Indiana Proposes Additional Funding for Housing Loan Program to Reduce New Home Costs

The Indiana House recently approved a bill aimed at reducing the costs of new housing by injecting more money into an existing loan fund.

The measure, which promotes housing affordability and expedites development processes, has garnered support from key stakeholders.

Current Housing Market Challenges

According to the Indiana Realtors Association, the median home price in the state is $245,000.

However, the cost of newly constructed homes far surpasses this figure, standing at $379,000. This stark difference underscores the need for strategies to make new housing more accessible.

About the Housing Loan Fund

The loan fund, established in 2023, initially made $75 million available to local governments to finance infrastructure needs for new housing developments. These loans cover essential utilities, such as water, sewer, gas, and electric connections.

Proposed Expansion Under House Bill 1005

The newly introduced legislation, House Bill 1005, proposes an additional $25 million for the loan fund.

The bill’s author, Rep. Doug Miller (R-Elkhart), emphasized the importance of increasing the housing supply to lower costs and create more homeownership opportunities.

Incentives for Local Governments

To encourage local governments to foster new housing development, the bill prioritizes loans for communities that implement zoning and building policy changes. These changes may include:

• Higher-density housing
• Mixed-use developments
• Projects targeting the “missing middle” housing market
• Multi-family residential units

Private Inspections for Faster Development

Under the proposed legislation, builders could use private third-party inspectors if local governments are unable to conduct inspections promptly.

Rep. Miller, a home builder himself, argued that this measure would expedite the permitting process and accelerate housing development.

Stakeholder Perspectives

David Ober, Indiana Chamber of Commerce Lobbyist: “By increasing supply, we’re going to put downward pressure on pricing and give more people the opportunity to become homeowners.”

Maggie McShane, Indiana Realtors Association Lobbyist: “Time is money, and the amount of money that we’re talking about, again, is astonishing.” McShane highlighted the significant cost disparity between new and existing homes.

Campbell Ricci, Municipal Lobbyist: While supportive of the overall goals, Ricci noted potential challenges.

“Most local governments can already meet the inspection timelines. Allowing third-party inspectors may create additional administrative work if local governments need to review their findings.”

Expected Impact

The initial $75 million funding is projected to facilitate the construction of more than 3,000 new homes.

With the proposed $25 million increase, lawmakers and stakeholders hope to further alleviate housing shortages and make homeownership more attainable for Indiana residents.

Next Steps

As the bill moves forward, the conversation continues on how best to balance efficiency and local oversight while addressing the growing demand for affordable housing.