Arizona First-Time Buyer And Down Payment Assistance Programs
Arizona’s warm desert climate and expanding economy have helped it grow steadily over the past few decades. Aspiring home buyers looking to buy in Arizona should be sure to look into the down payment assistance programs available in the state. These programs can provide eligible buyers with grants or loans that make buying a home in Arizona more affordable.
Key Takeaways:
- There are a variety of down payment and closing cost assistance programs available to Arizona home buyers that can help offset the costs of a home purchase.
- Many of these loans are forgivable and do not have to be repaid if you live in the home for a set number of years.
- In addition to statewide assistance programs, down payment assistance programs are offered on the city and local levels.
Home Plus Down Payment Assistance Program
The Arizona Department of Housing’s Home Plus down payment assistance program offers a 30-year, fixed-rate mortgage along with a down payment assistance grant. This grant can be for up to 5% of the primary loan amount and can be used to make your down payment or pay your closing costs — or both. An additional 1% of assistance is offered to eligible military service members and veterans.
“The Home Plus program is uniquely flexible, touching a wide range of income levels and home prices,” says Daniel Cabrera, owner of Sell My House Fast SA TX in San Antonio. “This program helps to minimize the upfront costs and ensures better loan terms to make home purchase easier and more affordable.”
Your DPA assistance comes from a three-year, 0% interest, deferred second mortgage. The loan will be forgiven at a rate of 1/36 a month over the loan term. This means you won’t need to make monthly payments, and the loan will be fully forgiven after three years. If you sell or refinance in that three-year window, you’ll need to repay the loan.
There is no first-time home buyer requirement. Home Plus is available with conventional loans – primarily from Fannie Mae and Freddie Mac – as well as government-backed from the Federal Housing Administration, Veterans Affairs and the U.S. Department of Agriculture.
You can also benefit from reduced mortgage insurance premiums with a Fannie Mae or Freddie Mac mortgage. There is no minimum contribution, and the assistance can cover your down payment and closing costs.
However, you can expect a slightly higher interest rate with a Home Plus loan than you would on a standard conventional loan. In addition, you’ll have a different interest rate for your down payment assistance loan.
The processing fees you’ll need to pay will vary depending on the lender. Some charge an origination fee on Home Plus transactions, while others don’t.
The Arizona Home Plus down payment assistance program is self-funded and available in every ZIP code in the state.
Requirements
To be eligible for the Home Plus assistance program, you’ll need to meet the following requirements:
- Your annual income cannot exceed $126,351.
- Your credit score must be at least 640.
- Your debt-to-income ratio cannot exceed 50%.
- Your loan-to-value ratio cannot exceed 97%.
- One borrower must complete a home buyer education course.
How To Apply
Instead of applying directly with Home Plus, you apply through your lender. You can find a participating lender using this directory.
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Home in Five Down Payment Assistance Program
The Home in Five down payment assistance program is available to home buyers in Maricopa County, which includes the cities of Phoenix, Scottsdale, Tempe, and Mesa.
The program offers up to 6% of the primary loan amount for a down payment and closing costs. An additional 1% of assistance is available to eligible borrowers, including military service members, veterans, teachers and first responders. A further 0.5% in assistance is available for buying a property in a designated low-income area.
The program provides a three-year, 0% interest, deferred-payment second mortgage. You won’t need to make monthly payments on this loan, which is forgiven if you live in the home for at least three years.
“This will cater especially to the buyers who might have monthly income and, therefore, be able to pay for the mortgage but might be challenged on how to amass the initial lump sum in home buying,” Cabrera says.
There’s no limit to the purchase price of the home, and you don’t have to be a first-time home buyer to be eligible.
Requirements
To qualify for Home in Five, you’ll need to meet the following requirements:
- The home you’re buying is in Maricopa County.
- You must occupy the home as your primary residence within 60 days of closing.
- Your credit score must be at least 640.
- Your annual household income cannot exceed $138,600.
- Your DTI cannot exceed 50%.
- You must qualify for a government-backed FHA, VA or USDA loan.
- The property must be a new or existing single-family home, two- to four-unit home, condominium or townhouse.
- You must take an approved home buyer education course.
How To Apply
If you think Home in Five is right for you, the first step is to find a participating lender. This tool lists a variety of approved lenders and their contact information. You can consult the official Home in Five program website for more details.
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Pima Tucson Homebuyer’s Solution
The Pima Tucson Homebuyer’s Solution is a down payment assistance program offered to home buyers in Pima County, which includes the city of Tucson.
This program offers between 2.5% and 6% of the primary loan amount for down payment and closing costs. The assistance comes as a three-year, 0% interest second mortgage that is forgiven after three years of ownership. The average amount of assistance that home buyers are awarded by this program is $13,800.
“Tailor-made to the unique market conditions prevalent in Pima and Tucson, this solution zeros down to the specific needs of the local home buyers,” Cabrera says. “The beneficiaries of this are the first-time home buyers. Starting them off with assistance in down payment and favorable terms in opening their way to be homeowners in an area that presents very diverse housing needs.”
This program is not unlike the Home In Five program in that there is no first-time home buyer requirement or purchase price limit beyond the limits imposed by your loan program.
Requirements
To qualify for the Pima Tucson Homebuyer’s Solution program, you’ll need to meet the following requirements:
- Your annual household income cannot exceed $126,351.
- You must qualify for a conventional, FHA, VA, or USDA loan.
- Your credit score must be at least 640.
- Your DTI cannot exceed 45%.
- The home you’re buying is located in Pima County.
- You must take a home buyer education course.
How To Apply
You’ll need to work with an approved lender, which you can find using this tool. You can also find more information on the program’s official website.
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Arizona Is Home Mortgage Assistance Program
The Arizona Is Home Mortgage Assistance program opened its doors in April 2024. It offers a below-market 30-year fixed-rate mortgage with a five-year, no-interest deferred mortgage of up to 4% of the primary mortgage amount for down payment assistance.
The program is a partnership between the Arizona Department of Housing and the Arizona Industrial Development Authority, and it targets first-time home buyers in rural counties.
Requirements
To qualify, borrowers need to meet the following requirements:
- Your credit score must be at least 640.
- You must qualify for a conventional, FHA, VA, or USDA loan.
- Your DTI cannot exceed 50%.
- The maximum purchase price is $481,176.
- Your income must meet limits based on the area median income for the county you’re buying in.
- You must buy a home in any county in Arizona except Maricopa or Pima.
- You must take a home buyer education course.
How To Apply
No direct application is required. You will need to work with your lender to qualify for an eligible mortgage that will work with Arizona Is Home. Participating lenders can be found at the Home Plus Arizona website.
Open Doors Down Payment Assistance Program
The Open Doors down payment assistance program is designed to help first-time buyers purchase a home in Phoenix. The program offers down payment and closing cost assistance in the form of a 0% interest, deferred-payment second mortgage that is fully forgiven after the period of affordability. The amount of assistance you can receive is based on need but can amount to as much as 10% of the home’s purchase price.
“This one is remarkable in the sense that it sometimes opens doors to homeownership that potential homeowners seemed to consider out of reach,” Cabrera says. “Such a source provides a means of life to potential buyers, in the form of grants and financial aid, especially belonging to lower to moderate families and individuals.”
Requirements
To qualify for the Open Doors down payment assistance program, you’ll need to meet the following requirements:
- You must be a first-time home buyer or have not owned your principal residence in the last three years.
- Your household income meets limits based on the area’s median income.
- You must own and occupy the property as your primary residence for the term of the loan.
- You must be able to qualify for a fixed-rate, fully-amortizing mortgage.
- You must make a minimum investment of $1,000.
- You must obtain a minimum two-year home warranty.
- The property is located in the city of Phoenix and passes an inspection.
- The property is at or below 95% of the HUD-approved median area purchase price of $428,000.
- You complete an eight-hour home buyer education course.
- You receive housing counseling from a U.S. Department of Housing and Urban Development-approved housing counselor agency.
- You must maintain the property in accordance with the City of Phoenix Neighborhood Preservation and Zoning Ordinances.
How To Apply
To schedule an appointment to apply, you can contact one of the following loan partners:
If you have additional questions, you can also contact the City of Phoenix Housing Department’s Open Doors down payment assistance program at 602-262-6794.
Mortgage Credit Certificates
Another way first-time buyers in Arizona can reduce the cost of a home purchase is to use mortgage credit certificates. MCCs can reduce the amount you have to pay in income taxes thanks to a tax credit that can be applied to the mortgage interest you pay. First-time home buyers and veterans can claim a maximum of $2,000 in mortgage interest as a federal tax credit every year for the life of the mortgage. This can also help you qualify for financing since less of your income will be withheld for taxes, and your DTI will be lower.
“This is a benefit that continues, helping considerably with the reduction of the overall cost of owning a home, making the whole exercise eventually more affordable,” Cabrera says. “Securing an MCC is a carefully navigated process that underscores, through its benefits, the importance of great financial planning in the home buying process.”
In Arizona, you can also combine an MCC with another of the previously mentioned down payment assistance programs. MCCs can save homeowners tens of thousands of dollars over their loan term. However, there is a one-time $500 program fee and a $100 annual renewal fee.
Requirements
To be eligible for a mortgage credit certification, you’ll need to meet the following eligibility requirements:
- You’re a first-time home buyer, a veteran, or you haven’t owned a home in three years.
- Your income range is less than $91,600 if you’re buying a home in a non-target area and $130,900 in a target area, depending on your location and family size.
- The home’s purchase price is between $481,176 and $660,515, depending on the location.
- You must apply to get approval before you close on the home.
- MCC funds are limited.
How To Apply
To apply for a mortgage credit certificate in Arizona, you can download the application here or schedule an appointment to fill it out over the phone. If you choose to fill out the application yourself, you’ll be asked to upload the completed version along with copies of your three most recent tax returns and a photo of your driver’s license.
Local Down Payment Assistance Programs
Down payment assistance programs are also offered on the local level in Arizona. Here’s a look at some of the assistance offered in these Arizona cities.
FAQ
Here are answers to common questions about down payment assistance programs in Arizona.
The Home in Five Down Payment Assistance Program is available in Maricopa County, Arizona.
VA and USDA loans are available for no down payment, but you must be an eligible borrower. That means being a military service member, veteran, or their surviving spouse – or a low- to moderate-income borrower buying a home in certain rural areas.
The Bottom Line
First-time home buyers face an increasingly uphill battle to be able to cover the upfront costs of buying a home. Luckily, there are a variety of assistance programs available to help make homeownership more affordable. If you live in Arizona and are looking to buy a home, be sure to see if you qualify for any of the above down payment and closing cost assistance programs that can help you make your homeownership dreams come true.
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