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.
The FHA loan program offers many benefits for homebuyers in Ohio who want to purchase a home with low down payment and flexible credit requirements. FHA loans are insured by the Federal Housing Administration, so lenders can offer borrowers lower interest rates and fees. However, there are specific FHA loan requirements in Ohio that borrowers need to meet to qualify.
In this comprehensive guide, we’ll explain all the key FHA loan requirements for borrowers in Ohio. We’ll cover topics like minimum credit scores, down payments, debt-to-income ratios, mortgage insurance, and more. Read on to learn everything you need to know to see if an FHA loan is right for you.
Overview of FHA Loans in Ohio
The most popular type of FHA loan in Ohio is the FHA 203(b) mortgage. This loan offers:
- Down payments as low as 3.5%
- Flexible credit requirements
- Low mortgage insurance rates
- Loan limits up to $831,000 in high-cost counties
FHA loans can be used for purchasing, refinancing, renovating, or constructing a home in Ohio You must occupy the home as your primary residence Investment properties do not qualify for FHA financing.
FHA Loan Limits in Ohio
The first FHA requirement to check is whether the home price falls under the FHA loan limits for your county in Ohio. Here are the 2022 FHA loan limits for several counties:
- Cuyahoga County: $428,100
- Franklin County: $482,000
- Hamilton County: $428,100
- Montgomery County: $428,100
You can look up the FHA loan limits in your county here. The standard maximum FHA loan limit in most Ohio counties is $420,680. But in high-cost areas, borrowers may qualify for higher loan amounts up to $831,000.
Minimum FHA Credit Score Requirements in Ohio
Your credit score is one of the most important factors in securing an FHA loan approval. Here are the minimum FHA credit score requirements in Ohio:
- 580 credit score with 3.5% down payment
- 500 credit score with 10% down payment
So if your credit score is below 580, you may still qualify by making a larger 10% down payment. Many lenders prefer scores of at least 600 for the best mortgage rates. The higher your credit score, the better your chances of getting approved.
Down Payment Requirements for FHA Loans in Ohio
FHA loans only require a 3.5% down payment in Ohio. This makes them more affordable than conventional loans that typically require 20% down.
Borrowers can make down payments as low as 3.5% if they have a 580 credit score. Or they can put down 10% with a minimum 500 credit score. Either way, this low down payment requirement makes FHA financing very attractive for first-time homebuyers and anyone lacking funds for a larger down payment.
Gift funds and down payment assistance programs can also help borrowers cover the down payment. But the funds must be documented and sourced.
Debt-to-Income Ratio Limits for Ohio FHA Loans
Lenders will review your debt-to-income (DTI) ratio to ensure you can afford the new mortgage payment. Here are the DTI requirements for FHA loans in Ohio:
- Maximum DTI of 43% with compensating factors
- DTI may go up to 50% with strong credit scores and reserves
Your lender will calculate your DTI by adding up your monthly debt payments like car loans and credit cards. They divide this number by your gross monthly income. The lower your DTI, the better your chances of approval. But even borrowers exceeding 43% may qualify with good credit history and savings.
Required Mortgage Insurance for Ohio FHA Loans
Borrowers with FHA loans in Ohio must pay monthly mortgage insurance premiums (MIP). This insurance protects the lender if you default on the loan.
You will pay an upfront MIP of 1.75% of the loan amount at closing. After that, you’ll make monthly MIP payments:
- 0.85% annual MIP for all loan terms
- MIP payments last for either 11 years or the full loan term
So for a $200,000 loan amount, you would pay $3,500 upfront for MIP plus $141 per month. Always factor the MIP costs into your mortgage payment budget.
Homebuyer Education with Ohio FHA Loans
Most lenders require homebuyer education if your credit score is below 640 and you have little money saved. You must complete an approved counseling course before closing on the home loan. Ask your lender about education requirements.
Occupancy and Property Requirements in Ohio
To qualify for an FHA loan in Ohio, you must plan to occupy the home as your primary residence. Second homes and investment properties do not qualify. Other property requirements include:
- Single-family homes, condos, townhomes, and PUDs eligible
- 2-4 unit properties eligible if owner-occupied
- Must be existing construction or complete within one year
- Home must meet FHA minimum property standards
The home you buy must be move-in ready to satisfy FHA housing quality standards and appraisal requirements.New construction homes must be complete before closing on the FHA loan.
Ohio FHA Loan Income Limits
One benefit of FHA loans is that there are no specific income limits to qualify. As long as you meet the DTI requirements, your income–whether high or low–will not disqualify you. This makes FHA loans available to a wider range of borrowers.
Ohio FHA Loan Requirements: Summary
The key FHA loan requirements in Ohio include:
- FHA loan limits up to $831,000 in high-cost areas
- Minimum credit scores of 500-580
- Total debt-to-income ratio below 43%
- 3.5% down payment with approved funds
- Upfront and monthly mortgage insurance premiums
- Must occupy home as primary residence
- Home must meet FHA minimum property standards
- No specific income limits
Carefully reviewing these FHA mortgage requirements will help you determine if this loan is right for your budget and home buying goals. Connect with a lender to pre-qualify and get more details on qualifying for an FHA loan in Ohio.
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?
Are FHA loans hard to get?
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.
What are Ohio FHA loan limits?
Ohio FHA loan limits vary by county, from $498,257 for single-family homes in most areas to $546,250 in more expensive metro areas.
What types of loans does OHFA offer?
OHFA offers FHA, VA, USDA-RD and conventional mortgage loans. These loans come with 30-year, fixed-rate terms and generous income and purchase price limits designed especially for homebuyers with low- and moderate-incomes. If you are not a first-time homebuyer, learn more about OHFA’s Next Home program.
How much does an FHA home cost in Ohio?
Ohio has 88 counties with FHA Limits ranging from a low of $498,257 for a 1-bedroom unit in Adams County to a high of $1,050,500 for a 4-bedroom unit in Delaware County .