Ohio First-Time Homebuyer Programs

Ohio First Time Homebuyer Programs
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There are several statewide grant and loan programs you might qualify for as an Ohio first-time homebuyer. These programs typically provide down payment assistance and flexible borrower requirements. For example, you could be eligible for unique benefits if you have a moderate income, are a recent college graduate or served in the military.

Ohio First-time Homebuyer Programs

You could be eligible for a first-time homebuyer program in Ohio if you haven’t owned a primary residence in the past three years, are an honorably discharged veteran or live in a target area. Depending on the program, it’s possible to also add down payment assistance or occupation-based loan benefits to reduce your interest rate or cover your upfront financing costs.

The Ohio Housing Finance Agency (OHFA) offers the majority of the state’s first-time homebuyer programs. Additionally, several Ohioan cities and counties offer homebuyer incentives. Here are some programs to consider:

OHFA Homebuyer Program

Borrowers with low or moderate incomes can qualify for OHFA traditional first-time homebuyer loans. This program has more lenient income and purchase limits than a typical home purchase loan, which makes it easier to qualify for.

The state housing agency works with participating lenders to provide 30-year, fixed-rate mortgages for the following loan types:

You can compare OHFA mortgage rates for conventional and government-backed loans to current 30-year mortgage rates to find your best option.

Ohio Heroes

The Ohio Heroes program provides reduced interest rates to borrowers who work in one of these careers:

  • Education: Teachers (pre-K through grade 12), administrators and counselors
  • First responders: Police officers, firefighters, volunteer firefighters, EMTs and paramedics
  • Medical: Physicians, nurse practitioners, nurses (registered nurses and licensed practical nurses) and STNAs
  • Military: Active duty, reserve components, veterans and surviving spouses

The interest rate reduction is up to 0.25% in comparison to the standard OHFA rates. Borrowers can also utilize down payment assistance benefits but will pay a higher rate in return.

Your Choice! Down Payment Assistance

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:

  • Closing costs
  • Down payment
  • Other pre-closing expenses

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.

Unfortunately, the mortgage interest rates are higher if you apply for this assistance. The 5% down payment assistance loans have the highest rates. Be sure to compare the OHFA mortgage interest rates to today’s 30-year mortgage rates to calculate your costs.

You can also combine this benefit with the Ohio Heroes and Mortgage Tax Credit Plus programs.

Mortgage Tax Credit

First-time homebuyers in Ohio could also be eligible for up to $2,000 in tax savings through OHFA for paid mortgage interest. This mortgage credit certificate is in addition to any federal mortgage tax benefits you qualify for and reduces your income tax liability.

How much you can deduct depends on which program you’re eligible for.

  • Mortgage Tax Credit Plus: You can have up to 40% of your interest for an OHFA First-Time Homebuyer loan deducted ($2,000 maximum annual credit). While these loans can have a higher interest rate, they’re also eligible for 2.5% down payment assistance combined with the tax deduction.
  • Mortgage Tax Credit Basic: If you take out a loan that isn’t offered through OHFA, you could still be eligible for up to 30% savings on a bank-owned property. The benefit drops to 25% for properties in target areas and to 20% for all other properties.

As this is a non-refundable tax credit, you may only be able to claim partial benefits if you owe less income tax.

City of Columbus American Dream Downpayment Initiative

Columbus, Ohio residents with low or moderate incomes can get a second mortgage through the American Dream Downpayment Initiative (ADDI) for their down payment and closing costs. This loan is deferred and forgiven after five years and can be worth up to 6% of the purchase price ($7,500 maximum).

Along with not owning a home within the last three years, you must have lived in Ohio for at least six months before applying. So if you’re moving to Ohio, another program may be a better option.

Cuyahoga County Down Payment Assistance Program

Buying a home in the greater Cleveland area can be easier with a Cuyahoga County Down Payment Assistance loan. The homebuyer’s income must be at or below 80% of the area’s median income to qualify initially.

Eligible buyers can receive assistance worth up to 10% of the purchase price ($16,600 maximum) in loan funds.

Additionally, the home purchase price cannot exceed $166,000. This loan will be a deferred second mortgage, and buyers must make a minimum 3% down payment contribution to apply. Keep in mind that you’ll have to repay this assistance if you sell, transfer or refinance your home.

Dayton Down Payment Assistance

The HomeOwnership Center partners with the City of Dayton and its neighboring communities to offer a down payment assistance loan. The assistance amounts differ by program but can usually cover from 10% to 20% of the home purchase price for buyers with qualifying incomes.

Forgiveness options also vary. While the city program currently doesn’t offer loan forgiveness, the Aloft Dayton and Inclusive Community Fund in the Greater Dayton area offer partial or full forgiveness after five years of ownership.

Ohio First-time Homebuyer Grants

Home purchase grants are usually a one-time lump sum to reduce your closing costs and starting loan balance. You usually won’t have to repay the balance but may need to own your home for a specific number of years to avoid repayment penalties. Here are some grants to consider:

Grants for Grads

The OHFA Grants for Grads program provides discounted interest rates and 2.5% or 5% down payment assistance on eligible first-time homebuyer loans. Note that you can’t participate in this program without receiving down payment assistance.

The down payment assistance benefit is fully forgiven after the first five years. However, you must repay all or part of the grant if you sell your home or move out of Ohio within these five years.

Communities First

The Communities First down payment assistance grant provides first-time homebuyers with 3% to 5% of the home’s purchase price in funds. Unlike similar programs, this one doesn’t have minimum residency requirements to qualify for benefit forgiveness—so while the Port of Greater Cincinnati Development Authority offers this program, it’s available to homebuyers statewide.

You may consider this grant since you will instantly gain equity and can sell or refinance your home early and without penalty. The income limits differ by county and only count the borrower’s income instead of household income.

This program might be a better fit than OFHA’s down payment assistance loan if you’re unsure about your future plans as there are fewer restrictions for receiving help.

How to Buy a House in Ohio

You can follow these steps to buy your first house in Ohio and potentially qualify for state or local first-time homebuyer programs:

  1. Make sure you qualify. Most Ohio homebuyer programs require a minimum credit score of 640 (650 for FHA loans) and have a maximum debt-to-income (DTI) ratio you must meet depending on your loan type. County-specific income and purchase limits also apply.
  2. Submit your financial documents. You’ll need to provide your tax returns, financial history and proof of being a first-time homebuyer.
  3. Find a lender. Working with a participating lender for your desired assistance program can make the assistance application process easier. Your lender can submit the necessary paperwork on your behalf if the seller accepts your offer.
  4. Attend a homebuyer education class. The assistance programs require completing a first-time homebuyer class approved by the Department of Housing and Urban Development (HUD) before closing. You may also be able to attend an online class offered by an assistance agency, such as OHFA.
  5. Sign the closing documents. After your lender completes the underwriting process, you’ll sign the closing documents and take ownership of the property.

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