Much has been said about the importance of home. The serenity, peace, security, and everything that comes with it. Once you reach a certain point in life you start to understand and experience the longing to have your own home. Even if it is a small place in the whole wide world, it is for you and your loved ones. Buying a home at any stage of life is a huge achievement and an equally daunting experience for everyone. It becomes more intimidating for first-time buyers as they know very little about the whole process.
It Doesn’t Cost as Much as You Think
The first misconception that you may have is that you will require a huge amount of money at hand to buy a home. While that is partly true in that you would need money, you don’t have to pay it in a lump sum at the time of buying the house. There are several state-run programs like the Arizona home buying programs which help people to purchase their homes with ease and at lower costs. Some of the programs even allow you to purchase your home without paying any down payment or closing charges at all. The only catch is it bumps up the interest rate a little.
Why You Need Down Payment Assistance
If you have already started looking for homes in Arizona you know that the prices are sky high and the houses are getting sold within weeks of being up for sale. It may seem that waiting for the prices to come down may be a smarter move. But it will turn out to be a long wait as it is a high demand market.
Here are the downpayment programs for buying a home in Arizona so that you do not have to wait to find the perfect home for you.
Arizona Home Plus Program
The Arizona Home Plus loan program is the most popular as it is available for people all across Arizona. Funds have been available for everyone that has qualified for such assistance. Arizona Home Plus program has helped numerous people to buy their own home.
It is a three-year program that is forgiven monthly over the course of 36 months. This literally means that you have to pay no interest or payment for the assistance that you receive. The only condition is that you have to stay in that home for the duration of those three years and you cannot refinance the property within that time. This generally does not put a hardship on the buyers. After the three years are over, they can refinance the house as per the reverse mortgage AZ terms.
The money that you receive from the program is used along with the other programs sponsored by the Government to pay the down payment on the house. Additionally, depending on the program that you choose, you can get higher assistance then the down payment. In that case, you can use the excess amount in paying the closing costs of purchase. This Downpayment Assistance amount is capped at 5% of the mortgaged loan.
The requirements of the program are:
- The home must be located within the state of Arizona;
- The maximum price at which you can buy the home is $396,680.
- The total income of your household should not exceed $99,170.
- Your Debt-to-Income (DTI) ratio should be lesser than or equal to 45%.
- You must complete the Home Buyer Education class.
- The credit score should be at least 640.
- You must stay at the home purchased for a period of three years following the purchase.
- This program can be used with multiple types of loans, such as conventional loans, FHA, VA, or USDA loan.
Buying a House in Arizona with Zero Down Payment
Home Plus VA & USDA Loan Programs
The two government loan programs that offer 100% financing are by the Agriculture Department and Veteran Affairs Department.
- USDA Loans – It is issued by the U.S. Department of Agriculture (USDA) through its Rural Development Guaranteed Housing Loan Program. USDA loan is a National program aimed to provide home buyers the opportunity to buy rural or suburban homes without any down payment. These loans are intended to help borrowers with low-to-moderate income and thus have income restrictions for qualifying for loans. It generally requires a credit score of 640 and higher. Any score below that would require a strict underwriting to get approved. In this program, one gets 2% down payment assistance.
- VA Loans – It is issued by the U.S. Department of Veteran Affairs for veterans, members in service and the surviving spouses of members. These have lenient rules and no official credit score requirements, however, a score of 640 or more is preferred. Under this scheme, one can get down payment assistance of 3%.
Because of this down payment assistance, the buyer would have to pay zero down payment. The additional assistance from the programs can be used to pay for the closing costs of buying the house.
So, just because you might have enough saved for a down payment…or even no down payment at all, don’t give up on the vision of getting a house. It is still very much possible!