Buying a home in Arizona takes a well-funded account. Unfortunately, not all people qualify for home mortgages, and this is owing to low incomes. The low-income earners are not able to raise the 20% down payment to qualify for a mortgage.

Are you thinking of buying a house in Arizona but worried about your low income? Luckily, a number of Arizona home buying programs cater to those earning low incomes. In this post, we review the top Arizona home buying programs suitable for low-income earners.

1. The USDA Home Loan

If you earn a low income, chances are that you are interested in Arizona home buying programs that require zero percent down. The good news is that you may apply for the USDA home loan so long as you qualify.

The U.S Department of Agriculture backs the USDA home loan, and it is part of the Rural Development Guaranteed Housing Loan Programs. The USDA home loan is available to homebuyers with a low to average income and provides up to 100% financing. Another advantage of the USDA home loan is that the applicants enjoy a reduced mortgage insurance premium.

However, the USDA home loan has strict qualification criteria. Here are some of the requirements you need to fulfill to qualify for the USDA home loan.

1. Meet the applicable income limit to qualify for the home loan guarantee. This varies from one location to another. Therefore, check the loan guarantee income limit applicable to your region, to find out if you qualify for the USDA loan.
2. The USDA home loan is available only to those looking to fund the owner-occupied primary residences.
3. Only U.S. Citizens (or persons with permanent residency) are allowed to apply for the USDA home loan
4. Have a credit score of above 680 or debt payments not exceeding 41% of your income.

Note that applicants with a credit score of 640 or higher enjoy a streamlined loan processing. However, if the credit score is below 640, the applicant is subjected to a more stringent underwriting process. In addition, if an applicant lacks a credit history or has a limited credit history, he or she may qualify for the nontraditional credit references.

Lastly, it is important to note that there are up to three USDA loan programs. The three USDA home loan programs are:

Loan guarantees: The USDA guarantees home buying loans issued by the eligible or participating local lender. This kind of arrangement allows low-income earners to enjoy low mortgage interest rates and zero down payment on mortgages. However, you have to pay mortgage insurance if you opt to put a low or zero down payment.

The Direct USDA Home Loan: This is issued directly by the USDA and the mortgages are for the low and very-low-income applicants. However, the income threshold to qualify for the direct USDA loan varies from one region to another.

Home Improvement Loans and Grants: these are USDA grants meant to enable low-income earners to repair or renovate their existing homes.

Therefore, you understand how the USDA home loans works, and the eligibility criteria. Now let us shift to the optional Arizona home buying programs for low-income earners.

The FHA Home Loan

Second, on our overview of the Arizona home buying programs for low-income earners, we have the Federal Housing Administration Loan. This is a home loan program designed to enable low to moderate-income borrowers to achieve the American dream of buying a house in Arizona.

The FHA loans require a 3.5% down payment to qualify. Moreover, the home loan features less stressful requirements when it comes to credit score. To that end, mortgage borrowers with a poor or low credit score but can raise just 3.5% down payment will qualify for this home buying program.

FHA Home Loan Qualification Criteria

• Have a FICO score of 500 to 579 and a 10% down payment or a FICO of 580 or higher with 3.5% down payment
• Ensure a verifiable employment history for not less than two years
• Ensure the loan is to be used to fund the purchase of a primary residence
• The income debt ratio does not exceed 31 percent of your gross monthly income

Compared to the conventional home mortgage, the FHA home loan provides more lenient loan application requirements.

The VA Home Loans

Lastly, in our overview of the Arizona home buying programs suitable for low-income earners, we have the VA home loan. This is a home buying program dedicated to service members, the veterans, and the eligible surviving spouses.

The VA home loan is available through eligible lenders like the private banks and the mortgage companies. Unlike the USDA and FHA home loans, the VA does not set a minimum credit score for VA eligibility.  However, some mortgage lenders do set credit score requirements, which vary from one lender to another.

Another reason to consider the VA loan is that eligible homebuyers are not expected to have a down payment, which is often the greatest barrier. In addition, the VA loan does not require payment of the mortgage insurance premiums.

Are you hoping to buy a property, but your low income, is becoming a major hindrance? Take advantage of the Arizona home buying programs we have looked at herein. The application procedure is simple so long as you meet the eligibility criteria.