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First-time buyers

by Debra Gelbart on May 2, 2016

If you’re a first-time homebuyer — and in the eyes of lenders that’s generally anyone who hasn’t owned a home in the past three years — or someone about to buy a home who owns no other real estate, there are multiple opportunities in Maricopa County for help with your down-payment including programs sponsored by the Arizona Department of Housing and the Industrial Development Authority of both Maricopa County and the City of Phoenix.

“Down-payment assistance programs used to require that a buyer be first-time,” said Jason Servais, a home loan consultant with On Q Financial, a private mortgage bank in Scottsdale. “But now most programs require only that you don’t own any other real estate.”

Credit qualifications

All buyers need to be cautious about how much debt they take on when purchasing a new home, advised Matthew Primrose, vice president and division manager for Universal American Mortgage Company (UAMC), the financial services subsidiary of the Lennar Corporation, which builds Lennar homes.

 “You may qualify for a loan of a certain value,” Primrose said, “but that doesn’t mean you’ll necessarily be comfortable with the monthly payment. So it may be better to plan on not taking out a loan that’s the maximum you can qualify for.” 

Primrose suggests sitting down with a lender ahead of time to find out the loan amount you can qualify for, what your FICO (credit) score is and how much of a monthly loan payment you can easily manage. Most mortgage companies require a minimum FICO score to qualify for any loan; generally, the higher your score (it ranges from 300 to 850), the lower your interest rate.

Demographics vary

A variety of demographics fit the first-time profile. 

“Surprisingly, it’s not just couples, but singles both with and without kids,” said Dennis Webb, vice president of operations for Fulton Homes. “They tend to be educated and older than previous first-time buyers. Their incomes generally are between $40,000 and $100,000 per year.”

Sometimes, a condominium or a townhome may be the most appropriate purchase for a first-time homebuyer.

“Condos and townhomes tend to have a great sense of community and opportunities to interact with neighbors and often have superior amenities to a typical single-family home community,” said Keith Mishkin, owner of Cambridge Properties in Phoenix. 

Incentives and education

“We have two unique communities that fit the first-time homebuyer perfectly,” said Stephanie Derendal of Woodside Homes. Located in Phoenix and Gilbert, the homes range from 1,400 to 2,400 square-feet, she said. “There are multiple options and design alternatives available to fit the needs and expectations of today’s active families,” she added.

Mattamy Homes offers incentives to buyers such as options packages and paying a portion of the closing costs, said Nicole Stanton, director of marketing for the Phoenix division of Mattamy Homes. Mattamy Home Funding LLC offers every borrower the opportunity to enroll in its Able, Ready, Own (ARO) program that helps buyers qualify for the best interest rate and loan terms. “This is not a credit repair program,” Stanton said. “Our service is a complimentary qualification improvement program.”

Meanwhile, Webb said that they will tailor incentives based on what the first-time homebuyer needs.

“For example, if they are coming out of an apartment, we will offer a washer, dryer and refrigerator as part of the incentive package,” he said. “If a cash down-payment is an issue, we will pay a certain amount of closing costs.”

“We’ll apply two percent of the purchase price of the home toward closing costs,” said Mike Dowell, vice president of sales and marketing for Lennar. Lennar’s mortgage company subsidiary, UAMC, also offers the Home Buyer Solution Group which educates prospective buyers with credit challenges about how to improve their credit profile to qualify for a home loan.

“Between 75 and 90 people graduate from that program every year and are then able to qualify for a mortgage,” Dowell said. Enrollment in the program is free and does not require attendees to purchase a Lennar home. 

Meritage Homes strives to provide “as much of a turnkey home as possible,” said Jamie McAndrew, Phoenix division vice president of sales for the company.

The builder includes items in a new home that the buyer typically would purchase after closing, McAndrew said, such as a washer/dryer, refrigerator, landscaping and window coverings. Paid closing costs also are part of an incentive package, he said. “The goal is to provide a beautiful home with as little out-of-pocket expense as possible for the first-time buyer,” he added.

Concerns and rewards

Builders’ representatives and mortgage experts agree that first-time buyers especially are concerned about financing their purchase. Many want to know “what initial steps they need to take to qualify for a loan,” Servais (of On Q Financial) said. “They also want to know how much money they’ll need to pay out-of-pocket costs and what their monthly payment likely will be.”

The process of buying a first home can be overwhelming but also rewarding, builders’ representatives say.

Indeed, McAndrew said buyers are surprised by “how much easier it is to own a home and how much they can afford, compared to how much rent they have been paying in the past.”

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