Purchasing a home can be one of the most significant decisions for many people. The financial and emotional investment is significant, and doing it right can be extremely important. It’s not just about finding the perfect home but also making sure it’s within your budget, in a good neighborhood, and has all the features you want.
If you’re looking to purchase a home in Phoenix, AZ, some house-buying programs are available to help make the process easier and more affordable. However, not all programs are alike, so it’s essential to understand which best suits your needs.
1. Federal First-Time Home Buyer Programs
The U.S. Federal Housing Administration (FHA) has several programs designed to help first-time home buyers with their down payment and closing costs. These FHA loans provide lower interest rates, require lower minimum credit scores, and often allow gift funds from family or friends.
Some of the most popular FHA loan programs available in Phoenix include the 203(b) fixed rate mortgage program, 203(k) rehabilitation loan program, and the Home Equity Conversion Mortgage (HECM) program.
However, not everyone can qualify for an FHA loan. You need to be able to make a down payment of at least 3.5% of the total buying price of the home and have a credit score of 580 or better. Regardless, it is an excellent option for anyone who needs help to afford to make a downpayment on a traditional loan program.
2. V.A. Loans
Veterans looking to purchase a home in Phoenix should consider taking advantage of the Veteran Affairs loan program. This special no-down-payment loan option is available only for those who have served in the military, enabling veterans and their families to buy homes with little or no money.
V.A. loans also come with other benefits, such as lower interest rates and closing costs. However, to be eligible for this loan program, you must have an honorable discharge from the military and meet other eligibility criteria.
On the downside, you need to pay into the V.A. fund when you take out the loan. It also has a lengthy application process, so you will have to wait for the approval. The good news is that if you qualify and find a home within two months of your loan application, you can still get the financing.
3. Section 502 Single Family Housing Guaranteed Loan Program
The Section 502 Single Family Housing Guaranteed Loan Program provides home loans with zero down payment and below-market interest rates to low-income families looking to purchase rural property in Phoenix.
The program is administered by the USDA Rural Development agency and intended for people who would otherwise not be able to afford a home without this assistance. You don’t have to worry about your credit score making a down payment to access this loan program. However, you need to have a Household income equal to or lower than 115% of the area median income for most USDA loans.
You should also be within the qualified area for the program. Consider this option if you are buying property in as-is condition, or in an area that doesn’t have access to traditional mortgages. The one downside is that these loans are only available in some areas, so you should check to see if the property you’re interested in qualifies.
4. Good Neighbor Next Door Program
The Good Neighbor Next Door Program helps law enforcement officers, firefighters, educators, and emergency medical technicians purchase a home in Phoenix at a substantial discount. The program allows buyers to purchase a HUD-owned single-family home for 50% off the list price if they agree to live in the home for three years.
This is an excellent opportunity for qualifying individuals to buy a home at an affordable price. However, it’s important to note that you must meet specific criteria and be able to commit to living in the home for three years to qualify. The program also has specific income requirements, and you must be able to get a mortgage through the FHA, VA, or USDA loan programs.
5. Fannie Mae/Freddie Mac HomeReady Program
The HomeReady program offered through Fannie Mae and Freddie Mac is an affordable mortgage option for first-time homebuyers and those who have previously owned a home. The program offers low down payments, flexible credit requirements, and more lenient income limits than other loan programs.
Qualifying candidates need a credit score of not less than 620 with an income close to the U.S. median. Additionally, you need to make a down payment of 3%. Once you qualify for the program and purchase the home, you will have to get private mortgage insurance which you can cancel after gaining 20% equity in your home. Home Possible mortgages Freddie Mac offers a similar loan option with certain unique benefits. It has a 15- to 30-year fixed-rate and 5/5, 5/1, 7/1, and 10/1 adjustable-rate terms.
6. Arizona Industrial Development Authority (AzIDA) Home Plus Program
The Home Plus Program is designed to help low- and moderate-income households purchase their first home in Arizona. It provides a 30-year fixed-rate mortgage with up to 5% of the loan amount being subsidized by AzIDA.
The program has several requirements, such as having an income at or below 80% of the area median income, being able to contribute at least 1% of the loan amount as a down payment, and demonstrating good credit history. The maximum home purchase price under this program is $314,827. In addition, you must complete an approved eight-hour homebuyer education course before applying for the program. You should also be aware that only certain lenders
7. Arizona Housing Finance Authority (AzHFA) Home in 5 Advantage Program
The Home in 5 Advantage program assists with home purchases, providing down payment assistance of up to 3% of the loan amount. The loans are available for first-time homebuyers, veterans, and those without an ownership interest in a primary residence within the past three years.
The program has some income guidelines, and the limits are based on family size. To qualify for the program, you must have a credit score of 640 or above and complete an approved homebuyer education course. This is an excellent option for those who want to purchase a home in Arizona but need more money for a down payment. You should explore this program if you qualify.
Many programs are available to help purchase a home in Phoenix. The programs can offer assistance with down payments, credit requirements, and income limits. Be sure to explore all the options available to you so you can make an informed decision when it comes time to buy a home.