First-time homebuyer programs: valuable state and federal resources are at your disposal

Arizona’s strong economy, booming employment opportunities, beautiful desert landscapes, and great year-round weather keep throngs of new residents streaming to the Grand Canyon state every month. First-time home buyers who aren’t already taking advantage of mortgage loan assistance programs offered by the Arizona Industrial Development Authority (AZIDA) through the Arizona Department of Housing (ADOH) should start exploring all their options without delay.

In addition to state mortgage loan programs developed expressly for first-time homebuyers, national home loan programs are available through a variety of lenders throughout the U.S., providing even more opportunities for prospective property owners to qualify for a home loan. Below is some basic information on loan and assistance opportunities to help fast-track your journey from tenant to deed holder.

First-time Arizona homebuyer programs

 

Arizona first-time home buyer loan programs

Arizona’s Home Plus mortgage program is designed specifically to help home seekers become homeowners. While current or past real estate owners can also qualify, more than 90 percent of Home Plus program participants are first-time home buyers according to Dirk Smith, Home Plus program administrator.

Home Plus program features
Assistance with down payments and closing costs
Lower mortgage insurance premiums

Eligibility requirements

Some mortgage types not available in certain counties.

Details you need to know

The Arizona Home Plus program combines 30-year fixed-rate mortgages and financial assistance for down payment or closing costs. Qualified applicants may receive up to 5 percent of the loan’s principal balance, depending on the mortgage type, by way of a deferred, no-interest second mortgage. Borrowers don’t need to repay the second mortgage as long as they do not sell or refinance the home within the first three years of ownership.

Only borrowers using the Home Plus program can take advantage of down payment assistance.  Securing a 30-year, fixed-rate loan with less than 20 percent down generally requires monthly mortgage insurance. The good news is, mortgage insurance premiums may be reduced under the Home Plus program. AZIDA collaborates with the government-sponsored Fannie Mae and Freddie Mac ventures to offer mortgage insurance priced significantly lower than premiums available outside the program

Take the next step

Now that you’ve become acquainted with the fundamentals of the Arizona Home Plus program, it’s time to get started.

For complete details and eligibility requirements, visit the ADOH website.

If you think you may qualify for a Home Plus mortgage, the next step is to select a lender. Keep in mind that AZIDA does not review mortgage applications or lend money; it depends on a network of participating lenders across the state. A link to a list of participating lenders is available on the Home Plus website. Individual lenders may have additional rules regarding credit scores, income limits, and the types of property eligible for a Home Plus mortgage. In order to determine whether you qualify for a mortgage loan, contact participating lenders directly.

National first-time home buyer loan programs

Some first-time home buyers run into trouble getting approved for a mortgage because of credit history issues or because they lack the money for a down payment.  This is where national home loan programs, available to borrowers in all 50 states, can help.

Conventional mortgage features

Can offer low down payment opportunities
Lenders can offer limited mortgage insurance premiums

Details you need to know
Conventional mortgages are home loans that are not guaranteed or insured by the federal government. Conventional mortgages that conform to Fannie Mae and Freddie Mac requirements permit down payments as low as 3 percent for or lower-income home buyers. Contrary to Federal Housing Administration (FHA) loans, conventional loans enable borrowers who make a down payment of t least 20 percent to eventually cancel their mortgage insurance or avoid insuring their mortgages entirely.

 FHA mortgage loan features
Can make exceptions for borrowers with a low credit score
Can offer low down payment opportunities

Details you need to know
The FHA offers a mortgage loan program for many first-time home buyers with lower credit scores that allows down payments as low as 3.5 percent for applicants with credit scores of 580 or higher. The FHA will insure loans for borrowers with credit scores as low as 500 provided they make a down payment of 10 percent. Unlike conventional mortgage loans, mortgage insurance is required for the life of an FHA loan and cannot be canceled.

Veterans Administration (VA) mortgage loan features
Available to military service members, veterans, and surviving spouses
Can offer low down payment opportunities

Details you need to know
The U.S. Department of Veterans Affairs provides home buying assistance and resources to service members, veterans, and surviving spouses. VA home mortgage loans are extremely ample, often requiring no down payment or mortgage insurance and providing competitive interest rates. And while no official minimum credit score has been established for VA mortgage loan approval, a minimum rating of 640 is required by most VA-approved lenders.

United States Department of Agriculture (USDA) mortgage loan features
Can offer low down payment opportunities

Details you need to know
USDA home loans, issued by the U.S. Department of Agriculture are zero-down-payment mortgage loans for eligible home buyers in rural and suburban areas. USDA loans are issued by the U.S. Department of Agriculture through the agency’s Rural Development Guaranteed Housing Loan Program. Income limitations are in place and vary by region. Applicants with credit scores of 640 or higher get streamlined processing, while applicants with scores below 640 face more rigorous underwriting standards.

If you’re in the market for your first home in Arizona, start learning all you can about state and federal home mortgage programs designed specifically to help first-time homebuyers achieve their dream. You’ll be surprised at the abundance of mortgage loan resources available to you!

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First-time Arizona homebuyer programs