First-Time Homebuyer Programs in Arizona

The down payment on a new home is often the biggest hurdle for first-time homebuyers. In Arizona, with an average home value of $430,658, you would need a down payment of $86,132 to avoid private mortgage insurance.

Fortunately, there are first-time homebuyer programs available in Arizona to help you achieve homeownership. There are also mortgages that allow first-time homebuyers to put less down on a home, but these usually have income requirements and require mortgage insurance. MoneyGeek explores several state-specific and government-backed first-time homebuyer programs for people from different financial backgrounds.

Arizona offers grants and loans to help first-time homebuyers cover both down payments and closing costs. We compiled the first-time homebuyer programs offered by Arizona Industrial Development Authority (AzIDA) and Trellis to help you find the best option for your particular needs and situation.

The AzIDA’s Home+Plus Home Buyer Down Payment Assistance Program offers a 30-year fixed-rate mortgage paired with up to 4% down payment assistance (DPA) depending upon the new underlying first mortgage.
The DPA comes in the form of a three-year, no-interest, no-payment, deferred soft second mortgage that can be used to cover down payment, closing costs or a combination of the two.
It is forgiven monthly at a rate of 1/36 over the term of the lien and will only need to be repaid if the homeowner chooses to refinance or sell their Home+Plus first mortgage in the first 36 months.

Arizona is Home, offered by the non-profit organization Trellis, is a down payment assistance program that offers up to $30,000 for first-time homebuyers who are at 80% or below Area Median Income (AMI) and up to $20,000 for first-time homebuyers who are between 81% to 120% of AMI. The down payment assistance comes in the form of a deferred second mortgage that is due on sale, with no interest and no monthly payments.

Aside from statewide first-time homebuyer programs in Arizona, city-specific programs are also available to help you pursue homeownership in a city of your choosing. Check out the table below for some of the cities in Arizona that provide first-time homebuyer programs for potential residents.

In Arizona, there are zero-down-payment loan programs that allow you to purchase a home without putting any money down. USDA and VA loans are two government-backed options that come with no down payment required.

USDA loans are designed to assist homebuyers in rural areas by providing affordable financing options. These loans are issued through the U.S. Department of Agriculture's Rural Development Guaranteed Housing Loan program. The USDA loans program offers unique benefits, including no down payment, reduced mortgage insurance costs, and competitive interest rates, making it an attractive option for eligible borrowers.

USDA loans come with specific conditions that borrowers must meet. These include the property being located in a USDA-eligible rural area with a population of less than 35,000 and having a size of 2,000 square feet or below. Additionally, borrowers must adhere to income limits that vary based on location. For instance, in Apache County, AZ, the income limit for a four-person, low-income household is $51,500, whereas in Greenlee County, AZ, it is $66,400. Understanding these criteria is essential for determining eligibility and maximizing the benefits of USDA loans.

VA loans are a specialized mortgage option issued by the U.S. Department of Veterans Affairs designed to assist veterans, active-duty service members, and eligible surviving spouses in purchasing homes. These loans offer unique benefits that make homeownership more accessible for those who have served.

One of the standout features of VA loans is the absence of a down payment requirement, which can significantly reduce the upfront cost of purchasing a home. Additionally, VA loans do not require private mortgage insurance (PMI), further lowering monthly payments compared to conventional loans. These loans typically offer lower interest rates than private loans, making them an attractive option for eligible borrowers. As of November 2024, the APR for a 15-year fixed-rate VA loan in Arizona is 6.16%, while a 30-year fixed-rate VA loan is 6.45%.

To qualify for a VA loan, applicants must meet specific eligibility requirements, including a minimum length of service or service commitment, duty status, and character of service. Additionally, applicants must meet certain income limits that vary based on location and obtain a valid Certificate of Eligibility (COE) to proceed with the loan application.

First-time homebuyers in Arizona can take advantage of low-down-payment loan programs that allow them to finance their home with a down payment of 3.5% or less. These programs include conventional, FHA and FHA 203(k) loans.

FHA loans and conventional loans are often compared as they are the two most common types of mortgages available. FHA loans require a minimum down payment of 3.5%, making them accessible for those with limited funds. Conventional loans, on the other hand, can require as low as 3% down payment for first-time homebuyers. Typically, conventional loans have stricter credit score and debt-to-income ratio requirements compared to FHA loans.

The interest rates for these loans can vary. As of November 2024, the APR for a 15-year fixed-rate conforming loan in Arizona is 5.98%, whereas the APR for a 15-year fixed-rate FHA loan is 8.08%. APRs on FHA loans can be higher due to additional fees and extra costs associated with government-backed loans.

You can use our FHA vs. conventional loan calculator below to help you compare both FHA and conventional mortgage programs and determine the best option for you.

We answered some frequently asked questions about first-time homebuyer programs in Arizona to help you determine the best option and get closer to achieving homeownership.

Explore additional MoneyGeek resources for first-time homebuyers in Arizona to help you with the homebuying process.