Wondering how to cover your down payment in the East Valley without draining your savings? You are not alone. Many Phoenix-area buyers use down payment assistance to bridge the gap between what they have and what they need to close. In this guide, you will learn what assistance looks like, who typically qualifies, where to find programs, and how to apply with confidence. Let’s dive in.
What down payment assistance is
Down payment assistance, or DPA, helps you pay part of your down payment and sometimes your closing costs. It usually comes as a second mortgage, a grant, or a tax credit. Most programs require you to live in the home as your primary residence and complete a homebuyer education course.
In the East Valley, you will find help from state, county, and city programs, along with nonprofits and lenders. Since funding and rules change, you should always confirm current details with the administering agency and your lender before you rely on any funds for closing.
Common program types
DPA comes in a few standard forms. Knowing the differences helps you compare options and plan your timeline.
- Forgivable second mortgage: A zero-interest loan recorded as a subordinate lien. The balance is forgiven over time or after you meet a minimum occupancy period.
- Repayable second mortgage: A low- or no-interest “soft second” that must be repaid when you sell or refinance, or by the end of a set term.
- Grant: Direct assistance that you do not repay. Grants are less common and may be targeted to specific buyers or areas.
- Mortgage Credit Certificate (MCC): A federal tax credit administered locally. Instead of cash at closing, you receive an annual credit for a portion of your mortgage interest if you qualify.
- Lender or employer assistance: Some banks, credit unions, or employers offer their own DPA or housing benefits.
- Gift funds: Money from family that meets lender documentation rules. This is not DPA in the strict sense, but many buyers use gifts alongside DPA.
Who typically qualifies
Each program sets its own rules, but these are common across the East Valley:
- Income limits: Many programs use Area Median Income thresholds, such as 80%, 100%, or 120% of AMI. Limits vary by household size and change annually.
- First-time buyer status: Often required, commonly defined as not owning a principal residence in the past three years. Some programs allow exceptions for targeted areas or veterans.
- Purchase price caps: Programs set maximum home prices by county and property type.
- Property and occupancy: You must use the home as your primary residence. Single-family homes and some condos typically qualify. Manufactured homes and investment properties are often excluded.
- Loan pairing: Programs may require a specific first mortgage, such as FHA, VA, USDA, or a conventional option like Fannie Mae HomeReady or Freddie Mac Home Possible.
- Credit and DTI: You must meet standard lender underwriting for credit score and debt-to-income ratio.
- Homebuyer education: Many programs require a HUD-approved course before closing.
Where to look in the East Valley
You have several layers of potential assistance. Start broad, then narrow to your city and neighborhood.
- State of Arizona: The Arizona Department of Housing is the primary statewide source for DPA that pairs with first mortgages. Check current program names, assistance amounts, income limits, purchase price caps, and whether funds are forgivable or repayable.
- County and cities: Maricopa County and East Valley cities like Phoenix, Mesa, Chandler, Gilbert, Tempe, Scottsdale, Queen Creek, and Apache Junction may operate or fund homeownership programs. These can be citywide or targeted to specific neighborhoods and may open and close based on funding cycles.
- HUD-approved counselors and nonprofits: Many programs require education and counseling. Local nonprofit partners sometimes offer their own assistance or matching funds.
- Participating lenders and credit unions: Many programs require approved lenders. Some lenders also offer stackable assistance.
- Federal mortgage options: FHA, VA, USDA, and conventional programs like HomeReady and Home Possible often work well with DPA. USDA has geography and income rules that can fit fringe East Valley areas, such as parts of Queen Creek or Apache Junction.
Tip: Availability changes. Ask early whether funds are currently open and if reservations are first come, first served.
How the process works
Plan for a slightly longer timeline than a purchase without DPA. A simple path looks like this:
- Research and pre-qualification
- Identify programs that match your income, location, and loan type.
- Get pre-approved with a lender who participates in your target program.
- Education and counseling
- Complete a HUD-approved homebuyer education course early. Some programs will not reserve funds until you do.
- Reserve assistance
- Once you have a purchase contract, your lender or the program administrator will reserve funds. Many programs operate on limited allocations.
- Underwriting and appraisal
- Your lender underwrites the first mortgage. The DPA approval runs in parallel. Appraisal and inspection steps follow the normal path.
- Closing and recording
- DPA funds arrive at closing. If your assistance is a second mortgage, it will be recorded as a lien. Confirm the forgiveness or repayment terms and keep copies of all documents.
Practical trade-offs to consider
DPA can make homeownership possible sooner, but you should understand the fine print.
- Forgivable vs. repayable: Forgivable assistance typically requires you to live in the home for a set period. Repayable seconds add long-term subordinate debt until you sell, refinance, or pay them off.
- PMI and loan terms: DPA lowers your upfront cash but usually does not remove mortgage insurance on low-down-payment conventional loans. PMI may be cancellable once you reach the required equity.
- Stacking help: Some programs allow you to combine state DPA, lender credits, and seller-paid costs. Ask your lender and the program about stackability rules.
- Resale and refinance: Read the recapture or forgiveness schedule. Selling or refinancing early may trigger repayment.
- Condo and HOA rules: Some programs limit condo eligibility or require condo project certifications. Confirm with your lender and the program administrator.
- Taxes: Many purchase-related second mortgages that are forgiven are not treated as taxable income, but tax outcomes vary. Consider speaking with a tax professional.
East Valley property nuances
Local price tiers and program caps matter. Higher-priced neighborhoods may sit above purchase price limits for some programs. If you are open to a broader search, you may find better matches in nearby areas with similar amenities and more program-friendly prices.
USDA financing is designed for rural areas and includes income and location limits. While it does not apply to central Phoenix or most dense suburbs, some fringe East Valley zones may qualify. Your lender can check USDA eligibility for a specific address.
What to bring to your first meetings
Organizing your paperwork early makes everything smoother. Use this quick checklist with your counselor and lender:
- Government ID and Social Security numbers for all borrowers
- Recent pay stubs, W-2s, and tax returns
- Bank and asset statements
- Documentation for any gift funds
- Proof of completed homebuyer education when available
- Purchase contract and property details once under contract
Quick action checklist
Use these steps to move forward with confidence:
- Check Maricopa County income limits and confirm where your household stands relative to program thresholds.
- Get pre-approved with a participating lender who works with your target program.
- Complete a HUD-approved homebuyer education course early.
- Ask whether assistance is forgivable, what triggers repayment, and how long you must occupy the home.
- Confirm whether you can stack DPA with lender credits or seller-paid costs and how that affects your loan terms.
- Verify that funds are currently available and reserved before you count on them for closing.
How The Holmes Team supports you
Buying a home in the East Valley is a big step, especially if you are exploring assistance programs. You deserve clear answers, a steady process, and a plan that fits your budget. Our team focuses on guiding you through neighborhoods, contract terms, inspections, and timelines while coordinating with your lender so your DPA stays on track.
If you are early in your search, we can help you map price ranges that align with typical purchase caps and identify property types that fit common program rules. If you are already pre-approved, we will tailor your home search so you do not lose time on properties that will not qualify.
Ready to take the next step toward owning in Gilbert, Chandler, Queen Creek, Ahwatukee, or nearby communities? Reach out to us. We are here to make your path simple and clear.
For a friendly, local strategy session about your East Valley home purchase and down payment assistance options, connect with The Holmes Team. We are ready to help you get started.
FAQs
How much down payment assistance can East Valley buyers get?
- Amounts vary by program and change over time. Many options provide a percentage of the purchase price or a fixed amount. Confirm current limits before you write an offer.
Do I have to be a first-time buyer to use Arizona DPA?
- Often yes, defined as not owning a principal residence in the past three years, but some programs allow exceptions for targeted areas or for veterans.
Can I use DPA with FHA, VA, USDA, or conventional loans?
- Many DPA programs pair with these loans, but each program lists which first mortgages are eligible. Ask your lender to confirm the allowed combinations.
Will using DPA raise my monthly payment?
- The first mortgage rate may not change, but a repayable second mortgage adds a payment later or at sale. Your lender will show you the total payment impact.
Are DPA funds taxable income in Arizona?
- Many purchase-related second mortgages that are forgiven are not treated as taxable income, but tax treatment can vary. Consider checking with a tax professional.
How long does it take to close with DPA in the Phoenix area?
- Timelines vary by program and lender. Plan for extra time compared with a purchase without assistance and reserve funds as early as allowed.
Which East Valley areas work with USDA loan programs?
- Central Phoenix and denser suburbs are typically not eligible, but some fringe areas such as parts of Queen Creek or Apache Junction may qualify. Your lender can check a specific address.
