Discover Your Down Payment Assistance Options in Phoenix, AZ
Picture yourself sipping a cold drink on a warm, sunny afternoon in the backyard of your brand-new Phoenix home. Sounds like a dream, right? But then, there's the scary part of figuring out how you will pay for everything. It's enough to make anyone's head spin. But here's the good news. Phoenix has some fantastic down payment assistance programs that can grant practical solutions to help you cross the threshold into your new home. Let's dive into these options and see how they can make your journey to homeownership smooth and stress-free.
The HOME PLUS program in Arizona offers a unique opportunity for homebuyers, especially those looking to purchase in Phoenix. This program is self-funded, meaning it doesn't rely on taxpayer money. Instead, it gets its funding from the national capital markets and the income generated from the program's operations. This setup allows the program to operate continuously without an end date, making it a reliable option for potential homeowners.
Here's how you can use HOME+PLUS to your advantage in the current real estate market:
- Boost Your Purchasing Power: You can increase your purchasing power by combining the HOME+PLUS with your own funds. This means you can afford a more expensive home than you could with your savings alone.
- Make a Stronger Offer: If the market is competitive, you can use these funds for the down payment and then use your own money to offer more than the home's appraised value to make your offer more appealing.
- Eliminate Mortgage Insurance: For those opting for a conventional mortgage, you can use this program to buy out the mortgage insurance (MI) in a single premium. This eliminates the need for ongoing mortgage insurance, and you can use your savings for the down payment instead.
- Pay-Off Debts: You can apply funds towards the down payment and use your own funds to pay off or reduce debts. This can help you qualify for the new mortgage by improving your debt-to-income ratio.
- Keep Funds for Reserves: Finally, you can use the program for the down payment and/or closing costs, allowing you to retain your personal funds as reserves. This can provide financial security and peace of mind after you move into your new home.
Home in 5 Platinum
If you're eyeing a new home in Maricopa County and are still trying to figure out the financial side of things, the Home in 5 Advantage program could be just what you need. This program is specially designed for first-time buyers with low to moderate income.
Here's how the Home in 5 Advantage program can work for you:
- 30-Year Fixed Rate First Mortgage: Borrowers receive a 30-year, fixed-rate mortgage.
- Second Mortgage: Along with the first mortgage, you get a second mortgage equal to 4% of the note amount. You can use this for down payment, closing costs, and pre-paid items.
- 7-Year Forgivable Second Mortgage: The 4% assistance is essentially a second mortgage with no interest and forgivable after 84 months (7 years). You don't need to make any payments on this second mortgage if you meet certain conditions.
- Conditions for Forgiveness: The second mortgage is only repayable if you refinance, sell, transfer, or otherwise dispose of the property, including foreclosure, or if you no longer reside in the property within the 84-month period. The second mortgage is forgiven if you stay in the home as your primary residence for this period without refinancing.
- Use of Funds: You can use this program for the down payment, closing costs, and pre-paids. This flexibility allows you to allocate funds where they're most needed in the home-buying process.
- No Cash Back but Possible Reimbursement: While you can't get cashback in this program, you may be reimbursed for any overpayment of escrow. Also, if there's any remaining assistance after covering eligible costs, it must be applied as a principal reduction to your mortgage.
The Section 32 Homeownership Program is a fantastic opportunity for first-time homebuyers who earn at or below 80% of the Area Median Income (AMI) and plan to use their new home as their primary residence. This program is particularly beneficial for those looking to make an affordable entry into homeownership.
Here's a closer look at what the program offers:
- Affordable Purchase Price: The home's purchase price under this program is set at its current appraised value, assessed within six months of the purchase. This means you'll pay a price reflecting the home's actual market value.
- 20% Discount Off Home Appraisal Value: One of the most significant benefits is the 20% discount off the home's appraised value.
- Financial Assistance: You might be eligible for a grant to cover your down payment, closing costs, and additional subsidies, further easing the financial burden of purchasing a home.
- One-Year Home Warranty: The program includes a one-year home warranty, offering peace of mind by protecting you from unexpected repair costs during your first year of homeownership.
- Lower Monthly Payments: With discounts, grants, and subsidies, you're likely to enjoy lower monthly mortgage payments compared to standard home purchases.
- Educational Requirements: The program requires you to complete classes in homeownership, financial fitness, and hands-on maintenance.
- Property Standards: Eligible properties must pass a Housing Quality Standards (HQS) Inspection to guarantee that the home you're buying is safe, secure, and meets a set quality standard.
Open Doors Down Payment Assistance
The Open Doors Program is another valuable resource if you earn at or below 80% of the AMI in Phoenix. For example, for a household of 2 people, the 2023-24 limit is $61,700. Therefore, being at or below 80% of the AMI would mean having an annual income of $49,360 or less. This program makes homeownership more accessible and affordable by assisting with down payment and closing costs.
Here's a detailed look at what the Open Doors Program offers:
- Financial Assistance: The program provides funds through a deferred payment loan. This means you don't have to worry about monthly payments on this loan.
- Interest Rate and Repayment Terms: The loan doesn't have an interest rate and requires no monthly principal payments. Repayment is only due if you sell the home, change your residency, or refinance within the affordability period.
- Maximum Assistance: You can receive up to 10% of the home purchase price as assistance.
- Period of Affordability: The affordability period can extend up to 15 years, depending on the loan amount.
- Loan Forgiveness: After the affordability period, the loan is fully forgiven. This means if you meet the conditions (like staying in the home for the specified period), you won't have to pay back the loan.
- Eligibility and Education Requirements: To be eligible, you must complete an eight-hour pre-purchase homebuyer education course and one-on-one housing counseling from a HUD-approved housing counseling agency and certified housing counselor.
- Purchase Price Limit: The home's purchase price cannot exceed $467,000.
- Combining with Other Programs: The loan can be layered with other homeownership assistance programs, offering flexibility to maximize financial aid. However, it's important to note that you cannot combine it with the Section 32 Homeownership Program.
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By connecting with a NewHomesExpert via our platform, you're not just finding your dream home. You're also gaining access to the finest lenders who can help you leverage these exceptional programs. Their guidance makes the path to financial assistance more effortless and achievable. So, what's the holdup? Your dream home in Phoenix is within reach, and we're here to help you unlock its doors. Let's turn your home dreams into your reality!