Buying a home is one of the biggest financial decisions you'll make, and the interest rate you secure is as important as the price of the house. Recently, the Federal Reserve cut interest rates, which signals the cost of borrowing money is starting to come down. Financial experts are hopeful that rates will drop again in 2026.
Even a small drop in interest rates can save a homebuyer hundreds of dollars per month, making their mortgage payment more affordable. To illustrate how much rates matter, let’s look at a typical home purchase scenario. If you bought a median-priced home in Ohio for $260,000 with a 3% down payment, here is how mortgage rates would affect your monthly payment:
| Mortgage Amount: $252,200 | |
|---|---|
| Mortgage Interest Rate | Monthly Principal & Interest Payment |
| 5% | $1,353.86 |
| 6% | $1,512.07 |
| 7% | $1,677.89 |
The Ohio Housing Finance Agency (OHFA) works to keep mortgage rates competitive through fluctuating market conditions. OHFA’s Director of Capital Markets Duane McCrobie offers the following insight:
Interest rates continue to shape affordability for Ohio families and the Federal Reserve’s recent rate cut offered a modest improvement in borrowing costs. Even with tight inventory across the state, lower rates can help ease the monthly payment burden. At OHFA, we’ve worked hard to keep our bond-funded mortgage rate competitive through evolving market conditions, ensuring more Ohioans can access homeownership.
OHFA can help a homebuyer save even more through two programs that can help offset higher mortgage rates:
- The Mortgage Tax Credit program allows eligible homebuyers to claim a portion of their annual mortgage interest as a dollar-for-dollar federal tax credit — effectively increasing a homebuyers take-home pay.
- The Ohio Heroes mortgage loan provides a reduced mortgage interest rate to those that serve the community, including:
- Veterans, active-duty military members, or members of reserve components (including surviving spouses)
- Police officers, firefighters, volunteer firefighters, EMTs, and paramedics
- Physicians, nurse practitioners, nurses (RNs and LPNs), and STNAs
- Teachers (pre-K through grade 12), administrators, and counselors
To view all OHFA homebuyer programs and eligibility requirements, visit myohiohome.org.
