The state of Ohio works with mortgage companies, lenders and credit unions to offer home loans to people with low and moderate incomes, including first time home buyers.
The Ohio Housing Finance Agency (OHFA) helps low- and moderate-income borrowers get 30-year, fixed-rate conventional, Federal Housing Administration, Veterans Affairs and U.S. Department of Agriculture Rural Development mortgages with relaxed income and purchase price limits. OHFA also has a number of programs that assist first time buyers and others buying a home. Benefits include lower mortgage rates, down payment assistance, tax credits and combined financing for buying and renovating a home. Besides basic eligibility rules, each program may have additional requirements.
Purchasing your first home is an exciting milestone! But navigating the world of mortgages and down payments can feel daunting for rookie homebuyers Thankfully, Ohio offers several programs tailored specifically to first timers These home loans make buying more affordable by offering benefits like low interest rates, down payment assistance, reduced fees, and more flexible credit requirements.
In this comprehensive guide, we’ll explore the top first time homebuyer loan options available through the state of Ohio. Whether you want low costs, low rates, or minimal cash needed to close, there’s likely a perfect Ohio mortgage solution for your needs. Let’s dive in!
OHFA First Time Homebuyer Loans
The Ohio Housing Finance Agency, or OHFA, administers the state’s primary first time buyer program. They offer a variety of affordable 30-year fixed rate mortgage products. Here’s an overview of what OHFA offers:
Available Loan Types
- FHA loans
- VA loans
- USDA loans
- Conventional loans
You can choose the type of loan that best fits your finances and goals. OHFA provides the same low rates and down payment assistance across all loan types.
Down Payment Options
- Standard 97% LTV with 3% down
- 100% LTV with no down payment, if you qualify
Closing Cost Assistance
- Up to 2% of the mortgage amount available to cover closing fees
Homebuyer Education
- 8-10 hour online course required
The key advantage of OHFA loans is the down payment flexibility. Options like 3% down or no down payment make these loans much more accessible for first time buyers on a budget.
OHFA works with lenders across Ohio to offer their special program loans. Your lender will guide you through applying, getting approved, and closing on the OHFA mortgage that fits your specific situation.
Conventional 97 Mortgages
Another route is to use a conventional 97 mortgage. These are traditional loans offered directly by lenders and backed by Fannie Mae. What makes them stand out is the low 3% down payment.
Conventional 97 loans offer:
- 3% down on 1-unit properties
- Minimum 620 credit score
- No mortgage insurance with 20% equity
The pros are low down payment, no PMI someday, and potentially better rates than FHA or USDA loans. The cons are higher credit/income requirements and upfront mortgage insurance premiums.
Conventional 97 mortgages can be a great fit if you want minimal cash needed for your down payment but have good credit and finances. Shop mortgage lenders to find the best 97 loan rates and terms.
Local Down Payment Assistance Programs
In addition to OHFA, many local municipalities and non-profit groups offer down payment programs for Ohio first time buyers. These can supplement OHFA loans or other mortgages with additional down payment or closing cost help.
For example, the City of Columbus offers up to $10,000 in down payment assistance for qualifying buyers purchasing homes in targeted neighborhoods. Franklin County also offers a similar program.
Research down payment grants available in your local Ohio area to maximize your buying power. Your lender or real estate agent may know of programs worth exploring.
USDA Guaranteed Loans
Don’t overlook USDA home loans in Ohio. The Department of Agriculture offers 100% financing for low income buyers in rural areas.
Key features include:
- 0% down payment required
- Lenient credit score requirements
- No monthly mortgage insurance
- Fixed rates on 30 year terms
The catch is home sites must fall into eligible rural zones, and income/property limits apply. But for qualifying buyers, USDA loans can be a great way to get into a home with minimal cash.
Your local USDA office can provide a list of approved properties and lenders offering USDA financing in your desired area.
VA Loans
Veterans and active duty service members should strongly consider VA loans. The Veterans Affairs home loan program offers:
- Zero down payment option
- No monthly mortgage insurance
- Competitive fixed rates
- Lower closing costs than other loans
To qualify, you need adequate income/credit and military service meeting the VA’s length of service requirements. Just submit a Certificate of Eligibility along with your home loan application.
VA loans give Ohio’s military families a smooth path to affordable homeownership.
Ohio First Time Home Buyer Grants
Beyond mortgages, Ohio also offers some grants specifically for first time buyers. These programs gift free money to qualified applicants to spend on down payments or closing expenses.
Top Ohio first time buyer grants include:
OHFA YourChoice Down Payment Assistance
- Up to 5% of the purchase price given for down payment/closing costs
OHFA Grants for Grads
- $2,500 grant for recent college graduates
Ohio Heroes Grant
- $1,000 grant for EMTs, teachers, nurses and more
FHLB Down Payment Assistance Grants
- Up to $7,500 based on income
Be sure to ask your lender about grants you may qualify for to lower your out-of-pocket costs. Every little bit helps when buying your first home.
Ohio First Time Home Buyer Tax Benefits
Along with mortgages and grants, new homeowners can enjoy some nice tax perks in Ohio.
Mortgage Tax Credit
- Offsets up to $2,000 in state tax liability
Property Tax Homestead Exemption
- Reduces property taxes by up to $25,000 off home value
Coordinate with your lender to complete the necessary paperwork to claim these tax credits and exemptions when you buy.
Tips for First Time Homebuyers in Ohio
If you’re just starting out on the homebuying journey, keep these tips in mind:
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Get pre-approved – Being pre-approved gives you a price range and shows sellers you’re serious.
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Save for down payment – Shoot for at least 3-5% down to keep payments lower.
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Know your budget – Factor in taxes, insurance, maintenance, utilities, and association fees.
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Start building credit – Apply for a credit card and make on-time payments to boost your score.
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Complete homebuyer education – Required for most Ohio first buyer programs but valuable for all.
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Research financing options – Learn about all the loans, grants, and programs available to first timers in Ohio.
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Find the right home – Pick a home you can afford now and that fits your lifestyle. Focus on move-in ready properties to limit surprises.
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Inspect before buying – Hire a professional home inspector to identify any issues needing repair.
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Read documents carefully – Review all contracts, disclosures, and paperwork prior to signing.
With proper preparation and financing, first time buyers can navigate the process smoothly. Take advantage of Ohio’s suite of programs catering specifically to new homeowners.
Finding the Best Ohio First Time Homebuyer Loan
The first step is connecting with an experienced loan officer familiar with the various mortgage options for first timers. Here are some tips on choosing the right lender:
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Check references – Ask friends, family, or your real estate agent for recommendations.
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Look for specialization – Seek out lenders highlighting first time buyer programs.
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Ask about fees – Make sure you understand all origination costs and closing expenses.
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Discuss rate/term fit – Match loan term and rate type to your budget and plans.
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Review disclosures – A good lender will explain charges, risks, and obligations thoroughly.
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Go local – Nearby lenders can offer personalized guidance and faster processing.
Team up with a lender invested in tailoring Ohio home loans and grants to your specific financial situation. They can walk you through available programs, paperwork, and steps to homeownership.
Next Steps to Buying Your First Home in Ohio
Once you have financing lined up, you can start the exciting process of actually purchasing your home!
Follow these next steps when you’re ready to buy:
- Tour homes that fit your budget and needs
- Make an offer through your real estate agent
- Negotiate price and terms with the sellers
- Complete inspections and appraisal
- Final walkthrough of property
- Sign closing paperwork and take ownership!
Then comes the fun part – move-in, decorating, and making memories in your new home. Enjoy the journey!
Buying a Home in Ohio’s Major Cities
Ohio hosts many vibrant metropolitan areas, each with their own real estate markets. Here’s a quick overview of buying in the state’s top cities:
Columbus
- Median Home Price: $315,000
- Competitive market favoring sellers
- Diverse neighborhoods and employment opportunities
- Top school districts attract families
Cleveland
- Median Home Price: $170,000
- Historic homes and cultural attractions
- Revitalization and gentrification
About OHFA and eligibility requirements
- A free homebuyer education course is required after borrowers submit a mortgage application
- Down payment assistance is available for first time home buyers and is forgiven after seven years unless the home is sold or refinanced during that time
- There are limits on purchase price and borrowers’ incomes, which vary by county and the number of people in a family
- A minimum credit score is 640 for conventional mortgages and USDA, VA, and FHA 203(k) home loans
- A minimum credit score is 660 for other FHA loans
- Each type of loan has its own debt-to-income requirements
- Veterans who’ve been honorably discharged are eligible for VA loans. They do not have to be first time home buyers.
- Eligible property types for these programs include existing single-family homes, duplexes, triplexes, fourplexes and condominiums; one-unit existing modular homes; and newly built single-family homes.
Ohio Homebuyer Assistance Programs
HOME BUYER PROGRAM
First time buyers have a few financing options through OHFA, including FHA, VA, USDA Rural Development and conventional mortgage loans with affordable 30-year fixed rates. Credit score minimums are 640 on conventional, VA, USDA and FHA 203(k) mortgages and 660 on non-203(k) FHA loans. Limits on income, purchase price and debt-to-income ratio also apply. Buyers can look up participating lenders and income and purchase-price limits. These loans, with somewhat different rules, are available to qualifying repeat buyers through the OHFA Next Home program.
MORTGAGE TAX CREDIT
Firsttime home buyers combining an OHFA mortgage and a down payment assistance program may be eligible for a mortgage credit certificate if they meet income and purchase price guidelines. The certificate allows a tax credit of up to 40% of the borrower’s annual mortgage interest paid and can be used annually for as many as 30 years, provided the property is your primary residence. Tax credits are available, but for less, for first time buyers using a non-OHFA mortgage.
You’ll need to owe a tax balance to claim the deduction, and there’s a limit on the maximum amount of possible credit. Your credit can’t be more than you owe, after deductions, exemptions and other credits. Borrowers using the tax credit also can get down payment assistance amounting to 2.5% or 5% of the home’s purchase price.
DOWN PAYMENT ASSISTANCE
First time home buyers and repeat buyers may qualify for down payment assistance of either 2.5% or 5% of the home’s purchase price. The larger assistance amount comes with a higher interest rate. You can use the money toward your down payment, closing costs or other qualifying “pre-closing” expenses. After seven years, the financial assistance is forgiven. If you sell or refinance before that, you’ll have to repay the money.
OHIO HEROES
Ohio Heroes offers discounted mortgage rates to eligible first time and repeat buyers who are members of helping professions, including veterans, active duty military members or reservists (surviving spouses included), police, paid and volunteer firefighters, emergency medical technicians, paramedics, physicians, nurse practitioners, registered nurses, licensed practical nurses, state tested nurse aides, and pre-K through grade 12 teachers, administrators and counselors. You can combine a Heroes discount with down payment assistance.
Recent graduates may be eligible for two homebuying incentives designed to keep them in Ohio after college. You’re eligible if you’re a first time buyer and if, within the past 48 months, you earned an associate’s, bachelor’s, master’s or doctoral degree from an accredited school recognized by the U.S. Department of Education.
The program offers a discounted mortgage interest rate that can be combined with down payment assistance of 2.5% or 5% of the home’s purchase price. In this case, the assistance is forgiven after five years unless you sell the home and leave Ohio before then, in which case you’ll need to repay some or all of it.
OHFA ADVANTAGE
Additional down payment and closing cost help is available in the form of a grant, which does not need to be repaid. For borrowers whose income is 80% or less of the median income in their county, a 0.5% grant is available. At 50% or less of the median income, the grant increases to 2%. For example, if the median income is $50,000, then borrowers who earn over $25,000 and up to $40,000 would qualify for a 0.5% grant; a borrower who makes $25,000 or less would qualify for a 2% grant.
The grants can be used only with a conventional mortgage. Using OHFA Advantage in combination with the Your Choice! Down Payment Assistance program is OK, but doing so will increase your mortgage rate slightly. Both first time and repeat home buyers may apply.
Take Advantage of a First-Time Homebuyer’s Program?
FAQ
How much of a down payment for first time home buyer Ohio?
What credit score do you need for a first time home buyer in Ohio?
How does OHFA help a first-time homebuyer?
This first-time homebuyer down payment assistance program through OHFA provides forgivable assistance of either 2.5% or 5% of the home purchase price. Your proceeds can help cover: The entire assistance amount is forgiven after you’ve lived on the property for seven years. However, you must repay in full if you sell or refinance your home early.
Can a first-time homebuyer get a loan in Ohio?
While many people lack the funds to realize their dream of homeownership, a first-time homebuyer loan or grant can be the key to making it happen. First-time homebuyers in Ohio can find a variety of programs to make buying more affordable, especially if they’re considered low-income. Some Ohio first-time homebuyer programs to check out include:
What first-time homebuyer programs are available in Ohio?
Some Ohio first-time homebuyer programs to check out include: Your Choice! Down Payment Assistance Your Choice! Down Payment Assistance The Ohio Housing Finance Agency’s (OHFA’s) Your Choice! program gives homebuyers with low and moderate incomes their choice of down payment assistance: either 2.5% or 5% of the home’s purchase price.
How much do first-time homebuyers put down in Ohio?
According to our first-time homebuyer study, the average down payment made by first-time buyers in Ohio was $25,841 in 2023, and the average mortgage was $227,695. That means, if we assume no other funding was used to complete those purchases, Ohioans put down about 10% on average.