Arizona is a great place to call home, which is why so many people move to the state every year. It’s also a great place to buy a home, especially for first-time homebuyers. Several programs aim to make homeownership a reality for people buying their first home. These programs help new homebuyers overcome some of the difficulties involved in the homebuying process, often through down payment assistance.
Down Payment Assistance Programs (DPA) help homebuyers cover the large upfront costs associated with purchasing a home. This may come in the form of a grant, loan or contribution match. These funds can often be used to help with both the down payment and closing costs. To qualify for a DPA program, you must meet income, credit and debt-to-income ratio (DTI) requirements.
Here are some first-time homebuyer downpayment assistance programs in Arizona you may want to look into.
Home In Five Program
The Home in Five program is a down payment assistance program for low to moderate-income individuals. It is administered through a partnership between the Phoenix and Maricopa County Industrial Development Authorities. The Home in Five program offers qualified homebuyers up to 5% assistance for their down payment, closing costs and mortgage. First responders, K-12 teachers, U.S. military personnel or veterans may qualify for an additional 1% DPA.
The Home in Five Advantage is only open to those that live in Maricopa County. Additionally, your annual income cannot exceed $122,100, and you must have a minimum credit score of 640. Borrowers must take a homebuyer education course, meet DTI guidelines and live in the home as their principal residence within 60 days of closing.
There is no direct application for assistance; you must work with a qualified, Home in Five trained lender to access the program. A few details to note about this program are:
- It is only for new home purchases, not for refinancing existing mortgages.
- It is for new or existing houses, condominiums and townhouses.
- There is no limit or price cap on the purchase price of homes.
WISH First-Time Homebuyer Program
The Workforce Initiative Subsidy for Homeownership (WISH) program offers down payment assistance to eligible first-time homebuyers. This program is for low and moderate-income borrowers only. The goal of the program is to help renters become buyers. It is available to Arizona residents that meet the eligibility requirement, with no county restrictions.
WISH provides grants to help with the down payment or closing costs. These grants may be up to $29,000 and can be used with other homeownership programs. The grant size varies based on your contribution, with the program matching $3 dollars for every $1 you put toward the down payment and closing costs.
You must work with a qualified lender to participate in the WISH program. A few details to note about this program are:
- Program eligibility depends upon funding.
- You will need to complete a homebuyer education course to qualify.
- You must live in the home for a set number of years. Otherwise, you may have to pay back a portion of the grant. The payback amount is based on how long you resided in the property after purchase.
The Importance Of Prequalification
These DPA programs are only accessible through a financial institution. This highlights the importance of working with a lender as the first step in the homebuying process. Starting with a lender can get prequalified and potentially matched with a down payment assistance program.
Getting prequalified for a mortgage gives you several distinct advantages as you begin to search for a home. First and foremost, it tells you how much you can borrow so you can focus your search on homes within your budget. This helps manage expectations but also saves time and energy. After all, if you don’t know your budget, you may waste time looking at homes you can’t realistically afford.
And if you plan to get a mortgage from the same lender that prequalifies you, you may be able to receive a preapproval letter. This letter shows sellers that you are a serious buyer and can proceed with the deal. This can give you an edge over other shoppers that are not preapproved.
Every lender has their own process, but to get prequalified for a mortgage, you usually have to:
- Complete an application.
- Provide information about your income and assets.
- Submit pay stubs, tax documents and other financial records.
Secure Your First Home With Financing Through Arizona Central Credit Union
Down payment assistance programs can help you turn your dream of homeownership into reality. There are programs to help first-time homebuyers, those that have purchased a home in the past, and those with low to moderate household incomes. Although you still must meet credit and DTI requirements, these programs can help you overcome the downpayment obstacle standing between you and homeownership.
A key element in applying for any DPA program is selecting a lender. Having the right lender walk you through the process, from prequalification to closing, makes the experience less stressful. It can also provide you access to DPA programs like these.
Those curious about these and other down payment assistance programs are encouraged to contact a mortgage specialist at Arizona Central Credit Union to learn more.
