Are you thinking about moving to Cincinnati? There’s a lot to love about the Queen City from its top-rated attractions and museums to its low cost of living. In fact, Cincinnati ranks third among the 50 largest U.S. metro areas for first-time homebuyers based on the ratio of home prices to incomes and cost per square foot. First-time homebuyers across all metro areas buy a home worth a median of 3.3x their household income but first-time buyers who buy a home in Cincinnati spend only 2.6x their household income.
The Queen City has also been ranked as one of the best cities for young professionals and renters. With average rent under $1,000 and an average salary of $59,400, that leaves plenty of money left in your budget after the essentials to put toward saving up a down payment to buy a house!
Here’s everything you want to know about buying a house in Cincinnati, from the process itself to where to buy a house in Cincinnati and how much you can expect to spend.
How to Buy a House in Cincinnati
Buying a home doesn’t need to be an intimidating process. Here’s the process of buying a house in Cincinnati with everything you need to know about determining how much you can afford, qualifying for a mortgage, and house hunting!
Step 1: Create a Budget – How Much to Buy a House in Cincinnati?
Before buying a house in Cincinnati, you definitely want to know how much house you can afford!
The 28/36 rule can be used as a starting point to set an affordable budget for buying a house. The 28/36 rule is simple: your total housing costs shouldn’t exceed 28% of your gross income and your total debts (which includes car loans, credit cards, and other payments) shouldn’t exceed 36% of your gross income.
With the median salary of $56,400, that means your PITI payment (principal, interest, taxes, and insurance) shouldn’t be more than $15,792 or $1,316 per month. Your total debt shouldn’t exceed $20,304 or $1,692 per month.
With that in mind, you can consider how much you can afford to borrow based on the purchase price, interest rate, and anticipated property taxes and home insurance.
How Much Does it Cost to Buy a House in Cincinnati?
Before you can start house hunting in Cincinnati or setting a budget to buy a home, you need to know what you should expect to pay.
The median home price in Cincinnati is $220,000 or $134/square foot. If you’re buying a condo, you can expect to pay anywhere from $110,000 to $450,000 for a two-bedroom condo depending on the neighborhood.
Of course, Cincinnati home prices range a great deal depending on the neighborhood and type of home. Here’s what you can expect to pay in several of the city’s most desirable neighborhoods.
- Mount Washington: $210,000 ($155/square foot)
- Kennedy Heights: $228,000 ($136/square foot)
- Over-the-Rhine: $251,000 ($238/square foot)
- Pleasant Ridge: $290,000 ($176/square foot)
- Oakley: $331,000 ($225/square foot)
- Hyde Park: $419,000 ($248/square foot)
- Clifton: $423,000 ($166/square foot)
- Mount Adams: $455,000 ($234/square foot)
- Mount Lookout: $465,000 ($242/square foot)
- Central Business District/Downtown: $465,000 ($294/square foot)
Don’t Forget the Hidden Costs of Buying a House in Cincinnati!
No one wants to end up house poor. Remember that the cost of buying a home in Cincinnati goes beyond the sales price and your mortgage payment. Here are crucial hidden costs of homeownership that should be included in your home buying budget.
- Utilities. Remember you’ll pay more for utilities if you’re moving from an apartment to a single-family home! Expect to pay $140 on average for utilities in Cincinnati.
- Property taxes. Ohio has one of the country’s highest property tax rates. The effective property tax rate for the Cincinnati area was recently 1.47% with an average tax bill of $2,816.
- Homeowner’s insurance. Budget about $90 to $100 per month for homeowner’s insurance.
- Closing costs. These will be around 2% to 5% of your purchase price.
- Escrow funds. If you put down less than 20%, you may need to prepay 3-6 months’ property taxes and homeowners’ insurance into an escrow account at closing.
- Home maintenance & repairs. Budget about 1% of the value of the home per year.
- Lawn care, gutter cleaning, and HVAC maintenance. The cost will depend on how much work you do yourself.
Step 2: Get Pre-Approved for a Home Loan
Before you can shop for a home, you need to get pre-approved. This is a letter from the lender stating the type and amount of loan you can qualify for and it shows sellers and their agents that you are a serious, qualified buyer.
Getting pre-approved for a mortgage is an involved process that requires filling out a mortgage application, submitting to a credit check, and providing extensive documentation. You will need to provide two years of tax returns, W-2 statements, documentation of your job history, assets, liabilities/debts, and more.
What Is Needed to Buy a House in Cincinnati?
There are a few basic financial requirements you must meet to get approved for a mortgage to buy a house. The specific requirements depend on the lender and mortgage program, but these are the general requirements to buy a home in Cincinnati.
- Ability to repay. This means you have sufficient income for the future mortgage payment and other obligations. You must typically have a debt-to-income ratio of 36%.
- Stable employment. The lender will usually want to see that you have been with the same employer for at least one year.
- Satisfactory credit. Buying a house in Cincinnati with bad credit is definitely possible, but you generally want a credit score of at least 620 to qualify for a home loan.
- Down payment. Most loan programs require a down payment. It’s usually best to put at least 20% down with most programs to avoid costly private mortgage insurance (PMI).
- Cash reserves. The lender will want to see that you have enough cash on hand to cover closing costs.
Mortgage Programs in Cincinnati
During the pre-approval process, you’ll want to know which type of home loan is best for you. The right mortgage will depend on how long you will stay in your home, anticipated changes in household income, and more.
- Fixed-rate mortgages are the most popular. Your mortgage rate and monthly payment remain the same.
- Adjustable-rate mortgages (ARM) have more risk. The payment and interest rate are lower initially but it’s subject to change. When interest rates are low, an ARM will almost always become more expensive later.
- FHA loans are a popular choice for first time homebuyers in Cincinnati. A down payment of at least 3.5% is required with less stringent credit and debt requirements. However, these loans have expensive mortgage insurance premiums.
- VA loans for qualifying military members, veterans, and families require no down payment. They have low funding fees and no mortgage insurance required.
- USDA loans have no down payment requirement, but the property must be within a designated rural area. Cincinnati and most of Hamilton County are not eligible.
- Conventional mortgages are not government-backed. They have stricter requirements and require a down payment of at least 3% to 5%. You must pay private mortgage insurance with less than 20% down. However, they generally have the lowest interest rates.
Step 3: Choose a Cincinnati Real Estate Agent
With your pre-approval in hand, you’re ready to start the most exciting part of buying a house in Cincinnati! It’s a good idea to work with a real estate agent who can help you choose a neighborhood, find homes that meet your needs, submit an offer, and negotiate with the seller. Home sellers usually pay the commission for the buyer’s agent so you do not need to pay anything for valuable representation and someone who will protect your best interests.
Step 4: Start House Hunting in Cincinnati
It helps to go into the house hunting experience prepared. Start with two lists: your needs and your wants. What are your top priorities and things you absolutely must have? You will not find a home that matches everything on your lists, but the focus should be on your needs, not wants.
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A good location is one of the most important things to look for. You can’t change your home’s location later, unlike the flooring, paint, and floorplan. Your agent can help you narrow down options and find the best areas to buy a house in Cincinnati based on your biggest concerns like:
- Nearby parks, shopping, and amenities
- Types of homes (Do you want a single-family home? Do you need a single story? Are you interested in townhomes?)
- Commute to work
- Nearby zoning and planned construction
- Churches/places of worship
- Lot sizes
- Age of homes/architecture
As you explore neighborhoods and homes, try to be open-minded and consider the potential of each home. While focusing on your needs, set emotions aside and view the home as a potential asset.
What are the best neighborhoods to buy a house in Cincinnati? Here are some guides to help you get started narrowing down your options.
- Overall best Cincinnati neighborhoods
- Safest neighborhoods in Cincinnati with low crime rates
- Best Cincinnati neighborhoods for families with low crime, good schools & family-friendly amenities
Step 5: Submit an Offer on a House
Once you’ve found a home you can see yourself in, you’re ready to make an offer! Your agent will help you prepare a purchase offer after reviewing comparable sales. Your agent will give you advice based on local market conditions to present the strongest offer possible.
With your offer submitted, the seller can accept it, reject it, or make you a counteroffer. It’s common for there to be some back-and-forth negotiation. The seller may ask for fewer contingencies, reduced seller assistance, or a higher purchase price.
After your offer is accepted, you will be officially under contract.
Step 6: Close on Your New Home!
It usually takes about 60 days to close after the purchase agreement is signed by both parties. Many things happen during the escrow process to get to the final closing.
- The buyer finalizes securing a mortgage
- The buyer must purchase homeowner’s insurance
- A home inspection is completed
- The bank appraises the home
- A title search is completed
- Contingencies are met such as negotiated repairs
- A final walkthrough is conducted
Once these steps are finished, it’s time to actually close. You’ll sign a lot of paperwork and then a new deed is submitted to the county naming you as the property owner. Funds will be transferred and you will receive the keys to your new home!
Programs for a First Time Homebuyer in Cincinnati, Ohio
Are you buying your first home in Cincinnati? First time homebuyers can qualify for a number of programs that make homeownership more attainable. Here are mortgage tax credits, first time homebuyer loans, and first time homebuyer grants in Cincinnati to explore.
- American Dream Down Payment Initiative (ADDI) from the City of Cincinnati offers up to $5,000 toward closing costs or the down payment for first-time buyers from a lower income or minority household.
- Fifth Third Bank Down Payment Assistance Program. If you meet property and income guidelines, you can receive up to $3,600 toward closing costs or your down payment from Fifth Third.
- Communities First Ohio Down Payment Assistance from The Port of Cincinnati with down payment assistance of up to 5%.
- Welcome Home Program from FHLB Cincinnati offers up to $5,000 (or more for veterans and military families) in first time homebuyer grants in Cincinnati.
- YourChoice! Down Payment Assistance from the Ohio Housing Finance Agency provides up to 5% of the purchase price for your down payment or closing costs in the form of a grant.
- Ohio Mortgage Tax Credit. This program offers a non-refundable tax credit on a percentage of the mortgage interest you pay every year as long as you remain in your home. You can save up to $2,000 per year!
Check out our complete guide to first time homebuyer programs in Ohio for information about additional grants, down payment assistance, and loan options!
Now that you know how to buy a house in Cincinnati, you’re ready to embark on the exciting journey of homeownership. Once you’ve made an offer on a home with a moving date on the horizon, Bell Moving & Storage is ready to help you get settled into your new home with a stress-free moving experience!