Down Payment Help Programs in Arizona
What Arizona offers to first-time home buyers
Arizona has several programs that help first-time buyers cover down payments and closing costs. The largest is the Arizona Housing Finance Authority (AHFA) First-Time Homebuyer Program, which offers loans that can cover up to 3 percent of your purchase price as a down payment grant or second mortgage. The state also participates in federal programs like the Community Development Block Grant (CDBG), which cities and counties distribute locally. Some programs are statewide; others depend on which county or city you're buying in.
Most Arizona programs require you to be a first-time buyer (or have not owned a home in the past three years), have a household income below a certain threshold, and complete a homebuyer education course. The income limits and loan amounts vary by program and by county, so the first step is always to find out what exists where you're buying.
Key Takeaways
- Arizona Housing Finance Authority (AHFA) offers down payment grants or second mortgages to first-time buyers statewide, with income limits that depend on your county.
- Many Arizona cities and counties run their own down payment programs through federal Community Development Block Grant funds, so you may have options beyond AHFA.
- Most programs require completion of a homebuyer education course before you can receive funds.
- Income limits and maximum loan amounts vary by location and program, so you need to check with your specific city or county housing department.
Arizona Housing Finance Authority (AHFA) programs
AHFA is the state agency that administers down payment and closing cost programs. Their main product for first-time buyers is the AHFA First-Time Homebuyer Program, which provides a second mortgage or grant to cover your down payment. The loan is forgivable over time — typically 30 years — meaning if you stay in the home, the balance decreases each year and eventually reaches zero.
To use AHFA, you must have a first mortgage approved by a lender first. AHFA then works with that lender to provide the second mortgage or grant on top of it. Your total debt-to-income ratio (all your monthly debts divided by your gross monthly income) cannot exceed 50 percent. AHFA's income limits depend on your county; Maricopa County (Phoenix area) has higher limits than rural counties. You can find current limits on the AHFA website or by calling their loan officer line.
You will also need to complete a homebuyer education course — either in person or online — before AHFA will fund your loan. The course typically takes four to eight hours and covers budgeting, credit, mortgage basics, and home maintenance. AHFA maintains a list of approved courses on their website.
City and county programs in Arizona
Many Arizona cities and counties run their own down payment assistance programs using federal Community Development Block Grant (CDBG) funds. These programs often have different income limits, maximum loan amounts, and terms than AHFA. For example, the City of Phoenix has a down payment assistance program separate from AHFA; Tucson, Tempe, and Mesa each run their own as well.
To find what exists in your area, contact your city or county housing department directly. You can also search the HUD Community Development Block Grant database online, which lists all CDBG-funded programs by location. Some programs are open year-round; others have funding cycles and may close when money runs out. A housing counselor at a local nonprofit can also tell you which programs are currently open in your area.
City and county programs often have stricter income limits than AHFA but may offer larger grants or lower interest rates. Some are designed for specific neighborhoods or for buyers purchasing homes below a certain price. Ask whether the program you find covers down payment only, or also closing costs, property taxes, and homeowners insurance.
How to start: finding programs in your area
Begin by identifying which city and county you are buying in, then contact the housing department or community development office directly. Most cities have a housing division that can tell you which down payment programs are open and what the current income limits are. You can also call 211 (a free referral line) and ask for down payment assistance programs in your area — they will give you phone numbers and websites.
If you are buying in a rural area or a small town, AHFA may be your only option. If you are buying in Phoenix, Tucson, Mesa, Tempe, Chandler, or another large city, you likely have both AHFA and a city program to choose from. Some buyers use both — AHFA for the second mortgage and a city grant for closing costs, for example.
Before you contact any program, gather these documents: proof of income (recent pay stubs or tax returns), a credit report, proof of residency, and a list of any debts (credit cards, student loans, car loans). You will also need to be pre-approved for a first mortgage by a lender, because most down payment programs require that before they will fund.
Income limits and what they mean
Every Arizona down payment program has an income limit — a maximum household income you cannot exceed to participate. These limits are set by the federal government and adjusted each year. They also vary by county and by family size. For example, a family of four in Maricopa County might have a higher income limit than a family of four in Gila County.
You can find current income limits on the AHFA website or by calling your city or county housing department. If your household income is above the limit, you will not be able to use that program, but you may still be able to use a different one — income limits vary between programs. Some programs also have a minimum income requirement, meaning you must earn enough to may have access to for a mortgage.
Income includes wages, self-employment income, Social Security, disability payments, child support, and alimony. It does not include one-time payments like tax refunds or inheritance. If your income is close to the limit, ask the program how they calculate it — some count only the income of the person whose name will be on the mortgage, while others count all household income.
Homebuyer education requirements
Most Arizona down payment programs require you to complete a homebuyer education course before you receive funds. This is a one-time requirement, and the course is usually free or low-cost. AHFA maintains a list of approved providers on their website; you can take the course online, in person, or sometimes over the phone.
The course covers topics like how mortgages work, how to build and maintain credit, budgeting for homeownership, property taxes and insurance, home inspection and appraisal, and what to expect at closing. It typically takes four to eight hours. Some providers offer it in one session; others break it into multiple sessions. You will receive a certificate of completion, which you submit to the down payment program as proof.
If you have already taken a homebuyer education course through another program or lender, ask whether the program will accept it. Some programs accept courses from HUD-approved counselors or from other down payment programs, which can save you time.
What happens after you are approved
Once a program approves you, they will coordinate with your mortgage lender and your real estate agent to ensure the funds are available at closing. For AHFA, the second mortgage is recorded at the same time as your first mortgage — you will see both on your closing documents. For city or county grants, the money may be paid directly to your lender to reduce your down payment, or it may be paid to you at closing.
The approval process typically takes two to four weeks, though it can be faster or slower depending on how quickly you provide documents and how busy the program is. During this time, your lender will continue processing your first mortgage. Tell your real estate agent that you are using a down payment program so they can coordinate with the program and your lender.
After closing, you will have a mortgage payment (or two, if you used AHFA's second mortgage). The second mortgage or grant may be forgivable over time, meaning your balance decreases each year. Read your loan documents carefully to understand whether your down payment assistance is a grant (assistance programs), a forgivable loan, or a loan you must repay.
Frequently Asked Questions
Do I have to be a first-time homebuyer to use these programs?
Most Arizona programs define first-time buyer as someone who has not owned a home in the past three years. If you owned a home more than three years ago, you may still be able to use the program. Some programs also serve single parents, teachers, or other specific groups. Ask the program directly whether your situation qualifies.
What if my income is above the limit?
If you exceed the income limit for one program, you may still may have access to for another — limits vary. You can also explore conventional down payment assistance from your lender or look into down payment loans (which you repay, unlike grants). Contact your mortgage lender to ask what they offer.
Can I use a down payment program if I already have a mortgage pre-approval?
Yes. In fact, most programs require a pre-approval before they will fund. Contact the down payment program while you are in the pre-approval stage so they can coordinate with your lender. This prevents delays at closing.
What if the program runs out of money?
Some programs have limited funding and close when money runs out. You can ask when the program expects to reopen or whether there is a waitlist. In the meantime, explore other programs in your area — most cities have more than one option.
Do I have to repay the down payment assistance?
It depends on the program. AHFA's second mortgage is forgivable, meaning the balance decreases each year and eventually reaches zero if you stay in the home. City and county grants are often fully forgivable (assistance programs). Ask the program whether what they offer is a grant or a loan, and if it is a loan, what the repayment terms are.