OHFA: A Popular First-Time Homebuyer Grant in Columbus, Ohio
If you’re seeking a first-time homebuyer loan in Columbus, Ohio, and you’ve been searching online for grant programs, you’ve probably come across a special first time buyer program commonly referred to as OHFA This program gets its nickname based on the initials of the agency which offers it, the Ohio Housing Finance Agency. This is one of the most popular first time homebuyer grant options in the state. It offers a grant of either 2.5% or 5% of the purchase price of a house. The house is then financed with an FHA loan. An FHA loan requires the borrower to contribute 3.5% of the purchase price to be applied towards the down payment. This grant then provides either the first 2.5% of that down payment or with the 5% option it provides the entire 3.5% plus an extra 1.5% that can be used to cover closing costs.
Drawbacks to Know About the OHFA First-Time Home Buyer Loan Program
You can learn more about how OHFA works in my previous article, 3 Great First-Time Home Buyer Programs in Ohio to Buy With $0 Down. In short, OHFA can be a fantastic resource — but it does come with a few catches. The interest rate for an OHFA loan is about 1% higher than the market interest rate and If you sell your home or refinance within the first seven years, you’ll have to repay part of that grant. The amount you must repay diminishes over time.
But did you know there’s another option that doesn’t have these drawbacks?
A Better Option for First-Time Buyers in Columbus: The 1% Down Conventional Loan
It’s called the 1% Down Conventional Loan. Here’s how it works: You contribute 1% of the purchase price, and the lender gives you a 2% first time home-buyer grant up to $7,000. Unlike OHFA, this grant is yours to keep, even if you refinance or sell the home later. And the interest rate is simply for a Fannie Mae conventional using the Home Ready loan program meaning that it is priced at regular market rates.
Who Qualifies for This First-Time Homebuyer Grant in Columbus, Ohio
To qualify, you’ll need:
- A minimum credit score of 620
- Income at or below 80% of the Area Median Income (currently $88,688 in Central Ohio)
How well does the 2% First-Time Homebuyer Grant Work When you apply for First-Time Homebuyer Loan in Columbus, Ohio?
This program works especially well in Central Ohio, where the median home price is around $340,000. It uses a conventional loan requiring a 3% down payment, but in this case, the buyer contributes just 1% while the lender covers the remaining 2%, up to $7,000. Since the grant is capped at $7,000, the maximum purchase price for a borrower to put down only 1% is $350,000.
Homes priced above $350,000 are still eligible, but the buyer must cover the difference to meet the full 3% down payment requirement.
It’s an excellent choice for younger buyers who are juggling student loans, starting families, or still getting established in their careers. If you can save up that 1% down payment, you can “get in the game” of homeownership faster — and start with instant equity from this first-time homebuyer grant from the lender.
Using Seller Contributions to Lower Costs for First-Time Homebuyers in Columbus
Like most mortgage loans, there are closing costs, but here’s the good news: the seller can contribute up to 6% of the purchase price toward those costs. That means it’s possible to get into a home with just your 1% down payment out of pocket.
How to Apply for First-Time Homebuyer Grants in Columbus, Ohio
If this sounds like the right fit for you, check out our 1% Down Conventional Loan program page or give me a call to talk through the details.
Happy house hunting!
