Many people here in the Valley are starting to ask about the “New FHA loan program with only a 1% down payment”.

The good news is that there is a new program that is available that new home buyers can advantage of that will allow only a 1% down payment for an FHA loan. The FHA loan requirements haven’t changed – they still require a 3.5% down payment, but this new program allows people to use government money to pay for 2.5% of the 3.5% down payment requirement – effectively leaving only 1% that a new home buyer must put down.

The new program is called the Neighborhood Stabilization Program – and it even gets better than just having to put 1% down!

Here are just a few of the important details regarding the Neighborhood Stabilization 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.

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 Purchase Price Limits:

Neighborhood Stabilization Program Income Limits:

In order to qualify for the program, 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.

Income Limits For Maricopa County:

Neighborhood Stabilization Program: Too Good To Be True?

1. Up to 22 percent of purchase price
2. 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
3. All loans are zero percent interest with no monthly payment.
4. The balance of the loan is forgiven at the completion of the term.

My Thoughts On The Neighborhood Stabilization Program

This program is very new (I think there have been a total of 6 of these transactions done in Arizona so far) but from everything that I can tell, it is a very “real” program. There is money available, the steps to getting the money are fairly clear and there is plenty of housing inventory right now. Unlike some (many?) of the government programs announced in the last few years, the NSP program actually will help people get into homes and in my best estimation, will actually help *stabilize* neighborhoods.

So for anyone out there who gets excited about the 8000 tax credit , just wait until they find out about the fact that they could get up to 22% of the purchase price of their home given to them as an incentive to move in and live in a home… it almost gets us back to the “good times”!