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Arizona boasts stunning views and generally mild winters, making it a place many people want to call home. Taking advantage of programs for first-time home buyers offered through the Arizona Department of Housing, or ADOH, may help you purchase a home in the Grand Canyon State sooner than you think.Home loan programs offered nationally by a variety of lenders also have features that could help you qualify for a mortgage. Browse loan and assistance options for first-time home buyers below.
National first-time home buyer programs
First-time home buyers sometimes have trouble finding a mortgage because of credit history issues or because they don't have extra money for a down payment. That's where these national loan programs — available to borrowers in all 50 states — may come in handy.
Conventional mortgage
Best for:
Low down payments, limited mortgage insurance premiums
What you need to know:
A conventional mortgage is a home loan that isn’t guaranteed or insured by the federal government. Conventional mortgages that conform to the requirements set forth by Fannie Mae and Freddie Mac allow down payments as low as 3% for first-time buyers or lower-income home buyers. Unlike FHA loans, conventional loans allow borrowers to eventually cancel their mortgage insurance or avoid mortgage insurance altogether if they put at least 20% down.
VA loans
Best for:
Military, low down payments
What you need to know:
The U.S. Department of Veterans Affairs helps service members, veterans and surviving spouses buy homes. VA loans are especially generous, providing competitive interest rates, often requiring no down payment or mortgage insurance. Although there is no official minimum credit score, most VA-approved lenders require scores of at least 640.
FHA loans
Best for:
Low credit score, low down payments
What you need to know:
This is the go-to program for many first-time home buyers with lower credit scores. The Federal Housing Administration allows down payments as low as 3.5% for those with credit scores of 580 or higher. The FHA will insure loans for borrowers with scores as low as 500 but requires a 10% down payment for a score that low. Mortgage insurance is required for the life of an FHA loan and cannot be canceled.
USDA loans
Best for:
Low down payments, rural
What you need to know:
A USDA home loan is a zero-down-payment mortgage for eligible rural and suburban home buyers. USDA loans are issued by the U.S. Department of Agriculture through the USDA Rural Development Guaranteed Housing Loan Program. There are income limitations, which vary by region. Applicants with credit scores of 640 or higher receive streamlined processing. Those with scores below that must meet more stringent underwriting standards.
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ADOH highlights and eligibility requirements
Arizona's Home Plus mortgage program is designed to help people become homeowners. While first-time home buyers may participate in the Home Plus program, owning real estate now or in the past doesn’t necessarily disqualify you.
» MORE: Tips for first-time home buyers
Highlights
Down payment and closing cost assistance.
Reduced mortgage insurance premiums on conventional mortgages.
Eligibility
Property must be located in Arizona and not exceed purchase price limit.
Borrower must meet income and credit score requirements.
Allows for properties that include new or existing single-family homes, townhomes, condominiums and manufactured homes.
Home buyer education course required.
» MORE: Browse ADOH mortgage lenders
ADOH first-time home buyer loan programs
Home Plus Loan
Best for:
Down payment assistance, closing cost assistance, low mortgage insurance
What you need to know:
This program combines 30-year, fixed-rate mortgages with financial assistance for your down payment or closing costs. Qualified applicants can receive up to 5% of the loan’s principal balance — depending on the mortgage type — in the form of a deferred, no-interest second mortgage. You don’t need to repay this second mortgage unless you sell or refinance the home within the first three years of ownership. Getting a 30-year, fixed-rate loan with less than 20% down typically requires monthly mortgage insurance, but with the Home Plus program, your premiums may be lower than usual. The program works with the government-sponsored enterprises Fannie Mae and Freddie Mac to offer mortgage insurance at a cost that’s lower than what you’ll see outside the Home Plus program.
Pathway to Purchase Down Payment Assistance
Best for:
Down payment assistance, closing cost assistance
What you need to know:
This program combines 30-year, fixed-rate mortgages with assistance for down payment and closing costs for homes in ZIP codes and cities most affected by foreclosures. Qualified applicants can receive up to 10% of the home’s purchase price in the form of a no-interest second mortgage with no monthly payments. Only existing homes are eligible for purchase under this program, and borrowers must live in the home as their primary residence. Income and purchase-price limits apply.
Summary: 2021 ADOH first-time home buyer programs
Home Plus loan with down payment and closing cost assistance, and the possibility of discounted mortgage insurance.
Pathway to Purchase Down Payment Assistance offers loans with down payment and closing cost assistance in targeted ZIP codes and cities.
Now that you’re familiar with the basics of Arizona state home buyer programs and how they work, it’s time to take the next step.
For full details and eligibility requirements of the Home Plus loan program, visit the Home Plus AZ website.
If you think a Home Plus mortgage may be right for you, select from a network of participating lenders throughout the state. These lenders may have additional rules about income limits, credit scores and the types of properties eligible for a Home Plus mortgage, so the only way to know whether you qualify is to contact them.
The state’s Department of Housing website provides details on how the Pathway to Purchase Down Payment Assistance program works, including a breakdown of which ZIP codes and cities are targeted.
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