Arizona Programs Available for First-Time Homebuyers
Buying your first home can be an exciting milestone, but it can also be an expensive process, especially in Arizona. According to January 2023 data from real estate brokerage Redfin, the median home price in The Grand Canyon state is currently $450,000. For first-time buyers on a budget, this can feel overwhelming, but there are several first-time homebuyer assistance programs that can make the process easier.
One program that can help is the HOME+PLUS program offered by the Arizona Industrial Development Authority (AzIDA). This program provides a 30-year fixed-rate mortgage coupled with down payment assistance of up to 5 percent of your loan principal. The first mortgage can be a conventional, FHA, VA, or USDA loan, and can come with reduced mortgage insurance to help keep your monthly payments low. HOME+PLUS is available to both first-time homebuyers and those who have owned a home before. According to the Arizona Department of Housing, more than 32,000 buyers have taken advantage of this program.
The HOME+PLUS down payment assistance is a no-payment second loan that is forgivable after three years, unless you sell the home or refinance the first mortgage before that time is up. To qualify, you’ll need a minimum credit score of 640 (680 if you’re buying a manufactured home), a maximum 45 percent to 50 percent debt-to-income ratio (DTI), depending on loan type, and an annual income under $122,100. You must also complete a homebuyer education course, and the property you’re purchasing must be a single- or two-family home, condominium, townhome, or manufactured home that is located in Arizona and will be your primary residence.
In addition to the HOME+PLUS program, there are other programs throughout Arizona that can help you cover the down payment and closing costs. For example, the Maricopa County Industrial Development Authority (MCIDA) and Phoenix IDA offer the Home in Five Advantage Program, which provides a 30-year fixed-rate conventional, FHA, or VA loan and a three-year forgivable second loan to be used for a down payment and closing costs. Borrowers can obtain up to 10 percent of the purchase price in down payment assistance through the Tucson Pima County HOME Down Payment Assistance Program, provided they can contribute at least $1,000 and meet other eligibility requirements.
If you’re a member of certain groups in Maricopa County, such as qualified U.S. military personnel and veterans, first responders, or teachers, you may be eligible for additional down payment and closing cost assistance through the Home in Five Advantage Program. Furthermore, the Home in Five Advantage BOOST program can provide an additional 0.5 percent of down payment assistance if you’re buying in a designated low-income neighborhood.
Another option to consider is the mortgage credit certificate (MCC), which can help lower your tax bill. In Arizona, the MCC allows you to take a federal tax credit of 25 percent of your mortgage interest up to $2,000 per year, provided you meet certain eligibility requirements.
Regardless of which program you choose, it’s important to shop around for mortgage offers and lock in competitive interest rates when you find them. The Arizona Industrial Development Authority and Bankrate provide lists of mortgage lenders who can help you throughout the process.
Buying your first home in Arizona may seem daunting, but with the help of first-time homebuyer assistance programs, you can make your dream of homeownership a reality. Be sure to explore national programs as well, and get started with your home purchase today.