The state of Ohio works with mortgage companies, lenders and credit unions 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 low- and moderate-income borrowers get 30-year, fixed-rate conventional, Federal Housing Administration, Veterans Affairs and U.S. Department of Agriculture Rural Development mortgages with relaxed income and purchase price limits.
OHFA also 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. Besides basic eligibility rules, each program may have additional requirements.
OHFA highlights and eligibility requirements
- A free home buyer education course is required after borrowers submit a mortgage application
- Down payment assistance is available for first-time home buyers and is forgiven after seven years, unless the home is sold or refinanced during that time
- First-time home buyers and others can use target area loans to purchase a home with an affordable mortgage and interest rate in specific areas selected for revitalization; a target area lookup tool allows home shoppers to see whether a property address is in a target area.
- There are limits on purchase price and borrowers’ incomes, which vary by county and the number of people in a family
- Minimum credit score is 640 for conventional mortgages and USDA, VA, and FHA 203(k) home loans
- Minimum credit score is 660 for other FHA loans
- Each type of loan has its own debt-to-income requirements
- Eligible veterans — those who’ve been honorably discharged — do not have to be first-time home buyers
- Eligible property types for these programs include: existing single-family homes, duplexes, triplexes, fourplexes and condominiums; one-unit existing modular homes; and newly built single-family homes
Ohio home buyer assistance programs
Home Buyer Program
First-time buyers have several financing options through OHFA, including FHA, VA, USDA Rural Development and conventional mortgage loans with affordable 30-year fixed rates. Credit score minimums are 640 on conventional, VA, USDA and FHA 203(k) mortgages and 660 on non-203(k) FHA loans. Limits on income, purchase price and debt-to-income ratio also apply. Buyers can look up participating lenders and income and purchase-price limits. These loans, with somewhat different rules, are available to qualifying repeat buyers through the OHFA Next Home program.
Mortgage Tax Credit
First-time home buyers combining an OHFA mortgage and a down payment assistance program 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 and can be used annually for as many as 30 years, provided the property is your primary residence. Tax credits are available, but for less, for first-time buyers using a non-OHFA mortgage.
You’ll need to owe a tax balance to claim the deduction, and there’s a limit on the maximum amount of possible credit. 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% or 5% of the home’s purchase price.
Down Payment Assistance
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 offers discounted mortgage rates to eligible first-time and repeat buyers who are members of helping 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.
Grants for Grads
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’s, 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. In this case, 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.
Additional down payment and closing cost help is available in the form of a grant, which does not need to be repaid. For borrowers whose income is 80% or less of the median income in their county, a 0.5% grant is available. At 50% or less of the median income, the grant increases to 2%. For example, if the median income is $50,000, then borrowers who earn over $25,000 and up to $40,000 would qualify for a 0.5% grant; a borrower who makes $25,000 or less would qualify for a 2% grant.
The grants can be used only with a conventional mortgage. Using OHFA Advantage in combination with the Your Choice! Down Payment Assistance program is OK, but doing so will increase your mortgage rate slightly. Both first-time and repeat home buyers may apply.
This program uses FHA 203(k) loans — with a minimum 640 credit score requirement — to help Ohioans get the money to both buy and renovate a home with one long-term, fixed-rate mortgage. The program is open to first-time buyers and others.
Here’s how it works:
- You get a mortgage for the estimated value of the property after your updates and repairs have been done (labor costs are included)
- One- to four-family homes that have “been completed for at least one year” are eligible
- You’ll need to use a RenovateOhio participating mortgage lender
Your next step
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. You also can find program criteria by county here, or call OFHA at 888-362-6432.
Not a first-time buyer? You may find help from Ohio’s Next Home program.
National first-time home buyer programs to consider
These national programs offer low down payment mortgages for qualified first-time buyers.
FHA-backed loans offer down payments as low as 3.5% and less-strict underwriting standards than conventional mortgages. Also, you’ll find FHA down payment grants for Ohio residents in Dayton and Cleveland listed here.
VA loans are a benefit for veterans and active-duty military service members who want to purchase a primary residence. VA loans have unique benefits, including limited closing costs, attractive mortgage rates, no mortgage insurance requirement and (typically) no down payment requirement.
USDA mortgages give home buyers in rural areas access to government-backed home loans that require no down payment. “Rural” is broadly defined here: Borrowers in many suburban areas are eligible, and there’s no need to be a farmer to apply.
Conventional mortgages backed by Fannie Mae and Freddie Mac are available for as little as 3% down.