Ohio first-time homebuyer programs

OHFA homebuyer program

The OHFA has several programs for first-time homebuyers, including 30-year fixed-rate Federal Housing Administration (FHA) loans, VA loans, U.S. Department of Agriculture-Rural Development (USDA-RD) loans and conventional loans.

To qualify for conventional, VA or USDA loans, you must have a credit score of 640 or higher. For FHA loans, you must have a credit score of at least 650. Price and income limitations must also be met; the exact amounts depend on the area.

Here are two first-time buyer programs offered by OHFA:

• Down payment assistance: This program offers either 3% or 3.5% of the home's purchase price that you can use toward your down payment, closing costs or other preclosing expenses. The loan is forgiven after seven years.
• Grants for Grads: This program is geared toward those who have graduated with an associate's, bachelor's, master's or doctorate within the last 18 months. You can receive 3% or 3.5% of the purchase price to be used toward your down payment, which is forgiven after just five years.

» MORE: Ohio closing costs

Eligibility criteria for first-time homebuyers

To be considered a first-time homebuyer in Ohio, you must not have owned your primary residence in the last three years. You can also qualify if you are a veteran or if you’re purchasing a home in a targeted area, a federally designated zone with special incentives to promote homeownership.

You must meet income limits based on the size of your household and your county. You need a credit score of at least 650 for FHA loans. For conventional, USDA or VA loans, you must have a credit score of at least 640. There are also debt-to-income ratios that you must meet, which vary based on loan type.

The following types of properties are eligible for assistance:

• Single-family homes
• Condos
• Duplexes
• Properties up to four units
• Newly built or nearly completed single-family homes
• Modular homes
• Manufactured homes

Qualifying properties are limited to two acres within the city limits and five acres outside the city limits.

» COMPARE: Best mortgage lenders for first-time buyers

Down payment assistance options

The assistance options in Ohio are the down payment assistance program and the Grants for Grads program. Both programs offer either 3% or 3.5% of the purchase price in the form of a grant that can be used toward your down payment or closing costs.

With down payment assistance, you must keep the home for at least seven years. However, the Grants for Grads Program offers forgiveness after five years. If you don’t keep the home for the required time, you must pay back the entire grant.

Elena Novak, lead real estate researcher and analyst at PropertyChecker, explained: "What sets this program apart is that it’s forgiven after seven years if the homeowner stays in the property. If they sell or refinance before then, the assistance must be repaid. There’s no separate application; borrowers simply opt in during their OHFA loan process.”

Note that the interest rate on your mortgage will be higher than it would be if you didn't take the assistance, so it's important to do the math and make sure it works in your favor.

You must also meet income and purchase price limits, which depend on the area where the home is located, as well as your household size. For families of one or two people, income limits range between $91,300 and $153,600. For families of three or more, income limits range between $104,995 and $179,200.

Purchase price limits range between $510,939 and $1,316,624, depending on the area and type of home.

Your credit score and debt-to-income ratios must also meet the requirements of the type of loan you are receiving. To qualify for a conventional, USDA or VA loan, you must have a credit score of at least 640. To qualify for an FHA loan, you must have a credit score of at least 650.

These programs can be combined with Ohio Heroes and the Mortgage Tax Credit.

Down payment assistance vs. Grants for Grads

Additional OHFA programs

There are several other homebuyer programs available in Ohio. The income and property price limits apply to these programs as well. Just like the programs above, income limits range between $91,300 and $179,200 while purchase price limits range between $510,939 and $1,316,624.

For OHFA programs, income limits generally range from $91,300 to $153,600 for smaller households and $104,995 to $179,200 for larger ones.

Ohio Heroes

Ohio Heroes is an assistance program for public service workers that gives them a discount on their mortgage interest rate. This program can be paired with a down payment assistance program. You don’t have to be a first-time homebuyer to qualify.

"The Ohio Heroes program provides discounted mortgage interest rates to individuals working in public service, such as teachers, nurses, police officers, firefighters, active-duty military, and veterans. It can be paired with OHFA’s down payment assistance, making it a strong option for stable-income, mission-driven professionals," said Novak.

Eligible public service professionals include:

• Active duty military
• EMTs
• Firefighters
• K-12 administrators
• K-12 counselors
• K-12 teachers
• Nurse practitioners
• Nurses
• Paramedics
• Physicians
• Police officers
• Reserve members
• Surviving spouses of military members
• Veterans
• Volunteer firefighters

Mortgage Tax Credit

The Mortgage Tax Credit program has two versions: Mortgage Tax Credit Plus and Mortgage Tax Credit Basic. The Plus version is for first-time homebuyers and allows for a tax credit equal to 40% of the interest paid on your mortgage, up to $2,000 per year. This is in addition to any federal tax credit you may be eligible for.

The credit is nonrefundable, meaning that it can’t bring your tax liability below zero. For example, if you only owe $1,500 in taxes, you’ll only be able to claim a $1,500 credit.

You can pair this program with down payment assistance.

The Basic version is available to repeat homebuyers and provides a credit for 20% of the mortgage interest if the property is in a targeted area. For homes outside targeted areas, the credit is limited to 15%.

Also, note that you’ll pay a slightly higher interest rate on your mortgage if you choose to use this program, so check how the interest will affect your pricing before you commit.

Next Home

The Next Home program provides FHA, VA and USDA-RD loans to those who aren’t first-time homebuyers. You can pair this program with down payment assistance if you qualify for that program as well.

OHFA eligibility

The following table lists eligibility requirements for popular OHFA programs:

Comparison of OHFA program benefits and eligibility

Homebuyer education and resources

Ohio requires borrowers who are taking advantage of their programs to take a free homebuyer education course. The course offers tools and resources aimed at helping new homeowners navigate the homebuying and homeownership process.

You’ll also get a homebuyer's guide that helps you determine if you’re ready to buy. This guide covers making a budget, planning for homeownership costs and understanding your credit score.

You’ll learn about the mortgage process, including how to get preapproved, how much you can afford to borrow and how to close on your new loan. There are also sections on finding a realtor, home inspections, what to look for in a new home and home insurance.

Once you have reviewed the information, you’ll take a test. Then, you’ll be issued a certificate of completion that the lender will be able to access.