Nationwide first-time homebuyer programs

When assessing your application for a garden-variety “conventional” mortgage, lenders in the private market will usually expect to see a credit score of at least 620 and a down payment of at least 5% of the overall purchase price.

More: Use these savings accounts to build up your down payment.

If you’re coming up a little short in either respect — as many first-time buyers do — you should look into one of the following nonconventional mortgages, which you can source through the federal government.

FHA loans

In 1934, the Federal Housing Administration created FHA loans to encourage Americans to buy homes. At the time, about 60% of Americans rented instead of buying.

FHA lenders will grant you a loan with a credit score as low as 580 and a minimum down payment of just 3.5%, making these loans accessible to more Americans. But depending on how much money you put down, you will face long-lasting fees to cover mortgage insurance. Try putting down 10% if you can, and 20% is even better.

The FHA's Loan Requirements Explained.

A walkthrough of how to meet the FHA's requirements.

See Guide

VA loans

VA loans were created toward the end of World War II to help veterans buy homes of their own. An act passed by Congress in 1944 made it possible for today’s U.S. Department of Veterans Affairs (VA) to guarantee or insure home, farm and business loans made to veterans by lending institutions.

To qualify for one of these loans, you must be an active service member, veteran or a surviving military spouse. You won’t have any down payment or mortgage insurance obligations, but you will have to pay a sizable funding fee.

USDA loans

USDA loans, which are guaranteed by the United States Department of Agriculture, also don’t require down payments or mortgage insurance. These loans are targeted to lower-income rural and suburban Americans.

Borrowers will find they’re charged an upfront 1% guarantee fee and an annual 0.35% fee. But if you do the math, the sum of those fees tends to be less in the long run than the mortgage insurance associated with other types of loans.

That said, you may make too much money to qualify for a USDA loan. The current income limits in most parts of the U.S. are $86,850 for one- to four-member households and $114,650 for five- to eight-member households, but the thresholds may be higher if you live in a county with a steeper-than-average cost of living.

You can find your region’s limit on the USDA’s website.

Who qualifies for Ohio first-time homebuyer grants and other programs?

OHFA offers competitive loans at 30-year fixed rates for residents of Ohio with low to moderate incomes. To qualify, you’ll need a credit score of 640 or higher for VA, USDA and conventional mortgage loans, and 650 or higher with an FHA mortgage.

For Ohio’s first-time homebuyer programs, you’ll also need to meet one of these eligibility requirements:

  • You haven’t owned a home in the last three years.
  • You’re an honorably discharged veteran.
  • You’re buying a home in a target area.

For each of these programs, you’ll also be required to take a homebuyer education course.

More: Get a free credit score and credit monitoring from Credit Sesame.

First-time homebuyer programs in Ohio in 2021

Infographic on programs for first-time home-buyers in Ohio

You won’t receive your loan directly from OHFA. Instead, you’ll work with one of the agency’s participating lenders to secure either an FHA, VA, USDA or conventional loan at OHFA’s rates.

Once you’ve qualified for an OHFA loan, you can also apply for one of the agency’s support programs. Your lender will help walk you through the application process.

Ohio Mortgage Tax Credit

OHFA provides first-time homebuyers with a direct federal tax credit worth up to 40% of the annual mortgage interest they pay.

The size of your credit varies, based on where your home is and what type of mortgage you have. OHFA also offers two different streams: Basic and Plus.

The Mortgage Tax Credit Plus provides a credit for 40% of the interest paid, to a limit of $2,000. The Plus program is open to homebuyers who are also using a loan through OHFA’s first-time homebuyer program. You may face a slightly higher interest rate than if you just use the loan program, but you’re also entitled to down payment assistance of up to 2.5% of your home’s purchase price.

If you go with a different loan program through your lender, you can still receive a Mortgage Tax Credit Basic. This entitles you to a 30% credit for your mortgage interest if you bought a bank-owned property, 25% if you purchased a home within a target area, and 20% for all other properties. With the Basic program, there are no credit score or homebuyer education requirements, but you’ll have to meet the OHFA’s other loan eligibility requirements.

The FHA's Loan Requirements Explained.

A walkthrough of how to meet the FHA's requirements.

See Guide

Your Choice! Down Payment Assistance

This down payment assistance program gives homebuyers the choice of a loan for either 2.5% or 5% of the home’s purchase price, which they can use for their down payment, closing costs or other pre-closing expenses.

While it’s a loan, it will be forgiven after seven years, unless you sell, refinance your home or move.

To qualify, you’ll have to meet the income and purchase price limits assigned to your region, as well as the debt ratio and credit score requirements for your loan type.

Ohio Heroes

This program was created to help Ohio residents in public service jobs obtain mortgage loans with discounted interest rates.

It’s open to:

  • Veterans, active duty military members or members of Reserve components.
  • First responders: police officers, firefighters, volunteer firefighters, EMTs and paramedics.
  • Medical health professionals.
  • Pre-K-12 teachers, administrators and counselors.

To qualify, you’ll need to meet the income and purchase price limits for your region, as well the debt-to-income ratios and credit score limits associated with your loan type.

If you’re not certain if you qualify, you can consult OHFA’s complete list of eligibility requirements.

The Best Lenders for a Mortgage

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Next steps

Now that you know all your options, you may be asking yourself: “What next?”

A great first move would be to take a look at your credit score and see how you measure up to your ideal loan’s requirements. You can get a free score through the site Credit Sesame.

Was your score disappointing? That’s OK; you have plenty of options. An organization like Self credit repair can help you bring your score up.

When you’re in good shape, don’t forget to gather the important documents you’ll need to prove you’ve got money in the bank and money flowing in.

Then you can finally think about getting pre-approved for a mortgage and start shopping for your new digs in Ohio.

Support for new homebuyers in other states

Arizona Department of Housing (ADOH) Read More
Arkansas Development Finance Authority (ADFA) Read More
California Housing Finance Agency (CalHFA) Read More
Colorado Housing and Finance Agency (CHFA) Read More
Connecticut Housing Finance Authority (CHFA) Read More
Delaware State Housing Authority (DSHA) Read More
Florida Housing Finance Corp. (Florida Housing) Read More
Georgia Dream Read More
Hawaii Housing and Finance Development Corporation (HHFDC) Read More
Idaho Housing and Finance Association Read More
Illinois Housing Development Authority (IHDA) Read More
Indiana Housing and Community Development Authority (IHCDA) Read More
Iowa Finance Authority (IFA) Read More
Kansas Housing Resources Corporation Read More
Kentucky Housing Corporation (KHC) Read More
Louisiana Housing Corporation (LHC) Read More
MassHousing (Massachusetts) Read More
Michigan State Housing Development Authority (MSHDA) Read More
Minnesota Housing Read More
Missouri Housing Development Commission (MHDC) Read More
Montana Board of Housing (MBOH) Read More
Nebraska Investment Finance Authority (NIFA) Read More
Nevada Housing Division Read More
New Mexico Mortgage Finance Authority (MFA) Read More
State of New York Mortgage Agency (SONYMA) Read More
North Carolina Housing Finance Agency (NCHFA) Read More
Ohio Housing Finance Agency (OHFA) Read More
Oklahoma Housing Finance Agency (OHFA) Read More
Oregon Housing and Community Services (OHCS) Read More
Pennsylvania Housing Finance Agency (PHFA) Read More
South Dakota Housing Development Authority (SDHDA) Read More
Tennessee Housing Development Authority (THDA) Read More
Texas Department of Housing and Community Affairs (TDHCA) Read More
Utah Housing Corp Read More
Virginia Housing Read More
Washington State Housing Finance Commission (WSHFC) Read More
Wisconsin Housing and Economic Development Authority (WHEDA) Read More
Wyoming Community Development Authority (WCDA) Read More

About the Author

Sigrid Forberg

Sigrid Forberg

Staff Writer

Sigrid is a staff writer with MoneyWise. A graduate of Carleton University's journalism program, she spent the better part of the last six years writing about business and retail. In her spare time, she enjoys reading, baking and riding her bicycle.

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