Ohio First-Time Homebuyer Programs
Amanda Gengler has been researching and writing about financial matters for media publications as well as investment firms for 15 years. She has discussed finances on CNN, MSNBC, FOX, NBC, CBS, ABC and other local and national outlets.
Residents of Ohio hoping to purchase their first home may qualify for assistance programs that can help you afford the upfront costs of a home, or save you money after you move in. We’ll give you a rundown of first-time homebuyer programs available statewide, including the type of assistance provided and who qualifies.
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First-time homebuyer programs in Ohio
The Ohio Housing Finance Agency (OHFA) offers certain Buckeye residents help to afford their own home. The assistance can come in the form of money for your down payment, a lower mortgage rate, or a lower annual tax bill. These benefits are typically geared to low- and moderate-income buyers, meaning your annual income usually cannot exceed approximately $140,000, depending on your county, household size and loan type.
Your Choice! Down Payment Assistance
This program gives buyers either 2.5% or 5% of the home sales price to put toward their down payment, closing costs or other pre-closing expenses. As long as you live in the home for seven years, the assistance is forgiven and does not need to be repaid.
Requirements
- Have not owned a home in prior three years (waived for veterans or those purchasing in a specific target area)
- Minimum 640 credit score, or 650 for FHA loans
- An income below the maximum thresholds, which vary by county and loan type
- A sales price below the maximum limits, which vary by county and your loan type
- Complete a homebuyer education course
- Meet traditional underwriting for the mortgage, including debt-to-income (DTI) thresholds
Pros and cons
| Pros | Cons |
|---|---|
Assistance is forgiven if you stay put for seven years Can choose a conventional loan or a government product such as a VA or FHA mortgage Free homebuyer education | An unexpected move could put you on the hook to repay the aid Income limits apply Trade-up buyers excluded Higher credit score needed than regular FHA loan of 580 |
Ohio Heroes
The state of Ohio honors certain public service workers by providing them a discounted mortgage rate. Eligible workers include those with jobs in public safety (police officers, firefighters including volunteers, EMTs and paramedics), health care (physicians and nurses including nurse practitioners, registered nurses, licensed practical nurses and state tested nurse aides) as well as education (teachers in pre-K, elementary, middle and high school, administrators and counselors).
Requirements
- Minimum credit score of 640 (or 650, for FHA loans)
- An income below the maximum threshold, which varies by county as well as loan type.
- A sales price below the maximum allowed, which varies by county and loan type.
- Complete the OHFA homebuyer education course
- Meet traditional underwriting for the mortgage, including debt thresholds
Pros and cons
| Pros | Cons |
|---|---|
Available to repeat homebuyers Helps to offer a lower monthly mortgage payment Can be combined with down payment assistance | Interest rate reduction amount is not disclosed May be limited to two acres Restricted to specific industries |
Grants for Grads
Ohio residents who have donned a cap and gown within the last 48 months by earning an associate, bachelor’s, master’s, doctorate or some other post-graduate degree may qualify for help buying a home. The state rewards recent graduates with a discounted mortgage rate. Graduates can also be granted either 2.5% or 5% of the house price to help cover the down payment. That assistance is forgiven as long as you live in the state for the next five years.
Requirements
- Have not owned your residence in the prior three years
- Degree comes from an accredited college or university
- Minimum 640 credit score, or 650 for FHA loans
- Income below the maximum threshold, which varies by county as well as loan type
- Home sales price below the maximum allowed, which varies by county and loan type
- Successful completion of the OHFA homebuyer education course
- Meet traditional underwriting guidelines, including debt thresholds
Pros and cons
| Pros | Cons |
|---|---|
A lower monthly mortgage payment Need to save less to buy a home Many degree types are eligible, including associate | An unexpected move will cost you Must use a participating lender The timeline may pressure you into buying before you are ready |
Mortgage tax credit
Homebuyers in Ohio may qualify to save up to $2,000 in federal taxes payments. Unlike a tax deduction, which simply lowers your taxable income, this tax credit will directly lower the taxes you owe dollar for dollar. If you work with a participating lender, you’ll qualify for a credit of 40% of your mortgage interest, up to the $2,000 max. Working with an outside lender will reduce the credit to 20% of mortgage interest.
Requirements
- Have not owned your home in the prior three years
- Income below the maximum thresholds, dependent on county as well as loan type
- Home sales price below the maximum limits, which vary by county and loan type
- Complete the OHFA homebuyer education course
- Meet traditional underwriting for the mortgage, including debt thresholds
Pros and cons
| Pros | Cons |
|---|---|
A reduced tax bill each year May be combined with down payment assistance Can still deduct your mortgage interest No minimum credit score | The 40% credit may raise your mortgage interest rate Limits the price of home you buy Must owe taxes to benefit from the credit |
Communities First — Ohio Down Payment Assistance
The Communities First —Ohio Down Payment Assistance program is available statewide, offering grants towards a down payment. Eligible homebuyers will be able to receive a down payment grant of 3%, 4% or 5%, depending on the mortgage rate. Because it is a grant, not a second mortgage, the assistance does not need to be repaid. According to Communities First, there are no restrictions on reselling or refinancing the home, nor is there a minimum required time you need to live in the home.
Requirements
- Income below 115% of the area median income (AMI), which varies by county
- Minimum credit score of 620
- Meet industry standard mortgage underwriting
- Move into property as primary residence within 60 days
Pros and cons
| Pros | Cons |
|---|---|
Need less cash upfront No restrictions on selling or refinancing your home No limit on purchase price Income limits apply to the buyer, not the entire household | No discounted interest rates Must use a participating lender |
Many cities and counties across the state of Ohio also have rolled out various types of assistance to help buyers afford their first homes. Find out if your area offers additional assistance here.
Ohio first-time homebuyer qualifications
To take advantage of one of these first-time homebuyer programs, follow these steps:
1. Find a lender.Under the first three programs offered by the Ohio Housing Financing Agency (OHFA), the loans do not come directly from the agency. You need to use one of their approved lenders, which include banks, credit unions and others. These lenders can help you figure out which assistance programs you may qualify for, and how much house you can afford. Be sure to reach out to a few, since their products may vary. The Communities First Down Payment Assistance Program maintains a separate list of participating lenders.
2. Gather paperwork.The agency recommends buyers have the following paperwork ready in order to be approved for a loan:
- Social Security number
- Tax returns and W-2s for the prior three years
- Paycheck stubs from the last 30 days
- Checking and savings account statements for the last 30 days
- Bankruptcy paperwork (if applicable)
- Divorce paperwork (if applicable)
- Copy of purchase contract (if you are already under contract for a home)
3. Understand the terms.These programs include differences as significant as having to pay back the entire assistance amount — or not. Make sure you understand the details and terms of the aid, including what happens if you need to unexpectedly sell your house or move out of state.
4. Get educated. You are required by the OHFA on all of their primary loans to complete homebuyer education. Your schooling takes place after you submit your application but before you are approved for a loan. The counseling is free.
5. Ask for help. The homebuying process can feel overwhelming. For education before you shop for a home or a loan, or if you have questions or concerns anytime throughout the process, reach out to a counselor approved by the U.S. Department of Housing and Urban Development (HUD).
Understanding Ohio first-time homebuyer down payment assistance
Down payment assistance is a common type of aid to help first-time buyers afford their home. This assistance can come in one of many forms.
Deferred second mortgage
This is a second mortgage you take out on your home, in addition to the primary mortgage. The payment on this loan is deferred, however, meaning you do not need to pay it throughout the life of the loan. The assistance is typically repaid at the end of the loan term or when you sell the house, whichever comes first.
Forgivable second mortgage
This type of second mortgage usually is forgiven at a predetermined date. Thus it typically does not need to be repaid as long as you remain in the house over that period of time. Be aware, however, that if you unexpectedly need to move, you could owe some or all of the assistance.
Grant
Ohio residents who receive a grant to help fund their down payment or closing costs do not need to pay back this type of aid.
Mortgage credit certificate
Rather than dole out cash upfront, this type of aid helps you save on your tax bill every year. Eligible buyers typically get a tax credit for a percentage of the interest they pay on their home, up to a maximum dollar amount. Even with this credit, buyers can typically still take advantage of the standard mortgage interest deduction.
THINGS YOU SHOULD KNOW
Many Ohio first-time homebuyer programs require borrowers to repay the assistance if they sell or move out of state too soon. The time period for what is considered too soon varies, but is commonly around five to seven years after buying. Make sure you understand what you’ll owe if you unexpectedly exit.
How much of a down payment do I need to buy a house in Ohio?
Thanks to programs such as these, as well as others, buyers often do not need the traditional 20% down you may have heard. In fact you may get away with putting down significantly less. A FHA loan requires only 3.5% down. VA and USDA loans require even less — in fact 0% — down. Even a conventional loan may allow you to put down only 3%. Of course buyers can use these assistance programs to help fund those minimal down payments as well as closing costs.
Can I qualify for down payment assistance in Ohio?
In general, to be eligible for one of the down payment assistance programs in Ohio you need:
→ At least a 620 credit score (some programs and loans are higher)
→ An income below the maximum thresholds
→ To meet traditional underwriting for the mortgage, including debt thresholds
On top of these common requirements, each individual program has additional standards.
How do I apply for Ohio first-time homebuyer down payment assistance?
The process of applying for Ohio first-time homebuyer programs begins with finding a mortgage lender. Both the OHFA and Community First programs maintain a list of participating lenders. Once you’ve found a participating lender, you can match your borrowing profile to the eligibility criteria for various programs in order to find the best options for you.
Other first-time homebuyer loan programs
Conventional loans
Conventional loans are what you likely think of as a traditional mortgage. You can find these loans through brick-and-mortar and online banks, credit unions and other lending institutions. They are not backed by a government agency such as the Federal Housing Administration (FHA) or the U.S. Department of Veterans Affairs (VA).
FHA loans
First-time buyers are often drawn to FHA loans because they allow small down payments and have less stringent credit and underwriting requirements. Unlike many of these assistance programs, there are no income caps. The trade-off, though, is typically a larger monthly mortgage that includes a mortgage insurance premium.
VA loans
Available to veterans, active duty service members and eligible surviving spouses, VA loans are mortgages backed by the U.S. Department of Veterans Affairs (VA). VA loans allow eligible buyers to get into a home with no down payment or mortgage insurance. However, you may have to pay a funding fee at closing.
USDA loans
USDA loans are specifically for buyers house-hunting in rural areas of the state. If your potential home meets the geographic requirements to qualify, USDA loans offer 0% down payments. The U.S. Department of Agriculture (USDA) backs these loans and sets strict rules around where you can buy and how much money you can earn to qualify.
What are the best first-time homebuyer loans?
There is no one best mortgage product for all Ohioans. What is right for you will depend on personal factors such as the price of the house, your income and credit, and how long you plan to stay in the home. Talk to a HUD-approved housing counselor anytime to help you navigate your options.
Home price trends in Ohio’s major areas
Mortgage rates and home values have increased substantially over the past year. Higher rates combined with higher home values often leads to large monthly mortgage payments. For example, the median monthly mortgage payment for a home in Franklin County — home to the state’s capital, Columbus — increased to $1,492 in the third quarter of 2022, up $571 year over year. In Hamilton County, home to Cincinnati, a monthly mortgage payment jumped $1,199 up from $743 a year before — a $456 increase.
Is there a first-time homebuyer tax credit in Ohio?
Yes. Ohioans who have not owned a home in the prior three years can save up to $2,000 in federal taxes if they qualify for this credit. Working with certain approved lenders may save you more than others.
What are the current mortgage rate trends in Ohio?
Mortgage rates have jumped significantly in Ohio and around the country in the prior year. As of December 28, 2023, the current rates for a 30-year fixed rate mortgage nationwide are averaging about 6.61% while 15-year loan rates are coming in around 5.93%, according to Freddie Mac’s Primary Mortgage Market Survey. The LendingTree mortgage rates page has the specifics in your state and area.
