To drive cars underwater you need to type in the following cheats during gameplay:

1st activate the infinite health cheat: Down, A, Right, Left, Right, R Trigger, Right, Down, Up, Y.

2nd activate the infinite lung air cheat: Down, Left, LT, Down, Down, RB, Down, LB, Down.

3rd activate the cars fly cheat: X, Down, LB, Up, LT, B, Up, A, Left.

Then drive your car into the water and let it sink to the ground below the surface.