Best First Time Home Buyer Programs in Arizona

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Contributor, Benzinga
April 21, 2021

Don’t let buying your first home intimidate you. The loan application and approval process might seem daunting, but it doesn’t have to be that way. 

Take a look at some of the first-time home buyer programs in Arizona designed to make your path to homeownership simple. 

Best First Time Home Buyer Programs in Arizona:

Best National First Time Home Buyer Programs:

First Time Home Buyer Programs in Arizona

Arizona offers first-time home buyer programs to help you achieve homeownership no matter your circumstances. These programs recognize how difficult it can be to save up for your first home — especially if you’re saddled with student loan debt and monthly rent payments. 

First-time home buyer programs can help you whether you’re self-employed or working a steady job for an Arizona corporation. Take a look at some of the programs currently offered by the state of Arizona.

1. HOME+PLUS Fannie Mae HFA Preferred Loan Program

This is one of the conventional loan options you can use to purchase a home anywhere in Arizona. HOME+PLUS is derived from the Fannie Mae HomeReady program and offers down payment assistance options between 3% and 5%. 

You’ll be able to avoid paying for private mortgage insurance if you qualify for this program — even if you have a down payment of less than 20%. Private mortgage insurance (PMI) is usually required to pay per month if you put down less than 20% of your home’s purchase price. 

Eligibility requirements: 

  • Annual income less than $105,291
  • Credit score of at least 640
  • Your debt-to-income ratio can't be over 50%. Debt-to-income ratio compares your debt payments to your income. It allows lenders to see how much money you have left over each month or year after you’ve made your debt payments.

2. HOME+PLUS Freddie Mac HFA Advantage Loan Program

Your other conventional loan option is the HOME+PLUS Freddie Mac HFA Advantage Loan Program. It’s derived from the Freddie Mac Home Possible Advantage program and can also be used anywhere in Arizona. 

You’ll receive similar benefits to the HOME+PLUS Fannie Mae FHA Preferred Loan Program, including no PMI requirement. You’ll also have the option of down payment assistance between 3% and 5%. 

Eligibility requirements: 

  • Annual income less than $105,291
  • Credit score of at least 640
  • Debt-to-income ratio can’t be over 50% 

3. HOME+PLUS Home Buyer Down Payment Assistance Program

This program is designed to help you buy a home even if you can’t afford the down payment and closing costs. It’s administered by the Arizona Industrial Development Authority (Arizona IDA), a nonprofit and political subdivision of the state of Arizona. 

The program offers a 30-year fixed-rate mortgage and down payment assistance (DPA) ranging from 0% to 5%. You can only use the down payment assistance you are given to cover the down payment and/or the closing costs on your home. This program is available in every county in Arizona.

Eligibility requirements:

  • HOME+PLUS mortgage
  • Annual income less than $105,291
  • Credit score of at least 640
  • Complete and pass a homebuyer education course before closing on your new home

4. Home in Five Advantage Program

Unlike other programs, you can only use the Home in Five Advantage Program if you’re buying a house in Maricopa County. It offers down payment and closing cost assistance of 3% to 5% to qualified borrowers. 

You may also be able to receive an additional 1% of down payment and closing cost assistance from this program if you qualify for a VA loan. The program comes with no payments and 0% interest. If you stay in your home for 3 years without refinancing, the lien you received from this program will be completely forgiven. 

Eligibility requirements: 

  • You must buy a home in Maricopa County.
  • Depending on the mortgage program, you might need to meet certain purchase price requirements.
  • The home you purchase must not have more than 4 units, but you can purchase a condo or townhome. 
  • Credit score of at least 640
  • Annual income less than $105,000
  • Complete a home buyer education course

Best National First Time Home Buyer Programs

Arizona’s statewide programs aren’t your only first-time home buyer options — let’s take a look at the national offerings. 

Benzinga’s added suggested lenders for each national program so you understand all your options.

FHA Loans

FHA loans were created to help low- and moderate-income individuals and families buy a home. These loans are mortgages issued by lenders approved by the Federal Housing Administration. 

Lenders who participate in the FHA loan program approve borrowers with lower credit scores and accept minimum down payments below standard requirements.  

Eligibility requirements:

  • Proof of employment and a steady income
  • FICO credit score of at least 500
  • Down payment of at least 3.5% of your home’s purchase price 
  • Down payment of 10% if your credit score is between 500 and 579
  • The home you purchase must be your primary residence. 
  • You must move in within 60 days of closing.
  • A debt-to-income ratio of less than 43% 
  • FHA loans require you to pay a mortgage insurance premium (MIP). Your MIP can be paid annually or monthly and based on the length of the loan and the loan-to-value ratio.
  • Finally, you can only use an FHA loan on a home that meets the minimum property standards. An FHA-approved home inspector will perform an inspection of your home to ensure that it meets these standards.

FHA loans are insured by the Federal Housing Administration (FHA). This means that if you default on the loan, the Federal Housing Administration will pay a claim to the lender of your FHA loan. You may be able to receive a grant if you need help coming up with the money for the down payment on your home.

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Best National FHA Lender: Rocket Mortgage® by Quicken Loans®

Rocket Mortgage® is a top online mortgage lending tool. Quicken Loans offers several mortgage products, including FHA loans. You’ll benefit from the customer service and intuitive website to help you navigate the mortgage process. Rocket Mortgage® also offers preapproval where you could receive a decision on the same day.

VA Loans

VA loans are mortgages offered exclusively to qualifying service members, veterans and some military spouses. The U.S. Department of Veterans Affairs (VA) guarantees these mortgages for eligible individuals and families. 

The benefits of VA loans include no minimum down payment, so you can finance 100% of your home’s purchase price. You aren’t required to pay for private mortgage insurance. If you have a VA loan, you’ll benefit from assistance if you fall on hard times and risk defaulting on your mortgage.

Eligibility requirements:

  • 90 consecutive days of active duty during wartime
  • 181 days of active duty during peacetime
  • Service in the National Guard or Reserves for at least 6 years
  • Spouse of a military member who died either in the line of duty or from a service-related disability.
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Best National VA Lender: Veterans United

Many lenders offer VA loans, but not all of them understand exactly what you’ve been through to qualify. Veterans United employs individuals who have served in all branches of the armed forces themselves. Its customer service team is available 24/7 to help answer questions and navigate any issues with your mortgage. You’ll also benefit from Veterans United’s online preapproval application process.

USDA Loans

Interested in buying a home in a rural area? A USDA loan might be able to help you out. The U.S. Department of Agriculture (USDA) has designated certain areas around the country for homeownership stimulus. Most of the designated areas are rural areas so you may be able to find suburban areas designated by the USDA as well. 

Eligibility requirements:

  • The home is in a qualifying area.
  • The home will be your primary residence.
  • Your income remains under the maximum income limits. The maximum income limits vary by county.

Best National USDA Lender: Caliber Home Loans

Like the other national first-time home buyer programs, you’ll probably find several lenders who can offer you a USDA loan. Caliber Home Loans offer physical locations in Arizona you can visit to receive in-person customer service. This is something that many lenders can’t offer, especially with the rise of online mortgage lenders. You can also access Caliber Home Loans’ customer service team by phone or secure online messaging.

Which Program is Right for Me?

If you qualify for 1 program, it’s very possible that you qualify for multiple programs. How do you choose the right program for you?

  • Consider which program can save you the most over the lifetime of your mortgage loan.
  • See if any of the programs can offer you a grant to cover your down payment and closing costs.
  • Look into whether each program requires additional payments, such as private mortgage insurance.
  • Be sure the program you choose offers you flexibility if you plan to move in a few years.
  • Compare your options. The best way to do this to get a quote, which is easy and free. Just enter your ZIP code to get started.

Frequently Asked Questions

Q

What are the requirements to qualify for down payment assistance in Arizona?

A

You must have a minimum credit score of 640, a household income not above $105,291 and a debt to income ratio below 50%.

Q

What are the closing costs in Arizona?

A

The closing costs range from 1.21% to 1.82%.

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