A rule change is making more Ohioans eligible for state-backed financial incentives when they buy a house.

Until recently, total household income was used to determine who was eligible for reduced mortgage interest rates and other home buying assistance offered through the Ohio Housing Finance Agency. That meant many two-income households earned too much to qualify.

Changes enacted last year, however, allow households to count only one personís income when they apply, as long the mortgage promissory note is in that personís name alone, said Jonathan Duy, real estate manager for the agency.

As a result, more households can now meet income limits for interest rate breaks, down payment assistance, home-repair loans and other programs backed by the state and aimed to make home buying more affordable.

Duy outlined the incentives last week during a continuing-education session for real estate professionals in Cuyahoga Falls.

The OHFA has two umbrella programs for home buyers, each of which offers several types of assistance.

One umbrella program, the First-Time Homebuyer program, is a bit of a misnomer. In addition to people buying their first homes, the program is open to honorably discharged veterans and people buying homes in certain economically distressed areas called target areas, regardless of whether they own a home now. People who havenít owned a home for at least three years are also eligible.

The other umbrella program, called Next Home, is for other current homeowners.

All the programs have income and purchase price limits, which differ according to the size of the family, the county and whether the house is in a target area.

In Summit County, for example, an individual or two-person family can qualify for most of the assistance programs if the person applying for the mortgage earns no more than $80,280.

That family could buy a house for up to $255,574, or $312,368 if itís in a target area.

Here are the programs available. Buyers may be able to take advantage of more than one.

Down payment help

A buyer can get either 2.5 percent or 5 percent of the homeís purchase price and use that money toward the down payment, closing costs or other prepaid expenses.

The buyer has to pay a slightly higher interest rate on the mortgage to get the down payment assistance, which is actually a second mortgage with zero percent interest. The second mortgage is forgiven after seven years, however, if the buyer doesnít sell or refinance the house.

The program is available to both first-time buyers and current homeowners. Next Home participants must use the down-payment assistance.

Grants for Grads

Similar down payment assistance is available to recent college graduates, along with slightly lower rates on mortgage loans.

In this case, the second mortgage that pays for the down payment is forgiven if the graduate stays in Ohio for five years.

For people who move out of state before that time, the repayment is prorated.

This program is available to people who are eligible for the First-Time Homebuyer program and who have earned an associateís, bachelorís, masterís or doctoral degree within the last four years.

Ohio Heroes

Military members, police, firefighters, teachers, some health care workers and others who work full time in certain public service jobs are eligible for slightly lower mortgage rates.

Both first-time buyers and current homeowners are eligible.

Mortgage tax credit

This program allows home buyers to claim a federal income tax credit each year for a portion of the mortgage interest they pay.

It is available to people who qualify for the First-Time Homebuyer program.

To participate, a buyer must pay a one-time, $500 fee when he or she closes on the house.

Credits range from 20 percent to 40 percent of the annual interest, depending on where the property is located and how it was obtained.

For example, a homeowner who pays $5,000 in interest each year for a house in a target area could claim a 25 percent credit, or $1,250. A homeowner with an OHFA mortgage could claim a 40 percent credit on that $5,000, or $2,000.

The tax credit can be taken in addition to the governmentís mortgage interest tax deduction, although a certain amount of the deduction is offset by the credit.

Credits are deducted from the amount of tax paid, so they wonít benefit people who donít have to pay income tax.

Repair loan

This type of loan, called a Limited 203(k) loan, lets people borrow extra money to fix up a home theyíre buying.

The buyer finances both the home purchase and the cost of repairs or upgrades in a single mortgage. He or she can borrow up to $35,000 for the home improvements.

The repair loans are available for both first-time buyers and current homeowners.

Mary Beth Breckenridge can be reached at 330-996-3756 or mbrecken@thebeaconjournal.com. You can follow her on Facebook at www.facebook.com/MBBreckABJ or on Twitter†@MBBreckABJ†.