If you talk to young people about purchasing a home one of the first questions they have is, "what do I need for a down payment?" Well, here in Arizona there are a number of Down Payment Assistance programs available to consumers. Towards the end of 2015 the AZ Housing Finance Authority introduced "Pathway to Purchase" to go along with the already established "Home in 5" and "Home Plus" programs. However, unlike the other two programs Pathway was not going to last forever. The funding came from leftover hardest hit fund monies and once it was used up it was gone forever. The idea behind the program was to help areas throughout Arizona that have been slower to recover versus the national average. 17 cities within the state were identified as eligible. Although the program got off to a slow start, mostly due to failure of lenders to educate their agent partners and the general public, it took off and took off quickly. The Housing Finance Authority expected funds to be available through the end of 2017 but as of April 18th the funds have been exhausted.
So the question now is, for potential buyers in the 17 cities served by Pathway to Purchase, what options do they have? Well in cities such as Goodyear, Buckeye, Avondale, Laveen, and El Mirage the Maricopa County Home in 5 program is an option. Home Plus is available in those cities as well but is also available in all areas of Arizona with the exception of Pima County. Individual cities have their own programs as well, such as City of Phoenix Open Doors.
So how does a buyer know which program to choose? Well, let's hope whatever lender they are working with is knowledgable in all of the availabe programs and presents the pluses and minuses of each one to the home buyer. These programs are certainly not one size fits all as they all have different advantages and disadvantages. For example, Home Plus and Home in 5 not only have higher income limits than other down payment assistance options, but also don't require lenders to count all of the household income. So if grandma is living with you her social security check isn't taken into consideration. Other programs, such as Neighborhood Stabilization, Wish Program, and Open Doors do require all household income to be considered but typically the buyer that is eligible for these programs is able to obtain a loan at market rate whereas Home in 5 and Home Plus charge an interest rate premium. This is how they are able to continually fund the programs. Home Plus and Home in 5 are true grants that don't require repayment if the home is sold within X amount of time, whereas many of the other programs require 5, 10, or more years in the house before the assistance is forgiven.
There are many other nuances within all of these assistance programs. If you or a client are interested in obtaining down payment assistance to secure a home you want to be sure your lender knows what is available and can guide (not steer) the buyer into the best program for them based on their short and long term goals. If you're not sure your lender is able to do that I'm happy to help. Miket@cnnmortgage.com or 480-840-4483
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