The study area is located in one of the most earthquake prone regions in southern Ethiopia, which is characterized by small-to-intermediate earthquake occurrences causing damage to buildings. Predicting liquefaction hazard potential and local site effects are imperative to manage earthquake hazard and reduce the damage to buildings and loss of lives. The objectives of this work were to perform the equivalent linear response analysis (ELA) and shear wave velocity (Vs.)-based liquefaction hazard analysis and classify the site into different seismic site classes based on the European and American codes. The SPT-N and Vs.30 values showed the site falls in the C and D classes based on the NEHRP (2015) code but falls in the B and C classes based on the EC8 (2003) code. The susceptibility of liquefaction was evaluated using grain size analysis curves. Moreover, peak ground acceleration (PGA), spectral acceleration (SA), and maximum strain (%), which are very critical to understanding the local site effects, were estimated by the DeepsoilV.7 program. The cyclic stress ratio and cyclic resistance ratio were used to calculate the factor of safety (FS). A liquefaction potential index (LPI), probability of liquefaction (PL), and probability of liquefaction induced ground failure (PG) were used to assess the probability of liquefaction. The peak ground acceleration (g) values ranged from 0.166 to 0.281 g, whereas spectral acceleration (g) was found to be high at 0.1–1s. The liquefaction susceptibility screening criteria revealed that the study area is highly susceptible to liquefaction. FS is < 1 for a liquefied site, but FS is > 1 for non-liquefied sites. In comparison to non-liquefied sites, the liquefaction forecast site has a liquefaction potential index value of 0–54.16, very likely high PL, and high PG. The findings will be helpful in the design of structures and in solving practical challenges in earthquake engineering.