Grants for Grads
With the concern that Ohio is losing a large portion of its talented graduates, the Ohio General Assembly directed OHFA to create a new program aimed to attract and retain professional residents. Grants for Grads, offered through OHFA's network of participating lenders, gives access to affordable fixed-rate mortgage financing and down payment assistance for qualified borrowers to purchase a home within 18 months of graduating from college.
In 2007, 6,981 more residents between the ages of 25 and 34 left Ohio than migrated into Ohio.1 The U.S. Census Bureau reports that, "When the young people moving into an area are also college educated, they provide a measure of economic opportunity in the area, while simultaneously serving to raise the area's stock of 'human capital.' This increase, in turn, fosters future economic growth in sectors in which education plays a key role."2
"Ohio's prosperity depends in part on keeping our best and brightest young people. Assistance in buying a home will encourage some graduates to put down roots in Ohio," said State Senator Steve Buehrer, sponsor of the legislation. A recent survey of students at Ohio colleges and universities found that 60% are very attracted to the idea of a cash grant for down payment on a home.3
Two of the biggest obstacles first-time homebuyers face are the lack of funds for a down payment and being able to afford the monthly costs of owning a home, including a mortgage payment. Grants for Grads will help overcome these barriers by offering:
- A down payment assistance grant equal to 2.5% of the purchase price of the home.
- An affordable mortgage interest rate.
- A 30-year fixed-rate loan underwritten to FHA, VA, Rural Development or Fannie Mae standards.
To qualify, participants must have been a resident of Ohio at the time of high school graduation and have received an associate, bachelor's, master's, doctorate or other postgraduate degree from an institution of higher education recognized by the Ohio Board of Regents. Other qualifications include:
- Being a first-time homebuyer, or
- Not having had an ownership interest in a primary residence in the past three years.
- Purchase a single-family home, condominium or manufactured home that meets OHFA guidelines.
Purchase price and household income limits apply as well.
Homebuyers are also required to complete a homebuyer education course offered by any U.S. Department of Housing and Urban Development (HUD) approved housing counseling agency or through OHFA's streamlined program.
Participants in Grants for Grads will not have to repay the assistance unless they move out of Ohio within five years of purchasing their home. A second mortgage will be recorded, and the balance will be forgiven at the rate of 20% per year. After the fifth year, the second mortgage will be removed.
1Sherri Williams, "Loss of Young Adults worries Ohio leaders," Columbus Dispatch, September 23, 2008.
2U.S. Census Bureau, "Migration of the Young, Single and College Educated: 1995 to 2000," November 2003.
3FDR Group, "Losing Ohio's Future, Why college graduates flee the Buckeye State and what might be done about it," Thomas B. Fordham Institute, June 2009.