How to Buy a House in Ohio: 6 Steps

Buying a house is a big financial decision that takes long-term planning. Ohio's average home value is $233,949, much lower than the national average of $362,481. This difference makes Ohio attractive for homebuyers seeking affordable options.

Understanding down payment assistance programs, mortgage types and state regulations can make homebuying smoother in the Buckeye State. MoneyGeek offers tips to guide you, from saving for a down payment and picking the right location to finding the best loan for your needs and credit score.

Ohio's homeowner vacancy rate in the second quarter of 2024 was 0.7%, according to the U.S. Census Bureau. This rate measures the percentage of vacant homes available for sale.

A rate of 0.7% signals a shortage of available homes for buyers. A balanced market typically has a vacancy rate of around 2%, offering buyers more options and flexibility. When the rate falls between 0.3% and 0.9%, as in Ohio, it reflects limited inventory, which can drive up competition and increase home prices.

Review your financial and credit history before buying a home in Ohio. A strong financial profile can boost your chances of approval when applying for a mortgage.

Your credit score impacts the mortgage loans and interest rates you qualify for. A higher score improves your chances of getting a better rate. In the third quarter of 2023, Ohio’s average credit score was 716, according to Experian.

If you have a bad credit score (between 300 and 579 on the FICO scale), you can still buy a house, but it may be harder to get mortgage approval. Check the table below for options based on minimum credit score requirements.

Source: Experian

Your DTI ratio shows how much of your monthly income goes to debt payments, helping lenders decide how much mortgage debt you can handle. Ohio's average mortgage debt was $144,784 in the third quarter of 2023, according to Experian, highlighting the added financial responsibility of owning a home in the state.

Monthly debt payments factored into your DTI include your mortgage, student loans, car loans, credit card payments and other debts. Use our debt-to-income ratio calculator below to find your front-end DTI (housing expenses) and back-end DTI (all debts). This tool also shows your total monthly debt payments.

Buying a house beyond your financial means can cause long-term financial strain. To avoid this, use the 28% rule, which suggests spending no more than 28% of your monthly income on your mortgage. This helps ensure your home is affordable.

In April 2024, the median annual income in Ohio was $46,690, according to the U.S. Bureau of Labor Statistics. That’s a gross monthly income of $3,891 before taxes. Applying the 28% rule, aim to spend no more than $1,089 monthly on your mortgage.

Use our mortgage calculator below to estimate your monthly payment in Ohio.

A down payment is an upfront payment made when purchasing a house and is crucial to securing a mortgage. The typical down payment is 20% of the home's price, but this can be a big challenge for many buyers. In Ohio, where the average home value is $233,949, a 20% down payment would be $46,790. For higher-priced homes, such as those costing $255,000, the 20% down payment would rise to $51,000.

Fortunately, a 20% down payment isn't always required. Government-backed loans like VA loans require 0% down, and FHA loans need just 3.5%.

If you put down less than 20%, your lender may require you to get private mortgage insurance (PMI). Use our PMI calculator to estimate your monthly PMI premium based on your credit score and down payment.

Ohio provides various down payment assistance programs to help make homeownership more affordable. The Ohio Housing Finance Agency (OHFA) is a key provider of this support.

See the table below for details on the state's down payment assistance program.

When choosing a location in Ohio, consider factors that affect your lifestyle and budget. Look at average home prices in different areas, as this impacts your financial plan. Also, think about proximity to family, friends, work and school, as it affects your commute and daily routine. Check for access to public transportation, parks, restaurants and shopping centers to ensure the area suits your lifestyle.

The cost of living is another critical factor in choosing your new home. According to the Missouri Economic Research and Information Center (MERIC), Ohio's cost of living index was 94 for the first quarter of 2024, below the national average of 100. This means living in Ohio can be more affordable than in other states.

When selecting a location, consider these expenses:

• Food
• Health care
• Clothing
• Utilities
• Education
• Transportation
• Entertainment

Check the table below for average home values in some Ohio cities. You can also use our cost of living calculator to estimate expenses in different areas.

Source: Zillow

Working with a real estate agent can speed up your house hunt in Ohio. They give advice, handle paperwork and offer an expanded list of property options you wouldn't access alone. Real estate agents can also recommend other service providers, like title companies and inspectors, to help you buy a home.

When finding a real estate agent, do your due diligence and interview those with experience in the neighborhoods you're interested in. Consider the following tips:

• Find someone who matches your needs and personality
• Verify their credentials, training and license
• Ensure they have in-depth knowledge of the area
• Compare rates from different agents

To find or verify real estate agents in the state, you can also use the license holder search tool from the Ohio Department of Commerce.

The homebuying process involves finding a mortgage that fits your budget. Options in Ohio include conventional, jumbo, FHA, VA and USDA loans. You can select from 10-year to 30-year terms and decide between a fixed-rate mortgage and an adjustable-rate mortgage (ARM). Choosing the best financing option can improve your approval chances and save you money over time.

Mortgage interest rates can change daily due to factors like the type of mortgage, the lender and the economy. While the interest rate is the percentage charged on the loan amount, the annual percentage rate (APR) reflects the actual cost of borrowing by including additional fees and costs associated with the loan.

As of December 2024, the APR for a 30-year fixed conforming loan in Ohio is 6.35%, while the APR for a 30-year fixed rate FHA loan is 8.21%. Check the table below for current rates in the state by mortgage type.

Getting pre-approved for a mortgage in Ohio can simplify your homebuying process. It helps you determine your budget and strengthens your offer. A pre-approval letter from a lender shows the loan amount you're eligible for and is usually valid for 60 to 90 days. This letter signals your financial readiness, making your offer more appealing to sellers.

To secure a mortgage pre-approval, you need to submit several documents, including:

• Proof of income
• Employment verification
• Credit history
• Identification

Understanding the distinction between mortgage pre-approval and prequalification is essential. Pre-approval involves a detailed financial health evaluation, whereas prequalification is a preliminary step based on self-reported information. Pre-approval provides a more accurate picture of your borrowing capacity, giving you a competitive edge in the housing market.

Home inspections are critical to the Ohio homebuying process, as they uncover issues that could impact a home's value and safety. Inspectors check areas like the roof, foundation, plumbing, electrical systems and HVAC. The inspection report outlines problems and suggests repairs.

An inspection might reveal structural damage or outdated wiring, lowering the appraisal value and affecting mortgage approval. If the repairs are too costly, buyers might back out. Knowing these risks helps buyers make smarter decisions and negotiate better terms.

The Ohio Division of Real Estate and Professional Licensing regulates home inspections in the state. Home inspectors must adhere to a well-defined scope of practice and a code of ethics emphasizing professionalism and impartiality. To maintain their license, they must complete 14 hours of continuing education every two years.

When looking for a home inspector in Ohio, ensure they hold a valid license. Check what previous clients have said, look at online reviews and ask for references. Use the Ohio Division of Real Estate and Professional Licensing's search tool to find or verify licensed home inspectors.

Home appraisals determine a property's market value and are crucial to the Ohio homebuying process. This valuation helps buyers and lenders ensure the price reflects the property's worth. The median appraisal cost in 2023 was $500, according to the National Association of Realtors (NAR).

While inspections and appraisals are vital, they serve different purposes. An inspection evaluates the property's condition and identifies potential issues, while an appraisal assesses the home's market value. Lenders require appraisals to protect their investment by ensuring the loan amount aligns with the home's value.

Closing is the final step in buying a house in Ohio, marking the ownership transfer when you receive the keys. Your lender must provide a closing disclosure document three days before the closing. This document outlines your loan terms, projected monthly payments and closing costs. As the closing day approaches, plan a final walk-through with your real estate agent to confirm that the property remains in the expected condition.

On the closing day, you'll review and complete a lot of paperwork that finalizes your home purchase. Here are some documents you need to sign:

• Final loan application: Confirms the loan terms you and your lender agreed upon. It ensures that all financial details are accurate and up-to-date before finalizing the loan.
• Deed transfer: Transfers property ownership from the seller to the buyer. It establishes the buyer's legal rights to the property.
• Promissory mortgage note: A written promise by the borrower to repay the mortgage loan under specified terms. It outlines the loan amount, interest rate and repayment schedule.
• Homeowners insurance: Covers potential damage to your home from fire, theft and natural disasters. Homeowners insurance in Ohio provides coverage options tailored to residents in the state.

Closing costs are the fees and expenses you pay when finalizing a real estate transaction. In Ohio, the average closing costs are $3,373, according to NAR. These costs include:

• Appraisal fee: Covers the cost of a professional appraiser determining the property value.
• Title search and insurance fee: Ensures the property's title is clear of liens or disputes.
• Escrow deposit: Covers future costs such as taxes and insurance.
• Prepaid costs: Upfront payments for homeowner's insurance and property taxes.
• Other closing costs: Include various administrative and processing fees associated with the loan.

Learning about the different first-time homebuyer programs in Ohio can also help you own a home faster.

Buying a house in Ohio is a financial commitment that lasts for years. We answered common questions about the process to help kickstart your homebuyer journey.