If you’re a looking to buy a home in Ohio, then there are several down payment assistance programs and first-time homebuyer programs available to help with the costs of homeownership. Read on to learn about eligibility requirements and how to apply.
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What are first time home buyer programs?
A first-time home buyer program is designed to assist individuals who have not owned a home before or have not done so in a while, in purchasing a home. These programs are available in several forms. They could provide financial aid, educational resources, and other assistance to make the home buying process more accessible and affordable.
How do first time home buyer programs work?
First-time home buyer programs offer different types of assistance to eligible buyers in the form of a grant, loan, or tax credit. Specifically, in Ohio, if you have not had an ownership interest in your primary residence in the last three years, are a honorably discharged veteran, or are purchasing a home in a target area you could qualify for a first-time home buyer program.
What are the benefits of being a first time home buyer in Ohio?
Apart from Ohio being the most affordable state to live in the United States, there are several advantages to being a first- time home buyer. Specifically, there are a variety of programs and down payment assistance available that could help with the costs related to purchasing a home.
Ohio Housing Finance Agency (OHFA) Loan Programs
The Ohio Housing Finance Agency (OHFA) provides a range of affordable loan options to assist homebuyers in purchasing a home. They offer 30-year fixed-rate, FHA, VA, USDA, and conventional mortgage loans, with income and purchase price limits that are specifically designed for individuals with low-to-moderate income. Here are the first-time homebuyer programs they offer:
Ohio Heroes Mortgage Program
The Ohio Heroes Mortgage Program provide discounted mortgage interest rates to residents of Ohio who work in public service professions. This program can be combined with down payment assistance and is available for FHA, Conventional, USDA, and VA Loans.
Eligibility
To qualify for the Ohio Heroes Mortgage Program, you must work in the following professions: Veterans, active-duty military members, reserve components members, police officers, firefighters, volunteer firefighters, EMTs, paramedics, physicians, nurse practitioners, nurses, STNAs, teachers, administrators, or counselors. Additionally, you need to meet income and purchase price limits, debt-to-income ratios for your loan type, and credit score requirements.
Next Home Mortgage Program
The Next Home program provide 30-year fixed-rate mortgages to non-first-time homebuyers. This program supports various loan types including Conventional, FHA, VA, and USDA-RD government loans. Moreover, homebuyers could also combine this program with YourChoice! down payment assistance program. However, it is not mandatory to use this assistance if buyers have their own down payment funds.
Eligibility
You may be eligible for this program if you meet income and purchase price limits, debt to income ratios, credit score requirements, use the home as your primary residence, and occupy the property within 60 days of closing.
How To Apply for Ohio First Time Home Buyer Programs
If you are looking to apply for any of the Ohio First Time Home Buyer Programs, then here’s what to expect:
- Check Eligibility: Use OHFA’s online tool to verify that you meet the program’s income and purchase price limits.
- Find a HUD-approved Counselor: Complete a mandatory homebuyer education course from a HUD-approved agency. OHFA’s portal can assist you in locating one near your area.
- Contact an OHFA-approved Lender: Once you have verified that you meet the income and credit requirements, you can apply for a mortgage through a participating lender, like Direct Mortgage Loans.
- Gather Documents: Prepare necessary documents, including tax returns, pay stubs, and bank statements. Once you have gathered your documents, you can apply for a mortgage.
- Submit Your Application to OHFA: Work with your Loan Officer to submit your application to OHFA, ensuring to include the completed homebuyer education certificate.
- Find a Home & Finalize Mortgage Application: Once you have found a home you want to purchase, you will need to work with your Loan Officer to finalize your mortgage application. If your loan is approved, then you will be able to close on your home and start enjoying the benefits of homeownership!
Ohio Down Payment Assistance
Ohio provides down payment assistance programs to help homebuyers with down payment and closing costs. These programs include OFHA Your Choice!, Grants for Grads, and the Communities First Down Payment Assistance Program.
OHFA Your Choice! Down Payment Assistance
The OHFA Your Choice! Down Payment Assistance Program gives buyers the option to choose between receiving 2.5% or 5% of the home’s purchase price to be used toward a down payment, closing costs, or any other pre-closing expenses. This down payment assistance will be forgiven after seven years. However, if the home is sold within this period, then the full amount of assistance provided must be repaid.
Eligibility
To be eligible for the OHFA Your Choice! Down Payment Assistance Program, you must meet specific requirements. These include income and purchase price limits, credit score requirements, and debt to income ratios for your loan type.
OHFA Grants for Grads
The OHFA Grants for Grads program is designed to incentivize recent graduates to make Ohio their home by providing them with reduced mortgage rates. The program also offers 2.5% or 5% down payment assistance, which could be forgiven after five years. However, if you sell your home and move out of Ohio before the end of the five-year period, then you must repay some or all the assistance provided.
Eligibility
To qualify for the OHFA Grants for Grads program, you cannot have owned or had an ownership interest in your primary residence in the last three years. Additionally, you must meet income and purchase price limits, credit score requirements, debt to income ratios, and have graduated in the last 48 months to be eligible for this program.
Ohio Communities First Down Payment Assistance
The Port of Greater Cincinnati Development Authority (dba The Port) offers the Communities First- Down Payment Assistance program which provides down payment/closing costs assistance grants to eligible homebuyers. This program was created as part of a commitment to increase homeownership opportunities for residents in Ohio.
What is Communities First Down Payment Assistance?
The Communities First Down Payment Assistance program is available statewide, offering down payment grants of 3%, 4%, or 5%, based on the mortgage rate. This grant, unlike a second mortgage, does not need to be repaid.
Eligibility Criteria for Communities First Down Payment Assistance
To be eligible for Communities First Down Payment Assistance, applicants must follow the standard industry regulations, abide by the maximum income thresholds, maintain a minimum FICO credit score of 620, and occupy the specified property as their primary residence within 60 days.
Benefits of Communities First Down Payment Assistance
The program offers several benefits. As a grant, not a loan, it eliminates concerns about a second mortgage. Eligible buyers also gain instant equity in their new homes. Moreover, the grant comes with no restrictions on refinancing or selling the home and the income limits are solely based on the borrower, not the entire household.
How do I apply for Communities First Down Payment Assistance?
To apply for the Communities First Down Payment Assistance program, complete the following steps:
- Apply through a Participating Lender: Direct Mortgage Loans is an OFHA participating lender and can walk you through the process.
- Verify Eligibility & Obtain Pre-Approval: We can assist you in verifying eligibility and obtaining pre-approval if you qualify for the program.
- Close on Your New Home: Communities First provides your grant at closing through your lender. Once you close, you’re all set to move into your new home.
Talk to An Approved Ohio Down Payment Assistance Lender Near You!
Mortgage Tax Credit
The OFHA Mortgage Tax Credit provides homebuyers with a direct federal tax credit on a portion of their mortgage interest payments. This program could help save up to $2,000 each year and is an additional benefit beyond the IRS home mortgage interest deduction. The actual credit amount you receive will depend on several factors such as your property’s location, type, and the type of loan you have.
Mortgage Tax Credit Plus
When you use the tax credit in conjunction with OHFA’s First-Time Homebuyer Program, you can receive a tax credit of 40% based on the interest paid on your mortgage. The maximum annual tax credit is $2,000, and this tax credit can be combined with the Mortgage Tax Credit as well as 2.5% down payment assistance.
Mortgage Tax Credit Basic
When using the Mortgage Tax Credit with an alternative mortgage option from your lender, the tax credit percentages are 30% for a bank-owned property, 25% for a property in a target area, and 20% for all other properties.
FHA 100% DPA
This program provides homebuyers with 100% financing without requiring a down payment. However, closing costs are still required. This is achieved through a combination of a 1st and 2nd mortgage. This DPA program can be used to obtain an FHA loan and the amount of the 2nd mortgage can be up to 3.5% of the sales price or the appraised value, whichever is less. The term for the 2nd mortgage is 10 years.
Eligibility
To qualify for the program, you need to have a minimum credit score of 620 and a maximum Debt-to-Income (DTI) ratio of 45%. You must complete a Homebuyer Education course. And the eligible properties for financing are defined by FHA guidelines based on the maximum HUD county limit. The program covers single-family homes, duplexes, manufactured homes, PUDs, townhouses, and condos.
FAQs About First Time Ohio Down Payment Assistance Programs
Can I qualify for multiple assistance programs simultaneously?
Depending on the specific programs you’re interested in and your eligibility, you may be able to combine multiple assistance programs. For instance, you could potentially use OHFA Your Choice! with the Mortgage Tax Credit and/or the Communities First program. Still, it is important to remember that each program has its own eligibility requirements and limitations, so it’s best to consult with a qualified Loan Officer to determine which combinations are possible and most beneficial for your specific situation.
How can I find a certified homebuyer education and counseling program?
If you’re looking for a certified homebuyer education and counseling program, then Ohio Housing Finance Agency (OHFA) provides a Homebuyer Education Portal that allows you to locate a HUD-approved counseling agency in your area by entering your zip code. These agencies offer free or low-cost courses and individual counseling sessions. Alternatively, you can visit the HUD Homeowner Education Programs website, which has a search tool to help you identify federally approved agencies nearby, sorted by city or county. These agencies offer a variety of education and counseling services.
Do Ohio first-time homebuyer assistance programs have restrictions on the type of properties I can purchase?
Property restrictions can differ based on the program. Typically, most programs allow the purchase of single-family homes, conforming condominiums, duplexes, properties with up to four units, newly constructed homes, modular homes, and manufactured homes.
Can I use the down payment assistance for closing costs as well?
Ohio offers various down payment assistance programs, such as OHFA Your Choice!, that can be used to pay for closing costs. Specifically, these costs are the fees associated with buying or selling a property. These costs can add up, so by utilizing the assistance for closing costs, you could reduce the upfront expenses associated with buying a home.
Is Communities First only available to first-time buyers?
The Communities First Program is available to all who meet the eligibility criteria, regardless of whether they are first-time home buyers or not.
What happens if I sell the home that I purchased with down payment assistance?
If you sell the home that you bought with down payment assistance, then you may be required to repay the assistance depending on the program you used. For example, OHFA Your Choice! program requires repayment of the assistance if you sell the house within 7 years. On the contrary, some programs such as Communities First do not have any repayment requirements.
What if I already have some savings for a down payment? Can I still apply for down payment assistance?
If you already have some savings for a down payment, you can still apply for down payment assistance. Certain programs, such as OHFA Your Choice!, provide the option to select the amount of assistance you need based on your financial situation. This can be helpful if you want to combine your savings with program funds to reach your desired down payment amount.
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