1% Down Payment FHA Loan – AKA National Stabilization Program

I have heard from more than one local Realtor that many mortgage professionals are telling them that there is a new FHA Loan that only requires only a 1% down payment.

I have good news and bad news.

First the bad: FHA has not changed their guidelines recently, they still require a 3.5% down payment.

Now the good.

FREE money. Money that I am pretty sure many, many people out there can take advantage of right now – assuming that they are aware of the program.

The mortgage program that many of these Realtors have been asking me about is called the National Stabilization Program and is even better than a 1% down payment requirement – AND – when the NSP program is combined with an FHA loan, only 1% down payment is required.

We all know that the devil is in the details, so here is my best shot at describing them.

I attended a training class on the NSP program taught by the Arizona NSP director and I took as many notes as I could to help me remember what the program is all about.  Do you Follow Me On Twitter Yet?

NSP Twitter Stream All

National 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.

National 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.

National Stabilization Program Purchase Price Limits:

NSP Purchase Price Limits

National 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:

NSP Income Limits

National Stabilization Program: 1% Down Payment?

A minimum of 3 percent of the property purchase price is required as down payment. One percent must come from the borrower’s own funds. Two percent can come from any other approved source.

National Stabilization Program: FREE Money?

  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 Take On The NSP Program

This is probably the most “real” program I have seen in years. There is money available, the steps to getting the money are fairly clear and there is plenty of housing inventory right now. If you are a Realtor, I am about 95% certain that you are probably currently working with someone who can take advantage of this program – and save tens of thousands of dollars when buying a home.

So if you think the 8000 tax credit is a good selling tool to help people get off the fence, wait until they hear about this pile of free money waiting for them.


  1. Great synopsis Justin – I’m buying lunch!

  2. Hi Justin, Does the 90 day seasoning period still hold for buying foreclosed properties using FHA financing?

  3. Hi Dru,

    Sorry for the delay, I wanted to be “sure”!

    The 90 day seasoning period for buying foreclosed properties DOES NOT APPLY when the property is owned by the lender who foreclosed.

    From a memo I got from one of our lenders:

    “HUD has recently announced the extension of the Property Flipping Waiver that was issued on June 9, 2008. The waiver originally expired on June 10, 2009. The waiver has now been extended until May 10, 2010. Details of the waiver are as follows:

    Under the waiver, homes that were foreclosed on and are being sold by the mortgagee or on its behalf may be purchased by FHA borrowers without regard to the 90-day seasoning period.

    The waiver does not apply to entities that purchase foreclosures either singly or in bulk for resale.

    Subsequent sales of such properties will continue to be subject to the standard regulatory requirements.

    Hope this helps!

  4. I’ve read this sentence about 15 times and cannot make sense out of it! What does it mean?

    “National Stabilization Program Highlights:

    * If you own a residence, you must be leasing your primary residence at least 12 months before applying for the program.”

  5. Hi Candace :)

    There is another program that is not NSP funds and the good news it is not limited to only bank owned or foreclosed properties.

    It’s a gift program that provides a gift of up to 2.5% of a homes value that does not need to paid back to be used towards the minimum FHA requirement of 3.5% for down payment and or closing costs. This allows home buyers to purchase any home with a FHA 30 year fixed mortgage with as low as 1% down.

    As the programs director for The Lending Company, I am thrilled to be able to help Arizona residence be able to take advantage of the program and buy a home.

    Here is an article about the program:

    Down Payment Assistance Arizona – 1% Down, No Strings Attached
    Unfortunately, many people cannot afford to buy a home because of the lack of funds for a down payment. Prices have been falling since 2008, and now is the time to buy
    Published on November 06, 2009

    by Joel McLaughlin



    In fact, it’s easier than ever to get into a home of your own! The Arizona Home Buyer Solutions Program makes it easy for you to own a home with as little as 1% down, and no strings attached.

    This new program is available only in the state of Arizona, and helps eligible homebuyers by providing up to 2.5% of the down payment in the form of a gift, which does not have to be repayed. This is perfect for families who have previously not been able to come up with the down payment for a home, but are eager to find a quality, affordable home.

    The Arizona Home Buyer Solutions Gift Program offers this gift to you through an Arizona based HUD approved non-profit charity, so this is not a seller funded down payment. The lender involved in this gifting is an exclusive lender, and there are many benefits that allow those who previously could not afford it to purchase a home. This is NOT limited to first-time home buyers!

    Recently, there has been much in the news about short sales, foreclosures and other methods of getting a home for a greatly reduced price. However, this program is not limited to those homes or properties that are vacant. This gift works with 1 to 4 family homes, and condominiums that are HUD approved.

    The Arizona Home Buyer Solutions Gift Program is available only in the state of Arizona, and buyers should be within FHA Median Income Limits which is $150,870 in Maricopa County, with non-occupant co-borrowers allowed as long as they qualify. Unlike numerous other programs, nearly any property that qualifies for FHA qualifies for this program!

    Are you ready for your chance to finally purchase a home for your family that you can afford? This is a once in a lifetime opportunity for those who could not come up with a down payment to get into a beautiful home – with absolutely no strings attached! Learn more about this gifting program, and begin your search for that home or property you have been dreaming of.

    The 1% down can actually be gifted by an employer or family member, so in these circumstances this loan can potentially be 0% down.

    If anyone has any questions, Please feel free to contact me at 480-621-4247 or MNewman@TheLendingCo.com


  1. […] “free money” mortgage program is called the National Stabilization Program and on top of giving you money to buy and live in a home, it is required that you only have a 1% […]

  2. REtopic.com says:

    1% Down Payment FHA Loan – AKA National Stabilization Program…

    HA has not changed their guidelines recently, they still require a 3.5% down payment. So why are folks saying you can get a loan with 1% down?…

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