The Midwest is the heartland of the United States, often attracting people with its affordable home prices and great assets. Don’t let yourself be daunted by the home financing process because there is help available at every turn. This page is a step-by-step guide to buying a home in Ohio.
Check Mortgage Rates in Ohio
Mortgage rates vary from state to state, by county to county and by the type of mortgage you choose, but it’s not arbitrary. Market conditions change depending on inventory and number of buyers in the market.
Home values have a lot to do with rates. Depending on which source you use, the median home value in Ohio ranges between $78,185 and $121,100, an increase of 3.3 percent over the past year. But in big cities like Cleveland, the median sale price was $131,600 in 2013. Location popularity always increases home values and home prices, but record low mortgage rates and rising housing markets make Ohio a great place for homebuyers who want great value now, and into the future.
Your specific rates, though, are determined mostly by your personal finances, how much of a down payment you can make, and your credit history (though don’t let bad credit history count you out — you may still be able to get a mortgage). For the definitive guide to mortgage rates, visit our mortgage rate guide.
First-Timer? Get Homebuying Help in Ohio
Ohio is teeming with financial support for first-time homebuyers:
Your Choice DPA program: Allows borrowers to choose a loan of either 2.5 percent or 5 percent of the purchase price, forgiven after seven years. You must have at least a 640 credit score.
OHFA Grants for Grads: To qualify you may not have had a stake in any home, including your primary home in the past three years. You are required to have completed an Associate’s, Bachelor’s, Master’s or Doctorate in the last 48 months. Loans are forgiven after five years as long as you remain in Ohio.
Ohio Heroes: If you haven’t owned or had ownership interest in three years, with a minimum credit score 640, you may qualify for this program. Discounts may be offered to firefighters, cops, veterans, police, healthcare workers, teachers or college professors.
Lakewood HOME Program offers zero percent loans of up to $10,000 for single-family homes and $14,000 for two-family homes. You must be able to put down 1.5 percent down, meet income guidelines, and not have owned a home in three years. (onelakewood.com)
The American Dream DPA Initiative (ADDI) for first-time homebuyers, requires you to be at or below 80 percent of median income. You must complete HUD-approved counseling. Up to $5,000 is available in the form of a five-year forgivable loan.
The Federal Home Loan Bank and Cincinnati’s “Welcome Home” Grant offers up to $5,000. Your income must be at or below 80 percent of median income limits, and you must contribute at least $500 towards the closing costs or down payment.
Next Home program: For current or new homebuyers who lack equity. (myohiohome.org)
For answers to other kinds of programs, and an in-depth explanation of the homebuying process check out our First-Time Homebuyers Guide.
Financial Assistance in Ohio for First-Time Buyers
Search here for the types of programs and assistance available to first-time buyers in Ohio.
Find a Housing Counselor in Ohio
Understanding Home Affordability in Ohio
Parts of Central Ohio, like Cleveland and Dayton and Columbus, are seeing a resurgence in home sales for the first time since the Great Recession. Realtors say houses are flying off the market faster than last year because Ohio has developed a reputation as a place where people can settle for a long time due to good schools and a solid job market. The average household income in Ohio was $49,308 in 2014 and is now $62,300.
Home values are likely to increase in coming years as home sales stay on a steady uptrend, and realtors feel your investment will be worthwhile for years to come, with good resale value.
How Ohio Mortgage Rates and Home Prices Affect Monthly Payments
|Metro Area||Estimated Monthly Mortgage Payment*||Q1 2016 (Change from Previous Year)||2015 Median Home Price||2014||2013|
Source: National Association of Realtors Q1 2016 Metropolitan Median Area Prices and Affordability report.
*Estimated Monthly Mortgage Payment is based on median home prices for the metro area in Q1 2016 and a 30-year fixed mortgage with today’s rates.
Determine How Much You Can Borrow in Ohio
Conventional loan limits are determined by the county where the home is located, and set using the highest median home price within the metropolitan area. But your specific loan limit will also be determined by your income and down payment.
Loan limits are $271,050 for single-family homes in all Ohio counties except: Hocking, Licking, Madison, Morrow, Perry, Pickaway City, Union, Franklin, Fairfield and Delaware County, which are all $316,250. The below table illustrates the FHA and conventional loan limits throughout Ohio.
Buying a Home in Ohio: Experts Weigh In
Teresa Rose is president of Western Ohio Mortgage Corp.
T.C. Strait is a manager and loan consultant at Lynx Financial Group in Cincinnati.
How has the real estate climate changed in your state, since the market crisis? Is now a better to time to refinance or purchase?
Real estate has returned to pre-crisis value in most areas of Ohio. It is a good time to buy due to low rates, but prices are higher and look like they will continue to climb. Additionally, inventories are low making selection limited. Refi opportunities have increased recently due to the effect Brexit has had on our markets. However, we only anticipate refinance to represent about 30 percent of the market.
Without a doubt, the availability of credit has tightened since the housing market crisis, but realistically, that had to happen (100 percent financing on a house with a 580 credit score was just disaster waiting to happen). The availability of credit, especially for self-employed borrowers has been difficult since, for the most part. To meet ability to repay guidelines, we have to document income via tax returns for self-employed clients. Also, very few lenders have been willing to think outside of the box, most notably when guidelines contain quite a bit of grey area, for fear of repercussions from the different regulatory agencies. Currently, rates are still near all-time lows, so it is a great time for homeowners to refinance or homebuyers to buy to secure a low rate. I have run into a number of refinance scenarios recently that, even though the homeowner was dropping their rate, didn’t make sense. Mainly due to FHA’s monthly insurance premium (MIP), similar to Private Mortgage Insurance (PMI). In 2013, FHA changed how long a homeowner had to pay MIP, and if the equity is less than 10 percent, it is for the life of the loan, which can make a HUGE difference in a refinance making sense.
What resources would you recommend for a new homebuyer?
Buyers can get educated about the homebuying process at any number of websites including Ohio Housing Financing which offers grants and reduced interest rates to first time buyers. www.ohiohome.org
As far as state-specific resources, realistically a new homebuyer would be much better served talking to an experienced loan officer, who would be able to help them navigate the homebuying process. Too many times I’ve spoken to a client that has tried doing research online for some aspect of the homebuying process, and it’s difficult to tell what information is currently relevant.
How can someone with little to no equity refinance?
Only in cases where they streamline. For example, FHA to FHA or VA to VA. Generally, equity is required.
As far as a homeowner with little to no equity refinancing, there are a few options, some depend on what type of mortgage they currently have. USDA Rural Development offers a refinance program for homeowners who purchased their home with a USDA Rural Development Loan (the purchase USDA RD loan is zero down). Also, FHA offers an FHA Streamline Refinance for homeowners that currently have an FHA mortgage. The FHA Streamline does not require an appraisal in most cases.
The Scoop on Ohio’s Closing Costs
Just when the deal seems signed and done, buyers need to remember there are a handful of closing costs that might catch you by surprise: Ohio’s closing costs are average for the U.S., if not a tiny bit lower than neighboring states: These fees may vary from county to county. Average Origination Fee: $933. Average Third Party Fees: $681. Broker fees: $967. Appraisal: $421. Attorney: $403. Survey: $178. Visit our guide for a full explanation of Common Closing Costs.
Average Closing Costs in the Buckeye State
Source: Bankrate’s 2015 survey of closing costs.
Refinancing a Mortgage in Ohio
Homeowners who currently have a mortgage owned by Fannie Mae or Freddie Mac and took that mortgage out before May 2009 may qualify for a HARP Refinance, which has options for homeowners with little to no equity and in some cases, with negative equity. Nearly 26 percent of loans paid off in 2012 were underwater and current, an increase of 11 percent in 2008. This suggests refinances or sales of potentially distressed loans are picking up, and are likely contributing to lowering the inventory of delinquent loans in the state.
As far as regular mortgages go (no special programs) a standard FHA refinance loan would require the least equity, 2.5 percent equity. Although interest rates have risen slightly, they are still at historic lows. For comprehensive information on refinancing, check out our Refinance Guide.
Other Ohio Mortgage Resources
Provides links and resources for first-time homebuyer down payment grants, with research materials for buyer knowledge. If you don’t qualify for the programs, the website offers several alternatives, and links to HUD-approved counselors.
A website geared toward job training and other education to prevent homelessness, and promote a goal of homeownership with long-term counseling.
Provides a long, detailed list of city-specific down payment assistance programs with free homebuyer education services.
Provides change of address form, property tax payment information and property search as well as information for future home purchases, with realistic figures to use when factoring mortgage payment.
A flexible down payment assistance program, with a long list of participating lenders. Brochure for buyers is available outlining program details.
Offers down payment assistance in Cuyahoga County, with the ability to complete homebuyer education online. Also has alternate programs that allow low-income buyers to lease the land, while still owning the home.
Possible rehabilitation grants for home improvement in eligible areas. Provides detailed information on water quality and private water resources.