What is Down Payment Assistance?
Down Payment Assistance is NOT a gift. Buyers to consult with their tax preparer or financial planner on individual matters related to potential or future tax obligations.
Down Payment Assistance is made available through generous grants and donations from the County of Maricopa and The Bruce and Diane Halle Foundation for first time home buyers with household incomes between 80 – 120% Area Median Income (AMI).
Also called DPA, is like a special loan that helps you with the initial costs of buying a home. It’s a soft second loan that is added to your main home loan. This extra loan helps you reduce the amount you need to pay upfront for the down payment, which makes your monthly payments more manageable. Under this program, your monthly mortgage payment including taxes, insurance and HOA fees cannot exceed 33% of your monthly income.
Buyers meeting the eligibility requirements can qualify for between $78,000 – $103,000 in down payment assistance.
How the Assistance Loan Works
This is a 0% interest, $0.00 payment forgivable loan, which means you might not have to pay it back.
The loan balance is reduced by 10% each year beginning year 1. The amount you have to repay if you sell early gets smaller each year until it is fully forgiven at year 10.
If you sell the house before 10 years and profit, you’ll need to repay the balance amount of the DPA loan. You keep the gains made in the form of forgiveness for each year you occupy the home.
If you are forced to relocate or sell in a down market for less than what you paid, you will not be responsible for paying back the difference.
Who is Eligible?
To be considered eligible, a household must earn at least $62,880 (80% AMI), but less than $89,000 annually to qualify for a 5.5% mortgage program, be a first-time homebuyer, which means not owned a home in the last three years, the home is to be used as primary residence and not as an investment or a second home.
You must be able to contribute a minimum of your own funds toward the down payment.
- If your income qualifies you for the 80% Area Median Income (AMI) level, you need to contribute at least $3,000.
- If your income qualifies for the 120% AMI level, you need to contribute at least $5,000.
You must also be able to qualify for a mortgage with a debt-to-income (DTI) ratio that is not more than 43%. This means that your total monthly debt payments, including your new mortgage, should not be more than 43% of your gross monthly income.
Note:
- An individual earning $62,880 cannot exceed $525. per mo. in credit/debt pmts. (1236 Plan)
- An individual earning $71,760 cannot exceed $750. per mo. in credit/debt pmts. (1337 Plan)
- An individual earning $80,880 cannot exceed $950. per mo. in credit/debt pmts. (1607 Plan)
