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Arizona First-Time Homebuyer Programs

Buying a first home can be an overwhelming and intimidating process for anyone — there’s a lot to do and so much to learn before you finally get the keys to your new place. Buying a home can also be very expensive.

If you are house hunting in Arizona, you should know that your state offers several housing assistance programs that can help ease your stress and make buying more affordable.

There are two statewide and several county- and city-specific programs that can assist first-time homebuyers. These programs offer help with making down payments or paying closing costs, among other services. Here’s what you need to know.

In this guide, we will cover:

Arizona first-time homebuyer programs

Arizona’s statewide programs are administered by the Arizona Department of Housing. Local programs are managed by city or county housing administration offices. Program eligibility is based on your income along with other requirements, which can vary by program. You can check current mortgage rates for Arizona here.

In January 2019, we researched first-time homebuyer programs in Arizona, which included reviewing program websites and the Arizona Department of Housing guidelines. Here’s what first-time homebuyers in Arizona need to know.

HOME Plus Home Loan Program

Features

  • Down payment assistance of up to 5% (some military-specific programs offer 6%)
  • Reduced mortgage insurance premiums (only applies to Fannie Mae and Freddie Mac mortgages)
  • 30-year, fixed-rate mortgage

Eligibility

  • Credit score of 640 or higher
  • Borrower(s)’ annual income must be $99,170 or less
  • Debt-to-income ratio of 45% to 50% or less, depending on the underlying mortgage
  • Must take a homebuyer education course before closing
  • Home purchase price must be $396,680 or less

How it works

Arizona’s HOME Plus Home Loan Program provides a 30-year, fixed-rate mortgage as well as a no-interest, no-payment-deferred second mortgage that’s forgiven over the first three years of homeownership. You can use the second-mortgage funds for a down payment, closing costs or both. Although the program isn’t specifically for first-time homeowners, the down payment assistance and fixed rate make it a good fit if you’re looking for your first home.

The HOME Plus program doesn’t require a direct application. Instead, you start by talking to an approved lender, who will work with you on applying for a qualifying mortgage and registering for HOME Plus assistance. To begin the process, visit the HOME Plus website and click the link that directs you to a list of all participating lenders. Choose a lender in your area and get in touch. Be sure to let them know you’d like to participate in the HOME Plus down payment assistance program.

Pathway to Purchase Down Payment Assistance Program

Features

  • Down payment assistance of up to 10%
  • 30-year, fixed-rate mortgage

Eligibility

  • Borrower(s)’ income must be $92,984 or less
  • Purchase price must be $371,936 or less
  • Previously occupied homes only (no new construction)
  • Must qualify for a Freddie Mac HFA Advantage mortgage
  • All borrowers must complete a homebuyer education course
  • Limited to homes in targeted zip codes within the following cities:
    • Bullhead City
    • Casa Grande
    • Glendale
    • Green Valley
    • Kingman
    • Phoenix
    • Rio Rico
    • Sahuarita
    • Sierra Vista
    • Tucson
    • Vail
    • Yuma

How it works

The Pathway to Purchase program provides funds in the form of a five-year, no-interest, no-payment, forgivable lien against your property. You can use the funds for a down payment,  closing costs or a combination of the two. The Pathway to Purchase down payment assistance must be used in conjunction with a Pathway to Purchase mortgage. Although this isn’t a program for first-time buyers only, the assistance could be invaluable if you’re planning to purchase in one of the targeted areas.

You don’t need to complete an application for the program. Instead, contact a participating lender and let them know you’d like to apply for a mortgage that qualifies for the Pathway to Purchase program. You can find the most up-to-date list of lenders by visiting the website and clicking the link for participating lenders.

Pima County City of Tucson HOME Down Payment Assistance Program

Features

  • Down payment assistance of up to 3.5% of the sales price

Eligibility

  • Income limited to 80% of HUD’s median income limits for the area, which are:
    • Family of one: $33,950
    • Family of two: $38,800
    • Family of three: $43,650
    • Family of four: $48,500
    • Family of five: $52,400
    • Family of six: $56,300
    • Family of seven: $60,150
    • Family of eight: $64,050
  • Must agree to live on the property for five years
  • Must complete HUD-certified homebuyer counseling before completing the contract
  • Mortgage must be reviewed and approved by a housing counselor at a participating agency
  • Must have less than $10,000 in cash assets
  • Must contribute at least $1,000 toward home purchase
  • Must have at least one month’s mortgage payment in a bank account
  • Must have a debt-to-income ratio of 45% or less; ratios above 31% may require additional documentation
  • Property must be approved by the city or county for compliance with federal environmental standards
  • Property must be inspected by a program-approved housing inspector
  • Maximum purchase price: $152,000 for pre-existing homes, $224,000 for new construction

How it works

This first-time homebuyer program provides down payment assistance toward the purchase of a home. The down payment is a no-payment loan, but if you sell the home in the first five years, you will need to pay back the loan.

To apply for the program, visit the Pima County housing website and click on the link to the program fact sheet. The fact sheet lists participating agencies. Choose an agency near you and contact them to get started.

Pima Tucson Homebuyer’s Solution Program

Features

  • Down payment assistance of 2.5% to 5%
  • 30-year, fixed-rate mortgage loans
  • Additional subsidy of up to $2,500 available for qualified borrowers
  • Can be combined with other programs

Eligibility

  • Credit score must meet the minimum requirements of the underlying loan program (FHA, VA, USDA Rural Development or conventional)
  • Borrower income limit of $99,169 for down payment assistance
  • Income limit of $29,650 for $2,500 subsidy
  • Income must be between $30,300 and $48,480 for $1,500 subsidy
  • Debt-to-income ratio of less than 50%
  • Borrowers must complete a homebuyer education course

How it works

Although not specifically for first-time homebuyers, this program’s flexible requirements, including no maximum purchase price, make it worth considering if you plan to buy your first home in Pima County. To get started, visit the program’s website and contact a participating lender. Let the lender know you’d like to participate in the Pima Tucson Homebuyer’s Solution Program.

Section 32 Homeownership Program (Phoenix)

Features

  • Possible subsidies for qualified borrowers
  • One-year home warranty
  • Lower monthly payment
  • 20% discount on the appraised value of the home

Eligibility

  • Must be a family of two or more people
  • Must meet income limit of 80% of area median or less:
    • Family of two: $44,250
    • Family of three: $49.800
    • Family of four: $55,300
    • Family of five: $59,750
    • Family of six: $64,150
  • Must pay 3% of purchase price, with at least 1% coming from your own funds (not a gift or a grant)
  • Must qualify for a 15- to 30-year, fixed-rate mortgage
  • Must have a history of on-time payments for rent and utilities
  • Must be able to get a positive recommendation from your current landlord
  • Family members must pass a criminal background check
  • Must commit to living in the home for at least five years
  • Borrowers must complete homeownership classes
  • Borrowers with a credit score of less than 640 must complete a financial fitness class
  • Must complete a pre-purchase one-on-one counseling session with a certified housing counseling agency if you don’t use a recommended lender
  • All homeownership costs, including insurance, taxes and utilities, must be below 35% of your family’s adjusted gross income

How it works

This first-time Phoenix-area homebuyer program may look daunting at first, but your lender or counselor will help walk you through the process. To get started, visit the City of Phoenix housing website and download the Section 32 program interest packet. Page two lists the first steps. You can start by scheduling counseling with a certified HUD agency or by calling one of their recommended lenders.

Open Doors Homeownership Program (Phoenix)

Per the City of Phoenix housing website, the program is temporarily suspended and will resume in July 2019.

Features

  • Up to $15,000 for down payment or closing cost assistance
  • Can be combined with other programs

Eligibility

  • Must be either a first-time homebuyer or not have owned a home for at least three years
  • Must live in the home for the loan term (15 years) or repay the loan if you sell or refinance within the first 15 years of ownership
  • Must complete eight hours of homebuyer education
  • Must contribute at least $1,000
  • Must qualify for a 15- or 30-year, fixed-rate mortgage
  • Must meet income limit of 80% of area median or less:
    • Family of one: $38,750
    • Family of two: $44,250
    • Family of three: $49.800
    • Family of four: $55,300
    • Family of five: $59,750
    • Family of six: $64,150
  • Must obtain a one- to three-year home warranty
  • No cash back at closing may be provided
  • Property must be a single-family home or condo
  • Must pass a property inspection
  • Property purchase price must be $208,000 or less
  • Property must be within the City of Phoenix jurisdiction

How it works

If you’re interested in this program, keep a close eye on the City of Phoenix housing program website. Once the program reopens, follow the website links to apply or call the Housing Department for more information at 602-262-6794. You will need to work with a loan administration partner to complete the application process.

National first-time homebuyer programs

In addition to Arizona’s homebuyer programs, there are several national programs to help first-time homebuyers purchase a home. For example, FHA loans have low credit score and down payment requirements, and VA loans provide flexible funding for current or former service members. Review our guide to learn more about national first-time homebuyer programs.

 

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