianapolis Carmel $1,991 ($1,907); Fort Wayne $1,534 ($1,381); Gary $1,739 ($1,612); Muncie $1,438 ($1,349); Anderson $1,743 ($1,594); Kokomo $1,420 ($1,388); Evansville $1,387 ($1,370)
5. U.S. Census Bureau QuickFacts, Indianapolis city (balance), Fort Wayne, Evansville, Gary and Hammond, Indiana. Median value of owner occupied housing units and owner occupied rate, ACS 2020 to 2024
6. U.S. Census Bureau QuickFacts, Muncie, Anderson and Kokomo, Indiana. Median value of owner occupied housing units, ACS 2020 to 2024 (Muncie $97,300, Anderson $119,000, Kokomo $137,400)
7. Freddie Mac Primary Mortgage Market Survey. 30 year fixed average 7.18% as of November 5, 2026 (reference only)

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