If the Home in Five program isn’t the right fit for you, perhaps the Arizona Home Plus program is, one of the various down payment assistance program options that exist for homebuyers. The Home Plus program has become much more popular amongst borrowers over the past years, due in part to expanded benefits, options, and coverage areas— currently anywhere in Arizona.
Home Plus is offered through the Arizona Housing Finance Authority and can provide up to $19,200 towards a down payment and/or closing costs. The program is derived from the Freddie Mac Home Possible Advantage program and is the other AZ conventional Home Plus loan programs offered.
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Participants of the Arizona Home Plus program will receive a 30-year fixed Home Plus loan and down payment assistance with options of 1% through 5% based on loan-specific guidelines. The amount of assistance is calculated based on the amount of the loan. For example, if your loan amount is $384,000 and you opt for the 5% assistance option, you’d receive $19,200 toward your down payment and closing costs.
No first-time buyer requirements apply, so new and experienced buyers are welcome. Similar to the Home in Five program, qualified United States active military and veteran personnel are eligible for an additional 1% assistance. Arizona Home Plus loans don’t have prepayment penalties. The program features no Mortgage Subsidy Recapture.
The money received for assistance is a silent second* that has no interest, no payment, and is forgiven monthly across the first three years of home ownership. The lien is completely forgiven if owners stay in the home for three years without refinancing. The silent second ensures the ongoing success of the program, which draws funds from a revolving pool of funds, assuring continuous funding.
Finally, a home inspection is optional and not required, but the fee from the inspection can be covered by the DPA grant.
The first step is to make contact with an approved lender who will let you know if you meet the requirements of the Home Plus loan and AZ DPA program guidelines. Depending on your needs, you can choose an FHA, VA, USDA, Fannie Mae or Freddie Mac home loan. Once you’re prequalified, you can begin your home search. Working with your real estate agent can negotiate your deal. When you have a fully-executed sales contract, your lender will reserve your Home Plus assistance funds.
To be eligible, the mortgage must be for the purchase of a owner-occupied, primary residence only. Borrower or borrowers income must be less than $105,291. The maximum debt-to-income (DTI, or the ratio of all debt including mortgage against income) ratio is 50%. Homebuyers are required to complete a pre-purchase homebuyer education course. Non-occupant co-signors are allowed on some Home Plus loan programs as well.
* A silent second mortgage is a second mortgage placed on an asset (such as a home) for down payment funds that are not disclosed to the original lender on the first mortgage. The second mortgage is called “silent” because the borrower does not disclose its existence to the original mortgage lender.