There are plenty of reasons to join in the O-H-I-O chant even if you aren’t at a Buckeyes football game. Ohio has something for everyone from every age group to celebrate. The state earned a spot on Bankrate’s list of best places to retire, thanks to its affordable Midwest lifestyle. But buying a home in Ohio isn’t just for those who are ready to wave goodbye to work. Cincinnati and Columbus, both with thriving downtowns and plenty of recent college graduates, appear in Bankrate’s list of the best places to live in the entire country, and there are plenty of other cities with youthful energy and opportunities, including Dayton, Cleveland and Toledo.
Buying a house in Ohio hasn’t exactly been easy lately, though. Like everywhere else in the country, the state has a shortage of available housing that has pushed average prices up to nearly $274,000 as of July 2022. While those prices might make you think about waiting to buy a house, the market is beginning to look better for buyers as more inventory hits the market. Plus, more sellers are now dropping their prices — more than 7 percent more than this time last year, according to Redfin data.
Read on for everything you need to know about how to buy a house in Ohio.
How to buy a house in Ohio
Decide where in Ohio to live
The Buckeye State covers more than 40,000 square miles, so you have plenty of land to choose from as you think about where to plant your roots. However, housing prices can look very different depending on where you’re trying to buy. While average prices in Athens were up by 16 percent in July, average prices in Lancaster actually declined by more than 27 percent in the same timeframe.
The cost of the house is only part of the equation, though. You should consider how much you’ll pay for everything else you need to live, too, like transportation, groceries and utilities. Bankrate’s cost of living calculator can help you understand how far your earnings will take you in different parts of the state. In Columbus, for example, the cost of living is more than 4 percent lower than it is in Cincinnati. That may sound small, but every dollar counts — particularly during a time of very high inflation.
And as you try to find the best place to live in Ohio, think beyond the current market and your current lifestyle. Will you be planning to have a family? Make sure you consider schools in the area. Do you travel a lot for work? Perhaps you’ll want to find a place near an airport. Buying a home is a long-term investment, so think about what you want to be doing in Ohio several years from now.
Tips for buying a house in Ohio
As you look at the kind of home you want to buy and the amount of money sitting in your bank account, you’ll get a good idea of whether you will need to borrow a chunk of cash that will require a jumbo loan. In Ohio, the conforming loan limit for a conventional loan is the same in every county: $647,200. If you need more than that amount, you’ll be looking for a jumbo loan, which means a lender will want you to have excellent credit and a bigger down payment.
Things to know about buying a house in Ohio
- Property taxes: Make sure you budget for what you’ll need to pay the government as an Ohio homeowner. Property tax rates here average 1.36 percent of a property’s assessed value, but they can look quite different from county to county. For example, the median property tax bill in Cuyahoga County is more than $2,600, while the typical bill in Vinton County is just $886.
- Dual agency: Keep in mind that Ohio law permits dual agency, which lets the same real estate agent or brokerage represent both the buyer and the seller in a transaction. There is potential for a conflict of interest with this arrangement, so you’ll have to provide written consent that you are OK with it.
- Seller’s disclosure: Make sure you read the seller’s residential property disclosure for any property you’re considering buying. This five-page form includes a range of helpful information about potential problems with a home, such as past structural issues or being located in the Lake Erie Coastal Erosion Area.
- Closing costs: In 2021, the average closing costs in Ohio added up to $4,223, according to ClosingCorp. However, you will not be responsible for that full bill. The cost of title insurance is usually split between the buyer and the seller here, and you can try to negotiate to get the seller to cover the cost of real estate transfer taxes, which make up a sizable chunk of these costs.
- Attorneys: Speaking of negotiations, having the right attorney can help make sure your interests are protected. While Ohio does not require buyers or sellers to hire a lawyer, real estate contracts can be complex, so it’s smart to have an expert on your side.
- Climate and weather considerations: From the Ohio River running alongside Cincinnati to Cleveland’s Lake Erie shoreline, Ohio has plenty of beautiful waterfront views. But that water also comes with flooding risks. A recent study conducted by the First Street Foundation estimates that more 493,000 properties in the state meet the threshold for needing to purchase flood insurance. As you compare properties you want to buy, make sure you are investigating whether you will need to pay for additional coverage to protect your home.
How much house can I afford in Ohio?
Buying a home starts with a basic budget rule: Do not spend more than 28 percent of your income on your mortgage payment. So, if you just got an offer for a job in Toledo that pays $6,000 each month, your monthly housing payment shouldn’t exceed $1,680.
However, your budgeting also needs to take your other debts into account, such as student loan payments, car payments and credit card balances. Use Bankrate’s new-home calculator to put your finances in perspective and determine what you can afford based on different down payment amounts.
Saving for a down payment in Ohio
If you’ve recently finished college, you might be facing a mountain of debt and wondering how you’ll ever come up with a down payment to buy a home. In Ohio, though, you’re in luck: The Ohio Housing Finance Agency offers a Grants for Grads program that can give you up to 5 percent of the purchase price of a home for your down payment and closing costs. As long as you live in the state for at least five years, you’ll never have to pay back the money. The OHFA also offers a number of other programs designed to help first-time homebuyers, and there are plenty of options throughout the state for borrowers with low and moderate incomes. For example, Cuyahoga County offers eligible low- and moderate-income buyers 10 percent down payment assistance up to $16,600.
Get preapproved for a mortgage
Once you have an idea of how much of a down payment you can make, it’s time to get preapproved for a mortgage. The “pre” means that a lender has taken an initial look at your pay stubs, recent tax returns, bank accounts and other assets to assess whether it is likely to approve your loan application. It’s a critical piece of getting a seller to take your offer seriously. Some lenders can issue preapprovals in less time than it will take you to eat lunch — just 15 minutes — while others might require a bit more time.
Find the right lender
The lender that issues your preapproval doesn’t have to be the company that actually loans you the cash to buy a home. It’s important to compare multiple lenders in Ohio to figure out who can offer the best combination of low fees, low rates and great customer service. As you compare mortgage rates in Ohio, pay close attention to the annual percentage rate, or APR. That’s the number that will give you an accurate look at the total costs of the loan. Additionally, ask each lender about unique programs that differentiate their business, such as an on-time closing guarantee or the opportunity to refinance your loan down the road without paying any fees.
Find the best local real estate agent in Ohio
Buying a home comes with loads of questions. Where should you start looking? What can you realistically expect with your budget? How quickly will you need to make an offer if you find a place you love? You don’t have to answer these on your own. Instead, the right real estate agent will be able to act as your trusted advisor, walking you through the process, helping you review documents and compare properties. Realtors are important for anyone buying a home in Ohio, but they’re critical if you’re buying a home from out of state. You might not be able to see a home as soon as it hits the market if you’re hundreds of miles away, so your agent can help you determine if that new listing is the one for you.
Start house hunting and make an offer
When you’re ready to start looking for a house, you’ll need to have an idea of what you must have and what you might be willing to sacrifice. Do you need to live in the walkable downtown, or are you OK with doing more driving? Do you need the updated kitchen today, or can you wait and build the kitchen of your dreams in a couple years? When you’re finally ready to make an offer, your agent will guide you through crafting a compelling offer that will capture the seller’s attention. You’ll likely go back and forth with counter-offers, contingencies and contract language for a bit of time.
Get a home inspection and appraisal
When it’s officially accepted, it’s time to verify that the property is worth the price. It’s smart to pay for a home inspection to uncover any issues lurking behind the walls. This will cost a few hundred bucks, but you’ll get the peace of mind of knowing that you’re about to make a smart investment. And you might be able to negotiate some concessions to more than cover your inspection costs.
Assuming you are financing the purchase, your lender will require a professional appraiser to assign a fair market value to the home. This is a standard part of every mortgage: The lender needs to know that it can recoup its losses if you ever default on the loan. If the appraisal is lower than your offer, what’s called an appraisal gap, you’ll either need to pay the difference or get the seller to lower the price.
Final walk-through and closing on your new Ohio home
A lot can change between the home inspection and closing day. What if a huge, damaging storm sweeps through town? To make sure that the home is in good condition, schedule a final walk-through before you become the official owner.
Once you’re satisfied with the state of the property, it’s time to get to the finish line: closing. You’ll have a firm number of what you have to pay included in your closing disclosure, and your attorney or agent will tell you how to pay for the expenses (likely a certified check or cashier’s check, so leave yourself time to go get one). Closing day will feel exciting and daunting; if you’re getting a 30-year mortgage, you’ll be signing loads of documents with a date that feels like it’s a lifetime away. Sign your autograph everywhere it needs to go, and get ready to celebrate. The keys are yours, and you can move into your new home. Say it loud: O-H-I-O.