Mortgage

Arizona First Time Residence Consumers: 2021 Applications and Grants

What You Should Know About Buying a Home in Arizona

First-time home buyers in Arizona, like much of the nation, are facing rapidly rising home prices. That can make saving up for a down payment seem like a challenge.

But there is also good news. Arizona has some generous down payment support programs that can help bridge the gap between your savings and your down payment and closing costs needs.

And there is other support in the state too. From dedicated mortgage programs to homebuyer training and advice, Arizona offers much to help you get the keys to your own doorstep.

Check Your Eligibility to Buy a Home in Arizona. Start here (1.11.2021)

In this article (continue to …)

Arizona Home Buyers Summary

The average home sales price in Arizona was $ 306,860 in August 2021, according to Arizona Realtors. This corresponds to an increase of 23.7% compared to the previous year.

Unfortunately, at the time of this writing, there has been little evidence that the property market is cooling off. And the number of listed houses continued to decline.

However, things could change if the copper state follows statewide trends that show fewer buyers are chasing more homes. Let's hope this helps first time home buyers in Arizona.

Arizona Home Buyers Summary

Average home sale price in Arizona
$ 306,860

Minimum deposit in Arizona (3%)
$ 9,200

20% deposit in Arizona
$ 61,370

Average Arizona Credit Score1
706

Maximum Grant for Arizona Home Buyers2
Loans of up to 10% of the purchase price in Pima County, including Tucson

Down payment amounts are based on the last available average home sale price in the state. A “minimum” down payment is assumed to be 3% less than a conventional mortgage with a minimum credit rating of 620.

If you are eligible for a VA loan (supported by the Department of Veterans Affairs) or a USDA loan (supported by the U.S. Department of Agriculture), you may not need a down payment at all.

Check Your Eligibility to Buy a Home in Arizona. Start here (1.11.2021)

Initial Loans For Home Buyers In Arizona

First time home buyers with a 20% down payment in the state of Arizona can obtain a conventional loan at a low interest rate. And they'd never have to pay for personal mortgage insurance (PMI).

Of course, only a few first-time buyers have saved enough for 20 percent. But the good news is you don't need that much. By far not.

Borrowers can often move into a new home as little as 3% or even 0% with one of these low down payment mortgage programs:

Conventional 97 – From Freddie Mac or Fannie Mae. 3% down payment and at least 620 credits. You can usually stop paying mortgage insurance after a few yearsFHA loans – Supported by the Federal Housing Administration. Down 3.5% and a credit score of at least 580. But you're usually on the hook for mortgage insurance until you refinance, move to another type of mortgage, or pay off your loanVA loan – For veterans, active service members, reservists and the National Guard only. A zero deposit is required. The minimum credit score varies by lender, but is often 620. No ongoing mortgage insurance upon completion. These are arguably the best mortgages available. So apply when you are eligibleUSDA loan – For low to middle income people who shop in designated rural areas. Zero deposit required. The creditworthiness requirements vary depending on the lender, but often 640. Low mortgage insurance ratesHome Plus AZ – May include competitive interest rate and mortgage insurance package and can be used with down payment assistance. More information below

Note that most of these programs require you to purchase a primary residence. This is a home that you will live in full time, not a vacation home or investment.

However, depending on the type of loan you choose, you may be able to move into your new home with minimal cash.

With these programs, you can even use free cash or Down Payment Assistance (DPA) to help cover down payment and closing costs.

If you are unsure which program to choose for your first mortgage loan, your lender can help you find the right deal based on your finances and your home purchase goals.

Find the First-Time Buyer Loan that is Best for You (Nov 1st, 2021)

First time home buyer in Arizona

The Arizona Industrial Development Authority manages Home Plus AZ, a mortgage program open to first-time home buyers in Arizona across the state.

You must select a lender from an approved list and complete a homebuyer training course, but these are common requirements for such programs. As well as income limits that exclude those with high household incomes (over $ 112,785 for most loans) from participating.

Compared to other mortgage programs, Home Plus AZ allows you to pay a slightly higher mortgage rate. However, this is usually counteracted by the lower mortgage insurance premiums offered.

Check the annual percentage rate (APR) of your loan estimate to see what you will actually pay and compare it to the loan estimates you receive from other lenders outside the program.

Home Plus AZ's minimum credit scores are higher (starting at 640), which is slightly stricter than the 620 minimum for Fannie Mae and Freddie Mac mortgages – and much worse than the 580 minimum for FHA loans. So you may need to look elsewhere if your score is an issue. Further information can be found on the Home Plus AZ homepage and the FAQs.

So far, Home Plus AZ doesn't sound that exciting. So why continue research? Well, because there is a great deposit assistance program out there that we're going to hit next …

Grants for First Time Home Buyers in Arizona

Home Plus AZ does not give any grants. But it offers interest-free, forgivable loans with a term of just three years. Depending on the type of mortgage you have chosen and your personal circumstances, you can borrow up to 5% of the purchase price of your home.

These loans do not require any monthly payments. And your loan balance will be reduced by 1/36 of the amount you borrowed each month. So after three years you owe nothing.

However, be aware that if you sell within this time, you will have to pay back the portion of your original debt that is still outstanding. And refinancing within this time could also require repayment. Still, three years is a short time.

Home Plus AZ may not be the only homebuyer utility in your city or county. So check out other local deposit support programs in case one of them suits you better.

Below is a list of city programs. But do an internet search for "(your city or county) Deposit Assistance" to make sure you don't miss any.

Check Your Eligibility to Buy a Home in Arizona. Start here (1.11.2021)

Buy a home in major Arizona cities

House prices in Phoenix and Mesa are higher than the Arizona average, although Tuscon's are slightly lower. However, the rate at which home prices rose between August 2020 and August 2021 was below the Arizona average. So there is good news and bad news for those looking to shop in a big city.

Phoenix first time home buyers

The average list price in Phoenix was $ 405,000 as of August 2021, according to Realtor.com. That was 9.5% more than in the previous year.

If you want to buy a home at this average price, your down payment options can be between the following options:

$ 12,150 for 3% deposit$ 81,000 for 20% deposit

The city of Phoenix says it is providing down payment assistance to home buyers whose household incomes are no more than 80% of the median income (AMI) of the area they are buying in, as shown on the median annual income table.

However, if more information is available on the city's website, it was buried too deep for us to find. So you should call (602) 262-3111 to ask for details.

Tucson First Time Home Buyers

The average list price in Tucson was $ 299,900 as of August 2021, according to Realtor.com. That was 20% more than in the previous year.

If you want to buy a home at this average price, your down payment options can be between the following options:

$ 9,000 for 3% deposit$ 59,980 for 20% deposit

Tucson City's HOME Down Payment Assistance (DPA) program is administered by Pima County and is available nationwide.

This program offers loans with no monthly payments up to 10% of the purchase price. In fact, it states, "When combined with other approved DPA resources, HOME can cover up to the remaining 20% ​​of the total PMI (private mortgage insurance) removal grant on a conventional loan."

Pima's DPA factsheet states that there is an "affordability" period during which you must repay the loan if you sell the home or transfer your main mortgage (including refinancing). But this otherwise excellent sheet does not state how long this period is, nor whether interest is charged.

You can call the Pima County Housing Center at (520) 724-2471 to fill in the blanks.

Mesa first time home buyer

The average list price in Mesa was $ 393,100 as of August 2021, according to Realtor.com. That was 17.5% more than in the previous year.

If you want to buy a home at this average price, your down payment options can be between the following options:

$ 11,790 for 3% deposit$ 78,620 for 20% deposit

"The City of Mesa Housing and Community Development (HCD) Homeownership Assistance Program (HOA) provides down payments, closure costs and (with exceptions) soft secondary loans for residents of the City of Mesa," the city website states. This link takes you to a comprehensive 51-page guide to the program.

That indicates that the amount you can borrow "may be the minimum amount required to make the purchase viable". And the more time you borrow, the longer the loan will be. So you're free and free after five years borrowing up to $ 15,000. But then there is a sliding scale that goes up to 15 years for those who borrow $ 40,000 and more, and 20 years for new construction and refinancing.

As you can imagine, there are a ton of selection criteria and rules on the 51 pages of the guide. But they are worth working through if you think the program might benefit you.

Where can I find help buying a home in Arizona

All of the organizations listed above should provide free advice to any first-time home buyer in or near Arizona.

In addition to our selections, the US Department of Housing and Urban Development (HUD) provides lists of statewide, regional, and local resources:

State and regional resources for first time home buyers in Arizona

Resources for city and county homebuyers

What Are The Mortgage Rates In Arizona Today?

Here you can see the current mortgage rates in Arizona.

When you're ready to start buying your home, make sure you get personalized interest rate quotes from at least three mortgage lenders.

Don't just look at the advertised prices online; Indeed, apply for pre-approval and compare the interest rates and fees that are offered to you. This is the only way you can be sure that you are getting the best possible offer for your new home loan.

Confirm your new plan (November 1st, 2021)

1 Source: Experian.com 2021 study on 2020 data

2Based on a review of available state DPA grants at the time of this writing

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