Ohio First-Time Home Buyer Programs of 2021

NerdWallet
By NerdWallet 
Edited by Amanda Derengowski
Ohio First-Time Homebuyer Programs

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If you are a first-time home buyer in Ohio, there's help to make homeownership more affordable. The state of Ohio works with mortgage lenders to offer home loans to people with low and moderate incomes, including first-time home buyers. You’re considered a first-time buyer if you haven’t owned a residence within three years.

The Ohio Housing Finance Agency, or OHFA, helps with 30-year fixed-rate conventional, Federal Housing Administration, Veterans Affairs and U.S. Department of Agriculture Rural Development mortgages that have relaxed income and purchase price limits, and can be combined with other assistance.

Here’s what to know about national and state programs available in Ohio and what you need to qualify.

National first-time home buyer programs

These national mortgage programs may be used by first-time home buyers to make home-owning more affordable in any of the 50 states.

Conventional mortgage

Best for:

Low down payments, limited mortgage insurance premiums

What you need to know:

A conventional mortgage is a home loan that isn’t guaranteed or insured by the federal government. Conventional mortgages that conform to the requirements set forth by Fannie Mae and Freddie Mac allow down payments as low as 3% for first-time buyers or lower-income home buyers. Unlike FHA loans, conventional loans allow borrowers to eventually cancel their mortgage insurance or avoid mortgage insurance altogether if they put at least 20% down.

VA loans

Best for:

Military, low down payments

What you need to know:

The U.S. Department of Veterans Affairs helps service members, veterans and surviving spouses buy homes. VA loans are especially generous, providing competitive interest rates, often requiring no down payment or mortgage insurance. Although there is no official minimum credit score, most VA-approved lenders require scores of at least 640.

FHA loans

Best for:

Low credit score, low down payments

What you need to know:

This is the go-to program for many first-time home buyers with lower credit scores. The Federal Housing Administration allows down payments as low as 3.5% for those with credit scores of 580 or higher. The FHA will insure loans for borrowers with scores as low as 500 but requires a 10% down payment for a score that low. Mortgage insurance is required for the life of an FHA loan and cannot be canceled.

USDA loans

Best for:

Low down payments, rural

What you need to know:

A USDA home loan is a zero-down-payment mortgage for eligible rural and suburban home buyers. USDA loans are issued by the U.S. Department of Agriculture through the USDA Rural Development Guaranteed Housing Loan Program. There are income limitations, which vary by region. Applicants with credit scores of 640 or higher receive streamlined processing. Those with scores below that must meet more stringent underwriting standards.

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OHFA highlights and eligibility requirements

OHFA 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. Not a first-time buyer? You may find help from Ohio’s Next Home program.

Highlights

  • Down payment assistance forgivable after seven years.

  • Mortgage tax credits available.

  • Incentives for recent college grads, military, teachers, healthcare workers and others.

Eligibility

  • Minimum credit score of 640, may be higher for FHA loans.

  • Free home buyer education required.

  • Limits on debt-to-income, purchase price and borrower incomes.

  • First-time buyer requirement waived for eligible veterans or for homes in target areas.

Ohio first-time home buyer loan programs

Ohio Your Choice! Down Payment Assistance

Best for:

Down payment assistance, closing cost assistance

What you need to know:

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

Best for:

Veterans, military, first responders, educators, doctors and nurses

What you need to know:

Ohio Heroes offers discounted mortgage rates to eligible first-time and repeat buyers who are members of service 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.

Ohio Grants for Grads

Best for:

Recent college graduates

What you need to know:

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, 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. 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.

Ohio Mortgage Tax Credit

Best for:

Tax credits

What you need to know:

First-time home buyers 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 with a maximum of $2,000. 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% of the home’s purchase price.

Summary: 2021 OHFA first-time home buyer programs

  • The Ohio Your Choice! Down Payment Assistance program for cash to apply to your closing costs or down payment.

  • Ohio Heroes for discounted interest rates on home loans to military borrowers, first responders, educators, doctors, nurses and others.

  • Ohio Grants for Grads for a discounted interest rate and down payment assistance of up to 5% of the home's purchase price to recent college grads.

  • The Ohio Mortgage Tax Credit for a tax credit of up to 40% of the mortgage interest you pay each year.

Start learning about OHFA first-time home buyer programs at the agency’s website. You’ll find details on income and purchase price limits, and links to lenders who are acquainted with these programs and their requirements.

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