Ohio First-Time Home Buying Assistance Programs for 2024

Ohio First-Time Home Buying Guide

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    By Kenny Zhu

    (Last Updated – 03/2024)

    Real estate competition has been brewing in the Buckeye State, as everywhere else.

    In January 2024, home prices in Ohio were up 6.3% compared to last year, hitting a $215,400 median price, according to Redfin. Sales prices had the biggest jump in Maple Heights, Kettering, and Springfield.

    Things can look a bit intimidating for first-time homebuyers in Ohio. Don’t fret, though, as home ownership may be more accessible than you think.

    The Ohio Housing Finance Agency (OHFA) offers a variety of programs for low- and moderate-income first-time and repeat homebuyers meant to help them achieve homeownership.

    4 Ohio Programs for First-Time Homebuyers

    OHFA offers four first-time homebuyer assistance programs that can be used in tandem with a 30-year fixed-rate FHA, VA, USDA, or conventional mortgage loan.

    The benefits from these programs come in the form of down payment assistance, a discounted rate, and a tax credit. Here are the basics of each program.

    1. Your Choice Down Payment Assistance

    The OHFA Your Choice program allows qualifying first-time homebuyers to borrow, in the form of a forgivable loan, 2.5% to 5% of the value of their home purchase to put toward down payment or closing costs.

    OHFA will forgive the assistance after seven years if you don’t sell or refinance the home. If you sell or refinance before seven years are up, you will be required to repay all assistance provided.

    2. Ohio Heroes

    The OHFA offers a discounted mortgage rate for first-time homebuyers in Ohio who work in industries that serve the public interest. Those who qualify for Ohio Heroes benefits are also eligible for the OHFA’s 2.5% to 5% down payment assistance loan.

    Qualifying sectors include:

    •   Veterans, active-duty military, reserves, and surviving spouses

    •   Police officers and professional and volunteer firefighters

    •   EMTs and paramedics

    •   Physicians, nurse practitioners, nurses, and state-tested nursing assistants

    •   Teachers, administrators, and counselors (preK-12)

    3. Grants for Grads

    The Grants for Grads program also offers a discounted mortgage rate and 2.5% to 5% in down payment assistance, forgivable after five years, for first-time homebuyers who have obtained a qualifying degree in the 48 months leading up to their loan origination.

    Eligible degrees include the following:

    •   Associate’s degree

    •   Bachelor’s degree

    •   Master’s degree

    •   Doctorate

    4. Mortgage Tax Credit

    OHFA offers a mortgage tax credit of 40% of annual mortgage interest paid, up to $2,000, for anyone who qualifies under OHFA’s first-time homebuyer program.

    If you use the tax credit with a different mortgage option from your lender, the tax credit percentage will be smaller.

    There are fees associated with applying for and receiving a mortgage credit certificate that vary by state. Often the savings from the lifetime of the credit can outweigh the fees.

    Who Is Considered a First-Time Homebuyer in Ohio?

    The OHFA considers you a first-time homebuyer if you meet any one of the following:

    •   You have not owned a primary residence in the last three years

    •   You are an honorably discharged veteran

    •   You are purchasing a home in a target area

    In addition, like all OHFA-qualified borrowers, you will need to:

    •   Meet the county-specific income and purchase price limits

    •   Have a credit score of 640+ for conventional, USDA, and VA loans

    •   Have a credit score of 650+ for FHA loans

    •   Meet debt-to-income ratios for loan type

    •   Buy a qualifying property type (up to four-unit residential properties, modular homes, and manufactured homes)

    •   Take a free homebuyer education course

    Recommended: First-Time Homebuyer Guide

    How to Apply to Ohio Programs for First-Time Homebuyers

    If you want to participate in OHFA’s first-time homebuyer programs, you’ll need to go through the following steps to find and apply for a loan. Don’t worry; it’s almost exactly the same process as applying for a conventional home loan. The main caveat is that your mortgage lender must work with the OHFA.

    Step 1: Find a Participating Lender

    Not all banks fall under the umbrella of OHFA-approved lenders. You can find participating mortgage
    on the website.

    Make sure you find a lender that works in the target county where you’re trying to buy. Most large local financial institutions typically show up as participants in the program.

    Getting pre-approved for a mortgage will show you the size of the loan you’d likely qualify for, and the interest rate.

    Step 2: Find an Agent and a Home

    A real estate agent can help you find a home in your price range and ensure that the property meets OHFA income and sales price limits.

    The OHFA may offer additional incentives for buyers of homes located in challenged “targeted areas .”

    Step 3: Take the Homebuyer Education Course

    The OHFA requires all first-time homebuyers participating in its programs to complete a free homebuyer education course (the sole exception being mortgage tax credit basic buyers).

    You can complete the course directly through the website , free of charge.

    Keep in mind that while it’s recommended that you complete the online education course in advance, the homebuyer education isn’t technically complete until after you’ve submitted a formal loan application through your lender.

    Step 4: Get an Offer Accepted and Finalize Your Loan Application

    Think of all the different types of homes out there, from condo to townhouse and single-family home, your budget, school districts, and wants and needs.

    Once you make an offer and the home seller has accepted it, you can move forward with finalizing your mortgage application. Your lender will work with you to coordinate a target closing date and verify that all underwriting and OHFA requirements are met.

    Your loan officer will advise you on how final OHFA benefits will be disbursed in accordance with which first-time homebuyer program you qualified for.

    Federal Programs for First-Time Homebuyers

    The OHFA’s first-time homebuyer program includes perks, but higher earners and others will not qualify.

    Several federal government programs are designed for people who have low credit scores or limited cash for a down payment.

    The mortgages are generally for single-family homes, two- to four-unit properties that will be owner occupied, approved condos, townhomes, planned unit developments, and some manufactured homes.

    Federal Housing Administration (FHA) Loans

    The FHA, which is part of the U.S. Department of Housing and Urban Development (HUD), insures mortgages for borrowers with lower credit scores. Homebuyers choose from a list of approved lenders that participate in the FHA loan program. Loans have competitive interest rates and require a down payment of 3.5% of the purchase price for borrowers, who typically need FICO® credit scores of 580 or higher. Those with scores as low as 500 must put at least 10% down.

    In addition to examining your credit score, lenders will look at your debt-to-income ratio (DTI, your monthly debt payments compared with your monthly gross income). FHA loans allow a DTI ratio of up to 50% in some cases, vs. a typical 45% maximum for a conventional loan.

    Gift money for the down payment is allowed from certain donors and will be documented in a gift letter for the mortgage.

    FHA loans always require mortgage insurance: a 1.75% upfront fee and annual premiums for the life of the loan, unless you make a down payment of at least 10%, which allows the removal of mortgage insurance after 11 years. For a $300,000 mortgage balance, upfront MIP would be around $5,250 and monthly MIP, at a rate of 0.55%, would be around $137. You can learn more about these loans, including FHA loans for refinance and rehab of properties, by reading up on FHA requirements, loan limits, and rates.

    Freddie Mac Home Possible Mortgages

    Very low- and low-income borrowers may make a 3% down payment on a Home Possible® mortgage. These loans allow various sources for down payments, including co-borrowers, family gifts, employer assistance, secondary financing, and sweat equity.

    The Home Possible mortgage is for buyers who have a credit score of at least 660.

    Once you pay 20% of your loan, the Home Possible mortgage insurance will be canceled, which will lower your mortgage payments.

    Fannie Mae HomeReady Mortgages

    Fannie Mae HomeReady® Mortgages allow down payments as low as 3% for low-income borrowers. Applicants generally need a credit score of at least 620; pricing may be better for credit scores of 680 and above. Like the Freddie Mac program, HomeReady loans allow flexibility for down payment financing, such as gifts and grants.

    For income limits, a comparison to an FHA loan, and other information, go to this Fannie Mae site .

    Fannie Mae Standard 97 LTV Loan

    The conventional 97 LTV loan is for first-time homebuyers of any income level who have a credit score of at least 620 and meet debt-to-income criteria. The 97% loan-to-value mortgage requires 3% down. Borrowers can get down payment and closing cost assistance from third-party sources.

    Department of Veterans Affairs (VA) Loans

    Active-duty members of the military, veterans, and eligible family members may apply for loans backed by the Department of Veterans Affairs. VA loans, which can be used to buy, build, or improve homes, have lower interest rates than most other mortgages and don’t require a down payment. Most borrowers pay a one-time funding fee that can be rolled into the mortgage.

    Another benefit of VA loans is that they do not require private mortgage insurance (PMI) for borrowers who make a down payment of less than 20%. And they have more flexible credit score requirements. In some cases, even those who have previously been in foreclosure or bankruptcy can qualify.

    Borrowers applying for a VA loan will need a Certificate of Eligibility from the VA so make sure to review a guide to qualifying for a VA loan as a first step in the process.

    Native American Veteran Direct Loans (NADLs)

    Eligible Native American veterans and their spouses may use these no-down-payment loans to buy, improve, or build a home on federal trust land. Unlike VA loans listed above, the Department of Veterans Affairs is the mortgage lender on NADLs. The VA requires no mortgage insurance, but it does charge a funding fee.

    US Department of Agriculture (USDA) Loans

    No down payment is required on these loans to moderate-income borrowers that are guaranteed by the USDA in specified rural areas. Borrowers pay an upfront guarantee fee and an annual fee that serves as mortgage insurance.

    The USDA also directly issues loans to low- and very low-income people. For loan basics and income and property eligibility, head to this USDA site .

    HUD Good Neighbor Next Door Program

    This program helps police officers, firefighters, EMTs, and teachers qualify for mortgages in the areas they serve. Borrowers can receive 50% off a home in a “revitalization area.” They must live in the home for at least three years.

    Ohio First-Time Homebuyer Stats for 2024

    Ohio Realtors® publishes an annual profile of homebuyers in Ohio. Here’s a look at homebuyer characteristics based on the latest data.

    •   Percent of all buyers who are first-time homebuyers: 26%

    •   Median household income of Ohio homebuyers: $75,000

    •   Average credit score in Ohio: 716

    Additional Financing Tips for First-Time Homebuyers

    In addition to federal and state government-sponsored lending programs, there are other financial strategies that may help you become a homeowner. Some examples:

    •  Traditional IRA withdrawals. The IRS allows qualifying first-time homebuyers a one-time, penalty-free withdrawal of up to $10,000 from their IRA if the money is used to buy, build, or rebuild a home. The IRS considers anyone who has not owned a primary residence in the past three years a first-time homebuyer. You will still owe income tax on the IRA withdrawal. If you’re married and your spouse has an IRA, they may also make a penalty-free withdrawal of $10,000 to purchase a home. The downside, of course, is that large withdrawals may jeopardize your retirement savings.

    •  Roth IRA withdrawals. Because Roth IRA contributions are made with after-tax money, the IRS allows tax- and penalty-free withdrawals of contributions for any reason as long as you’ve held the account for five years. You may also withdraw up to $10,000 in earnings from your Roth IRA without paying taxes or penalties if you are a qualifying first-time homebuyer and you have had the account for five years. With accounts held for less than five years, homebuyers will pay income tax on earnings withdrawn.

    •  401(k) loans. If your employer allows borrowing from the 401(k) plan that it sponsors, you may consider taking a loan against the 401(k) account to help finance your home purchase. With most plans, you can borrow up to 50% of your 401(k) balance, up to $50,000, without incurring taxes or penalties. You pay interest on the loan, which is paid into your 401(k) account. You usually have to pay back the loan within five years, but if you’re using the money to buy a house, you may have up to 15 years to repay.

    •  State and local down payment assistance programs. Usually offered at the regional or county level, these programs provide flexible second mortgages for first-time buyers looking into how to afford a down payment.

    •  The mortgage credit certificate program. First-time homeowners and those who buy in targeted areas can claim a portion of their mortgage interest as a tax credit, up to $2,000. Any additional interest paid can still be used as an itemized deduction. To qualify for the credit, you must be a first-time homebuyer, live in the home, and meet income and purchase price requirements, which vary by state. If you refinance, the credit disappears, and if you sell the house before nine years, you may have to pay some of the tax credit back. There are fees associated with applying for and receiving the mortgage credit certificate that vary by state. Often the savings from the lifetime of the credit can outweigh these fees.

    •  Your employer. Your employer may offer access to lower-cost lenders and real estate agents in your area, as well as home buying education courses.

    •  Your lender. Always ask your lender about any first-time homebuyer grant or down payment assistance programs available from government, nonprofit, and community organizations in your area.

    The Takeaway

    If you’re a first-time homebuyer in Ohio, discounted-rate mortgage programs and down payment assistance are available to help make your home purchase more affordable in today’s tough market.If you don’t qualify for those programs, you might want to further investigate government-backed loans and conventional loans.

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    Should I take first-time homebuyer classes?

    Yes! Good information is key to a successful home-buying experience for anyone, but especially for newcomers, who can easily be overwhelmed by the jargon, technicalities, and magnitude of applying for a mortgage and purchasing a home. First-time homebuyer classes can help. Indeed they are required for the principal Ohio Housing Finance Agency loan program.

    Do first-time homebuyers with bad credit qualify for homeownership assistance?

    Often they do. Many government and nonprofit homeowner assistance programs are available to people with low credit scores. And often, interest rates and other loan pricing are competitive with those of loans available to borrowers with higher credit scores. That said, almost any lending program has credit qualifications. That’s why it’s important to take all possible steps to improve your credit standing before you go house hunting.

    Is there a first-time homebuyer tax credit in Ohio?

    Yes. The OHFA sponsors the mortgage tax credit plus program, which allows you to file for a dollar-for-dollar federal tax credit of up to 40% of your annual mortgage interest paid, up to $2,000.

    The tax credit percentage will dip to 30% and below for the state’s basic mortgage tax credit program.

    Is there a first-time veteran homebuyer assistance program in Ohio?

    While not specific to veterans, the Ohio Heroes program is offered through the OHFA and is tailored toward Ohio residents who serve or have served in sectors that contribute to the public good. This includes veterans, active-duty military members, and reserves as well as surviving spouses.

    Ohio Heroes offers a reduced mortgage rate; down payment assistance can be added.

    What credit score do I need for first-time homebuyer assistance in Ohio?

    OHFA lists a minimum credit score of 640 for conventional, USDA, and VA mortgage loans and 650 for FHA loans.

    What is the average age of first-time homebuyers in Ohio?

    There is no recent data specific to Ohio, but nationally the average age of a first-time homebuyer in the U.S. is 35.

    Photo credit: iStock/Davel5957

    *SoFi requires Private Mortgage Insurance (PMI) for conforming home loans with a loan-to-value (LTV) ratio greater than 80%. As little as 3% down payments are for qualifying first-time homebuyers only. 5% minimum applies to other borrowers. Other loan types may require different fees or insurance (e.g., VA funding fee, FHA Mortgage Insurance Premiums, etc.). Loan requirements may vary depending on your down payment amount, and minimum down payment varies by loan type.

    ¹FHA loans are subject to unique terms and conditions established by FHA and SoFi. Ask your SoFi loan officer for details about eligibility, documentation, and other requirements. FHA loans require an Upfront Mortgage Insurance Premium (UFMIP), which may be financed or paid at closing, in addition to monthly Mortgage Insurance Premiums (MIP). Maximum loan amounts vary by county. The minimum FHA mortgage down payment is 3.5% for those who qualify financially for a primary purchase. SoFi is not affiliated with any government agency.

    †Veterans, Service members, and members of the National Guard or Reserve may be eligible for a loan guaranteed by the U.S. Department of Veterans Affairs. VA loans are subject to unique terms and conditions established by VA and SoFi. Ask your SoFi loan officer for details about eligibility, documentation, and other requirements. VA loans typically require a one-time funding fee except as may be exempted by VA guidelines. The fee may be financed or paid at closing. The amount of the fee depends on the type of loan, the total amount of the loan, and, depending on loan type, prior use of VA eligibility and down payment amount. The VA funding fee is typically non-refundable. SoFi is not affiliated with any government agency.

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