Down Payment Assistance Programs: Neighborhood Stabilization Program

The Neighborhood Stabilization Program (NSP) is a federally-funded down payment assistance program serving both Maricopa and Pima Counties in Arizona. Qualifying homebuyers falling within specific area median income (AMI) ranges can receive $5,000 in closing cost assistance and either a $20,000 or $40,000 subsidy. These incentives can be used in the purchase of a newly built or remodeled home in an established local neighborhood. More on all of that in a bit.

In order to help communities hit the hardest by foreclosures and abandoned properties, the Neighborhood Stabilization Program was created. In 2009, the city of Phoenix received $39.4 million in HUD NSP grant funds from the Housing and Economic Recovery Act of 2008. In 2010, they received $60 million in funds under the American Recovery and Reinvestment Act in addition to $16 million from the Dodd-Frank Act. Grants derived from these funds is expected to aid more than 2,200 single- and multi-family properties in Phoenix.

NSP shares some of the same features and regulations as the other available down payment assistance programs in Arizona: Home in Five, Home Plus, Arizona HFA Preferred, the Pima Tucson Homebuyer’s Solution, the City of Phoenix Open Doors, the American Dream DPI, the Chenoa Fund, the Home Success Mortgage Credit Certificate, and the NeighborhoodLIFT, though it does feature the largest amount of funds available of the lot. 

Areas Served and Available Grants

Homebuyer Eligibility Criteria

Borrowers will be required to meet area median income (or AMI, which is a statistic by HUD for the purposes of determining the eligibility of applicants for certain federal housing programs). For those earning between 50 and 120% AMI, in addition to the $5,000 closing cost assistance, can receive a $20,000 homebuyer subsidy. For those earning less than 50% AMI, the subsidy is $40,000. 

The above mentioned subsidy is a forgivable loan with no interest that exists provided the buyer stays in the home for 15 years from the closing date. Should the buyer wish to leave prior to 15 years, they must sell the property and the subsidy must be returned, as outlined in the loan documents. The property must also be used as a primary residence and cannot be rented during the 15 year period.

Additionally, legal U.S. resident buyers must contribute 50% of the down payment and cannot be on the title of any other residential property. Furthermore, borrowers must complete an eight hour homebuyer education course. A list of HUD-approved Housing Counseling agencies providing the course locally can be found at hud.gov.

To learn more about the Neighborhood Stabilization Program down payment assistance program in Phoenix, please call 602-262-6602 or email [email protected] Your local licensed loan officer can also answer your questions and help determine if this subsidy is something you’re eligible for.

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