Ohio FHA Loans – Ohio FHA Lenders 2024

ohio fha lenders

Ohio home buyers who need a small down payment or have poor credit scores may be able to purchase a home with an Ohio FHA loan. There are many Ohio FHA lenders who offer the program, but not all of them participate in all of the FHA loan options available.

FHA loans are often chosen by first time home buyers because of the flexible requirements and small down payment.

We will take you through the Ohio FHA loan requirements, detail what is needed to qualify, then help you to get pre-qualified. If you already know that an FHA loan is right for you, then click to connect with an Ohio FHA lender whether you live in Columbus, Cincinnati, Cleveland, Dayton, or anywhere else.

Click to Get a Quote or Pre Approved By an Ohio FHA Lender

Overview of FHA Loans in Ohio

FHA loans are federally insured against default by the Federal Housing Administration. They serve to help homebuyers with home affordability and will allow for lower credit scores and a small down payment.

They have flexible debt-to-income ratios which allows borrowers to potentially get approved for a higher loan amount than a conventional loan. 

FHA loans are very popular with first time home buyers who sometimes struggle to qualify for other types of mortgages. There are maximum loan amount set for each county in the US and this is known as loan limits. Every year the limits are adjusted for each county based upon the average home sale prices for the prior year.

Paul Sian, an experienced real estate agent in Cincinnati Ohio has provided his perspective. “The Ohio home buyer can benefit from using the FHA mortgage loan mainly because of the lower down payment requirements.  FHA credit requirements are also not as strict as those for conventional loans which can help buyers get into an affordable home.  An expert real estate agent and mortgage lender can guide the buyer as to what sort of conditions may be of concern.”

Ohio FHA Loan Benefits

These are the benefits of an FHA loan versus a conventional loan:

  • Lower credit scores permitted
  • Lower down payment requirement
  • FHA interest rates are lower than conventional rates
  • Gift funds allowed
  • Seller closing cost contributions are allowed
  • FHA loans are assumable
  • Co-signers allowed
  • Higher debt to income ratios permitted

These are just some of the things that make FHA loans a smart choice for many home buyers.

Ohio FHA Loan Requirements for 2024

Below are the basic FHA loan requirements for this year. All of these must be met to be approved for an FHA loan. If you are not positive on whether you meet these standards or have questions, an FHA lender can help.

  • Down payment of 3.5% or 10% if your credit score is below 580
  • 2-year steady employment history with some exceptions allowed
  • Fully document your income for the past two years
  • Minimum FICO score requirement of 500 – down payment will vary
  • Mortgage Insurance Premium (MIP) is required for every FHA loan
  • Maximum debt to income ratio of 43% with exceptions up to 56%
  • The home must be your primary residence
  • No bankruptcies or foreclosures in the past two years

Some of these are non-negotiable such as the home being your primary residence and the down payment requirement. However, some lenders may be more flexible on the other requirements.

Other FHA Eligibility Requirements in Ohio 

The following are additional Ohio FHA loan requirements whether you are purchasing or refinancing a home.

FHA Income Requirements – With the exception of the streamline refinance, each FHA loan has income requirements. You must fully document your income using pay stubs, W2’s and/or tax returns. You are able to use disability income, child support income, retirement income, or any other income that can be documented and is likely to continue after closing for at least two years. Unlike USDA loans, there are no income limits for FHA loans.

FHA Debt to Income Ratio Requirements – The debt to income ratio must fall within the maximum limit of 56.9%. However, very few lenders are willing to go that high. You would need some compensating factors such as good credit. FHA loans have this wonderful advantage vs conventional loans and can help home buyers to qualify for a larger mortgage amount.

FHA Property Requirements – FHA loans are for primary residences only. You can use FHA financing for a single family home, condo, townhouse, mobile home, or 2-4 unit properties.

FHA Appraisal and Inspection – Each home must pass the FHA inspection for purchases and an appraisal for both purchases and refinances (excluding FHA streamline refinances). This serves to verify the home’s value and to make sure the home is safe and meets the FHA property standards. You can read more about FHA inspection requirements which serve to protect you from buying a home that is in disrepair.

Ohio FHA Down Payment Requirements

The down payment requirements for an FHA loan is the same in every state. The minimum requirement for an FHA loan is 3.5% of the purchase price. However, if your credit score is below 580, then the down payment requirement will be 10%.

If you do not have the down payment needed, you can also use gift funds from a relative.

Ohio FHA Down Payment Assistance

There are various down payment assistance programs in every state. Below is a list of just a few down payment assistance programs that may be available to you in Ohio. Home buyers will need to contact, and arrange for these programs independently. Lenders will accept the funds from these programs for your down payment but they will not arrange for the down payment assistance.

Your Choice Down Payment Assistance Program

Cuyahoga County Down Payment Assistance

Dayton Ohio Down Payment Assistance

We also have lender in our network who offer down payment assistance in the form of a second loan. Then, if you keep the loan for a minimum number of years. they will forgive the loan being used for the down payment.

Read our full article on FHA down payment assistance programs

Ohio FHA Loan Limits

Every county in the United States has specific maximum loan limits that are set for single family homes, as well as 2-4 unit properties. The limits are set based upon the average home sales value in that county. The base FHA loan limit for single family residences in Ohio for most counties is $472,030. Use this FHA loan limit lookup tool to see what the FHA loan limits are in your county.

Ohio FHA Loan Limits Chart

Single Family 2 Units 3 Units 4 Units
$498,257 $637,950 $771,125 $958,350

Visit our FHA loan limits article where you can lookup all of the loan limits for every county in Ohio.

Types of FHA Loans in Ohio

These are examples of other types of FHA loans that are available to you in Ohio. These are in addition to the traditional purchase or refinance loans.

FHA 203k Loans in Ohio

FHA 203k loans are a great program which will allow you to borrow the money needed to purchase the home plus additional funds needed to rehabilitate or remodel the home. This program is also available in your state and we work with lenders that help with your FHA 203k loan.

Often times we may not find the perfect home or dream home. However, with the FHA 203k loan, you can transform the home you are buying to have everything you need.

If you would like to fully understand how this program works, we suggest reading our article on FHA 203k loans.

FHA Streamline Refinance in Ohio

The FHA streamline refinance program is available to existing homeowners who would like to refinance for a lower rate while eliminating some of the refinance costs such as an appraisal.  Lenders also will not ask for income documentation or copies of your bank statements.

You may also get a discount on the mortgage insurance premium which is another advantage. With this program, you can only refinance the current mortgage balance and cashing out equity is not permitted.

For more information, please read our article on the FHA streamline refinance.

FHA Cash Out Refinance 

If you have equity in your home and would like to pull some of it out, you can apply for the FHA cash out refinance. Unlike the 203k, you can use the money for anything including debt consolidation or investments.

With this program, the most you can borrow is 80% of the appraised value of the home. Although you will still have 20% equity in the home, FHA guidelines still require mortgage insurance. 

Read more about the FHA cash out refinance.

FHA Construction Loans in Ohio

You may be interested in building your home in Ohio rather than purchasing a pre-existing home. You may qualify for the FHA One Time Close Construction Loan which will allow you to purchase a lot and also build your dream home all with just 3.5% down.

The loan will cover the cost of the lot, your architect and engineering, permits and the complete cost of the build. If you already own your lot, the equity can be used towards the down payment.

This is one of the most affordable ways to build your dream home. Although FHA guidelines permit credit scores down to 500, you can expect the requirements for the construction loan to be much higher.

The first step is to see how much you can get approved for. Then, you will need to find a builder and possibly an architect if you are looking for a custom home. Be prepared for a lot of work for you as the Ohio homebuyer.

To start the process, contact us here to see how much you can get approved for and also to answer any of your questions.

Ohio FHA Loan Approval Process

If you are looking for an FHA loan, there is an optimal process you should follow to get pre-approved.

  1. The first step is to make sure you have the minimum down payment needed to qualify
  2. Check your credit and try to cleanup anything that is pulling down your scores
  3. Get a copy of your tax returns for the past two years
  4. Get copies of your pay stubs for the past month
  5. Get copies of your last two months’ bank statements
  6. Speak to an FHA lender about your loan scenario

Speak to a lender early in the process because they can identify opportunities to help with your FHA approval. This should be done months before you start looking for a home. Starting the pre-approval process early will provide you with enough time to repair your credit or find the funds needed to complete your home purchase.

Read more about how to get pre-approved for an FHA loan.

What to Look for in an FHA Lender in Ohio

We take a few things into consideration when looking at which Ohio FHA lenders we work with. Some of these also may be, or should be very important to you as you continue shopping for an FHA loan.

A good FHA lender will have the following characteristics:

    • Allow for credit scores as low as 500
    • Provide FHA 203k rehab loans
    • Offer competitive rates and fees
    • Have a great processing and underwriting team
    • Work closely with you throughout the loan process
    • Communicate well and will provide you with updates along the way

Top Ohio FHA lenders

These Ohio lenders are just a few options for you to consider. Please note that each lender is different and it is possible that none of these options are best for you depending upon your scenario.

  • Mortgage Broker – Mortgage brokers have the ability to shop your mortgage to multiple lenders. The average broker will have at least 2-3 lender options that can help with your FHA loan.
  • Large Bank – Home buyers often call their local bank to see if they can help with their FHA loan. Large banks are well known but they may not allow for lower credit scores and they do not always have the best rates.
  • Online Mortgage Lender – Online mortgage lenders are used by a large portion of consumers today. In fact, most of the mortgage transactions are happening through an online lender or an online application process. We suggest shopping various online lenders.

Let us help you to find the best FHA lender in your area by completing this FHA loan scenario form with some basic loan scenario information. No credit report will be pulled and we can connect you with the best option.

Fifth Third BankContact

First Commonwealth BankContact

Kembia Credit UnionContact

Union Savings BankContact

Community Heights FundingContact

Ohio FHA Loan Calculator

Our FHA calculator will provide you with what your FHA mortgage payment could look like. Simply change the data in the fields to match your scenario. Use the current average interest rate for FHA loans or call us at 732-761-9041 and we can help with this.

FHA Calculator
Purchase Price
Interest Rate
Annual Property Taxes
Annual Homeowner's
Insurance
Credit Score Above 580
Term of Loan
FHA Payment Amount
$0
Monthly Principal &
Interest
FHA Monthly Mortgage
Insurance
Monthly Taxes and
Insurance
Loan
Amount
Down Payment
Amount
Upfront FHA Mortgage
Insurance

Frequently Asked FHA Questions

Can I get an FHA loan with a bankruptcy?
In general, you will need to wait two years before applying for an FHA loan after a bankruptcy. However, there are some exceptions which may allow you to apply sooner. Read our article on the bankruptcy waiting period.

Are all FHA lenders the same?
Not all lenders who offer FHA loans are the same. They all do not offer all of the FHA programs and their rates and fees may also vary. Most importantly, the individuals who help to process and underwrite your loan will have a huge impact on your FHA loan experience.

Can I use gift funds for an FHA loan?
FHA loans do allow for gift funds to cover your down payment as well as your closing costs. The gift funds must come from a relative or a close friend as approved by the lender. You will need to provide the lender with a gift letter that is signed by the donor.

Do I need an appraisal for an FHA loan?
The FHA does require an appraisal and inspection before your loan can be approved. The FHA inspection has clear guidelines on what needs to be repaired before your loan can close. They want to make sure home buyers are moving into a home that is safe and operational.

Can I get an FHA loan for an investment property?
FHA loans are for primary residences only and if your goal is to purchase an investment property, you cannot use FHA insured financing for that purchase. However, if you are currently living in a home that is financed with an FHA loan, you can move to a new home and keep the current home as an investment.

Can I get an FHA loan if I have a foreclosure?
FHA guidelines permit homebuyers to apply for a home three years after a foreclosure. The clock starts ticking once the bank sells the foreclosed home.

Ohio Home Purchase Data

You may find this information to be extremely interesting and helpful when deciding whether purchasing a home in Ohio is best for you.

  • Number of homes or housing units in Ohio = 5,293,000
  • Percentage of units that are owner occupied = 66%
  • Average home value = $189,900
  • Average monthly cost of home ownership = $1,838
  • Average cost to rent in Ohio = $1,370
  • Average time to travel to work = 23.7 minutes
  • Median household income = $61,938

The average home price may seem lower, but there are many inexpensive homes in rural areas.  Over the past three years, the cost to own or rent a home has increased significantly.

Benefits of Buying a Home in Ohio

Ohio is a great place to own a home and raise a family and almost 12 million people reside in this great midwestern state. You have some larger cities such as Cleveland, Cincinnati and Columbus, but also a large rural geography within the state where you can enjoy the quiet life.

The average home is worth a little over $150,000 and the median income for the state is $56,111. Meanwhile, just under 15% of the population is living below the poverty level.

Homes appreciate in value at a slower rate in Ohio versus some of the states that border the oceans or that are located in the most densely populated cities in the country. Therefore, if you are buying a home in Ohio you are doing it for the quality of life rather than a huge upside in appreciation.

Ohio offers a true four season living but typically does not see too many major storms to interrupt life. You can expect cold temperatures to begin toward the end of October and the warm weather will start to return in the beginning of April.

There are many universities to attend and the state has professional sports teams in both Cleveland and Cincinnati. Many residents of Ohio have the opportunity to enjoy the outdoors while participating in fishing and hunting.