Buying your first home can be both thrilling and overwhelming. The house hunting process is fun, but deciding on how to finance it usually isn’t. It seems everyone has a different opinion on which type of home loan is best, and with so many types of loans on the market, making a decision can leave you with a headache.
Most first-time home buyers in Ohio find themselves in the same position, and many of them decide to take out an Ohio FHA loan. Keep reading to find out why an FHA loan may be right for you.
Why Use an FHA Loan in Ohio?
Choosing the right mortgage is confusing, but many Ohio residents decided an FHA loan was the best option for them. As of April 2019, the total value of FHA loans in the state of Ohio was $317 million! So whether you are looking to settle on the lake in Cleveland or maybe down south in Cincinnati, an FHA loan in Ohio might be the most reliable home loan option for you.
Benefits of choosing an FHA Loan in OH
- FHA loans are great for first-time homebuyers, especially those who can’t or don’t want to put down a large down payment.
- FHA mortgage rates are typically lower than conventional mortgage rates.
- FHA down payment and credit score requirements are typically lower than conventional loans
- Sellers can contribute up to 6% of the purchase price or appraised value (whichever is less) towards the buyers’ closing costs.
- FHA loans are assumable
FHA Loan Limits in Ohio
Maximum FHA loan limits in Ohio depend on location and are adjusted annually. In most of Ohio, the baseline limit of $314,827 applies, but in Columbus, the limit is $356,500 due to the relatively high cost of real estate in the area. This is done to ensure everyone can afford a home. See the link below for a full list of Ohio FHA loan limits.
Are You Eligible for an FHA Loan?
You may be eligible for an FHA loan, if you:
- Have 2 years of steady employment, preferably with the same employer.
- Have had steady income (or increasing income) in the past two years.
- Have had less than two 30 day periods of late payments on your credit report.
- Have declared bankruptcy no less than two years ago and have maintained good credit since.
- Have not been a party in a foreclosure for at least three years and have maintained good credit since.
- Anticipate your mortgage payment will be equal to or less than 30% of your gross income.
What Do You Need to Apply for an FHA Loan in OH?
Buyers must be able to provide the following information and documents as requested by lenders:
- The addresses of all your residences over the past two years.
- The names of your employers over the past two years.
- W2's for the past two years and current paycheck stubs.
- Your current gross monthly salary.
- Your Social Security Number.
- Names, addresses, and account numbers with balances on all checking and savings accounts.
- Addresses and loan information of any other real estate you owned.
- Self-employed individuals will need to provide personal tax returns for the past two years and a current income statement and balance sheet for the business.
- Students will need to provide evidence of enrollment. If you have student loans, you need to provide verification information.
Note: Facts and figures sourced from the latest statistics available at the time of this writing including data from the United States Department of Labor, United States Census Bureau and the United States Department of Housing and Urban Development.