Everything You Need to Know as a First Time Home Buyer in Columbus, Ohio

Looking to make Columbus your hometown? Here’s everything you need to get started with your house hunting.

realtor handing house keys to first time Columbus homebuyer
HER, REALTORS:
Greater Columbus Area
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681 High St, Worthington, OH 43085
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Homes for sale in 
Greater Columbus Area

By

Tori Stroup

on

Jan 21, 2021

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As a first-time homebuyer, there’s a lot to take in.

How do you know how much you can afford? What is the minimum amount you should have saved for a down payment? How do you even go about making an offer?

All of these things are questions that any first-time homebuyer should be asking. Luckily, you don’t have to go down this road alone. There are plenty of resources available to help you navigate the process of first-time home buying -- and you’ve come to the perfect place to start your research.

In this article, we’ll take a look at everything you need to know about first-time home buying in Ohio. From the first step of determining exactly how much you can afford to provide you with a list of assistance programs, you may be eligible for -- we’ll cover it a.

These are the two main topics we’ll cover in this article:

  • Everything you need to know about first-time home buying
  • Assistance programs for first-time homebuyers

First Time Home Buying: What You Need to Know

The home buying process can be overwhelming for first-time homebuyers. But with the proper guidance, you can navigate the world of home ownership with ease and find your dream home.

Before you get started with your search, there are a few things you’ll want to consider. From what you can afford to the areas you want to live in -- it’s all important to think about before jumping in too far.

To help you move forward in purchasing your first home, we’ve pulled together a list of things you need to know to be prepared. This list will help you feel more prepared and allow you to confidently move forward in your search for the perfect first home.

Know What You Can Afford

We all dream of living in a big house with a great backyard and entertaining space -- but that dream home often comes with a hefty price tag. For most first-time home buyers, this isn’t a real starting place.

So before you start looking at home or going to open houses, it’s a good idea to sit down and determine what you can afford and what the market looks like.

In Columbus, the median listing price is right around $230k. That’s not to say if your budget doesn’t allow for a home at this price, you won’t find the perfect home, but it’s important to know what to expect as you start to look at homes within your budget.

There are plenty of mortgage calculators out there that can help you start to understand what mortgage amount your budget can withstand.

Another great way to have a clear picture of what you can afford is by getting pre-approved. Working with a lender to get pre-approved will tell you how much you can manage in a monthly mortgage and set you up for a quicker mortgage process.

how much home you can afford chart
When you start researching what you can afford, you’ll find tons of different resources that can help you determine your max budget. If you consider the monthly payment based on your monthly income, you can quickly see what you can and can’t afford. Image courtesy of CNBC.

While mortgage calculators and getting preapproved are great ways to know what you can afford -- you also need to consider your lifestyle and future monetary needs. Sometimes the estimates you receive from these different avenues are quite high, but that doesn’t mean you should go all-in at that price.

If you plan to start a family or enjoy taking lavish vacations, then you may want to make sure you have additional spending money outside of your monthly mortgage payment. These are all things you should consider when figuring out how much you can really afford.

Save for a Down Payment

The biggest upfront cost when purchasing a house is the down payment. You’ll often hear people saying that you have to put down a 20% down payment.

Luckily, as a first-time homeowner, there are various programs and benefits to help you -- we’ll cover these in more detail in the next section, so stay tuned.

One of those benefits is a lower down payment requirement of only 3 to 3.5%. This will help you save money upfront, have additional funds after closing, and make more out of your budget.

It’s also important that you have enough money set aside to cover your closing costs. Closing costs are typically around 2 and 5% of the loan amount. Planning for this additional out-of-pocket cost will help you avoid any unexpected expenses.

down payment percentage chart
This example gives you an idea of the difference between putting 20% down versus 5%. The upfront cost is much cheaper, but the monthly mortgage payments are slightly higher. What’s right for you depends on what your situation is. Image courtesy of Consumer Financial Protection Bureau.

There are benefits to putting more down initially if you have the extra money, such as lower monthly payments and a lower monthly mortgage insurance payment (also known as PMI). But for many first-time home buyers, the extra cash upfront is more valuable.

Find the Right House and Neighborhood

Once you’ve come up with your budget and started to save towards your down payment goals, it’s time to start looking for your new home!

You’ll want to spend time looking at different styles of homes to figure out what type of home you like best. This will help you narrow down your options and give your realtor insight into what you’re looking for.

But it isn’t only about the type of house you like. You also want to research different areas around the city.

columbus neighborhoods map
Knowing where you want to live within the Columbus area will help you determine how much home you can get within your budget. Some places will be much more affordable than others, while others may offer the appeal of a larger house at a lower price. Image courtesy of Wexner Medical Center.

Think about how long you plan to be in this home. If you plan to start a family in this house, what does the school district look like? Do you want a community that is within walking distance of shops and restaurants?

All of these things can help you find the perfect place for you to find your perfect starter home.

As you look at different neighborhoods, you quickly realize that some are much more affordable than others. This is likely something that will impact what you can afford.

In a more affordable neighborhood, like South Linden, where the median home listing price is $110,000, your budget will stretch a lot further -- but it might not be the neighborhood you’ve been dreaming about.

On the other hand, if you’re interested in living in the German Village neighborhood where the median listing price is $499,500, you’ll likely have to settle for something a bit more modest.

All of these are things you should be thinking about as you start your journey towards homeownership.

Make an Offer

You’ve done the work, went to endless open houses, and finally found that new house -- congrats! Now it’s time to put in your offer.

During this stage, you’ll likely lean heavily on your realtor, but there are a few things you’ll want to know about. Especially in the competitive real estate market we are experiencing today. With multiple offers coming in, you’ll want to make sure your offer is solid from the start.

Here are a few tips to help you make the best offer to stay competitive:

  • Make your offer as clean as possible; as a first-time buyer; you don’t have to worry about contingencies which makes your offer more appealing than others
  • Offer above-asking if there are other offers on the table, and you can afford it
  • Put down a substantial earnest money deposit to show you’re interest

Putting in a competitive offer is more important than ever, knowing that houses are selling at a rapid rate.

days on market chart
Homes in Ohio are selling quickly. While it does vary by price point, most homes are selling within 30 days of hitting the market. This means you need to act fast once you find a home you love. Image courtesy of Columbus Realtors.

Columbus is one of the cities with the fastest-selling homes, and that means you need to make your offer stand out. The more appealing you can make your offer while still staying within your initial budget, the better.

Close the Deal

There are a few more steps between making the offer and closing the deal, but we’ll jump ahead here a bit.

Once you’ve found the house, made the offer, and officially locked in the mortgage, you just have to wait for your closing day. When that day arrives, you’ll hand over the rest of your down payment, sign tons of paperwork -- and get the keys to your new home!

This is when you can celebrate and start moving your household items into your new home. If you’ve made it this far, congrats! You’re now a first-time homeowner.

Assistant Programs for First Time Homebuyers in Ohio

As a first-time homeowner, you have a number of different programs and benefits available to you. These different programs will allow you to make the most out of your budget and potentially save on the money you need to provide upfront.

Whether it’s a lower down payment required or discounted interest rate -- these assistance programs can help make home ownership more affordable for first-time homebuyers.

Each program has different benefits and requirements. To determine which option is best for your situation will depend on several things, including your credit score, purchase location, military status, and more.

In this section, we’ve compiled a list of various assistance programs available both nationally and specifically to Ohio. These will give you an idea of the program and the basic requirements you’ll need to meet.

National First-Time Home Buyer Programs

There are national mortgage programs available to first-time homebuyers in any state. These mortgage options are great options for first-time homebuyers and help finance your dream home more attainable.

Here are the national mortgage programs available:

  • Conventional mortgage
  • FHA loans
  • VA loan
  • USDA loans

Let’s quickly look at each of these to help you decide whether they’re the right fit for your needs.

National Conventional Mortgage

A conventional home loan will allow you to put as little as 3% down if the mortgage meets specified requirements by Fannie Mae and Freddie Mac. There are minimum credit score requirements, but if you have a higher credit score, you may qualify for better interest rates.

Another benefit to a conventional mortgage is that if you can afford to put 20% down, you’ll save yourself from having to pay mortgage insurance premiums.

conventional loans
For many homebuyers, a conventional loan may be the best way to go, especially if you have enough money stashed away to meet that 20% down payment. Image courtesy of The Mortgage Reports.

FHA Loans

FHA loans are insured by the Federal Housing Administration (FHA). They offer first-time homebuyers with more relaxed qualification requirements -- specifically around down payment and credit scores. If you have decent credit, you may not have to put more than 3.5% for your down payment.

One disadvantage of an FHA loan is that they do require mortgage insurance that cannot be cancelled.  

fha loans
FHA loans are a very popular loan option among first-time home buyers. That’s because they offer low down payment options and provide funding even if you don’t have a perfect credit score. Image courtesy of The Mortgage Reports.

VA Loans

If you’re a military member or veteran, you may qualify for a VA loan. This mortgage option will provide you with benefits, including things like no minimum credit score, no down payment, and no mortgage insurance. There may be a VA funding fee associated with a VA loan.  

va loansd
If you’re a military member or veteran, then a VA loan might be the perfect fit for your needs. There are some very appealing benefits to obtaining a VA loan, such as no PMI and low down payment requirements. Image courtesy of The Mortgage Reports.

USDA Loans

The USDA loan program is designed for rural and suburban homeownership. It offers zero-down-payment mortgages for lower-income buyers. These loans are only offered in specific areas, and not everyone will qualify for them.

usda loans
USDA loans are another great option, especially for those first-time homebuyers that meet the income limits. This one does have some additional requirements and isn’t offered in all areas. Image courtesy of The Mortgage Reports.

First-Time Homebuyer Assistance Programs Offered in Ohio

The Ohio Housing Finance Agency (OHFA) offers several different assistance programs available to first-time homebuyers. In this section, we’ll highlight each different program and provide you with some information on how you may qualify for them.

The OHFA assistant programs we’ll cover include:

  • OHFA Ohio Heroes Program
  • OHFA YourChoice! Down Payment Assistance
  • OHFA Grants for Grads

OHFA Ohio Heroes Program

The OHFA Ohio Heroes Program offers those who qualify a discount on their mortgage rates.

This program is designed for people who work in the following industries:

  • Police officers, firefighters, EMTs, or paramedics
  • Physician, nurses, nurse practitioner, or STNA
  • Teachers, administrators, or counselors
  • Veterans

You are required to meet a few requirements around credit score, income, purchase limits, and complete a homebuyer education course.

OHFA YourChoice! Down Payment Assistance

This program offers buyers 2.5 to 5% for a down payment, closing costs, or other expenses. As long as you live in the residence for seven years and do not refinance in that time, the funds do not have to be refunded.

You are required to meet a few requirements around credit score, income, purchase limits, and complete a homebuyer education course.

OHFA Grants for Grads

The OHFA Grants for Grads program makes home buying easier for first-time homebuyers who recently completed their degree. If you’ve recently completed your associate’s, bachelor’s, master’s, or doctorate, this program can make your mortgage more manageable with your student loans.

This program offers forgivable down payment assistance with 2.5 to 5% and discounted mortgage rates. If you stay in the home for at least five years, you will not repay the down payment assistance.

You are required to meet a few requirements around credit score, income, purchase limits, and complete a qualifying degree within the last four years.

Put Down Your Roots in Columbus, Ohio

Now that you have all the information you need to make the right decisions on what is right for your budget and family -- you’re ready to start searching for your perfect home.

Now, all you have to do is find the perfect home and put down your roots in Columbus, Ohio. You can easily find a perfect first home by doing the right research and planning based on your specific wants and needs.

Discover your dream home in German Village, OH.

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November 4, 2021
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