This article itemizes first-time home buyer assistance programs in Ohio and respective loan requirements.
But before I delve into those details, let’s define some basic terms.
First-Time Home Buyer Assistance Types in Ohio
First-time home buyer assistance comes in different forms. Below is the list of the common types of assistance such programs offer.
- Grants: These are financial assistance to help first-time home buyers in paying specific lending fees and charges. Nonprofit groups, state and local governments, and local housing authorities typically fund these grants.
- Down payment assistance: This first-time home buyer assistance provides all (or a portion of) the down payment for the purchase. These 1st time home buyer programs are generally offered by the Federal and state governments and some nonprofit groups.
- Tax credits: The upfront credits reduce tax liability, as opposed to a tax deduction that may or may not reduce your overall taxes. Credits incentivize home buying to make the purchase more affordable by directly reducing the tax bill by the amount of the credit.
- Closing cost assistance: Home buyer closing costs include title and escrow services, recording fees, and lender origination charges. Grants may cover some or all of these charges, and some lender programs will waive all charges or add them to the mortgage.
- Forgivable loans: Forgivable home loans provide new buyers cash to complete a home purchase. This money is forgiven after a prescribed period of time. These loans may restrict participants and have specific actions that must be completed for forgiveness.
- Deferred payment loans: This loan agreement allows the borrower to decrease the loan amount due each month, or it might postpone any loan payments for a set amount of time. Typically, this amount isn’t forgiven. It’s simply due at a later date.
- Low down payment loans: These loans might be offered as a lending program where the down payment is made by someone other than the home buyer. These loans may be governed by specialized government or financial institution regulations that require only a minimum down. Unfortunately, the days of a no-no loan (no down payment and no closing costs) are history. Most programs and first-time home buyer grants in Ohio that pay the down or the closing costs still require the buyer to pay $500 to sort serious buyers from the unserious. But overall, first-time home buyers in Ohio do have lending options that eliminate or reduce their down payment.
- Low interest loans: Interest rates vary widely with the type of loan and the applicant. Special loans allow first-time homeowners to qualify for a loan by giving them a lower interest rate compared to other lending offerings.
- First-time home buyer savings accounts: Select financial institutions offer high-interest savings accounts with few or no fees where new buyers can save cash over time for a future home purchase.
First-Time Home Buyer Programs Requirements in Ohio
The term “first-time buyer” typically refers to people who haven’t owned a home in the last three years, but some programs set longer time limits.
Other common lender requirements for Ohio buyers include a solid credit and employment history, but a number of programs lend to buyers without either one.
Let’s look closely at a few of the largest lending programs available to Ohio residents who qualify as first-time buyers.
#1 HomePath Buyer Program
The HomePath loan is available to buyers purchasing foreclosed Fannie Mae-backed properties.
The First-Look Program gives first-time buyers priority to purchase these foreclosures, forfeitures, or short sales before they’re available at auction to the general public.
Types of Assistance
- Inventory of low-cost housing to purchase
- Possible discounted down payment
Requirements
- Using an approved HomePath lender and real estate agent is mandatory.
- You must live in the property as your primary residence and occupy it within 60 days after closing.
- Both buyer and real estate agent must be registered users of the HomePath online system.
- Offers must be made by using the HomePath online web platform.
- Lower credit score and higher debt-to-income ratio standards compared to conventional loans.
Pros & Cons
Pros
- No mortgage insurance
- Low down payment
- Loose appraisal requirements
- Can be stacked with a home repair loan for minor property repairs
- Fannie Mae occasionally has properties improved and repaired before listing
- Buyers can receive a discounted down payment after completing an education course
Cons
- Restricted to Fannie Mae properties and approved lenders
- Limited inventory in many areas and in tight real estate markets
#2 Your Choice! Down Payment Assistance by Ohio Housing Finance Agency (OHFA)
Your Choice! is a state-specific OHFA assistance program that works with approved local lenders to offer low- and mid-income earners financial help with down payments and Ohio closing costs.
The program cooperates with lenders providing VA, USDA-RD, and FHA mortgages.
Fannie Mae HFA Preferred and Freddie Mac HFA Advantage loans are also a program option, but only with conventional mortgages.
Types of Assistance
- Down payment assistance
- Closing cost assistance
Requirements
- The loan must be through an OHFA-approved lender.
- Both income and purchase price have county restrictions.
- You must choose either a 30-year fixed-rate conventional loan or a VA, FHA, or USDA-RD government loan.
- Completion of a home buyer education course.
Pros & Cons
Pros
- Assistance is forgiven after seven years
- You select the loan option
- Free online home buyer education and financial planning tools
Cons
- Selling before the seven-year qualification results in a demand to repay all assistance
- Must use an OHFA-approved lender
#3 Housing Choice Voucher (HCV) Homeownership Program
Certain county Public Housing Agencies in Ohio offer the option of using Housing Choice Vouchers (HCV) to purchase a local property.
While the Federal program allows anyone to use the voucher to purchase a house, the county agency sets the guidelines.
Call your local Public Housing Agency to see if this program is available in your county.
Buyers with bad credit typically have a difficult time getting mortgage approval, but this is one of several possible first-time home buyer programs in Ohio for bad credit.
Types of Assistance
- Down payment assistance
- Closing costs assistance
Requirements
- Restricted to HCV participants
- Requires approval from local Public Housing Agency
Pros & Cons
Pros
- Vouchers provide cash for down payment or closing costs
Cons
- Approval from agency to use the voucher for this purpose
#4 The Columbus American Dream Downpayment Initiative (ADDI) Program
The American Dream Downpayment Initiative is sponsored by the City of Columbus to allow first-time buyers an opportunity to purchase a home.
The project offers a deferment or forgiveness for loans used to put toward a down payment.
If the home is sold within five years, the proceeds from the sale return the loan to the program. Homeowners staying in the property for five years or more have the down payment loan forgiven.
Program money is provided through a non-Federal Neighborhood Economic Development (NED) Fund.
Types of Assistance
- Down payment assistance
- Closing cost assistance
Requirements
- The property must be in Columbus corporation limits.
- The property must be owner-occupied for five years.
- It may not be leased, rented, or the title transferred during the first five years.
- The purchase price cannot exceed the fair market value as set by Uniform Residential Appraisal Report (URAR). The buyer must cover any purchase cost above that level.
- The buyer may not have owned any other property over the last 36 months.
- Home education coursework must be completed and certified.
- The buyer must supply $500 of their own funds to contribute to closing costs.
- Income and debt ratios apply.
Pros & Cons
Pros
- Loans can be forgiven after a five-year period of regular payments
- Properties in the city proper can combine this program with Housing Development Programs (HDP)
Cons
- The program relies on infrequent Federal and state government funding to operate
- Restricted to certain geographical regions
#5 Communities First/The Port of Greater Cincinnati Development Authority
The Port assistance grant is offered in partnership with the statewide Communities First program. It’s part of the overarching “The Port” project to revitalize and modernize the city of Cincinnati.
The project goal is also to narrow the wealth gap through opening opportunities to home ownership.
Through the program, you can get down payment assistance with an FHA loan, VA, Rural Development, or conventional loans. It also offers closing costs assistance.
Types of Assistance
- Down payment assistance
- Closing costs assistance
Requirements
- Lender qualification is based only on borrowers’ income, not household income. The income limit is either 114% AMI, by using county data, or Freddie Mac HFA Advantage restrictions, depending on the type of home loan used.
- The owner must occupy the home as the principal residence.
- Single family, condo, PUD, and duplexes (with the owner occupying at least one unit) qualify.
Pros & Cons
Pros
- No restrictions on reselling
- No regulations against refinancing the home mortgage
- Options for flexible percentage of down payment assistance
- Nothing to repay
- No home purchase price limits
Cons
- Income restrictions
- The applicant must find a participating lender
- The origination fees are determined by the lender
#6 Believe Mortgage/Cuyahoga County Down Payment Assistance (DPA) Program
Believe Mortgage (formerly CHN Housing Capital) offers residents of Cuyahoga County assistance with a down payment. This program is funded through community partners.
Types of Assistance
- Down payment assistance of up to 10% of the purchase price (with a cap of $20,900).
Requirements
- Single-family homes exclusively.
- The home must be located in one of the 51 eligible Cuyahoga County neighborhoods.
- The buyer must not have owned a home in the last three years.
- Property must be owner occupied.
- Applicant’s income must be at or below 80% of the area median income.
- The buyer must complete a series of homeownership courses.
Pros & Cons
Pros
- Free homeowner education and training
- Access to other homeowner assistance, including grants for home restoration and renovation
Cons
- Restricted to certain neighborhoods
#7 Grants for Grads
The Ohio Housing Finance Agency’s Grants for Grads program is restricted to first-time buyers who have graduated during the past 18 months.
Degrees from any community college and four-year accredited institution qualify. These may also be advanced and post-graduate degrees.
Types of Assistance
- Down payment assistance
Requirements
- First-time buyers (no titled homeownership in the previous 36 months).
- The credit score and debt-to-income ratio must meet stated loan requirements.
- The buyer must be degreed within the last 18 months.
- The buyer must be a state resident.
- You must complete a HUD-approved home buyer education course.
- Purchase price restrictions.
Pros & Cons
Pros
- Ability to combine grants with FHA, USDA, conventional, and VA home loans
- Free homeowner education classes
- Free access to money management tools
Cons
- Restricted to graduates
- Five-year residency required
- Purchase price limits
First-Time Home Buyer Loans in Ohio
A first-time home buyer in Ohio can choose from an array of home loans that offer attractive terms, conditions, and benefits.
This segment reviews the types of loans that can also be viewed as first-time home buyer assistance programs in Ohio.
#1 Ohio Heroes
Educators, law enforcement personnel, medical workers, and members of the military can use this low-interest loan program, which includes the opportunity for future loan forgiveness after meeting requirements.
#2 U.S. Department of Veterans Affairs (VA) Loans
A VA loan generally has lower interest and better loan terms for most current and former members of the military, including first-time buyers.
#3 U.S. Department of Agriculture (USDA) Rural Development Loans
The USDA Section 502 Guaranteed Loan Program offers loans on rural home purchases. First-time home buyers may qualify for a no-down home purchase by using a USDA-backed loan.
#4 National Homebuyer Fund
The NHF, a non-profit public benefit corporation (a Government Section 115 entity), has down payment assistance for first-time home buyers.
#5 Employer-Sponsored Loan Programs
Some employers offer special mortgage programs, grants, or buy-downs for their workers. New workers may even negotiate for these benefits as part of the employment package.
#6 Lender-Specific Programs
Local credit unions, home mortgage firms, and regional banks have specialized loans and lending programs, some with reduced interest rates, to encourage first-time buyers to purchase homes in targeted neighborhoods.
#7 Federal Housing Administration (FHA) Home and FHA 203(k) Loans
If you don’t have a high credit score, you can apply for an FHA loan in Ohio. Local lenders offer these loans with low down payments that are administered and backed by the Federal Housing Administration.
Different from conventional loans, buyers can combine (stack) an FHA loan with 203(k) repair loan to purchase homes that need extensive repairs.
To avail, here are the FHA loan requirements in Ohio.
#8 HomeReady Mortgage
Fannie Mae’s HomeReady mortgage is available for home purchases offered to buyers in minority or low-income districts and for properties in natural disaster areas.
#9 Home Possible
Freddie Mac’s My Home/Home Possible includes backing for home loans with special considerations for energy-efficient homes and properties that have been renovated to accommodate single families.
#10 Conventional Loans
Credit unions and banks offer conventional loans that aren’t insured or backed by government agencies. Some Ohio mortgage lenders may offer more desirable terms and loan conditions for their current banking clients.
Ohio First-Time Home Buyer Savings Accounts
First-time home buyer savings accounts are financial instruments that allow buyers to save over time to collect money to pay for a down payment and closing costs.
#1 Individual Development Accounts
IDAs are specialized bank accounts established specifically to assist you in buying a home in Ohio.
- The state uses a one-to-one to a four-to-one match to provide funds.
- Your income must be at or below 200% of the annual Federal Poverty Guidelines.
- Account holders must be a U.S. citizen or a permanent resident as determined by the U.S. Homeland Security.
- Requires participation in a financial literacy program.
- Funds are restricted to paying for a down payment or closing costs.
- The fund typically has a cap on the total amount saved that includes matching funds.
- There’s a time limit to use the savings, typically three years.
#2 Ohio Homebuyer Plus
This savings account gives Ohioans money to buy a home at a below-market interest rate that might also qualify for an Ohio income tax deduction.
- Account holders must be at least 18 years old.
- Savers must have a primary residence in Ohio.
- Proceeds must be used for a down payment and closing costs for a personal residence purchased in Ohio.
- The account must maintain a minimum balance of $500 for new accounts opened after April 1, 2025.
- The account is capped at $100,000. Once that amount is reached, it must be used within 12 months.
- All funds must be used within five years.
- The program includes numerous financial participants. A list of banks is available from the Ohio Treasurer.
- Funds may be used to buy a new or a pre-existing house. They can’t be used to buy land and construct a house.
- Accounts also can’t be used to purchase seasonal or vacation properties.
Bottom Line
Federal, the Buckeye State local governments, and private lenders have many programs for first-time home buyer down payment assistance in Ohio.
It may be confusing to understand the terms and whether you qualify. I’m here to offer my expertise in answering your lending questions and to assist you in selecting the lending options that best meet your personal needs.
But besides finding a loan, you should also remember that homeowners are typically focused on selling a home fast.
Organizing your financial portfolio and getting pre-approved for a home loan allows you to move quickly when you find the perfect house and want to apply for a mortgage.
You can apply for quick mortgage pre-approval now without risking lowering your credit score with a hard credit inquiry.
