While home ownership remains a critical aspect of the American Dream, many families find themselves up against multiple obstacles like bad credit or saving the requisite money for a down payment. Even those with the most thorough plan and who do all of the right things for saving this money will likely have unexpected expenses come up in the meantime (life happens), making it challenging and frustrating. The good news is that with down payment assistance programs in Phoenix, you might be closer to purchasing a home than you think.
Why Down Payment Assistance Programs?
But first, you may be asking yourself, “Why would anyone want to help me with the down payment on my home? What’s the catch?”
Governments at city, county and state levels throughout the country are very motivated to increase home ownership within their jurisdictions and can have very large impacts on homeownership. This, in turn, leads to increasingly stable neighborhoods and ripple effects throughout local economies.
Home in Five Advantage Program
Take, for example, the Home in Five Advantage program created by the Phoenix and Maricopa County industrial development authorities (IDAs). The program has been so successful in helping tens of thousands of residents with down payment assistance in Phoenix that other cities have looked to it as a model, President Obama has lauded its success and Phoenix Mayor Greg Stanton announced an expansion of it last fall.
There are a few parameters for families to qualify, though much less strenuous than other similar programs. It is a great option for families with incomes less than $88,340 looking to at Maricopa County or Phoenix, AZ real estate up to $300,000. You must be purchasing a home (no refinancing) and occupy the house as your primary residence within 60 days of closing (you couldn’t buy a vacation home or rental property under this down payment assistance program). Then, assuming you meet those qualifications and qualify for a loan from an approved lender, you will just complete a simple homebuyer education course through a HUD-approved housing counseling agency within the state of Arizona.
It is a grant (you do not repay it) and qualifying participants will get a 3% grant for the principal balance of their mortgage and loan ($6,000 toward the down payment on a $200,000 house, for example). The benefits available are even greater for qualifying military personnel, veterans, teachers and first responders who receive an additional percentage towards their grant—$8,000 toward a down payment if we use the same example of a $200,000 house.
Open Doors Homeownership Program
Down payment assistance programs are a significant help to and one of many resources available for first-time homebuyers. The Open Doors Homeownership Program spearheaded by the City of Phoenix and partners offers a deferred payment loan of up to $15,000 for qualifying individuals looking to buy Phoenix, AZ real estate. The loan’s interest rate is 0% with no monthly payments. It is forgiven after 15 years and is due for repayment when participants sell their house, refinance it or begin living in another house within the first 15 years of homeownership.
Eligible homebuyers under this down payment assistance program will have a total annual household income that does not exceed 80% of the Area Median Income (AMI). That number ranges from $35, 250 for an individual up to $66,400 for a family of 8. Contact the City of Phoenix Housing Department for more information and to determine if this program is a good fit for you.
Wells Fargo’s NeighborhoodLIFT®
Late last year, Phoenix Mayor Greg Stanton praised Wells Fargo’s commitment to expand its down payment assistance programs in Phoenix by $5 million in the form of its NeighborhoodLIFT® program. This program provides up to $7,500 in down payment assistance for participants and does not require that they get their home loan through Wells Fargo.
Similarly to other down payment assistance programs in Phoenix, this one does have a homebuyer education component and other qualifications that would-be homebuyers must meet—though the requirements are reasonable.
Phoenix, AZ real estate is a great investment and one of the most affordable metro areas in the country.
And while many news mongers are recently quick to write stories about supposed huge spikes in interest rates for home mortgages, the truth is, as the Wall Street Journal reports, that an average of 3.87%, the interest rates “are still incredibly low by historical standards; the average over the past 45 years is 8.26%, according to data from Freddie Mac.” The time to buy a home is now. If the down payment is the only thing keeping you from taking the leap, know that there is help available and research all of your options.
If you are still not sure where to start or if it is the right time to buy a home, contact our team today. We would be honored to use our expertise to help you make your dreams of homeownership come true.