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?

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:

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:

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.