The Bankrate promise
At Bankrate we strive to help you make smarter financial decisions. While we adhere to strict , this post may contain references to products from our partners. Here's an explanation for .
Buying your first home can be an exciting yet expensive process, especially if that home is in Arizona. Fortunately, there are easy trails that can lead to owning a home in the sun-drenched state. Whether you’re looking in Phoenix, Flagstaff, Sedona or somewhere in between, consider these first-time homebuyer assistance programs.
Arizona first-time homebuyer loan programs
The Arizona Industrial Development Authority (AzIDA)’s HOME+PLUS program offers a 30-year fixed-rate mortgage coupled with down payment assistance up to 5 percent of your loan principal. The first mortgage can be a conventional, FHA, VA or USDA loan, and can come with reduced mortgage insurance to help keep your monthly payments low.
HOME+PLUS is available to both first-time homebuyers and those who have owned a home before.
The program’s down payment assistance is a no-payment second loan forgivable after three years, unless you sell the home or refinance the first mortgage before that time is up. The loan doesn’t require a separate application; when you work with an approved mortgage lender and apply for the compatible first mortgage, you’ll automatically be considered for assistance.
Here’s a rundown of the requirements you’ll need to satisfy:
- 640 minimum credit score; 680 if you’re buying a manufactured home
- Maximum 45 percent to 50 percent debt-to-income (DTI) ratio, depending on loan type
- Annual income under $126,351
- Must complete homebuyer education course
- Must be buying a single- or two-family home, condominium, townhome or manufactured home in Arizona
- Must using the home as a primary residence
Arizona down payment assistance
In addition to the HOME+PLUS down payment assistance option, there are other programs throughout the state to help you cover the down payment and closing costs.
Home in Five Advantage Program
The Maricopa County Industrial Development Authority (MCIDA) and Phoenix IDA offer the Home in Five Advantage Program to help low- to moderate-income families afford a home in Maricopa County. Through the program, borrowers can obtain a 30-year fixed-rate conventional, FHA or VA loan and a three-year forgivable second loan to be used for a down payment and closing costs. You are not required to repay the second loan unless you sell your home or refinance the first loan within the first three years.
To qualify, you’ll need:
- A 640 minimum credit score
- An Annual income under $138,600
- No more than a 50 percent DTI ratio
- A completed homebuyer education course
- To be buying a single-family home, condominium or townhome in Maricopa County
- To use the home as your primary residence
- To move in within 60 days of closing
The Home in Five Advantage Program also offers an additional 1 percent in down payment and closing cost assistance to the following:
- Qualified U.S. military personnel and veterans
- First responders
- Borrowers earning less than $49,500 per year
In addition, the program’s BOOST component can help get you an additional 0.5 percent of down payment assistance if you’re buying in a designated low-income neighborhood.
Tucson and Pima County down payment assistance
This local down payment assistance program is for first-time homebuyers purchasing in Tucson or Pima County and offers up to 20 percent of the purchase price, provided you can contribute at least $1,000 and your income doesn’t exceed a certain amount. You’ll also need to complete homebuyer counseling. The maximum purchase price for an existing home is currently $302,100, and for new construction, $358,835.
Other first-time homebuyer loan programs
If you’re an Arizona first-time homebuyer or veteran or buying in a targeted area, you might be able to lower your tax bill via a mortgage credit certificate (MCC). An MCC allows you to claim your mortgage interest as a federal tax credit, up to $2,000 per year. You’ll need to be within income and purchase price limits, which vary based on household size and buying location. The program costs $500 upfront, then $100 annually to renew.
In addition to Arizona state homebuying programs, consider any of the nationally available first-time homebuyer loan programs, such as:
- FHA loans – If you have a lower credit score or limited savings, consider an FHA loan. These loans are widely available, have a minimum credit score of 580 and require a down payment as little as 3.5 percent.
- VA loans – If you’re a member of the military or veteran, you could qualify for a VA loan, which doesn’t require a down payment.
- USDA loans – USDA loans don’t have a down payment requirement, but are only available to borrowers buying in a USDA-eligible rural area. You typically need a credit score of 640 or higher to qualify.
- Good Neighbor Next Door program – This HUD program has a very low down payment requirement on homes in certain areas, coupled with the ability to save 50 percent on the purchase price.
Now that you know some options available to first-time homebuyers in Arizona, you’re ready to get started with your home purchase. Here are some next steps:
- Do your homework. The Arizona Industrial Development Authority provides a list of mortgage lenders who can help you throughout the process. You can also browse lenders outside of Arizona housing agency partners on Bankrate.
- Work on your credit score. It’s the most important factor in determining your mortgage rate, so focus on boosting your number.
- Compare lenders. Regardless of which program you choose, it’s important to shop around for mortgage offers. Interest rates are always changing, so if you find a rate that’s especially competitive, be sure to lock it in.