NSP Move-In Ready Program

The NSP Move-In Ready Program offers buyers a practical option in their pursuit of a home. These newly improved foreclosed homes meet the HUD Housing Quality Standards, offer energy efficient features and enhanced curb appeal.

The Move-In Ready Program consists of a $15,000 loan to assist with down payment and closing costs to purchase the “Move-In Ready” home.

This interest-free, no monthly payment loan from the city is forgivable and declines over a 15-year timeframe.  If the owner sells the home, refinances or no longer occupies the residence prior to 15 years, the remaining balance will be due.

Buyers who chose this option enjoy the benefits of living in established areas of the city of Phoenix.

NSP Program Guidelines

Q. What is the NSP?

A. The Neighborhood Stabilization Program (NSP) was established for the purpose of stabilizing communities that have suffered from foreclosures and abandonment. Through the purchase and redevelopment of foreclosed and abandoned homes and residential properties, the goal of the program is being realized.

Q. Is Phoenix the only city with the NSP program?

A. No, other cities in Arizona also received NSP funding, however, money obtained from the City of Phoenix must be used in Phoenix.

Q. How many households will qualify for NSP Funds? Is it a lottery?

A. No, it is not a lottery. Through the Home Ownership Assistance Program down payment assistance  is available  for approximately 188 households. Future programs using NSP funds will serve additional households.

Q. Is this program operated on a first come first served basis?

A. Yes.

Q. How long does the process take from start to finish?

A. There are several steps in the process. A potential home buyer will be required to attend a home buyer education session and counseling in order to receive an eight hour home buyer education certificate. Then they must meet the eligibility requirements and find a home that they wish to purchase. Once a purchase contract has been signed, escrow will require a minimum of 45 days.

Q. If I use NSP down payment assistance, will I still be eligible for available federal tax credits?

A. Tax credits are separate from the Neighborhood Stabilization Program. Participation in NSP does not make you ineligible for any available tax credits but you should consult with your tax adviser.

Q. Can I still use the money if I have closed escrow before the program money is available?

A. No.

Q. Who can I contact for more detailed information on buying a new home: loans, inspections, lot taxes, city codes, etc?

A. The NSP program requires all households considering the purchase of a home to complete a home buyer education class offered by a HUD certified counseling agency, which will educate potential home buyers on the buying  process and the responsibilities of ownership. Contact a real estate professional to answer questions about buying a home.

Q. In this program, can a participant purchase a duplex with the intent to occupy one of the units?

A. Yes, a duplex, triplex and fourplex are all eligible for NSP.

Q. Do manufactured homes in parks qualify?

A. Yes, if you can hold title to the land and the improvements. No, if the land is leased.


Homeownership Counseling

Q. Does the eight hour counseling session certificate expire in one year?

A. The Homeownership Assistance Program requires that you be determined eligible to purchase a home within one year of receiving your certificate.

Q. Do any of the counseling agencies refer clients to realtors?

A. All counseling agencies strongly encourage families to secure the services of a real estate professional, however, most do not provide referrals.

Q. What resources should we use to find foreclosed homes?

A.  A real estate professional will be in the best position to identify foreclosed homes.

Q. Does this program add time to the closing date?

A. It may. We suggest planning for a 45 day close.

Q. Can I complete the eight hour counseling at any location?

A. You can complete the eight hour homebuyer education  requirement with any HUD certified counseling agency, however, the two hour credit assessment mjst be completed by one of the city’s four counseling agency partners: Chicanos Por La Causa, Community Housing Resources of Arizona, Greater Phoenix Urban League or Neighborhood Housing Services of Phoenix.

Q. Are there fees for the counseling? I heard that one of the agencies is charging.

A. Neighborhood Housing Services of Phoenix charges $50 for the homebuyer education class, however, that fee is returned if the participant purchases a home. At this time, we are not aware of other agencies charging a fee.

Q. If you have a good FICO, do you still have to go to the class?

A. Regardless of your credit score, completion of the Homebuyer Education Class, (eight hours), and the two hour credit assessment is a requirement of the Neighborhood Stabilization Program.


Eligibility Criteria

Q. What if I’ve had a bankruptcy and it has been discharged?

A. After completing the homebuyer education class and the credit assessment, the HUD certified counseling agency will be able to advise you about your eligibility for homebuyer assistance. The lender’s credit requirements will dictate your credit worthiness and whether you can qualify for a loan.

Q. Must I sign a purchase offer before a final decision is made about my eligibility for the $15,000 loan?

A. Yes, because both the  buyer and the property must be determined to be eligible.

Q. I just put an offer on a house and it will close soon. Could I still qualify for the $15,000 if the money is not available yet?

A. No

Q. If a single person gets married a year or two later will the qualified person be in default?

A. No. Eligibility is determined during the purchase process.

Q. Is this program based on income?

A. One of the eligibility criteria for the family is a 120 percent area median income cap based upon the number of family members. To see the Homeownership Assistance Program fact sheet for those income limits, visit http://phoenix.gov/residents/stabilization/nsp/eligible/index.html

Q. Are only homes that are “bank owned” foreclosed properties eligible?

A. Yes.

Q. Do properties sold at Trustee’s Sale qualify?

A. No. The properties must have gone through the foreclosure process and title has changed.

Q. Will the buyers be provided with a copy of the HQS inspection guide?

A. Yes.

Q. What are my responsibilities as a buyer if the house does not pass the HQS inspection?

A. You will need to look for another house or apply for a 203K loan.

Q. If the home does not have appliances, will it fail the inspection?

A. If the seller and buyer agree, they may sign off on the HQS inspection form acknowledging the missing appliances. If the buyer has secured a 203K  loan, the purchase of appliances can be included in that loan.

Q. Is there a specific size of home required based on the size of the household?

A. No.

Q. What if the lender/seller will not make the repairs?

A. The family can consider a 203K loan through and FHA-approved lender to finance the purchase and rehabilitation of the house. The house must pass the housing quality standards and be in compliance with FHA guidelines.

Q. Is income determined  by  my current income or by the previous tax year?

A. The determination of income eligibility will require verification of all current incomes sources and will include the last three year of tax returns.

Q. How do you account for self-employment income?

A. The IRS Schedule SE (Self Employment Tax) will be used. The lender’s credit requirement will dictate your credit-worthiness and whether you can qualify for a loan.

Q. What if any funds are left from down payment and closing costs?

A. Any balance of funds will buy down the principal mortgage balance.

Q. Do I need to be approved for the full purchase price or only for the amount of the loan without the $15,000?

A. You need to be approved for the full purchase price.

Q. Can you do this loan with a 203K rehab loan?

A. Yes you can but the property must meet the Federal Home Administration (FHA) standards after completion of the rehabilitation. Written documentation will be required.

Q. Where does my $1000 portion of the down payment get applied?

A. It is combined with the $15,000 NSP funds to pay for closing costs, inspections and other fees associated with the real estate transaction. Any remaining funds will be applied to the principal loan balance.

Q. If a person doesn’t have the ability to qualify for an FHA loan due to income or credit can a family member co-sign on the loan?

A. No.


Loan Questions

Q. Will FHA allow the 3.5 percent down payment to come from the $15,000 loan?

A. Yes.

Q. Is a lien placed on the home for the $15,000 loan?

A. Yes.The city’s loan  is recorded as a lien in second position.

Q. Who pays for the home warranty policy?

A. A portion of the $15,000 city loan may be used to cover this cost.

Q. If you do not need all of the $15,000 what happens to the balance?

A. You may apply it to the principal balance of your mortgage.

Q. If I’ve had a foreclosure in the past, what period of re-qualification is imposed?

A. Most lenders require a 3-7 year waiting period after a foreclosure before consideration for a new mortgage.

Q. What is the 31% housing ratio?

A. Add up the total mortgage payment (principal, interest, property taxes, hazard insurance, mortgage insurance premium, homeowners association fees, etc.). Take that total amount and divide it by your gross monthly income. The maximum ratio to qualify is 31% meaning your total monthly housing costs can not exceed 31% of your gross monthly income.

Q. Can a veteran benefit from this program?

A. Yes, as long as they meet all the eligibility requirements of the NSP program.

Q. Is obtaining  a mortgage loan to purchase the property mandatory? Can I pay cash?

A. If the family meets all of the eligibility criteria, it is not a requirement of the NSP that they obtain a mortgage.

Q. Can I access the equity on the home?

A. Not unless the city loan is repaid in full.

Q. Is there a limit on the price of the property?

A. Yes. Currently the FHA mortgage limit for a one-family property in Phoenix-Mesa-Scottsdale is $271,050. This is subject to change by the FHA.

Q. Does the NSP down payment assistance loan accrue interest?

A. No. It is a 0% loan.

Q. How is the NSP down payment assistance loan repaid?

A. There is a lien on the property and the $15,000 city loan is repaid in full at the time of sale or refinance.

Q. Is there a post-purchase component?

A. No additional monitoring is required, however, the HUD-certified counseling agency partners offer post-purchase counseling.

Q. Can you pay off the $15,000 loan early without re-financing or selling?

A. Yes. There is no prepayment penalty.

Q. What will happen to the $15,000 loan if I decide to rent the house?

A. A condition of the loan is that the home remain the borrower’s principal residence. If it does not the loan is considered  to be in default and the full repayment of the loan is due.

Q. How do student loans in forbearance affect the eligibility?

A. FHA guidelines would be followed in this situation.

Q. Is there a limit on retained savings after the $1000?

A. There is no limit but asset income is calculated into the household income and the gross income cap cannot be exceeded at the time of eligibility determination.

Q. If married, do both spouses have to purchase?

A. Yes, for eligibility, all household income must be counted and both persons must qualify for the loan together. Both spouses must also take title and sign all loan documents.