Arizona First-Time Home Buying Assistance Programs & Grants for 2024

Arizona First-Time Home Buying Guide

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    By Kim Franke-Folstad

    (Last Updated – 03/2024)

    First-time homebuyers in Arizona are facing many of the same challenges as buyers across the rest of the country: high costs. But perhaps they are feeling the pinch even more. The average home value in the state is $421,939, according to Zillow, vs. the national average of $342,941. In some popular Arizona communities, the numbers soar higher still. For example, in Scottsdale, home prices are currently averaging $792,522.

    First-time buyers may feel as if the keys to their first home are dangling further out of reach, but fortunately, they may be able to get financial help through programs offered by the state and some counties. There also are longstanding federal programs that could improve a buyer’s chances of success. These programs can help prospective homebuyers save on their down payment, mortgage, and closing costs.

    Who Is Considered a First-Time Homebuyer in Arizona?

    For most programs offered in Arizona, like elsewhere in the country, applicants are considered first-time homebuyers if they haven’t owned a principal home for at least the past three years.

    It’s a good idea, though, to be clear on each program’s specific eligibility standards before you start the application process.

    💡 Quick Tip: Thinking of using a mortgage broker? That person will try to help you save money by finding the best loan offers you are eligible for. But if you deal directly with an online mortgage lender, you won’t have to pay a mortgage broker’s commission, which is usually based on the mortgage amount.

    6 Arizona Programs for First-Time Homebuyers

    Most first-time homebuyer programs in Arizona are designed to help low- to moderate-income buyers who need help coming up with a down payment and/or closing costs. Generally, that assistance comes in the form of a second mortgage that is fully forgiven if the buyer stays in the home for a set amount of time (usually three years).

    During that time, buyers don’t have to make a monthly payment or pay interest on the second loan. But if they sell the home before the full three years is up, they will be required to repay a portion of the assistance they received.

    Participants must meet limits regarding their income, credit scores, and debt-to-income ratio. Typically, the home must be the buyer’s primary residence, and there may be limits on how much the home can cost. Also, at least one of the buyers may be required to complete a homebuyer education course.

    Here are details about Arizona’s homebuyer programs.

    1. Home+Plus Down Payment Assistance Program

    The Arizona Industrial Development Authority’s Home+Plus Home Buyer Down Payment Assistance
    offers qualifying buyers a 30-year fixed-rate mortgage paired with up to 4% down payment assistance (DPA) to use toward the down payment and/or closing costs.

    Depending on your eligibility and the home you plan to buy, you may have the option of choosing from different types of mortgages, including an FHA, VA, USDA, Fannie Mae, or Freddie Mac home loan.

    Availability: Statewide

    Assistance Amount: Up to 5% of the home’s purchase price

    Type of Assistance: Second mortgage, fully forgiven after three years in the home

    Benefits and Qualifications Include:

    •   Annual income can’t be more than $126,351

    •   All borrowers must have a minimum credit score of 640 (680 for some loan types)

    •   Maximum DTI ratio allowed is 45% (50% in some cases)

    •   Mortgage insurance is required if the first mortgage is a Fannie Mae or Freddie Mac loan and the down payment is under 20%, but the cost may be lower than for coverage outside the Home+Plus program

    •   You don’t have to be a first-time homebuyer to qualify

    •   At least one borrower must complete a homebuyer education course before the loan closes

    To Apply: If you’re interested in Home+Plus assistance, a good first step may be to find a participating lender that is familiar with the program and can take you through the process.

    2. Home in Five Advantage Program

    The Home in Five Advantage program is offered to low- to moderate-income homebuyers in Maricopa County. Qualified borrowers can receive assistance with their down payment and closing costs, as well as a loan with a competitive interest rate.

    Eligible K-12 teachers, first responders, military personnel and veterans, and individuals who earn up to $49,500 annually may receive an additional 1% in assistance.

    Availability: Maricopa County, city of Phoenix

    Assistance Amount: Up to 5% of the home’s purchase price

    Type of Assistance: Second mortgage, fully forgiven after three years in the home

    Benefits and Qualifications Include:

    •   Annual income can’t be more than $138,600

    •   All borrowers must have a credit score of 640 or above (680 for some loan types)

    •   Maximum DTI ratio allowed is 50%

    •   No maximum purchase price

    •   At least one borrower must complete a homebuyer education course

    •   Buyers must occupy the purchased home as their principal residence within 60 days of closing

    •   Must be a new or existing single-family home, condominium, or townhome

    Homebuyers in designated low-income neighborhoods may receive an additional 0.5% in assistance through the Home in Five Advantage BOOST program. Your lender can help you check your eligibility for this extra support.

    To Apply: A trained loan officer with an approved lender can help you get started.

    3. Pima Tucson Homebuyer’s Solution Program

    The Pima Tucson Homebuyer’s Solution Program is provided by the Tucson Industrial Development Authority and the county of Pima. The program offers qualified homebuyers multiple first mortgage options (including FHA, VA, Freddie Mac, and Fannie Mae loans) along with a forgivable second mortgage that can be used for a down payment (typically 2% to 5%) and closing costs.

    Availability: Pima County and city of Tucson

    Assistance Amount: Available at multiple levels

    Type of Assistance: Assisted and unassisted rate mortgages and second mortgage, fully forgiven after three or 30 years

    Benefits and Qualifications Include:

    •   There is neither a first-time homebuyer nor purchase price qualification

    •   Typical income cap is $126,351

    •   Minimum credit score of 640 and maximum DTI of 45%

    •   Buyers must occupy the property as their principal residence

    •   Borrowers must complete a homebuyer education course

    To Apply: Contact an approved lender .

    4. Tucson Pima County HOME Down Payment Assistance Program

    Qualified homebuyers in Tucson and Pima County can receive down payment assistance through the Community Investment Corporation’s HOME Down Payment Assistance Program Assistance is based on family size and household income.

    Availability: Pima County and city of Tucson

    Assistance Amount: Up to 20% of purchase price

    Type of Assistance: Second mortgage; forgiveness depends on loan amount and duration

    Benefits and Qualifications Include:

    •   Maximum income of $85,750, depending on family size

    •   Maximum DTI of 45%

    •   Maximum purchase prices of $302,100 for existing homes; $358,835 for new properties

    •   No cash assets over $10,000 and homebuyer must contribute at least $1,000 of their own funds to the purchase and have the equivalent of two months’ worth of mortgage payments on reserve in the bank

    •   Buyers must occupy the property as their principal residence during the affordability period

    •   Borrowers must complete a homebuyer education course

    •   Inspection of property typically required

    To Apply: Contact one of these approved counseling agencies for more information and assistance:

    •   Administration of Resource and Choices

    •   Chicanos Por La Causa

    •   Family Housing Resources

    •   Pima County Community Land Trust

    •   Pio Decimo Center

    •   Primavera Foundation

    5. Mortgage Credit Certificate Program

    Borrowers can use a mortgage credit certificate (MCC) to claim a portion of their annual mortgage interest, dollar for dollar, up to $2,000, as a federal tax credit every year for the life of their loan.

    Applicants must be first-time homebuyers (you can’t have owned a home within the past three years) unless you’re a qualified military veteran or buying in a designated area. The nonprofit Community Investment Corporation administers the MCC program; income and purchase price limitations may vary by county.

    To Apply: You can apply for the credit certificate when you take out a home loan through a state-approved participating lender. You can schedule an appointment with Arizona’s Community Investment Corporation (CIC) to learn more.

    6. Pathway to Purchase Homebuyer Assistance Program

    The Pathway to Purchase program also offers homebuyers a 30-year fixed-rate mortgage paired with a forgivable second mortgage as down payment assistance. But Pathway to Purchase, which is offered by the Arizona Department of Housing and the Arizona Home Foreclosure Prevention Funding Corporation, is available only to borrowers using a Freddie Mac HFA Advantage® mortgage offered by an approved lender. You do not have to be a first-time buyer to qualify.

    Availability: Limited to designated communities hit hardest by foreclosures: Bullhead City, Casa Grande, Glendale, Green Valley, Kingman, Phoenix, Rio Rico, Sahuarita, Sierra Vista, Tucson, Vail, and Yuma.

    Assistance Amount: Up to 10% of the home’s purchase price, up to $20,000

    Type of Assistance: Second mortgage, fully forgiven after five years

    Benefits and Qualifications Include:

    •   Annual income cannot exceed 80% of the median income in applicant’s purchase area

    •   Purchase price has a maximum

    •   Purchased home must be principal residence

    •   Cannot be used for new construction home

    •   At least one borrower must complete a homebuyer education course

    •   Funding is limited and available only on a first-come, first-served basis; check to see if funds are still available if you want to apply

    To Apply: If you think you could qualify, you may want to contact a local lender and inquire about how to proceed.

    Federal Programs for First-Time Homebuyers

    Several federal government programs are designed for people who have low credit scores or limited cash for a down payment. Although most of these programs are available to repeat homeowners, like state programs, they can be especially helpful to people who are buying a first home or who haven’t owned a home in several years.

    The mortgages are generally for single-family homes, two- to four-unit properties that will be owner occupied, approved condos, townhomes, planned unit developments, and some manufactured homes.

    Remember that the Arizona state and county programs offer many of these same loans, along with that forgivable second loan for a down payment or closing costs. And the cost of mortgage insurance may be lower. So if you meet the income limits, that might be the way to go.

    Federal Housing Administration (FHA) Loans

    The FHA, which is part of the U.S. Department of Housing and Urban Development (HUD), insures mortgages for borrowers with lower credit scores. Homebuyers choose from a list of approved lenders that participate in the FHA loan program. Here are details:

    •   Loans have competitive interest rates and require a down payment of 3.5% of the purchase price for borrowers, who typically need FICO® credit scores of 580 or higher. Those with lower credit scores (between 500 and 579) must put at least 10% down.

    •   In addition to examining your credit score, lenders will look at your debt-to-income ratio (DTI, your monthly debt payments compared with your monthly gross income). FHA loans allow a DTI ratio of up to 57% in some cases, vs. a typical 45% to 50% maximum for a conventional loan.

    Gift money for the down payment is allowed from certain donors and will be documented in a gift letter for the mortgage.

    FHA loans always require mortgage insurance: a 1.75% upfront fee and annual premiums for the life of the loan, unless you make a down payment of at least 10%, which allows the removal of mortgage insurance after 11 years. For a $300,000 mortgage balance, upfront MIP would be around $5,250 and monthly MIP, at a rate of 0.55%, would be around $137. You can learn more about these loans, including FHA loans for refinance and rehab of properties, by reading up on FHA requirements, loan limits, and rates.

    Freddie Mac Home Possible Mortgages

    Very low- and low-income borrowers may make a 3% down payment on a Home Possible® mortgage. These loans allow various sources for down payments, including co-borrowers, family gifts, employer assistance, secondary financing, and sweat equity.

    The Home Possible mortgage is for buyers who have a credit score of at least 660.

    Once you pay 20% of your loan, the Home Possible mortgage insurance will be canceled, which will lower your mortgage payments.

    Fannie Mae HomeReady Mortgages

    Fannie Mae HomeReady® Mortgages allow down payments as low as 3% for low-income borrowers. Applicants generally need a credit score of at least 620; pricing may be better for credit scores of 680 and above. Like the Freddie Mac program, HomeReady loans allow flexibility for down payment financing, such as gifts and grants.

    For income limits, a comparison to an FHA loan, and other information, go to this Fannie Mae site .

    Fannie Mae Standard 97 LTV Loan

    The conventional 97 LTV loan is for first-time homebuyers of any income level who have a credit score of at least 620 and meet debt-to-income criteria. The 97% loan-to-value mortgage requires 3% down. Borrowers can get down payment and closing cost assistance from third-party sources.

    Department of Veterans Affairs (VA) Loans

    Active-duty members of the military, veterans, and eligible family members may apply for loans backed by the Department of Veterans Affairs. VA loans, which can be used to buy, build, or improve homes, have lower interest rates than most other mortgages and don’t require a down payment. Most borrowers pay a one-time funding fee that can be rolled into the mortgage.

    •   Another benefit of VA loans: They do not require private mortgage insurance (PMI) for borrowers who make a down payment of less than 20%.

    •   They have more flexible credit score requirements. In some cases, even those who have previously been in foreclosure or bankruptcy can qualify.

    Borrowers applying for a VA loan will need a Certificate of Eligibility from the VA so make sure to review a guide to qualifying for a VA loan as a first step in the process.

    💡 Quick Tip: Active duty service members who have served for at least 90 consecutive days are eligible for a VA loan. But so are many veterans, surviving spouses, and National Guard and Reserves members. It’s worth exploring with an online VA loan application because the low interest rates and other advantages of this loan can’t be beat.†

    Native American Veteran Direct Loans (NADLs)

    Eligible Native American veterans and their spouses may use these no-down-payment loans to buy, improve, or build a home on federal trust land. The VA is the direct lender on NADLs and charges a funding fee. Learn more by emailing [email protected].

    US Department of Agriculture (USDA) Loans

    No down payment is needed on these loans to moderate-income borrowers that are guaranteed by the USDA in specified rural areas. Borrowers will pay an upfront guarantee fee and an annual fee that serves as mortgage insurance.

    The USDA also issues direct loans to low- and very low-income people. Head here for income and property eligibility.

    HUD Good Neighbor Next Door Program

    This program helps police officers, firefighters, emergency medical technicians, and teachers qualify for mortgages in the areas they serve. Borrowers can receive 50% off a home in what HUD calls a “revitalization area.” They must live in the home for at least three years.

    First-Time Homebuyer Stats for 2024

    Ever wonder where you fit amid the mix of buyers who are out there shopping for a home? Here are some stats to consider:

    •   Percentage of buyers who are first-time buyers: 50%

    •   Median household income of homebuyers: $107,000

    •   Typical down payment percentage of first-time homebuyers: 8%

    •   Average credit score in Arizona: 713

    •   Median age of first-time homebuyers: 35

    Recommended: Understanding Mortgage Basics

    Additional Financing Tips for First-Time Homebuyers

    In addition to federal and state government-sponsored lending programs, there are other financial strategies that may help you become a homeowner. Some examples:

    •  Traditional IRA withdrawals. The IRS allows qualifying first-time homebuyers a one-time, penalty-free withdrawal of up to $10,000 from their IRA if the money is used to buy, build, or rebuild a home. The IRS considers anyone who has not owned a primary residence in the past three years a first-time homebuyer. You will still owe income tax on the IRA withdrawal. If you’re married and your spouse has an IRA, they may also make a penalty-free withdrawal of $10,000 to purchase a home. The downside, of course, is that large withdrawals may jeopardize your retirement savings.

    •  Roth IRA withdrawals. Because Roth IRA contributions are made with after-tax money, the IRS allows tax- and penalty-free withdrawals of contributions for any reason as long as you’ve held the account for five years. You may also withdraw up to $10,000 in earnings from your Roth IRA without paying taxes or penalties if you are a qualifying first-time homebuyer and you have had the account for five years. With accounts held for less than five years, homebuyers will pay income tax on earnings withdrawn.

    •  401(k) loans. If your employer allows borrowing from the 401(k) plan that it sponsors, you may consider taking a loan against the 401(k) account to help finance your home purchase. With most plans, you can borrow up to 50% of your 401(k) balance, up to $50,000, without incurring taxes or penalties. You pay interest on the loan, which is paid into your 401(k) account. You usually have to pay back the loan within five years, but if you’re using the money to buy a house, you may have up to 15 years to repay.

    •  State and local down payment assistance programs. Usually offered at the regional or county level, these programs provide flexible second mortgages for first-time buyers looking into how to afford a down payment.

    •  The mortgage credit certificate program. First-time homeowners and those who buy in targeted areas can claim a portion of their mortgage interest as a tax credit, up to $2,000. (This doesn’t lower your mortgage payments, but can still be a good way to save.) Any additional interest paid can still be used as an itemized deduction.

    To qualify for the credit, you must be a first-time homebuyer, live in the home, and meet income and purchase price requirements, which vary by state. If you refinance, the credit disappears, and if you sell the house before nine years, you may have to pay some of the tax credit back. There are fees associated with applying for and receiving the mortgage credit certificate that vary by state. Often the savings from the lifetime of the credit can outweigh these fees.

    •  Your employer. Your employer may offer access to lower-cost lenders and real estate agents in your area, as well as home buying education courses.

    •  Your lender. Always ask your lender about any first-time homebuyer grant or down payment assistance programs available from government, nonprofit, and community organizations in your area.

    The Takeaway

    If you can qualify for one of the many homebuyer programs in Arizona, or a federal program, you may be able to achieve your goal of purchasing a property, despite housing costs being above the national average. You may also want to look into what commercial lenders offer to see what your options are in terms of covering your down payment, mortgage, and closing costs.

    Looking for an affordable option for a home mortgage loan? SoFi can help: We offer low down payments (as little as 3% - 5%*) with our competitive and flexible home mortgage loans. Plus, applying is extra convenient: It's online, with access to one-on-one help.

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    Should I take first-time homebuyer classes?

    These courses can be helpful for prospective homeowners and can provide important information about how the process works and what to expect. Also, these classes are required for some government-sponsored loan programs.

    Do first-time homebuyers with bad credit qualify for homeownership assistance?

    Often they do. Many government and nonprofit homeowner assistance programs are available to people with low credit scores. And often, interest rates and other loan pricing are competitive with those of loans available to borrowers with higher credit scores. Yet almost any lending program has credit qualifications so it can be important to build your credit before you go house hunting.

    Is there a first-time homebuyer tax credit in Arizona?

    Yes. First-time buyers in Arizona can apply for the mortgage credit certificate program, which allows borrowers to claim a portion of their annual mortgage interest as a federal credit every year.

    Is there a first-time homebuyer assistance program for veterans in Arizona?

    VA-backed home loans are available nationwide to eligible service members, veterans, and eligible surviving spouses. If you’re a veteran and you and/or your spouse are Native American, you may qualify for a VA direct loan. Arizona’s Home in Five Advantage program also offers special benefits for service members and veterans.

    What credit score do I need for first-time homebuyer assistance in Arizona?

    Most programs in Arizona require a score of 580 to 680, but some will accept a lower score. And some programs use criteria other than credit scores to determine a borrower’s eligibility.

    What is the average age of first-time homebuyers?

    The typical first-time buyer is 35, according to the latest data.

    Photo credit: iStock/BCFC

    *SoFi requires Private Mortgage Insurance (PMI) for conforming home loans with a loan-to-value (LTV) ratio greater than 80%. As little as 3% down payments are for qualifying first-time homebuyers only. 5% minimum applies to other borrowers. Other loan types may require different fees or insurance (e.g., VA funding fee, FHA Mortgage Insurance Premiums, etc.). Loan requirements may vary depending on your down payment amount, and minimum down payment varies by loan type.

    †Veterans, Service members, and members of the National Guard or Reserve may be eligible for a loan guaranteed by the U.S. Department of Veterans Affairs. VA loans are subject to unique terms and conditions established by VA and SoFi. Ask your SoFi loan officer for details about eligibility, documentation, and other requirements. VA loans typically require a one-time funding fee except as may be exempted by VA guidelines. The fee may be financed or paid at closing. The amount of the fee depends on the type of loan, the total amount of the loan, and, depending on loan type, prior use of VA eligibility and down payment amount. The VA funding fee is typically non-refundable. SoFi is not affiliated with any government agency.

    ¹FHA loans are subject to unique terms and conditions established by FHA and SoFi. Ask your SoFi loan officer for details about eligibility, documentation, and other requirements. FHA loans require an Upfront Mortgage Insurance Premium (UFMIP), which may be financed or paid at closing, in addition to monthly Mortgage Insurance Premiums (MIP). Maximum loan amounts vary by county. The minimum FHA mortgage down payment is 3.5% for those who qualify financially for a primary purchase. SoFi is not affiliated with any government agency.

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