Arizona First-Time Home Buyer: 2022 Programs and Grants

What to know about buying a house in Arizona

Arizona offers plenty of assistance to first-time home buyers, from special mortgage programs to home buyer education and counseling. Even better, the state has some generous down payment assistance programs that could help you bridge the gap between your savings and your down payment and closing costs needs. Here’s how to get started.

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Arizona home buyer overview

The median home sales price in Arizona was $365,444 in May 2022, according to Arizona Realtors. That represented an increase of 21% year over year.

Arizona home buyer stats

Average Home Sale Price in Arizona1	$365,444
Minimum Down Payment in Arizona (3%)	$10,960
20% Down Payment in Arizona	$73,090
Average Credit Score in Arizona2	710
Maximum Arizona Home Buyer Grant3	Loan of up to 10% of the purchase price in Pima county incl. Tucson

Down payment amounts are based on the state’s most recently available average home sale price. “Minimum” down payment assumes 3% down on a conventional mortgage with a minimum credit score of 620.

If you’re eligible for a VA loan (backed by the Department of Veterans Affairs) or a USDA loan (backed by the US Department of Agriculture), you may not need any down payment at all.

First-time home buyer loans in Arizona

First-time home buyers with a 20% down payment in the state of Arizona can get a conventional loan with a low interest rate. And they’d never have to pay for private mortgage insurance (PMI).

Of course, few first-time buyers have saved enough for 20% down. But the good news is, you don’t need that much. Not by a long shot.

Borrowers can often get into a new home with as little as 3% or even 0% down using one of these low-down-payment mortgage programs:

• Conventional 97: From Freddie Mac or Fannie Mae. 3% down payment and 620 minimum credit score. You can usually stop paying mortgage insurance after a few years
• FHA loan: Backed by the Federal Housing Administration. Eligibility requirements include 3.5% down and a 580 minimum credit score. But you’re on the hook for mortgage insurance until you refinance to a different type of mortgage, move, or pay off your loan
• VA loan: Only for veterans, active-duty military members, reservists, and National Guard. Zero down payment is required. Minimum credit score varies by lender but often 620. No ongoing mortgage insurance after closing. These are arguably the best mortgages available, so apply if you’re eligible
• USDA loan: For those on low-to-moderate incomes buying in designated rural areas. Zero down payment required. Credit score requirements vary by lender but often 640. Buyers must meet income limits, too, which vary by location and household size. Low mortgage insurance rates
• Home Plus AZ: May include competitive interest rate and mortgage insurance package, and can be used with down payment assistance and closing cost assistance. More information below

Note that government loan programs (including FHA, VA, and USDA home loans) require you to buy a primary residence. That means you can’t use these loans for a vacation home or investment property.

In addition, most programs let you use gifted money or down payment assistance (DPA) to cover your down payment and closing costs. Depending on the mortgage loan you choose, you could potentially get into your new house with minimal cash out of pocket.

If you’re unsure which program to choose for your first mortgage, your lender can help you find the right match based on your finances and home buying goals.

Arizona first-time home buyer programs

The Arizona Industrial Development Authority administers Home Plus AZ, which is a mortgage program open to Arizona first-time home buyers everywhere in the state.

The Home Plus program offers a 30-year fixed-rate mortgage that can be paired with down payment assistance of up to 5 percent.

You’ll have to choose a lender from an approved list of partners and undertake a home buyer education course, but those are common requirements for such programs. As are income limits, which bar people with high household incomes (over $112,785 for most loans) from participating.

You may pay a slightly higher mortgage rate with the Home Plus program compared to other mortgage programs. But that’s typically counteracted by the lower mortgage insurance premiums on offer.

Check your Loan Estimate’s annual percentage rate (APR) to see what you’ll actually pay and compare that with Loan Estimates you get from other lenders outside the program.

Credit score minimums start at 640 with Home Plus AZ, which is a bit tougher than the 620 minimum on mortgages from Fannie Mae and Freddie Mac — and much worse than the 580 minimum for FHA loans. So you may have to look elsewhere if your credit score’s an issue. Check out the Home Plus AZ webpage and FAQs for more details.

Arizona first-time home buyer grants

Home Plus AZ doesn’t provide grants. But it does provide down payment assistance in the form of an interest-free, forgivable second mortgage with a three-year loan term. And you can borrow up to 5% of the home’s purchase price, depending on the type of mortgage you choose and your personal circumstances.

• These forgivable loans require no monthly payments. Your loan balance is reduced by 1/36th of the amount you borrowed each month. So, at the end of three years, you owe nothing
• If you sell before the loan term ends, you’ll have to repay the portion of your original debt that is yet to be forgiven. And refinancing within that time could require repayment as well. Still, three years is a short time

Home Plus AZ may not be the only home buyer assistance program in your town, city, or county. So make sure you check out local down payment assistance programs in case one of those suits you better.

There’s a list of city programs below. But do an internet search “[your city or county] down payment assistance” to make sure you don’t miss any.

Buying a home in Arizona’s major cities

Home prices in Phoenix and Mesa are higher than the Arizona statewide average, though those in Tuscon are just a bit lower. Additionally, real estate prices rose over 25% between April 2021 and April 2022 for both Phoenix and Mesa, making Maricopa County a real estate hot spot in the Copper State.

Phoenix first-time home buyers

The median list price in Phoenix was $475,000 in April 2022, according to Realtor.com. That was up 26.7% year over year.

If you want to buy a home at that median price, your down payment options might fall between:

• $14,250 for 3% down payment
• $95,000 for 20% down payment

The City of Phoenix says that it provides down payment assistance to home buyers whose household income is no greater than 80% of the area median income (AMI) where they’re buying, as shown on the Median Annual Income Table.

However, there’s little other information on the city’s website. So you should call (602) 262-3111 to ask for details.

Tucson first-time home buyers

The median list price in Tucson was $350,000 in April 2022, according to Realtor.com. That was up 18.6% year over year.

If you want to buy a home at that median price, your down payment options might fall between:

• $10,500 for 3% down payment
• $70,000 for 20% down payment

The City of Tucson’s HOME down payment assistance (DPA) program is administered by Pima county and is available countywide.

That program provides loan amounts of up to 10% of the purchase price with no monthly payments. Indeed, it says “If layered with other approved DPA resources, HOME may cover up to the remaining balance to equal 20% total subsidy to remove PMI [private mortgage insurance] on a Conventional Loan.”

Pima’s DPA fact sheet says that there’s a “Period of Affordability” during which you’ll have to repay the loan if you sell the home, transfer, or refinance your main mortgage. But that otherwise informative fact sheet doesn’t specify how long that period is, nor whether interest is charged.

You can call the Pima County Housing Center at (520) 724-2471 to learn more.

Mesa first-time home buyers

The median list price in Mesa was $459,000 in April 2022, according to Realtor.com. That was up 28.2% year over year.

If you want to buy a home at that median price, your down payment options might fall between:

• $13,770 for 3% down payment
• $91,800 for 20% down payment

“The City of Mesa Housing and Community Development’s (HCD) Homeownership Assistance Program (HOA) provides down-payment, closing costs, and (with exceptions) soft second loans for City of Mesa residents,” according to the City’s website. That link takes you to a comprehensive 51-page guide to the program.

That specifies that the amount you can borrow can be “the minimum amount required to make the purchase feasible.” And the time before the loan is forgiven grows longer the more you borrow. So you’re free and clear after five years if you borrow up to $15,000. But then there’s a sliding scale, rising to 15 years for those who borrow $40,000 and over, and topping out at 20 years for new construction and refinances.

As you can imagine, there’s a pile of eligibility criteria and rules within the 51 pages that make up the guide. But it would be well worth looking through them if you think you could benefit from the program.

Where to find home buying help in Arizona

All the organizations we’ve listed above should provide advice freely to any first-time home buyer in Arizona or their local area.

In addition to our selection, the U.S. Department of Housing and Urban Development (HUD) provides lists for statewide, regional, and local resources:

Statewide and regional first-time home buyer resources in Arizona

City and county home buyer resources

What are today’s mortgage rates in Arizona?

You can see today’s live mortgage rates in Arizona here.

When you’re ready to start the home buying process, make sure you get personalized rate quotes from at least three mortgage lenders.

Don’t just look at advertised rates online. Actually apply for preapproval and compare the interest rates and fees you’re offered. That’s the only way to know you’re getting the best deal possible on your new home loan.

¹Source: Arizona Association of Realtors Housing Report

²Source: Experian.com study of 2021 and 2020 data

³Based on a review of the state’s available DPA grants at the time this was written