Individual Development Accounts
Families earning less than 80% of the area median income may be eligible for additional assistance through the BOTHANDS Individual Development Account program (IDA). The IDA program is funded by the Federal Home Loan Bank, Assets for Independence, City of Flagstaff CDBG, and United Way of Northern Arizona and provides matching funds to families saving for down payment on a first home. The IDA program helps low-income families acquire assets. Studies show that asset accumulation (home, small business, education) is the “key to helping the working poor reach economic self-sufficiency. … Assets can be a cushion during a family emergency like a sudden illness or job loss, or they can help pay for college or buy a car to commute to a higher paying job,” Assets for Arizona Alliance
At BOTHANDS, we currently have more than 20 families actively saving for a first home through our IDA program.
Program Overview:
Low-income individuals and families meet one-on-one with a homebuyer counselor and determine their savings goals. They then commit to saving between $25 and $500 a month in a dedicated savings account until pre-determined savings goals are met. The family will participate in the program for at least 10 months and less than 3 years. They will also complete Homebuyer Counseling through BOTHANDS, Inc. Once the family has met their pre-determined goals, they will be eligible to purchase a home using IDA money for down payment. Money in the family’s IDA will be matched 3:1 up to $15,000. (If eligible for Assets For Independence funding, the total amount of match may be $19,000 if a family saves $5,000.) For every dollar saved, the client will receive $3-$5 in matching funds. If the family stays in their home for five years, funds are forgiven and don’t have to be repaid. In order to qualify for the program families must be low-income earning less than 80% of the area median income or earn no more than twice the poverty limit, based on household size, and they also must live in and purchase a home within 30 miles of the Flagstaff City limits.
Eligibility:
- Household income must be no more than 80% AMI at the time of application AND when the family purchases their home in order to receive matching funds.
- Household must have lived within a 30-mile radius of the City of Flagstaff city limits for at least one year prior to application to the program.
- Household must purchase a home within a 30-mile radius of the City of Flagstaff city limits.
- Prospective IDA households must have the ability to qualify for a conforming first mortgage, have a steady employment record and adequate savings. Fannie Mae, Freddie Mac and FHA underwriting criteria will be used for qualifying.
- At the time of purchase, household must contribute at least 1% of the purchase price towards the down payment. FHA financing requires 3% buyer contribution.
- Home must be owner-occupied and be the client’s primary residence.
- The home must meet general quality standards of FHA, VA, Fannie Mae or Freddie Mac and pass a professional home inspection.
- The purchase price of the home cannot exceed $256,500.
- All homes purchased must be an "arm's length transaction."
- No more than 33% of gross monthly income can be used to pay monthly mortgage and no more than 41% of the gross monthly income may be used to pay total debt payments, including house payment.
Fees:
IDA clients may be required to pay a $17- $34 fee for credit reports.
Assistance:
- Once an individual/household meets savings goals, education requirements and has a home identified for purchase, funds saved in the IDA can be matched for down-payment on a home.
- Matches range from 5:1 to 3:1 depending on funding availability.
- Funding is first-come, first-served.
- Assistance is in the form of a grant and is not required to be paid back.
- Assistance can be layered with other forms of down-payment and closing cost assistance.
- Maximum IDA assistance per family cannot exceed $19,000.
- Families also receive pre-purchase counseling and education.
If you are interested in Individual Development Accounts, please contact Cher Ferry at cferry@bothands.org or (928) 214-7456.
