Many people have been asking me lately about the “1% down payment program” that is supposedly new and asking me for details.
I have some good news — there is a new program that is available where people can buy a home with an FHA loan and only put 1% down.
No, FHA requirements haven’t changed – but the new program allows this to happen under certain conditions. And wait – there is more! The program is much more than just the 1% down payment program.
Neighborhood Stabilization Program Highlights:
- If you own a residence, you must be leasing your primary residence at least 12 months before applying for the program.
- You must use us a lender from the ADOH participating lender list.
- You must attend and complete an eight‐hour Homebuyer Education Class provided by one of the ADOH participating homebuyer counseling agencies. (A list will be provided by your lender once you begin the process.)
- The property you purchase must be your primary residence.
- You must have a maximum debt‐to‐income ratio of 31/43.
- You must be AUS approved eligible.
- You must have two months PITI reserves.
- You can use any type of financing with the NSP program – including paying cash. That means you can still get up to 22% of the purchase price even if you pay cash for the house.
- You must be approved and have your paperwork completed for the program prior to submitting an offer on a house. (This means you are going to want to contact a loan officer who knows about the program as soon as possible in the process).
National Stabilization Program: 1% Down Payment?
A minimum of 3 percent of the property purchase price is required as down payment. One percent must come from the borrower’s own funds. Two percent can come from any other approved source.
National Stabilization Program: How Much Money Can You Get?
- Up to 22 percent of purchase price
- All loans are forgivable after a period of time based on the amount of the loan. * 5 years for assistance of $15,000 or less * 10 years for assistance of $15,001‐$40,000 * 15 years for assistance of more than $40,000
- All loans are zero percent interest with no monthly payment.
- The balance of the loan is forgiven at the completion of the term.
Neighborhood Stabilization Eligible Property Types:
- Foreclosed properties only. A property is considered “foreclosed upon” at the point that the mortgage or tax foreclosure is complete.
- One‐unit detached single family homes, condos and townhomes.
- The property must be vacant at time of listing.
Neighborhood Stabilization Program Income Limits:
In order to qualify for the Neighborhood Stabilization Program in any county in Arizona, you must have a gross income (the total income before taxes, health care costs, social security, etc.) of no more than 120 percent of the average median income for the county they want to purchase a foreclosed house in. Here are the limits for Maricopa County:
My Opinion On The Neighborhood Stabilization Program
Whether or not this program should exist is not the question in my mind — I have almost quit having an opinion about whether or not something like this should exist.
But what I can say is that the program is very real — meaning this program isn’t one of those programs that the government announces that really doesn’t exist and that there are too many “catches” where it narrows it down to where no one qualifies.
This program is very “real” and is generating a lot of excitement. The real bottom line is basically that if you are buying a foreclosed property and meet the guidelines – AND – plan on living in the home, then this program is easy to take advantage of.
With as much excitement as the 8000 tax credit has generated, I would think this will generate just as much once people get the word that free money is real and available.
Arizona Mortgage Rates July 20, 2009
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