Down payment assistance is sold as free money. In Arizona it almost never is. The statewide program is a second loan on your house, the first mortgage that comes with it can carry a higher rate, and if you sell or refinance in the first five years you pay the assistance back. None of that is hidden. It is on the official program pages. It is just not in the ads.

Blake's take: down payment assistance usually comes with a higher rate, so the monthly payment is often higher than a traditional loan. For most buyers who can cover 3 to 3.5%, the traditional loan wins. That is my guidance as Director of Lending at Pillar Mortgage Group, from pricing both versions of the same deal. It is not a statistic. Below are the facts that back it up, straight from the program administrators, checked October 26, 2026. For the full list of Arizona programs, see our Arizona down payment assistance page, and for the bigger picture, our Arizona first time home buyer guide.

What HOME Plus actually is

HOME Plus, run by the Arizona Industrial Development Authority, is the only assistance program open in all 15 Arizona counties. Here are its terms, in the administrator's own words where it matters:

• The amount. Up to 4% of the first mortgage. FHA, VA and USDA loans can carry 0, 2, 3 or 4%. Fannie Mae HFA Preferred and Freddie Mac HFA Advantage loans can carry 0, 3 or 4%. Not 5%, whatever older articles say.
• The form. A second lien at 0% interest with no monthly payment.
• Forgiveness. "The DPA second mortgage is completely forgiven after 5 years/60 months." Forgiven all at once at that point, not a little each month.
• Repayment. "If a refinance or sale occurs within the first 60 months, the DPA second lien must be repaid."
• No exceptions. "Arizona IDA does not subordinate or provide exceptions to the DPA repayment terms."
• The rate. The first mortgage rates "may be slightly higher than current industry rates."
• Eligibility. 620 minimum credit score, household income up to $155,386 as of April 6, 2026, and one borrower must finish a homebuyer education course before closing. No first time buyer requirement.

Quotes and terms are from the Arizona IDA's HOME Plus page, its 2026 income limit page and its June 2026 lender summary.

You get the assistance once. You pay the rate every month, for as long as you keep the loan.

The three costs nobody puts in the headline

1. The rate on the whole loan

The assistance covers a few percent of the price. The rate applies to the entire first mortgage. If the program rate is even slightly above what you could get on the open market, you pay that difference on every dollar you borrowed, every month. We will not invent a rate gap here, because it moves daily and differs by lender. The only honest way to see it is two Loan Estimates for the same home on the same day.

2. The five year handcuff

Inside 60 months, selling or refinancing means repaying the second lien in full. Think about what that does in a falling rate market. Rates drop in year two, every neighbor refinances, and you have to come up with the assistance balance first, from cash or from enough equity to pay it off in the new loan. The Arizona IDA says it does not subordinate. There is no workaround.

3. Less equity on day one

With assistance you start with two liens and very little skin in the game. If prices dip in your first few years and you need to sell, you owe the first mortgage plus the full second. With a traditional 3.5% or 3% down loan you start with one lien and your own money in the house.

Run your own numbers

DPA vs a traditional low down loan, side by side

Here is the structural comparison, using only what the official sources say. No rates and no payments are invented. Yours come from live pricing.

Sources: Arizona IDA HOME Plus page and June 2026 lender summary; HUD Handbook 4000.1; Fannie Mae Selling Guide B3-5.1-01 and 97% LTV FAQs (June 5, 2024). Compare the traditional options on our pages for FHA loans in Arizona and conventional loans. VA and USDA buyers who qualify can put 0% down with no assistance at all; see VA loans in Arizona.

The other Arizona programs carry their own strings

• Home in Five Advantage, Maricopa County. Up to 6%, 640 minimum score, income up to $153,440. Its site does not publish the repayment or forgiveness terms, so ask a participating lender before you commit. (homein5advantage.com)
• City of Phoenix Open Doors. Up to 10% of the price as a 0% deferred loan, forgiven after an affordability period of up to 15 years, and repaid on sale, move out or refinance inside that period. Income at or below 80% of area median income and a $470,250 price cap. (phoenix.gov)
• Pima Tucson Homebuyer's Solution. A 0% interest, 30 year forgivable second that comes due early if you sell, transfer or refinance during the term. 640 minimum. (eHousingPlus)
• Tucson and Pima County HOME DPA. Up to $50,000 or 20% of the price, whichever is less, at 2% deferred interest. Interest is forgiven after the affordability period, but the principal is repaid when you sell. (Tucson fact sheet, June 2026)
• Flagstaff CHAP. Never forgiven. Repaid with a share of appreciation when you sell, stop living there or do a cash out refinance. (City council packet, Oct 21, 2025)
• Arizona Is Home. Closed. The Arizona IDA says 2026 funds are exhausted and the program is retired for the rest of the year as of October 6, 2026. (homeplusaz.com)

Pillar Mortgage Group does not run any of these programs. Each is administered by the agency named. We are a broker, so we can price a loan with a program and without it on the same home, and show you both.

The test I run for every buyer who asks

When someone asks me about assistance, I do not argue. I price it. Two Loan Estimates, same home, same day: one with assistance, one traditional. Then four questions:

1. What is the difference in monthly payment? Look at principal, interest and mortgage insurance on both.
2. How many months until the payment difference eats the assistance? Divide the cash the assistance saves you at closing by the monthly difference. That is your break even in months.
3. Will you keep this loan past that point and past 60 months? If there is a real chance you sell or refinance first, the assistance comes due.
4. What could you do instead? A seller credit, a lender credit, a family gift, or simply buying a little less house can close the same gap with one loan.

If the break even comes fast and you would have kept the loan anyway, the traditional loan was the better deal. That is the result I see most often, which is why my take is what it is. Your numbers decide it, not mine.

Better ways to close the cash gap

Before taking a second lien, try these. A seller credit toward closing costs, capped on conventional loans by Fannie Mae's Selling Guide (B3-4.1-02) at 3% of the price above 90% loan to value. A lender credit. Gift funds from family. Or a 3% down conventional loan instead of 3.5% FHA. Our guide to how much cash you need to buy a house in Arizona runs the math on a $400,000 home. Already in a DPA loan? See refinancing with down payment assistance. Still house hunting? Browse homes across the Phoenix area in the range that works without a second lien.

See all our loan programs, how pre approval works, and more about Blake, or start at pillarmortgagegroup.com. If you are just getting started, read what a first time buyer should do first in Arizona.

Sources

Every figure in this post comes from the source named next to it. All sources were checked on October 26, 2026. Pillar Mortgage Group facts (average close, office hours, licensing) come from Pillar Mortgage Group.

1. Arizona IDA, HOME Plus Down Payment Assistance: homeplusaz.com
2. Arizona IDA, HOME Plus 2026 income limits: homeplusaz.com
3. Arizona IDA, HOME Plus product training, version April 6, 2026: homeplusaz.com
4. Arizona IDA, HOME Plus program summary for lenders, June 2026: homeplusaz.com
5. Arizona IDA, Arizona Is Home status notice, October 6, 2026: homeplusaz.com
6. Home in Five Advantage, Maricopa County: www.homein5advantage.com
7. City of Phoenix, Homeownership Opportunities (Open Doors): www.phoenix.gov
8. eHousingPlus, Pima Tucson Homebuyer's Solution program highlights: www.ehousingplus.com
9. City of Tucson and Pima County, Down Payment Assistance fact sheet, June 2026: www.tucsonaz.gov
10. City of Flagstaff, CHAP expansion council packet, October 21, 2025: public.destinyhosted.com
11. HUD, Single Family Housing Policy Handbook 4000.1: www.hud.gov
12. Fannie Mae Selling Guide B3-5.1-01 and B3-4.1-02, and 97% LTV Options FAQs, June 5, 2024 (cited by name)

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