So you’ve decided that you want to buy a home in Phoenix, AZ. Besides the many advantages to living in the Valley, interest rates reaching all-time lows coupled with the recent plunge in home prices make Phoenix a very affordable and attractive option. Nowadays, it is actually cheaper to purchase a home in the Phoenix area than rent. The only down side to this scenario is that you’re short on cash for a down payment. Unfortunately, you cannot get a gift from your family, you’ve already tapped out your 401K, you are not eligible for a VA loan, you make too much money to qualify for down payment assistance, and you have no desire to live in a rural area. So, the question is….. What can you do without a down payment??? Meet the qualifications for the $100 Down Payment HUD Home Program.
Let’s take a trip back in time and describe why the availability to finance a home with the $100 Down Payment HUD Home Program arose. During the housing boom, many of the homes in Phoenix were financed with Conventional loans. Prior to the run-up in home prices, many first-time homebuyers used FHA loans to purchase housing. Once home prices started rising at unsustainable levels; homeowners began to refinance their FHA loans into Conventional loans to pull cash out, remove mortgage insurance, and lower their monthly obligations. Once these homes, now with Conventional financing, went into foreclosure, the banks began to sell their inventory at a discounted price. At the beginning of 2007, many of the new homebuyers were forced to use a FHA loan due to inability to finance their purchases with Conventional mortgages in Phoenix. These homebuyers were unknowingly still buying homes at inflated home prices. Sadly, many of these homes purchased in 2007 and 2008 with FHA loans are currently going into foreclosure. In most cases, the current values of these homes are significantly less than what is owed. The $100 Down Payment HUD Home Program is a result of a FHA borrower foreclosing and HUD repossessing the home that is now for sale.
So Who Qualifies?
|Owner Occupancy||Primary Residence|
|Maximum Loan Amount||$346,250 for One-Family Home – Maricopa County|
|Loan Types||FHA Fixed Rate 30 year, FHA Fixed Rate 15 year, FHA 5/1 Adjustable Rate Mortgage|
|Income||Take 45% of your gross monthly income and subtract your monthly debts listed on your credit report. Your monthly payment shouldn’t exceed the remaining balance after your debts are subtracted.|
|Reserves||There is no reserves requirement for the program|
|Property Types||Single Family Residences, Townhomes, Planned Unit Development homes, and Condos|
|Credit Score||Middle credit score of 620 or higherMinimum 24 months since discharge of any bankruptcies; 36 months since any foreclosure|
|Eligibility||All borrowers must have a valid social security number. Income borrowers must demonstrate 2 years of employment history, school transcripts are usually acceptable.|
|Closing Costs||Standard closing costs will apply but HUD will pay up to 3% of the sales price toward the buyers closing costs and prepaid items|
|Mortgage Insurance||FHA mortgage insurance is required on all loans|
Now that you’ve been able to determine you may be able to qualify, here is an outline of the next steps you need to take.
Step 1 — Get pre-qualified for the $100 downpayment HUD Homes Program
Step 2 — Choose search area and type of home (i.e. North Phoenix – 3 bedroom, 2 bath with 1,500 square feet or more)
Step 3 — Create a login and password at our customized database to search homes
Step 4 — Contact us to match you with one of our Realtor partners that can assist you with viewing the homes you are intrested in. Please note, not all Realtors are trained and educated for HUD homes. It’s very important to work with one of our preferred partners that has experience with HUD homes.
Step 5 — Submit an offer, get acceptance and go through the loan process.
Step 6 — Close on your purchase using an FHA-insured loan.
It can be a very simple process but the first step is to get pre-qualified.Questions? Contact David Krushinsky Today!