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2022 Ohio First-Time Homebuyer Programs

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The state of Ohio has several different programs for first-time homebuyers that can help you afford the down payment, closing costs and other expenses associated with your first house. You will need to meet income limits to qualify, and you will need to live in the home for a number of years before you enjoy the full benefits. In this article, we’ll go over the major first-time homebuyer programs in Ohio.

Ohio statewide and local first-time homebuyer programs

First-time homebuyers in the state of Ohio will find several different programs that will help them afford their first house. The first three programs on this list come from the Ohio Housing Finance Agency, and may require you to take out a first mortgage through one of its programs. The fourth is through the Port of Greater Cincinnati Development Authority.

Program nameAssistance amountAssistance typeWhere it’s available
Your Choice! Down Payment Assistance2.5% or 5% of the home’s purchase priceForgivable loanStatewide
Grants for Grads2.5% or 5% of the home’s purchase priceForgivable loanStatewide
Mortgage Tax CreditUp to $2,000Federal tax creditStatewide
Communities First - Down Payment Assistance3%, 4% or 5% of the home’s purchase priceGrantStatewide

What to know about different types of down payment assistance

Down payment assistance can come in one of several forms. Here are a few of the more common types you may come across.

Grants. Grants are money given to you that you don’t need to pay back. Grants may be offered as a percentage of a home’s purchase price to help you make your down payment.

Second mortgage. Other assistance is structured as a second loan, on top of your primary mortgage. You may need to start paying this loan back right away. However, the second mortgage may be what’s known as a “soft second,” meaning you won’t need to pay it back until you sell the home. Some second mortgage programs are 100% forgivable over time.

Forgivable loan. A forgivable loan is a type of second mortgage that can be wiped away over time. These loans may be forgiven a portion at a time for every year you stay in the home, or they may be forgiven all at once after a certain number of years. If you sell the home before the forgiveness period is over, you’ll have to pay back whatever portion of the loan remains.

How Ohio first-time homebuyer programs work

Qualifying for most of Ohio’s first-time homebuyer programs starts with taking out a first mortgage through the Ohio Housing Finance Agency. We’ll cover the steps in the process below. Applying for the Communities First program is very similar, and most of the steps will apply as well. Before you begin, you will need to commit to living in this home for a number of years to enjoy the full benefits of the program.

Step 1: Find a participating lender

The Ohio Housing Finance Agency’s loan programs are made by approved lenders across the state. You can find a list of these lenders on the agency’s website. Your lender will be able to guide you through the full process of getting approved for an OHFA assistance program. You can also call the housing finance agency at 888-362-6432 for help navigating the process.

When you meet with your lender, the OHFA recommends bringing the following documents and information:

  • Social Security number
  • Tax returns for the past two years
  • W-2 forms for the past two years
  • Paycheck stubs from the past 30 days
  • Bank account statements from the past 30 days
  • Any documents from a bankruptcy or divorce, if applicable

With this information, your lender may be able to prequalify you for a mortgage of a certain amount. It is likely worthwhile to contact several different lenders at this stage and get prequalified. You will be able to compare loan offers and find the one that offers you the best rate and terms.

The Communities First program has its own list of participating lenders, and the first step in applying for the down payment grant is to contact one of these lenders.

Step 2: Find a home

With a prequalification in hand, you’ll know the price range of the home you should be looking for. You may consider hiring a real estate agent who can help you find the right home and guide you through the process of making an offer.

Step 3: Apply for your loan

Once you have a purchase contract on your future new home, you can complete a full loan application with the lender you’ve selected. Your loan officer will be able to fill you in on the steps you’ll need to take to do this. You may need to provide additional information and documentation to verify that you qualify for the loan.

Step 4: Take a homebuyer education course

The Ohio Housing Finance Agency requires all borrowers to complete a homebuyer education course approved by the U.S. Department of Housing and Urban Development, or take the online course offered by the agency. The OHFA program is free.

Step 5: Get final loan approval and close on the loan

Your lender will verify all the information you provided and make sure you qualify for an Ohio Housing Finance Agency loan. Once that’s all done and you’re approved, you will move toward closing. Closing typically occurs between 30 and 45 days after you applied for the loan

Ohio first-time homebuyer program requirements

Each first-time homebuyer program has its own criteria to qualify. Most have income limits. You can see if you meet the income limits for the Ohio Housing Finance Agency program of your choice here.

Program name Credit score minimumDTI ratio maximumMaximum income limitHow long you have to live in home
Your Choice! Down Payment Assistance640 for conventional, USDA and VA loans; 650 for FHA loansDetermined by loan typeVaries by county, family size and loan program, from $51,200 to $137,760Seven years
Grants for Grads640 for conventional, USDA and VA loans; 650 for FHA loansDetermined by loan typeVaries by county, family size and loan program,from $51,200 to $137,760Five years
Mortgage Tax Credit640 for conventional, USDA and VA loans; 650 for FHA loansDetermined by loan typeVaries by county, family size and loan program, from $51,200 to $137,760N/A
Communities First - Down Payment Assistance64045%Varies by county; ranges from $86,595 to $113,160No restrictions

THINGS YOU SHOULD KNOW

Most first-time homebuyer programs have some sort of income limit, or a maximum amount your household can earn to qualify. These limits are often set in relation to your area’s median income as determined by the U.S. Department of Housing and Urban Development. You can look up your area median income using HUD’s lookup tool.

National first-time homebuyer programs

Ohio’s first-time homebuyer programs use first mortgages that are part of one of the four most common loan types. These loans aren’t exclusive to first-time homebuyers, but several have features that may be attractive to people buying their first homes.

Conventional loans. Conventional loans are loans that aren’t part of a government program. You may be able to qualify for a conventional loan with a credit score of 620 (though the Ohio Housing Finance Agency requires 640), and down payments can be as low as 3%. If you make less than a 20% down payment, you generally will need to pay for private mortgage insurance (PMI).

FHA loans. FHA loans have more lenient qualifying criteria than conventional loans, making them a common choice for first-time buyers. You can qualify for an FHA loan with a credit score as low as 500 with a down payment of 10%. If you have a credit score of 580, you can make a down payment as low as 3.5%. Of course, the Ohio Housing Finance Agency requires a credit score of 650 for FHA loans.

VA loans. These loans are a benefit for military servicemembers and veterans, and offer the ability to buy a home with no down payment. The government does not set a minimum credit score for VA loans, though the OHFA requires a score of 640.

USDA loans. USDA loans are intended for low- or moderate-income families buying homes in rural areas, and offer the ability to buy a home with no down payment. The OHFA requires a credit score of 640 to qualify, and USDA loans have their own income limits you must meet.

FAQs about Ohio’s first-time homebuyer programs

Who qualifies as a first-time homebuyer in Ohio?

Under HUD’s definition, a first-time homebuyer is someone who has not owned an interest in their home in the previous three years. You can still be considered a first-time buyer if you only owned a home with a former spouse. You can also be a first-time homebuyer if you owned a mobile home.

Can I qualify for down payment assistance in Ohio?

In general, to qualify for down payment assistance in Ohio you must:

  • Be a first-time homebuyer, veteran or buy a home in a targeted area
  • Have a credit score of at least 640 for conventional, VA and USDA loans, or 650 for FHA loans
  • Meet income limits and debt-to-income ratio maximums

How much of a down payment do I need to buy a house in Ohio?

You may not need to provide any down payment out of your own pocket. The Ohio Housing Finance Agency offers down payment assistance of up to 5% of the purchase price of your home, which is higher than the minimum down payments of several loan programs. The OHFA does not require you to use any money out of your own pocket.

Home price trends in Ohio’s major areas

The median home price is below $350,000 in the vast majority of Ohio’s counties, according to data from the National Association of Realtors. In many parts of the state, the median home price is below $150,000. However, these prices are rising: up more than 9% in many counties over the past year, according to the NAR data.

In Hamilton County, home to Cincinnati, the median home price as of the second quarter of 2021 is $196,830, up 9% year-over-year, equating to a monthly payment of $747 on a 30-year loan, up from $705 in the previous year. In Cleveland’s Cuyahoga County, the median price is $164,155, up 9.1% year-over-year, averaging a monthly mortgage payment of $623, up from $588 in the previous year.

 

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