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Buying your first home in Arizona can require more than finding an affordable mortgage. Down payment assistance, income limits, credit requirements and homebuyer education rules can all affect which programs you qualify for. Arizona buyers may be able to combine state or local assistance with FHA, VA, USDA or conventional financing, depending on the program. Comparing the current options can help you determine how much cash you may need upfront and which programs fit your income, location and credit profile.
If you need guidance in the homebuying process, consider enlisting the help of a financial advisor.
Federal First-Time Home Buyer Programs
Before we dive into the programs offered specifically to Arizona buyers, it’s worth reviewing national mortgage programs that can reduce some of the upfront barriers to buying a home. FHA, VA, USDA and certain conventional programs can offer low or no down payment options, but they are not necessarily limited to first-time homebuyers. Eligibility depends on the particular loan program, your finances and, in some cases, where you plan to buy.
FHA Loans
| Pros | – Low down payment – Flexible credit approval |
| Cons | – A bigger down payment needed for those with a weaker credit score |
| Eligibility | – Down payment of at least 3.5% of the home’s purchase price – Credit score of 580 or above |
| Best For | – Anyone without enough savings to cover a typical down payment |
FHA loans are backed by the U.S. Federal Housing Administration. These loans can be useful for buyers who have limited funds available for a down payment. An FHA loan can generally finance up to 96.5% of a home’s purchase price, which translates into a down payment as low as 3.5%. FHA policy generally allows borrowers with qualifying credit scores of 580 or higher to use the 3.5% minimum down payment, while borrowers with scores from 500 through 579 may need at least 10% down. Individual lenders can impose additional requirements.
VA Loans
| Pros | – No down payment – No private mortgage insurance – Low closing costs |
| Cons | – Long application process – Requires payment of into the VA fund |
| Eligibility | – Must be a current or former military member, spouse, or other beneficiary – Credit score of 580 or above |
| Best For | – Veterans earning a low monthly income |
The Department of Veterans Affairs insures VA loans to help eligible veterans, service members and certain surviving spouses finance a home. VA itself generally does not require a down payment or private mortgage insurance, although the lender must still approve the borrower based on income, credit and other underwriting factors. VA also does not establish a minimum credit score; individual lenders may set their own minimums.
Many borrowers pay a one-time VA funding fee unless they qualify for an exemption. For a VA-backed purchase loan with less than 5% down, the funding fee is currently 2.15% for first use and 3.3% for subsequent use. With a down payment of at least 5%, the applicable percentage can be lower. Eligible borrowers receiving certain VA disability benefits and some surviving spouses are among those who may be exempt from the fee.
USDA Loans
| Pros | – No down payment – Flexible credit approval |
| Cons | – Only available to those that cannot secure a conventional mortgage |
| Eligibility | – Only available to those who cannot secure a conventional mortgage |
| Best For | – Low- to moderate-income individuals looking to live in a rural or semi-rural area |
Officially known as the Section 502 Single Family Housing Guaranteed Loan Program, USDA mortgages are designed to expand homeownership in eligible rural areas. The program can offer 100% financing with no required down payment to qualifying low- and moderate-income households. It is not restricted to first-time homebuyers.
Applicants generally must have household income no higher than 115% of the median household income for the area, occupy the property as their primary residence and purchase a home in an eligible rural area. USDA does not set a minimum credit score for the guaranteed program, although applicants must demonstrate the ability and willingness to repay debt and lenders may apply their own underwriting standards. Applicants also generally must be unable to obtain conventional financing without private mortgage insurance.
Good Neighbor Next Door Program
| Pros | – Flat 50% discount on the home’s value – Down payment as low as $100 |
| Cons | – Only available to certain people and in certain areas |
| Eligibility | – Must be a police officer, firefighter, emergency medical technician, or pre-K through grade 12 teacher – Must live in the home for at least three years after purchase |
| Best For | – Teachers and emergency personnel without adequate savings for a home purchase |
The U.S. Department of Housing and Urban Development (HUD) sponsors the Good Neighbor Next Door Program, which is actually more like a discount than a loan. It grants certain public servants 50% off the purchase price of a home. Participants are encouraged to get a conventional, VA, or FHA mortgage or pay cash for the home.
To qualify for a Good Neighbor Next Door discount, the home must be located in a “Revitalization Area.” Applicants must also agree to live in the home for at least three years. So long as you do, you can sell the home and hold onto any equity you’ve acquired.
Fannie Mae/Freddie Mac
| Pros | – Low down payment – Flexible credit approval – Multiple loan styles |
| Cons | – Higher interest rates than other federal programs |
| Eligibility | – Income requirements dependent on the home’s location |
| Best For | – Anyone that doesn’t qualify for other federal mortgage programs |
Fannie Mae and Freddie Mac are government-sponsored enterprises, not mortgage lenders that make loans directly to homebuyers. Instead, they purchase qualifying mortgages from lenders and support conventional loan programs with specific underwriting guidelines.
The HomeReady® loan from Fannie Mae allows down payments as low as 3%. Borrower income generally must be no more than 80% of the area median income for the property’s location, and the home must be a principal residence. HomeReady is not limited to first-time buyers. Down payment and closing-cost funds can come from several permitted sources, including gifts and eligible grants.
Freddie Mac’s Home Possible® program also allows financing of up to 97% of a one-unit property’s value, meaning a down payment as low as 3% may be possible. Qualifying income is generally limited to 80% of area median income. Freddie Mac can also accommodate some borrowers without traditional credit scores, although underwriting requirements depend on the loan.
Native American Direct Loan Program (NADL)
| Pros | – No down payment – Flexible credit approval – No private mortgage insurance – Low closing costs |
| Cons | – Only available to certain people in certain areas |
| Eligibility | – Home must be in a qualified area |
| Best For | – Native American veterans without enough savings to cover a typical down payment |
The Department of Veterans Affairs offers Native American Direct Loans (NADLs) directly to eligible Native American veterans and certain eligible spouses to buy, build or improve a home on federal trust land, or to refinance an existing NADL. The applicable tribal government must have a Memorandum of Understanding with VA, and the borrower must meet VA eligibility, credit and income requirements.
NADLs generally require no down payment, do not require private mortgage insurance and have limited closing costs. As of Oct. 1, 2026, VA says the NADL interest rate starts at 2.47% for a 30-year fixed loan, down from the much higher rate quoted in the previous version of this article.
Arizona First-Time Homebuyer Programs
The Arizona state government offers mortgages, down payment assistance, closing cost assistance and other benefits through the Arizona Industrial Development Authority (AzIDA) and Arizona Department of Housing (ADOH) mortgage programs. For both products, homebuyers apply through a network of state-approved lenders.
Borrowers must meet income and credit score requirements (minimum score of 640) and complete a homebuyer education course to qualify. The home must also fall within specified purchase price limits and be the borrower’s primary residence.
Home Plus
| Pros | – Deferred, no-interest second mortgage of up to 5% of the first mortgage – Lowered private mortgage insurance costs |
| Cons | – Strict eligibility requirements |
| Eligibility | – Credit score of 640 or above – Debt-to-income ratio below 45% – Income not to exceed $126,351 – Maximum loan amount $396,680 – Must complete homeownership education course |
| Best For | – Low- to moderate-income individuals without enough savings to cover the upfront costs of homeownership |
The AzIDA Home Plus program combines 30-year fixed-rate mortgages with down payment assistance. Creditworthy borrowers can receive up to 5% of the mortgage amount in the form of a no-interest second loan, which can be used toward a down payment, closing costs or both.
To make the loan even more helpful, you don’t need to repay the second mortgage for at least three years, or until you sell or refinance the home. It’s forgiven monthly at a rate of 1/36 over the life of the loan. Perhaps best of all, Home Plus mortgages awarded through Fannie Mae and Freddie Mac come with lowered mortgage insurance premiums.
Arizona Is Home
| Pros | – Forgivable, no-interest second mortgage of up to 10% of the home’s purchase price |
| Cons | – Only available for certain types of homes and in certain areas |
| Eligibility | – Home must be in qualified area – Must have a Freddie Mac Advantage mortgage – Income below $92,984 – Purchase price below $371,936 – Must complete homeownership education course |
| Best For | – Low- to moderate-income individuals willing to live in areas hit especially hard by the housing crisis |
Arizona Is Home provides down payment assistance to qualifying first-time homebuyers, but program structure and availability depend on where the property is located. The Arizona Department of Housing currently describes a continuation of the program for Maricopa and Pima counties, with buyers earning up to 120% of area median income potentially eligible for assistance. For this program, a first-time buyer generally means someone who has not owned real estate during the previous three years.
The Arizona Industrial Development Authority also offered an Arizona Is Home program covering 13 counties outside Maricopa and Pima, with a below-market 30-year fixed-rate mortgage and 4% down payment or closing-cost assistance for eligible buyers earning no more than 100% of area median income. However, the Arizona IDA announced that its allotted 2026 funding was exhausted as of Oct. 6, 2026, and that version of the program is paused for the remainder of the year. Because funding and program terms can change, buyers should verify current availability before relying on Arizona Is Home assistance.
Bottom Line
Arizona homebuyers have several potential ways to reduce the upfront cost of buying a home, including Home Plus, Arizona Is Home and local programs such as Home in Five, along with FHA, VA, USDA and low-down-payment conventional mortgages. Eligibility can depend on your income, credit, location, military status and the type of mortgage you choose. Program limits and funding can also change during the year, so confirm the current rules with the administering agency or an approved lender before making an offer. Comparing both the first mortgage and the terms of any down payment assistance can help you understand not just how much assistance you receive upfront, but whether any second loan must eventually be repaid.
Tips for a New Mortgage
- There’s no way around it: buying a home will impact your finances in a big way. While it means you’re building up home equity, it can also force you to adjust your budget. Consider getting professional help manage the implications for your finances. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
- Just because you qualify for a first-time buyer program from the federal or Arizona state government doesn’t mean that you should apply for it. You should do as much research you can about the lenders, interest rates and down payment stipulations for every option.
- Determine how much house you can afford before you start looking. It’s important to keep your wallet and expectations in sync.
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