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2022 Arizona First-Time Homebuyer Programs

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The state of Arizona offers first-time homebuyer programs that provide down payment and closing cost assistance to qualified borrowers in 2022. However, many of these programs come with restrictions on how much you make, where you can buy and how long you’ll need to live there.

Understanding these rules will help you decide which Arizona first-time homebuyer program works best for you.

Arizona statewide and local first-time homebuyer programs

The Arizona Department of Housing (ADOH) administers statewide down payment assistance (DPA) programs, while city and county housing administration offices manage local first-time homebuyer options.

Income restrictions are common and some programs may have other eligibility requirements. Below is a snapshot of these programs and how much assistance you may be eligible for throughout different parts of Arizona.

Program nameHow much assistance you can getType of assistanceWhere it’s available
HOME PLUS3% to 5% for down payment and closing costsForgivable second mortgageAll counties and cities in Arizona
Home in 5 Advantage℠3% to 6% for down payment and closing costsForgivable second mortgageMaricopa County City of Phoenix
Pima Tucson Homebuyer’s Solution Program2.5% to 6% for down payment assistance and closing costsForgivable second mortgagePima County City of Tucson
Pima County/City of Tucson Down Payment AssistanceUp to 10% of the contract sales priceForgivable second mortgagePima County City of Tucson

What to know about different types of down payment assistance

Most first-time homebuyer programs include down payment assistance you’ll receive as a forgivable second mortgage or a grant. Although the money may seem free, it comes with some strict rules you need to know to avoid having to pay it back. Here’s how each type of down payment assistance works.

Forgivable second mortgage. With this type of assistance, a second mortgage lien is secured against your home and you’ll be required to live there for a set time period. In most cases, no monthly payment is required and no interest is charged. If you refinance or sell before your time in the program is up, you’ll have to repay a portion of the money you received.

Grant. With grant money, no lien is recorded against your home. However, you’re still required to live there a designated number of years, and could end up paying the funds back if you refinance or sell.

How Arizona first-time homebuyer programs work

LendingTree researched 2022 Arizona Department of Housing guidelines and program websites to compile the list of programs below. However, special homebuyer programs may be funded by local governments throughout the year, so check with local housing nonprofits and housing authorities in your area to see if there’s anything new available.

There are five basic steps you’ll take to get approved for an Arizona first-time homebuyer program:

  1. Complete your homebuyer education requirements. All Arizona homebuyer programs require homebuyer education. The courses are designed to make sure you understand the pros and cons of homeownership. Some even require you to complete the class before you make an offer on a home.
  2. Get a mortgage approval from a program-approved lender. Each program provides a link with a list of approved lenders to choose from for your first mortgage. A word of warning: The credit requirements are more strict than regular loan programs, so check with your loan officer if you have spotty credit or a lot of debt.
  3. Learn the income limits.Down payment assistance is designed to help low- to moderate-income earners become homeowners. Check the program’s website to find out what the income limits are for your county, family size and loan program.
  4. Know the payback requirements Before you sell or refinance. You’ll need to stay in the home for a specific timeline to avoid paying all or some of the assistance dollars back. You’ll also be stuck repaying a portion of the money if you refinance your loan within that same period.
  5. Expect higher interest rates than regular loan programs. The interest rates are set by agencies that offer these programs, so make sure you can afford the higher payment.

Arizona first-time homebuyer program requirements

Before you spend time taking homebuyer education classes and applying for a loan, make sure you know the basic requirements. In many cases, they are more stringent than the minimum requirements set for a first mortgage. The table below provides you with program requirements to help you determine which ones are the best fit:

ProgramCredit score minimumDTI ratio maximumMaximum income limitHow long you have to live in home
HOME PLUS640*45%
50% with 680 minimum score
$41,120 to $112,785**3 years
Home in 5 Advantage64050%$63,200 to $112,785**3 years
Pima Tucson Homebuyer’s Solution Program64045%$54,720 to $112,785**3 years
Pima County/City of Tucson Down Payment AssistanceMust meet first mortgage credit guidelines45%$38,450 to $72,500***Depends on assistance amount

*680 score required for some Fannie Mae and Freddie Mac loan types 
**Income limits vary based on county and first mortgage type 
***Income limits vary based on family size 

THINGS YOU SHOULD KNOW

It’s important to know the median income limits for the area you’re buying in to ensure you don’t earn more than the program allows. You can check the most up-to-date Arizona income limits by visiting the HUD website and entering your state and county information.

National first-time homebuyer programs

All of the programs listed above require that you’re approved for a first mortgage. There are also some government-backed loan programs that don’t require a down payment. These may be called “national first-time homebuyer programs,” though many aren’t limited only to buyers purchasing their first home.

Arizona’s first-time homebuyer programs can be used to cover the down payment and possibly closing costs on the following loan types:

  • Conventional loans. Conventional mortgages aren’t backed by any government agency and come with more stringent requirements and higher loan limits than government-insured mortgage programs. The Fannie Mae HomeReady® and Freddie Mac Home Possible® programs are popular conventional first-time homebuyer loans; they have lower mortgage insurance premiums than FHA loans for qualified buyers.
  • FHA loans. The Federal Housing Administration (FHA) insures loans for borrowers with lower credit scores and higher debt ratios than conventional lenders allow. However, FHA loan limits are lower than conventional loans, and you’ll pay two types of FHA mortgage insurance. One important note: Although FHA guidelines allow financing for borrowers with scores as low as 580, you won’t be eligible for most Arizona DPA programs unless your score is at least 640.
  • VA loans. Designed for military borrowers, the U.S. Department of Veterans Affairs (VA) guarantees VA loans. With no loan limits, no down payment requirement and no mortgage insurance required, VA loans offer the most flexibility of any government-backed loan program. VA loans don’t normally require a down payment, but you can use down payment assistance to pay VA closing costs.
  • USDA loans. Low- to moderate-income homebuyers can finance homes in designated rural areas with the backing of the U.S. Department of Agriculture (USDA). No down payment is required, but DPA funds can be used toward closing costs.

FAQs about Arizona’s first-time homebuyer programs

Who qualifies as a first-time homebuyer in Arizona?

In most programs, you’re considered a first-time homebuyer if you haven’t owned a home in the past three years. Some programs may have more lenient requirements, so if you aren’t a “true” first-time homebuyer, contact the program administrators to find out if you’re eligible.

Can I qualify for Arizona down payment assistance?

As long as you meet the income and credit requirements of the Arizona program you’re interested in above — and funds are still available — you may qualify for down payment assistance.

How much of a down payment do I need to buy a house in Arizona?

If you’re eligible for a VA or USDA loan you won’t need any down payment. Conventional first-time homebuyer lenders allow you to borrow with as little as 3%, while the minimum FHA down payment requirement is 3.5%.

House price trends in Arizona’s major counties

Home prices in Arizona rose, with some counties experiencing double-digit price gains in 2021. Maricopa County (Phoenix) median home prices were up 16.8% to $365,197 from last year, according to data from the National Association of Realtors, and the higher loan amounts translated to a monthly mortgage payment spike of $164. Pima County (Tucson) median prices shot up to $252,849, a 13.2% increase versus 2020, with an $87 per month bump in mortgage payment.

 

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