When applying for a mortgage, a popular option is a loan backed by the Federal Housing Administration (FHA) because of its lenient eligibility requirements. However, FHA loans come with annual loan limits that restrict how much house a borrower can buy. In Ohio, the FHA loan limit in 2024 for a single-family home is $498,257 — except in high-cost areas, where the maximum is $546,250.
An FHA loan is a popular option for first-time homebuyers in Ohio thanks to low down payments flexible credit requirements and access to down payment assistance programs. But navigating the FHA loan process can seem daunting if you’ve never purchased real estate before.
This comprehensive guide will walk you through the key steps needed to successfully apply for and obtain FHA-insured financing on your Ohio home purchase.
Overview of FHA Loans in Ohio
FHA loans are government-backed mortgages insured by the Federal Housing Administration (FHA). This reduces risks to the lender, allowing them to offer more favorable terms to buyers who may not qualify for conventional loans.
Some of the main benefits of an FHA loan in Ohio include
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Low Down Payments – Only 3.5% down required on purchase prices up to $350,000 in most counties. Even lower options exist.
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Lenient Credit Guidelines – Minimum 580 credit score needed with some flexibilities on past issues.
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Down Payment Help – Grants and second loans available to cover all or part of the down payment.
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Low Mortgage Insurance – Upfront 1.75% premium plus 0.45% – 1.05% annual MIP. Drops off after 11 years.
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No Income Limits – FHA doesn’t cap income, only adjusts loan amounts based on area median income.
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High Debt-to-Income – DTI up to 56% allowed if you can prove extenuating circumstances.
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Assumable Financing – Future buyers can take over your FHA mortgage, making homes easier to sell.
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Wide Home Style Eligibility – Condos, townhomes, 2-4 units all qualify along with single family homes.
Clearly FHA offers multiple advantages to those struggling to buy in Ohio’s competitive market. But you have to properly follow the process to get approved.
FHA Loan Requirements in Ohio
While flexible, FHA loans do have certain borrower, property and underwriting requirements you must meet:
For the Borrower:
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Minimum 580 credit score
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Debt-to-income ratio typically below 55%
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At least 12 months with current employer
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No bankruptcies or foreclosures in past 3 years
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Homebuyer education certificate
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Cash to pay upfront mortgage insurance premium
For the Property:
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Primary residence – no second homes
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Single family, townhome, condo or 2-4 unit property
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Move-in ready condition; no major repairs needed
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Appraisal supporting purchase price
For Underwriting:
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Loan amount below county limit
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Interest rate at or below market
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Monthly payments affordable based on income/debt
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1-2 months cash reserves after closing
Meeting these FHA requirements ensures you loan has the best shot at approval. Know exceptions exist in some cases too.
Steps to Apply for an FHA Loan in Ohio
Follow this 10 step process to successfully obtain an Ohio FHA mortgage:
1. Check Your Credit Score and Report
Order copies of your credit reports from Equifax, Experian and Transunion. Review for any errors negatively impacting your FICO or Vantage credit scores. Dispute inaccuracies with the bureaus to maximize your score.
2. Get Pre-Approved for an FHA Loan
Consult lenders to get pre-qualified or ideally pre-approved for an FHA loan based on your income, debts, and credit profile. This shows sellers you’re a serious buyer who can obtain financing.
3. Complete Homebuyer Education
FHA requires all first-time buyers complete an approved homebuyer education course. Numerous HUD-certified nonprofits offer online and in-person classes in Ohio.
4. Find an FHA-Approved Property
Search for homes, condos and multi-unit properties in your target price range that meet FHA’s physical condition requirements. If repairs are needed, factor those costs in.
5. Make an Offer and Negotiate Terms
Make an offer based on comparables, making sure home appraises to support the price. Hire a real estate attorney to represent you in negotiations.
6. Conduct Inspections and Appraisal
Schedule professional inspections to uncover any issues with the property. Also cooperate with lender on the mandatory FHA appraisal.
7. Secure Down Payment Funds
FHA loans in Ohio only need 3.5% down but you must source this from your own savings, gifts or grants. OHFA, FNMA, and lenders offer down payment assistance programs.
8. Finalize Mortgage Contingency
Work with your lender to get fully approved now that the property and price are set. Provide all needed documents and submit for final underwriting.
9. Close on Time
Arrange funds for closing costs and down payment. Sign final paperwork and transfer funds on schedule to complete purchase.
10. Move In!
With financing squared away, you can now get keys, move your belongings, and settle into your new Ohio home supported by an affordable FHA loan!
While each real estate transaction has unique aspects, following this general process helps you proactively address key steps and avoid surprises.
5 Tips for a Smooth FHA Loan Application
These extra pointers will also optimize your chances getting an FHA mortgage approved:
1. Check OHFA’s Income Limits
Maximum household income varies by county and family size. Verify you fall under the ceiling for FHA loans issued through Ohio Housing Finance Agency.
2. Know Your DTI Can Exceed 55%
Compensating factors like significant assets or stellar credit may allow FHA to approve DTI up to 56%. But aim for under 50% if possible.
3. Have Reserves for Closing
Bring 1-2 months of mortgage payments to closing to prove you can handle unexpected expenses. Gifts are OK.
4. Add an FHA Co-Borrower
Adding a second borrower boosts qualifications. Income, debts and credit scores of both applicants are used.
5. Get Down Payment Help from Grants
Utilize down payment assistance grants from OHFA, FHLB, FNMA, or other sources to supplement your own savings. These provide gap financing to cover your entire down payment and closing costs.
Getting pre-qualified early, submitting a complete application, and leveraging all available resources will help you secure an FHA mortgage approval.
7 Top FHA Lenders in Ohio
These leading lenders across Ohio offer some of the best FHA mortgage rates and customer service:
- Guaranteed Rate
- Loan Depot
- Amerifirst Financial
- Crosscountry Mortgage
- Academy Mortgage
- Caliber Home Loans
- Fairway Independent Mortgage
Expanded options are also available from dozens of credit unions, community banks, and online lenders in Ohio.
Be sure to shop offers from multiple FHA lenders to find the lowest rates and fees. Pre-approval from one doesn’t obligate you to use them for the final mortgage.
Alternatives If You Don’t Qualify for FHA
What if you don’t meet the minimum FHA loan requirements? Before giving up, consider these alternative mortgages to buy in Ohio:
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Conventional 97 – Only 3% down with flexible income limits.
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USDA – 100% financing for rural properties.
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VA Loan – No down payment for qualifying veterans.
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203(k) Rehab Loan – Finance home repairs into mortgage.
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HFA Preferred – Ohio Housing Finance Agency options for lower scores/income.
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Manual Underwrite – Alternative path without credit scoring model.
Don’t assume homeownership is out of reach if you can’t get FHA approved. These options show if one path is closed, others exist to navigate around obstacles and achieve your dreams of owning a home.
Let FHA Help You Buy a Home in Ohio
Owning your own home in Ohio offers financial stability, a safe environment to raise a family, and the chance to build equity for the future. With proper guidance and persistence, an FHA mortgage can help turn this aspiration into a reality.
How to qualify for an FHA loan in Ohio
To qualify for FHA loans in Ohio, homebuyers will need to share employment history, a record of income and other personal and financial information. While eligibility requirements can be less stringent than those with a conventional mortgage, borrowers still have to demonstrate an ability to repay the loan as well as pay a down payment and all closing costs when finalizing the property purchase. As such, lenders will review the following:
→ Credit score: For borrowers paying 3.5% down on the loan, the minimum credit score is 580; the minimum credit score drops to 500 for borrowers paying 10% down.
→ Debt-to-income (DTI) ratio: DTI ratio refers to your total monthly debt divided by your gross monthly income. The maximum DTI ratio for FHA loans is 43%; for borrowers with high credit scores and sufficient cash reserves, the DTI ratio could be higher.
→ Mortgage insurance: FHA loans require borrowers to pay for mortgage insurance to help offset the risk that comes with lower down payment and credit score requirements. Borrowers are required to pay for both upfront and annual mortgage insurance premiums.
→ Income limits: There are no income limits for FHA loans.
→ Residency: All FHA borrowers must use the property as their primary residence for a minimum of one year.
→ Cash reserves: If borrowers have fair or poor credit, the lender may require them to maintain a minimum amount of cash reserves to cover several months of mortgage payments.
How are FHA loan limits determined?
Each year, the FHA resets the loan limits according to the guidelines listed in the National Housing Act. To do so, it uses a percentage of the national conforming loan limit set by the Federal Housing Finance Agency (FHFA) for conventional mortgages guaranteed or owned by Fannie Mae or Freddie Mac.
The FHFA set the 2024 national conforming loan limit at $766,550 for the purchase of a one-unit property. To set the “floor,” or the lowest maximum loan amount, the FHA took 65% of this amount, or $498,257. Most counties in the country utilize this loan limit. For areas where the cost of living is higher, the FHA set a “ceiling,” or highest loan amount limit, of $1,149,825, which is 150 percent of the national conforming limit. In areas in Alaska, Hawaii, Guam and the U.S. Virgin Islands where building costs are even higher, the ceiling could be higher.
The Good and BAD of FHA Loans | NEW FHA Loan Requirements 2023
FAQ
What do you need for a FHA loan in Ohio?
What will disqualify you from an FHA loan?
Is it hard to get approved for a FHA loan?
What credit score does FHA require?
Can I get an FHA loan in Ohio?
To qualify for an FHA loan in Ohio, your home loan must be below the local FHA loan limits in your area. For 2024, the maximum loan limit in Ohio is $498,257 for a single-family home and $1,050,500 for a four-plex. Limits varies by county. The minimum loan limit is $5,000. Loan limits vary by county and home size.
How do I get a home loan in Ohio?
Find an OHFA-approved lender in your area, along with tips to help you with the application process, or call us toll-free at 888.362.6432. For advice on improving your credit score, please contact a HUD-approved counseling agency in Ohio. Homebuyers must meet debt to income ratios for their loan type.
What are FHA loan limits in Ohio?
FHA loan limits in Ohio represent the maximum amount you can borrow through an FHA loan while still benefiting from the program’s advantageous terms and government backing. In most Ohio counties, the 2024 FHA loan limit for single-family dwellings is set at $498,257.
How do I qualify for an Ohio FHA mortgage?
Determining your eligibility for an Ohio FHA Mortgage is easy. FHA will look at a couple of things to determine if borrowers meet Ohio FHA loan requirements: 1) Documentation of your income and, 2) Verification of your credit, 620 credit score required. If you already own a home, showing your mortgage payment history will be required.