First-Time Homebuyers Can Benefit from These Loan Programs

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Arizona continues to attract homebuyers with its efficient public transport system, ample job opportunities, scenic views, and mostly sunny weather. The cost of living in the state is reasonable as well.

The median home value in the state is currently at $270,320. Many real estate experts expect this value to rise within the year. Luckily, Arizona offers various mortgage programs to help homebuyers lower the cost. If it’s your first time to buy a house in the state, take note of the following loan programs and their requirements.

  1. FHA Loan

The U.S. Federal Housing Administration (FHA) helps those who don’t have enough to pay for the down payment. FHA lets you pay only 3.5% of a property’s value, but you’ll need a credit score of at least 580. You can still lower the down payment to 10% if your score falls between 500 and 579. FHA loan interests are also lower to help you afford your monthly payments.

You’ll need a debt-to-income ratio below 43%, two or more years of steady employment, and an annual Mortgage Insurance Premium (MIP) to qualify for an FHA loan.

  1. VA Loan

The Department of Veterans Affairs (VA) offers mortgage assistance to active or former military service members and their families. The biggest advantage of VA loans is that they require zero down payment. And unlike an FHA loan, you don’t need a mortgage insurance to apply for this mortgage since the government agency will back a part of your risk.

The VA itself doesn’t impose a credit score requirement for applicants. However, most lenders require a minimum score of 620. You also need to pay a fund fee, which stands at 2.3% for first-time VA loan borrowers.

  1. USDA Loan

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The U.S. Department of Agriculture (USDA) backs mortgages to attract new homebuyers to semi-rural and rural areas throughout the country. As such, you can only get this type of loan if you’re purchasing in a qualified location.

Similar to VA loans, USDA loans typically don’t require down payments. But if you have a low credit score, you may need to pay around 10% of your home’s value upfront. Plus, you can get the privilege of a faster process with a FICO score of 640 or higher. To qualify, make sure you don’t exceed the income limit designated to the location you’re planning to move to.

  1. Home Plus Loan

Lastly, the Arizona Industrial Development Authority (AzIDA) offers the Home Plus program for residents in the state. It’s a three-year fixed mortgage with upfront assistance, which you can use to pay for the down payment or closing costs.

Another advantage of the Home Plus loan is it comes with lowered mortgage insurance premiums if you get it through Freddie Mac or Fannie Mae. Borrowers must meet the score requirement of 640, income limit of $99,170, and complete a homebuyer education course.

Before you even start looking for a property, determine how much you can afford. This way, you can keep your budget-setting and expectations in sync and in check. Research about all your loan options, so you can purchase your ideal home at the best price.

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