What to know about buying a house in Ohio

If you’re an Ohio first-time home buyer, count yourself lucky. Because the Buckeye State provides some great support for people like you. You could be in line for one-on-one counseling, free homebuyer education, and even some generous down payment assistance.

Indeed, you might even be eligible for a grant (which never has to be repaid) of up to 5% of the purchase price of your first home. Imagine the difference that could make to your homebuying plans.

Here’s how to get started.

Verify your home buying eligibility in Ohio. Start here (Sep 29th, 2021)

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Ohio home buyer overview

The association of Ohio Realtors says the average sales price across Ohio in July 2021 was $252,200. That was a 12.9% increase over the same month in 2020.

Such sharp rises in home prices make it challenging to save for a down payment and closing costs. So be sure to read on for information about home buyer assistance programs that could help you bridge the gap between your savings and those requirements.

Ohio Home Buyer Overview
Average Home Sale Price in Ohio $252,200
Minimum Down Payment in Ohio (3%) $7,560
20% Down Payment in Ohio $50,430
Average Credit Score in Ohio1 711
Maximum Ohio Home Buyer Grant2 5% grant from Communities First Ohio

Down payment amounts are based on the state’s most recently available average home sale price. “Minimum” down payment assumes 3% down on a conventional mortgage with a minimum credit score of 620.

If you’re eligible for a VA loan (backed by the Department of Veterans Affairs) or a USDA loan (backed by the US Department of Agriculture), you may not need any down payment at all.

Verify your home buying eligibility in Ohio. Start here (Sep 29th, 2021)

First-time home buyer loans in Ohio

First-time home buyers with a 20% down payment in the state of Ohio can get a conventional loan with a low interest rate. And you never have to pay for private mortgage insurance (PMI).

Of course, few first-time buyers have saved enough for 20 percent down. But the good news is, you don’t need that much. Not by a long shot.

Borrowers can often get into a new home with as little as 3% or even 0% down using one of these low-down-payment mortgage programs:

  • Conventional 97 — From Freddie Mac or Fannie Mae. 3% down payment and 620 minimum credit score. You can usually stop paying mortgage insurance after a few years
  • FHA loan — Backed by the Federal Housing Administration. 3.5% down and a 580 minimum credit score. But you’re typically on the hook for mortgage insurance until you refinance to a different type of mortgage, move, or pay off your loan
  • VA loan — Only for veterans, active-duty military members, reservists, and National Guard. Zero down payment is required. Minimum credit score varies by lender but often 620. No ongoing mortgage insurance after closing. These are arguably the best mortgages available, so apply if you’re eligible
  • USDA loan — For those on low-to-moderate incomes buying in designated rural areas. Zero down payment required. Credit score requirements vary by lender but often 640. Low mortgage insurance rates
  • OHFA or Communities First Ohio — May include competitive mortgage interest rates and can be used with down payment assistance. More information below

Note that most of these programs require you to buy a primary residence. That’s a home you’ll live in full-time, not a vacation home or investment property.

Still, depending on the loan type you choose, you could potentially get into your new house with minimal cash out of pocket.

These programs even let you use gifted money or down payment assistance (DPA) to cover the down payment and closing costs.

If you’re not sure which program to choose for your first mortgage loan, your lender can help you find the right match based on your finances and home buying goals.

Find the best first-time home buyer loan for you (Sep 29th, 2021)

Ohio first-time home buyer programs

Ohio has a couple of great, statewide first-time buyer programs that could make your home purchase more affordable. These include the My Ohio Home and Communities First mortgage programs.

My Ohio Home

OhioHome.org is part of the state government’s Ohio Housing Finance Agency (OHFA).

OHFA offers programs based on conventional mortgage loans, USDA loans, and VA Loans (for which you need a minimum credit score of 640). It also has FHA loans, for which that minimum is 650.

As is usual with these state programs, you must:

There are three basic eligibility criteria. You must be one or more of the following:

  1. A first time home buyer (meaning you must not have owned a primary residence in the last three years); OR
  2. A veteran with an honorable discharge; OR
  3. Planning to buy a home in one of OHFA’s target areas

There are other eligibility requirements too, including income caps and purchase price limits. You can learn more on OHFA’s website.

Communities First

Communities First Ohio is run by the Port of Greater Cincinnati Development Authority, and appears to offer mortgages to all Ohio first-time home buyers. You can expect similar rules and eligibility criteria to those for OHFA mortgages.

However, Communities First seems to offer more generous down payment assistance (DPA) along with its loan programs — including home buyer grants of up to 5 percent of the home purchase price.

Ohio first-time home buyer grants

OHFA’s down payment assistance offer is pretty good compared with many nationwide. It has a number of programs, but the most popular is probably Your Choice! Down Payment Assistance.

With that, Ohio first-time home buyers can borrow either 2.5% or 5% of their next home’s purchase price. That takes the form of a loan, but it’s forgiven after seven years. That means if you stay in the home at least seven years, you won’t have to pay anything back.

What’s not to like? Well, you have to repay the OHFA loan in full if you move, sell the home, refinance, or transfer your main mortgage during those seven years.

With Communities First, you can apply for a grant of 3, 4, or 5 percent of your next home’s purchase price. And, because it’s a grant, you never have to repay the funds.

You may also qualify for one of these grants more easily than an OHFA loan. Because only the borrower’s income is counted, not the whole household’s. You can find more details in the program brochure.

Verify your home buying eligibility in Ohio. Start here (Sep 29th, 2021)

Buying a home in Ohio’s major cities

Ohio is one of those states where it is, on average, less expensive to buy a home in a big city than statewide. And if you wish to buy in Cleveland, you’re doubly lucky. Because home prices are roughly half those in Columbus and Cincinnati. And Cleveland prices are rising much less quickly.

Columbus first-time home buyers

The median list price in Columbus was $229,900 in August 2021, according to Realtor.com. That was up 12.2% year over year.

If you want to buy a home at that median price, your down payment options might fall between:

  • $6,900 for 3% down payment
  • $45,980 for 20% down payment

The City of Columbus offers a down payment assistance program called the American Dream Down Payment Initiative (ADDI).

The program offers five-year deferred loans. So you don’t have to repay the money you receive, providing you don’t move out of the home, refinance, pay off your mortgage during that period.

Some eligibility criteria are shown at that link. But details (including how much you can borrow) are scant. You can call (614) 645-7896 for more information.

Cleveland first-time home buyers

The median list price in Cleveland was $113,000 in July 2021, according to Realtor.com. That was up 3.7% year over year.

If you want to buy a home at that median price, your down payment options might fall between:

  • $3,390 for 3% down payment
  • $22,600 for 20% down payment

Cleveland’s down payment assistance is administered by Cuyahoga County. It offers a deferred loan of up to a staggering 10% of the purchase price.

This can be used for homes with a value up to $149,000. So the loan amount is capped at $14,900. Still, that home price cap is higher than the median list price for the city.

The loan is never forgiven. But it is repayable only when you move, sell the home, refinance, transfer, or pay down your mortgage.

You can download a PDF program guide from the Cuyahoga County website for more details, including income limits and other eligibility criteria.

Cincinnati first-time home buyers

The median list price in Cincinnati was $224,900 in August 2021, according to Realtor.com. That was up 15.3% year over year.

If you want to buy a home at that median price, your down payment options might fall between:

  • $6,750 for 3% down payment
  • $44,980 for 20% down payment

The City of Cincinnati operates an American Dream Downpayment Initiative program for first-time homebuyers with modest incomes. And you can borrow up to $5,000 as an interest-free deferred loan that is forgiven after five years.

However, the city’s website says, “All or a portion of the funds will be recaptured in the event a homeowner moves from the residence, sells or transfers ownership during the five-year residency period.”

Download the program’s guide (PDF) for all the details.

Where to find home buying help in Ohio

All the organizations we’ve listed above should provide advice freely to any first-time home buyer in Ohio or their local area.

In addition to our selection, the U.S. Department of Housing and Urban Development (HUD) provides lists for statewide, regional, and local resources:

Statewide and regional programs in Ohio

You can also find programs by county, city, and town on HUD’s Ohio first-time home buyer webpage.

What are today’s mortgage rates in Ohio?

You can see today’s live mortgage rates in Ohio here.

When you’re ready to start the home buying process, make sure you get personalized rate quotes from at least three mortgage lenders.

Don’t just look at advertised rates online; actually apply for preapproval and compare the interest rates and fees you’re offered. That’s the only way to know you’re getting the best deal possible on your new home loan.

Verify your new rate (Sep 29th, 2021)

1 Source: Experian.com 2021 study of 2020 data

2Based on a review of the state’s available DPA grants at the time this was written

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