Arizona Home Buying
Real Estate Law

What You Should Know About Arizona Home Buying Programs

Buying a home in Arizona for the first time can feel downright scary! How do you find the right home? How do you choose the right Arizona home buying programs? How much down payment do I need when buying a house in Arizona? Well, this is just a fraction of the questions that may come to your mind.

When it comes to evaluating Arizona home buying programs, there is much more to have in mind than meets the eye. In this post, we review what you need to know about the different Arizona home buying programs.

FHA, USDA and VA loans Have more Lenient Qualification Requirements

Did you know that it is easier to qualify for the FHA home loan than for a conventional home loan? The FHA, USDA, and VA are some of the Arizona home buying programs providing borrowers more lenient qualification criteria.

Let us analyze what is required to qualify for each of these friendlier home-buying programs:

Requirements to qualify for FHA Loan

  • A Credit Score of 500 or higher
  • A Debt to income ratio of 50% or less
  • Raise up to 3.5 percent minimum down payment
  • The property meets the FHA imposed property requirements and it is your primary residence.

Requirements for the USDA Home Loan:

  • A Citizen of the USA with Permanent Residence
  • A credit score of at least 640
  • Show proof of stable and dependable income
  • Be willing to repay the mortgage
  • Property serves as a permanent residence and located in a qualified rural area

Requirements for VA home loan

  • You have served for a minimum number of days either during wartime, peacetime,
  • You are a surviving spouse to a service member who died in the line of duty
  • Applying through VA approved lender
  • No minimum credit score

As illustrated above, the VA, USDA, and FHA home loans have lenient application requirements compared to conventional home loans.

Only VA Home Loan Does not Require Mortgage Insurance

The FHA home loan and USDA home loan require that the borrowers pay mortgage insurance. The Conventional home loan does not come with the requirement to pay mortgage insurance so long as the borrower has paid the 20% down payment. On the other side, the VA home loan does not require payment of mortgage insurance.

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Mortgage insurance is an insurance cover that protects the mortgage lender in case the mortgage borrower defaults on the payments, dies or otherwise becomes unable to meet the contractual obligations.

Arizona Home Buying Programs Protect Borrowers With Bad Credit

If you are a first-time homebuyer with a bad credit score, the Arizona home buying programs await your application. This means that hundreds of new borrowers can proceed to pursue their dream of buying a home in Arizona. These different home-buying programs started as a measure for catering for people with poor or low credit score, while others came about as welfare programs for persons meeting the strict criteria.

Not All Arizona Mortgage Lenders Offer All Home Buying Programs

Before you have started the process of applying for a particular home buying program, find out the mortgage lenders licensed to provide the mortgage. Remember that only conventional loans are available from nearly all the mortgage lenders in Arizona. You may find out whether your preferred mortgage lender offers the home buying program you are interested in from their website. Finding out the mortgage lenders who provide the credit helps to save time and resources.

Even the Eligible Mortgage Lenders Have Different Qualification Criteria

Mortgage borrowers need to be aware of the qualification criteria issued by the mortgage lender they choose to work with. Although respective departments back the different home buying programs explained above, mortgage lenders have a criteria to guide them when lending. In that regard, you may find that a certain mortgage lender restricting FHA loan to applicants with a high credit score, compared to other mortgage lenders.  It is upon the borrower to research and find out the credit score and other requirements before applying for a mortgage. The objective is to find the mortgage lender providing lower mortgage rates and favorable terms for the home buying mortgage.

Get Prequalified Before Starting the House Search

Buying a house in Arizona is certainly a dream come true! However, to help you choose the appropriate property, it is necessary you seek mortgage prequalification first. Talk to a mortgage lender near you and ask for qualification before you have started the search. The mortgage prequalification is meant to make sure you are purchasing the right home and within the budget.

The different home buying programs in Arizona started as an initiative to help improve homeownership. Through these programs, homebuyers can afford a property of their dream even when they do not qualify for conventional home loans.