It’s unfortunate, but true: Many Americans don’t have a lot of money. Even so, quite a few renters want to buy a home. The problem is that they think their dream of home ownership is out of their reach. Enter the Home in Five Program.
The Home in Five Program is a City of Phoenix program wherein qualified home buyers can receive 5% of the original loan amount to cover their down payment and closing costs.
For a home priced at $100,000, that’s $5,000 in down payment and closing cost assistance that the borrower is normally responsible for.
The best part is it doesn’t ever have to be paid back.
Eligibility requirements are as follows:
- Available to only 30-year FHA, VA, and USDA-RD loans
- Home must be located within Maricopa County
- Purchase price cannot exceed $300,000
- Home must be professionally inspected
- Home must be a primary residence
- Minimum FICO credit score of 640
- Maximum debt-to-income ratio (percentage of monthly income that goes toward paying debts) of 45 percent
- Borrower income cannot exceed $90,000
- All buyers must attend an eight-hour home buyer education course plus obtain a certificate of completion.
Be advised that just because you meet the requirements doesn’t necessarily mean it’s the best option for you. Here’s some things to thinks about:
1. There’s a 2% administrative fee the program charges to each borrower. So the 5% grant, in actuality, is only a 3%. But, hey, that’s better than nothing.
2. Because the minimum down payment for an FHA loan is 3.5%, the borrower is responsible for the remaining ½% plus the closing costs, which can be up to 3% of the total loan amount. This amount can be alleviated if Seller agrees to pay Buyer closing costs.
3. While the program is helpful in the beginning, borrowers will have slightly higher monthly payments than those obtaining traditional FHA and conventional mortgages. This is due to the Home in Five program’s higher interest rates.
4. Buyers can expect a 45-day escrow instead of the normal 30 days.
All things considered, the choice boils down to the individual. Ask yourself: 1) Do I want 3% of my original loan amount for free? 2) Do I want to continue renting? 3) Is it more important to have less money up front or lower monthly payments?
For more information on the Home in Five Program, talk to your mortgage lender or visit http://www.downpaymentassistancearizona.com/home-in-5-program/.
Jana Haren, Realtor
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