Removing Barriers to Homeownership

Are you renting because you think you can’t afford a house? Are you unsure if it’s a worthwhile investment? You may feel more comfortable with the flexibility of renting or you don’t want to hassle with maintenance. And then there was that housing market crash a few years ago — that was enough to turn a whole generation off to the idea of homeownership! But there are many pros to homeownership — you are paying your own mortgage instead of your landlord’s and, as a result, you are building equity. You also get a pretty nice tax benefit and owning is a great way to become more connected to your community. And, for the time being, owning is still more affordable than renting! Here is a startling statistic: According to a recent study by Zillow, renters in Phoenix spend 28% of their monthly incomes on rent, whereas homeowners only spend 17% of their monthly incomes on mortgages. Hard to believe? Well, consider this: Home prices in Phoenix are still very attractive even though they are slowly rising, and mortgage interest rates have remained low while rents have been on the rise over the past few years.

Have I convinced you that it’s time to start looking at real estate? Still think homeownership isn’t for you because you lack cash for a down payment or your income is on the low side? Homeownership may be more accessible than you think — the city of Phoenix offers several home-buying assistance programs that can help you purchase a home (or condo) of your own!

Home in 5 Advantage

This program is offered through the Maricopa County Industrial Development Authority. It provides buyers 4% of the home value (veterans can get 5%) to use towards down payment and closing costs. This is not a loan, it’s a grant that does not have to be paid back.

What you need to know: You must have a FICO credit score of at least 640 and a 45 debt-to-income ratio. You can earn no more than $88,340 and you must qualify for a 30-year-fixed mortgage. Homes must be owner-occupied and can be anywhere in Maricopa County, including Phoenix.

How to get started: visit the Industrial Development Authority of Maricopa County

Home Plus Home Loan Program

This program is offered through the Arizona Department of Housing and provides fixed-rate 30-year mortgages to renters who would like to buy but lack cash for a down payment. Home Plus offers down payment assistance (DPA) to these buyers through a grant program that does not have to be paid back.

What you need to know: The program is available to credit-worthy buyers who earn less than $89,088. The maximum home price is $356,352 and all applicants must attend a homebuyer education course. There are additional requirements depending on the type of loan used for the purchase.

How to get started: visit the Arizona Department of Housing

Neighborhood Stabilization Program (NSP)

Offered through the City of Phoenix and funded by the federal government, this program provides DPA of up to $15,000 in the form of a no-interest loan that is forgiven after the owner has lived in the home for 15 years. If the buyer sells or refinances the home before the 15-year requirement ends, the balance of the loan must be paid back. NSP purchases foreclosed homes in established neighborhoods and remodels them to be move-in ready and energy efficient.

What you need to know: NSP has income requirements based on the area’s median income. Check the website for specific details. You must also be a legal U.S. resident, occupy the home and contribute 50% of the down payment.

How to get started: visit the City of Phoenix NSP Website

Section 32 Homeownership Program

Another City of Phoenix program that is similar to NSP in that available homes are owned by the city in established areas.

What you need to know: Income requirements are based on the area’s median income. Check the website for specific details. Applicants must be first-time homebuyers and the home must be owner occupied. Education classes are also required.

How to get started: visit the City of Phoenix Section 32 Website.

A couple things to keep in mind:

When looking at these programs on the web, go to the government page for each specific program. There are many loan companies that appear at the top of the page in the search engine results and they may not be the best fit for you. The links I have provided here go directly to the .gov sites for each program. Many of these programs can be layered so you get the maximum benefit available to you. These programs are only offered through specific lenders so check each program’s website for a list of approved lenders. Or, you can contact us for some referrals to lenders we’ve worked with on these programs.

Mesa, Chandler, Tempe and El Mirage also have DPA programs. Check each city’s website or download the booklet Arizona Housing Alliance Academy — Housing Counseling Training — Down Payment Assistance Programs Overview from the Arizona Housing Alliance website.

More information about paths to homeownership is available through these agencies:

  • Community Housing Resources of Arizona — 602-631-9780
  • Desert Mission Neighborhood Renewal 602-331-5833
  • Chicanos Por La Causa (CPLC) — 602-257-0700
  • NSP Customer Advisory Services — 602-262-6602

 

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