Ingrid B. Quinn

NMLS ID #211652 Arizona, Loan Consultant


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Low 3% Down Payments

            After a brief disappearance in the economic downturn, 3% down payment loan products are back. This is especially important to our first-time buyer market and our returning buyer who has had a 3 year or longer wait period after an adverse credit occurrence. This is a helpful product to get back into the home purchase arena.  Fannie Mae (FNMA) loans, conventional conforming products are now available. Check your local market for loan limits in high cost areas but for most of the country the loan limit for a FNMA loan is $453,100.

All loans will require private mortgage insurance (PMI). This expense may be less costly monthly for a borrower with a higher credit score than the mortgage insurance carried on a FHA loan that requires a 3.5% down payment. PMI also can be dropped at some point down the road when there is enough equity in the home versus FHA which will require life of loan mortgage insurance if a minimum down payment was made.

Additionally, there may be down payment assistance programs to help with the 3% down payment. There are separate guidelines for those products. Gifts from family members are also allowed on the FNMA conventional programs.

For more information on low down payment options, please contact me and we will discuss what will work for you.


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No Down Payment Means No House? Think Again

No Down Payment Means No House? Think Again

Arizona Down Payment Assistance Programs Are a Great Option

You want to buy a house and you’ve been trying to save the down payment for years. But something always gets in the way. Your car breaks down. Your eight-year-old needs braces. Rent keeps going up.

You’re beginning to think you’ll never own a home.

Think again.

Arizona has three great down payment assistance (DPA) programs for middle income borrowers. And they’re not just for first-time home buyers.
What is down payment assistance? Down payment assistance is a grant or a forgivable loan. Once you qualify for a first loan to buy a house, you receive the assistance money to pay the down payment and closing costs (prepaid taxes, home owners and mortgage insurance, and so on).

Two of the DPA programs are offered by the Arizona Department of Housing (ADOH) and the third by the Industrial Development Authority of the County of Maricopa (IDA). Note that the lender’s requirements may trump some of the assistance programs’ requirements based on the loan programs the buyer qualifies for.

Pathway to Purchase

The Pathway to Purchase program (P2P) helps home buyers in certain cities in Arizona put together a down payment. It works like this. You apply for a first loan through the Pathway program, which is a 30-year fixed-interest rate loan. Once you apply for the loan, you also receive a 2nd loan for the down payment and closing costs up to 10% of the purchase price with a max of $20,000. If the first loan is $100,000, for example, then the second loan will be $10,000. This second loan is forgivable—it has no payments and no interest, and after five years, it is forgiven.

There are a few stipulations. You can’t own another residential property at the time of close; your annual income can’t be more than $89,088; the purchase price can’t be more than $356,352; and your credit score must be 640 or greater.

This program is available only in these Arizona cities:

Arizona City, Avondale, Buckeye, Case Grande,
Coolidge, Douglas, El Mirage, Fort Mohave,
Goodyear, Huachuca City, Laveen, Maricopa,
Red Rock, Sierra Vista, Snowflake, Tucson,
Yuma

Arizona Home Plus HFA Preferred Loan Program

If you are eligible for the Home Plus program, you can get up to 5% of the loan amount (not purchase price) for down payment assistance, depending on the type of loan you qualify for—and as much as 6% if you are qualified military personnel, such as a veteran, active duty military, active reservist, and active National Guard. This program is not available in Pima County, and with some types of loans, it is not available in Maricopa County.

As with the Pathway program, the first mortgage is a 30-year-fixed loan, with no minimum loan amount. Your income can’t be more than $89,088, the purchase price can’t be more than $356,352, and your credit score must be higher than 640. If your credit score is higher than 680, however, you’ll get a higher percentage of the maximum assistance.

Arizona Home In 5 Advantage Loan Program

The Industrial Development Authority offers the Home in Five program, which is strictly for homes purchased in Maricopa County. Home in Five provides down payment assistance up to 4% of the loan amount for eligible buyers and up to 5% for “hero” buyers: qualified military personnel, first responders, and teachers. The actual amount depends on the type of loan and the buyer’s credit score. The first loan is a 30-year-fixed interest rate loan.

This program has certain requirements as well. Your income can’t be more than $88,340, the purchase price can’t be more than $300,000, and your credit score should be at least 640—but the higher your credit score, the higher the assistance up to the program’s maximum.

What Do the Programs Have in Common?

In all three programs, the loans must be for purchases of owner-occupied, primary residences. They cannot be for refinance or new construction loans or for manufactured or mobile homes, and buyers cannot receive cash back after the loan closes. Each type of loan and each program have their own requirements about the type of property allowed: new or existing homes, single family, multi-unit, condos, townhomes, and so forth.

All programs require a DTI of 45%. DTI is debt-to-income ratio—your total monthly debts divided by your gross monthly income. If you have a $1,000 mortgage payment, $200 in credit card payments, and a $300 car payment, for example, and a $5,000 monthly income, your DTI is $1,000 + $200 + $300 / $5,000 = 30%.

In addition, to participate in these programs, you must take a homebuyer education course. Generally, you can take the course online, in person, or by phone.

Next Step

Give us a call to see which program is best for you. We’ll walk you through the process, find you the right program, and get you into a home before you know it.