Perhaps you’re thinking of buying your first home and have heard that you’ll need to spend a large chunk of change upfront to purchase your home in addition to a bank loan to cover the purchase price.
Saving up for that down payment can be challenging and might make your dream of owning your own home daunting.
What many people don’t know is that there are great programs in Arizona that can help to dramatically reduce the amount of your down payment.
Other factors such as your credit score, credit history, total debt and annual income will also impact the amount you can afford. But knowing about these programs could help you along with your goal of home ownership.
Home in Five
The Home in Five program is a 4% grant down payment assistance of the total loan amount on a Federal Housing Administration loan in Maricopa County. The FHA requires a 3.5% down payment and charges an Upfront Mortgage Insurance premium of the loan amount of 1.75% which is added to the loan. They also charge a monthly mortgage insurance premium of 85% which is permanent for the life of the loan. The minimum credit score requirement is a 640 for the 2.5% Grant and a 660 score will give you a 3.5% Grant. The maximum income allowable is $88,340/yr with a 45% debt-to-income ratio.
The new Government Heroes program provides for an additional 1% grant for First Responders, Teachers, and active Military or Veterans.
The nonprofit that administers this program charges a 0.5% origination plus approximately $785 in other bond program fees. To limit your out-of-pocket dollars we ask the seller to pay your closing costs through a seller concession. If the purchase contract and loan is structured correctly the only items required to be paid upfront and usually in the 1st week of the transaction are the appraisal ($495), home inspection ($350), earnest money ($500-1,000), and online home counseling course ($99/person).
Federal Housing Administration Preferred Conventional
The FHA Preferred Conventional program offers 3%, 4% and 5% grants for down payment assistance of the loan amount on a 95% or 97% financing. This means that you will have to come up with a ¼ percent down payment. The conventional loan has a much lower monthly mortgage insurance premium and is not permanent for the life of the loan with a 680 score and above. The minimum credit score requirement is a 640. Max income allowable is $92,984/yr with a 45% debt-to-income ratio. This program applies to homes with an acquisition limit up to $371,936.
The nonprofit that administers this program charges $785 in other bond program fees. To limit your out-of-pocket dollars we ask the seller to pay your closing costs through a seller concession. If the purchase contract and loan is structured correctly the only items required to be paid upfront and usually in the 1st week of the transaction are the appraisal ($470), home inspection ($350), and earnest money deposit ($500-1,000). A Home Counseling course is free.
Pathway to Purchase
The Pathway to Purchase (P2P) program is a 2nd lien equal to 10% of the purchase price, up to a maximum $20,000. The 2nd Lien is a 5 year, forgivable lien with 0% interest and no required monthly payments. You must occupy the home for 5 years. The funds can be used towards your down payment and/or closing costs. The conventional loan has a much lower monthly mortgage insurance premium and is not permanent for the life of the loan with a 640 score and above. The minimum credit score requirement is a 640. Max income allowable is $92,984/yr with a 45% debt-to-income ratio.
This Program is limited to homes in the following 17 Cities: Arizona City, Avondale, Buckeye, Casa Grande, Coolidge, Douglas, El Mirage, Fort Mohave, Goodyear, Huachuca City, Laveen, Maricopa, Red Rock, Sierra Vista, Snowflake, Tucson, and Yuma.
New construction is NOT allowed. The nonprofit that administers this program charges $785 in other bond program fees. To limit your out-of-pocket dollars we ask the seller to pay your closing costs through a seller concession. If the purchase contract and loan is structured correctly the only items required to be paid upfront and usually in the 1st week of the transaction are the appraisal ($470), home inspection ($350) and earnest money deposit ($500-1,000). A Home Counseling course is free.
Home Plus
The Home Plus program offers 3% and 4% grant down payment assistance of the total loan amount on an FHA loan in any County other than Pima and Maricopa. The FHA requires a 3.5% down payment and charges an Upfront Mortgage Insurance premium of the loan amount of 1.75% which is added to the loan. They also charge a monthly mortgage insurance premium which is permanent for the life of the loan. The minimum credit score requirement is a 660 for FHA, 640 for VA or USDA. Max income allowable is $92,984/yr with a 45% debt-to-income ratio.
The nonprofit that administers this program charges approximately $785 in other bond program fees. To limit your out-of-pocket dollars we ask the seller to pay your closing costs through a seller concession. If the purchase contract and loan is structured correctly the only items required to be paid upfront and usually in the 1st week of the transaction are the appraisal ($495), home inspection ($350), earnest money ($500-1,000). Home Counseling course is free.
USDA Rural Housing
The USDA Rural Housing loan is a true 0% down loan program specific to the eligible areas:
In the Phoenix area; only Queen Creek, parts of Buckeye and Anthem are eligible. The USDA charges an upfront 2.75% guarantee fee financed into the base loan amount. It is not an out-of-pocket expense. There is also a monthly mortgage insurance premium of .5% which is permanent for the life of the loan. The minimum credit score requirement is a 620. Max income allowable is determined by County and number of people in household. For families of 1-4 maximum income allowable is $76,600 and for families of 5+ maximum income allowable is $101,100. To limit your out-of-pocket dollars we ask the seller to pay your closing costs through a seller concession. If unavailable rate can be priced higher to allow for a lender credit for closing costs. No counseling course required.
These programs at a glance…
If you’re ready to explore these programs, just reach out. We’re here to help.