2024 Arizona First-Time Homebuyer Programs and Loans

Purchasing a home is one of the most difficult financial milestones you can reach in your lifetime. But with the help of a first-time homebuyer program, it doesn’t have to be quite as hard. For homebuyers in Arizona, there are multiple programs that can make it easier to qualify for a mortgage and cover all the costs involved with buying a home, whether you’re a first-time or a repeat buyer.

First-time homebuyer programs in Arizona

For low- and moderate-income buyers in Arizona, there are a handful of first-time homebuyer programs available. Qualified borrowers may be able to use special mortgage programs, along with funds for their down payment and closing costs, to make their dream of homeownership a reality. First-time homebuyer programs in Arizona include:

• HOME+PLUS
• Home in Five Advantage
• Home in Five Platinum
• Pima Tucson Homebuyers Solution Program

HOME+PLUS

The HOME+Plus Home Buyer Down Payment Assistance Program is a state-run program available for use throughout Arizona. HOME+PLUS can give you a 30-year, fixed-rate mortgage and up to 4% in down payment assistance (DPA) for your down payment and/or closing costs. The DPA comes in the form of an interest-free second mortgage that’s fully forgiven after you live in the home for three years.

Requirements

• Maximum annual gross income of $126,351
• Minimum 640 credit score
• Debt-to-income (DTI) ratio up to 50%
• Must complete a homebuyer education course.

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Home in Five Advantage

Home in Five Advantage is a down payment assistance program for repeat and first-time homebuyers in Maricopa County (which includes Phoenix). Most qualified buyers can get up to 6% in down payment assistance in the form of an interest-free, forgivable second mortgage. However, you may be eligible for an extra 1% in assistance if you’re an elementary school teacher, first responder, U.S. military/veteran or you earn no more than $49,500 a year.

Requirements

• Maximum household income of $138,600
• Minimum 640 credit score
• Maximum debt-to-income ratio (DTI) of 45%
• Must complete an eight-hour homebuyer education course in-person or online

Home in Five Platinum

With Home in Five Platinum, you receive a 30-year, fixed-rate, mortgage plus up to 4% of the loan amount in the form of a 0%, forgivable second mortgage that you can use for your down payment, closing costs or pre-paids. You must be a first-time homebuyer to qualify; however, there is an exception for veterans and for homes in certain areas. Like Home in Five Advantage, this program is only for home buying in Maricopa County.

Requirements

• Maximum household gross income of $130,900
• Minimum 640 credit score
• Sales price up to $660,515 for one-unit homes
• Two- to four-unit properties must be at least five years old
• Must complete an eight-hour homebuyer education course either in-person or online

Pima Tucson Homebuyers Solution Program

The Pima Tucson Homebuyer’s Solution Program (PTHS) is available for people who want to purchase a home in Pima County (including Tucson). This program gives you a 30-year, fixed-rate mortgage with down payment and closing cost assistance in the form of a loan that’s forgiven after you live in the home for three years. Through PTHS, you can get financing for up to 100% of your home-buying cost. In other words, you may not need any money for the down payment or other expenses related to the purchase of your home. The funds can also be combined with other down payment assistance and a mortgage credit certificate (MCC) (more on this below).

Requirements

• Maximum income of $126,351
• Minimum 640 credit score
• Maximum debt-to-income ratio (DTI) of 45%
• Must complete a homebuyer education course

Arizona first-time homebuyer qualifications

Arizona buyers might be surprised by who qualifies as a first-time homebuyer. According to the state, you belong in this category if you haven’t owned any part of your primary residence within the prior three years. Most programs also have a maximum income limit and a minimum requirement for your credit scores and down payment.

Steps to apply for a first-time homebuyer program

Every first-time homebuyer program has different application requirements, but here’s what you can generally expect as you go through the process:

1. Search what’s available. Search for homebuyer programs in your state, county and city to see what your financial and credit situation makes you eligible for. While the average credit score in Arizona is 713, many FTHB programs accept lower scores.
2. Find a participating lender. To get started on finding a loan and financial support, you may need to choose a lender who works with the assistance program you’re interested in. When you meet with a participating loan officer, they can preapprove you for a loan and inform you as to what assistance you qualify for.
3. Complete homebuyer education. Most first-time homebuyer programs require you to complete a homebuyer education course. You’ll want to do this as early in the process as possible since it will inform your buying experience and can help you save money on your loan.
4. Shop for a home. Use the program guidelines and your mortgage preapproval to guide your search for a home that meets the specifications for location and price.
5. Review and complete the paperwork. To close the deal, you’ll need to pay any fees that are due and review and sign paperwork from the lender and from the homebuyer program.

Understanding Arizona first-time homebuyer down payment assistance

Down payment assistance in Arizona comes in a few different shapes and sizes. As you’re researching your funding options, you may come across some terminology that’s new to you. Here’s what these assistance-related terms mean:

Deferred second mortgage

A second mortgage, also known as a junior-lien, is a loan you can use to cover your down payment and closing costs. If you have a deferred second mortgage, it doesn’t have to be paid until you sell the home – in which case you might use the proceeds to pay off the loan – or when you pay off or refinance your first mortgage.

Like a primary mortgage, your second mortgage will be secured against your house as collateral, but the interest rates on second mortgages are usually higher than primary mortgages.

Forgivable second mortgage

A forgivable second mortgage is a loan that’s forgiven if you meet specific requirements. These loans are usually forgiven gradually, by a small percentage each month, until you’ve lived in your home for a set period of time. If you sell your home before that period, you’ll have to pay the remaining balance. If not, you won’t have to pay any money toward the loan.

Grant

Grants are a form of funding that eligible homebuyers can use to help cover their down payment and closing costs. The money you receive from a grant does not have to be repaid.

Mortgage credit certificate

A mortgage credit certificate (MCC) allows you to claim up to $2,000 of your mortgage interest fees as a federal tax credit each year. MCCs in Arizona are available for first-time homebuyers, veterans and buyers who have not owned their residence in the prior three years. However, you’ll have to pay a $500 up-front fee and a $100 annual fee to use the program. All Arizona residents can apply for an MCC at CICTucson.org.

Keep these things in mind about DPA programs

Homebuyers should note that forgiven and canceled debt is often considered taxable income. The amount of debt canceled on a forgivable second mortgage may be considered “Qualified Principal Residence Indebtedness” and is not likely to be taxed by the IRS; however, state rules vary. The forgiven debt will need to be reported to the IRS.Grants can also be taxed at the federal and state level. However, grant money that’s received from a government or nonprofit program and used for home down payment is not usually taxable by the IRS.For more guidance on tax issues for homeowners, consult with a tax professional.

How much of a down payment do I need to buy a house in Arizona?

According to our latest first-time homebuyer report, first-time buyers in Arizona forked over an average of $29,815 for their down payments in 2023, and their average mortgage amount was $320,328. In other words, they put down 9.31% on average. Whether you pay more or less depends on a number of factors, including the type of loan and, if applicable, the homebuyer assistance programs you use. For example, with an FHA loan your down payment can be as low as 3.5%.

Can I qualify for down payment assistance in Arizona?

There are several down payment assistance programs in Arizona, and there’s a chance you could qualify for one or more, especially if you have low to moderate income. To find out what’s available, search for programs from the state, as well as your city and county, and check to see if you meet the requirements.

How do I apply for Arizona first-time homebuyer down payment assistance?

You’ll need to meet with an approved lender to apply for HOME+PLUS, the state of Arizona’s first-time homebuyer down payment assistance program. You can find a lender at HomePlusAZ.com.

 Here’s what you need to know about the process of applying for a home loan.

Other first-time homebuyer loan programs

Conventional loans

Whether you’re a first-time homebuyer or a repeat buyer, a conventional loan is worth considering. These loans are not insured by a government agency (unlike FHA and VA loans). The interest rates and requirements to qualify may be higher than other loan types, but conventional loans usually cost less overall than government loans. One reason why is that you don’t have to pay private mortgage insurance if you make a down payment of 20% or more, or once you have gained 20% equity in your home.

FHA loans

FHA loans are offered by many lenders and they’re insured by the Federal Housing Administration (FHA). FHA loans are often the most affordable option for borrowers with low down payments and low credit scores.

VA loans

VA loans are loans backed by the U.S. Department of Veterans Affairs (VA) and available through private mortgage lenders. You might qualify for one of these low APR, no mortgage insurance loans if you’re a veteran, service member or eligible spouse, even if you have no down payment.

USDA loans

You might qualify for a loan from the U.S. Department of Agriculture (USDA) if you’re a low-to-moderate income borrower looking to buy a home in a rural area. You don’t need a down payment and depending on your income, your USDA loan rate could be as low as 1% to 4.5%.

What are the best first-time homebuyer loans?

There’s no single loan that works best for every first-time homebuyer. To narrow down your best option, look for the most affordable loan based on your income, credit and down payment.

Home price trends in Arizona’s major areas

If you live in Arizona, you’ve probably noticed homes getting more and more expensive each year. In 2023, home prices increased by 6.63% throughout the state from the previous year, but that price jump pales in comparison to the nearly 80% increase Arizonans saw over the last five years.

Of course, some areas have fared worse for homebuyers than others. In the Phoenix-Mesa-Chandler metro area, which includes Maricopa and Pinal Counties, home prices increased by 3.73% in 2023 from the previous year, and Tucson saw a 6.17%% increase, but prices went up most in Flagstaff, where they increased by 7.56%.

Is there a first-time homebuyer tax credit in Arizona?

Arizona home buyers who want a tax break can apply for the state’s Mortgage Credit Certificate (MCC) program, which gives you up to $2,000 in annual tax credit for the interest you’ve paid on your mortgage. At the federal level, the most recent tax credit for homebuyers expired in 2010. While a new credit for homeowners was proposed in March of 2024, no legislation has been passed.

What are the current mortgage rate trends in Arizona?

Interest rates on mortgages are slowly dropping in Arizona. For the average Arizona resident with 71 FICO scores, the rates on a 15-year fixed mortgage are less than half a percentage point lower than on a 30-year fixed mortgage.