Saving for a down payment in Tempe can feel like the hardest part of buying. You are not alone, and you have more options than you might think. Arizona offers several paths to cover part of your down payment or closing costs, and with the right plan, you can still write a competitive offer on a condo or home. In this guide, you will learn what types of help exist, who typically qualifies, how these programs work with loans and condos, and the steps to take now. Let’s dive in.
What down payment help is
Down payment assistance, often called DPA, is money that helps you cover the cash needed to purchase a home. It can be a grant, a forgivable loan, a deferred second mortgage, or a repayable second loan. Some programs also cover closing costs, which reduces out-of-pocket fees but does not replace earnest money or minimum down payment rules.
Many programs are offered through approved lenders and pair with specific first mortgages. Expect standard mortgage underwriting along with a second layer of review for the assistance itself.
Arizona programs Tempe buyers use
State-administered assistance
Arizona’s statewide options are a common starting point. Programs are delivered through participating lenders and often come as a second mortgage that is forgivable, deferred, or repayable. Check the latest offerings and lender lists with the Arizona Department of Housing.
County and city programs
Maricopa County and the City of Tempe may fund targeted homeownership help. These programs can be income-based and sometimes favor current residents or local employees. Look for updates on the Maricopa County site and the City of Tempe housing pages, since availability changes with funding cycles.
Lender and mortgage-insurer programs
Some lenders provide their own grants or second loans that work with specific conventional products. These often pair with conventional low-down-payment programs that are designed for moderate-income buyers.
Federal mortgage options that lower cash needed
- FHA loans typically require a 3.5 percent down payment for eligible borrowers. Many DPA programs are built to pair with FHA, which is why you will see FHA mentioned often.
- Conventional low-down-payment loans include Fannie Mae’s HomeReady and Freddie Mac’s Home Possible. These can allow as little as 3 percent down for eligible buyers, and some DPA programs work with them.
- VA and USDA can be zero down for eligible buyers. DPA is less common here, though some programs may still help with closing costs.
Employer and nonprofit support
Large employers, universities, and nonprofits sometimes offer grants or loans that can stack with other programs. HUD-approved counselors can help you find current options and confirm compatibility.
Closing costs vs. down payment help
Closing-cost assistance pays lender fees, title fees, and prepaids. Down payment assistance covers the down payment itself or replaces part of it with a second loan or grant. Some buyers combine both to reduce total cash to close.
Who typically qualifies
Income and price limits
Most programs use income limits and purchase price caps that change by household size and program. Many limits tie to area median income bands, such as 80 percent or 100 percent of AMI for Maricopa County. The exact numbers change, so verify current thresholds with the program administrator or your lender.
First-time buyer definition
First-time buyer usually means you have not owned a home in the past three years. Some programs offer exceptions, such as targeted areas or certain life events. Always check the program’s definition before you assume eligibility.
Credit, debt, and reserves
You still need to qualify for the first mortgage. That means meeting minimum credit scores, acceptable debt-to-income ratios, and any reserve requirements. DPA programs may add homebuyer education or counseling as a condition.
Forms of assistance
- Forgivable grant. The amount forgives over a set period while you live in the home.
- Deferred second mortgage. No monthly payment, but it must be repaid when you sell, refinance, or reach the end of the term.
- Repayable second mortgage. Monthly payments or a balloon due later, sometimes at a low or zero interest rate.
- Closing-cost grant. Funds are limited to fees and prepaids, not the down payment.
Occupancy and resale rules
Assistance is for primary residences, not investment properties. Some programs include resale or recapture rules, such as repayment if you sell within a certain period. Read the fine print before you commit.
Education and documentation
Many programs require a homebuyer education course or counseling, often completed before closing. A HUD-approved agency can guide you and provide the certificate you need. To find one, start with HUD.
How programs pair with loans
FHA plus DPA
FHA paired with DPA is common for buyers who need help with both the down payment and closing costs. If you are buying a condo, make sure the project is FHA eligible, since many Tempe condos are not on FHA’s approval list. If the project is not eligible, you cannot use an FHA loan there.
Conventional plus DPA
If you have stronger credit and want to avoid FHA mortgage insurance, a conventional loan paired with DPA can work well. Many lender-backed or state programs allow a subordinate lien with conventional financing, especially for HomeReady or Home Possible borrowers.
VA or USDA plus assistance
These loans are often zero down. Some assistance may still help with closing costs, but availability varies and is less common.
Seller concessions and limits
Programs and loan types set limits on how much a seller can contribute to your costs. FHA, VA, and conventional loans each have caps. In competitive markets, large seller concessions are less common, so have a plan that balances assistance with a clean, compelling offer.
Timing and extra underwriting
Expect an additional layer of review for the assistance itself. Income checks, education certificates, and program applications can add time. The solution is simple. Get both your mortgage preapproval and a DPA pre-qualification or conditional commitment before you write offers.
Condo rules that matter in Tempe
Project approvals
For FHA or VA loans, the condo project must meet agency rules. If the project is not on the agency’s approval list or cannot pass a review, that loan type will not work. Your lender can check lists and project eligibility through HUD or their internal systems.
HOA dues and debt ratios
HOA dues count toward your monthly payment and affect your debt-to-income ratio. Higher dues can limit the loan amount you qualify for and, in some cases, your eligibility for certain low-down-payment programs. Ask your lender to model different HOA levels early.
Special assessments
Pending or recent special assessments can complicate underwriting. These costs may change your qualifying numbers or make a program ineligible. Review HOA documents as soon as you go under contract.
Make a competitive offer with DPA
Understand seller concerns
Sellers often worry about extra paperwork and longer timelines. They also worry about condo eligibility and the appraisal. Your goal is to remove uncertainty.
Smart offer strategies
- Bring a DPA pre-commitment letter and a strong lender preapproval.
- Work with a lender who regularly closes Tempe or Maricopa County deals that use your chosen program.
- Keep your offer clean. Shorten inspection timelines where appropriate, but never skip essential protections without advice.
- Increase earnest money or add a limited appraisal gap if you can and if it fits your risk tolerance.
- Be flexible on closing date to match the seller’s plans.
Timing checklist
- Early. Speak with a lender that participates in Arizona DPA and ask for DPA pre-qualification.
- When you find a condo. Confirm project eligibility for your loan type and assistance.
- Before the offer. Secure a written DPA commitment you can share with your offer, if allowed.
- During underwriting. Plan for an extra step while the lender coordinates with the program administrator.
Step-by-step next moves
- Gather documents. Income, assets, ID, and employment history.
- Meet with a HUD-approved housing counselor for budgeting and program guidance.
- Choose a lender who is approved for Arizona DPA and experienced with condos in Maricopa County.
- Get full mortgage preapproval and apply for DPA pre-qualification or conditional approval before you shop in earnest.
- If you focus on condos, verify project eligibility for your loan type early in escrow.
- Complete any required homebuyer education as soon as possible.
- Coordinate timelines with your agent so your offer stays strong while all program conditions are met.
Trusted resources
- State programs and lender lists. Start at the Arizona Department of Housing.
- County updates and local initiatives. Check Maricopa County.
- City-level information and referrals. Visit the City of Tempe housing pages.
- HUD resources and counseling. Explore HUD for counseling agencies, FHA information, and condo guidance.
- Conventional low-down-payment programs. Review Fannie Mae and Freddie Mac.
Work with local experts
You can absolutely buy in Tempe with help on your down payment or closing costs. The key is to prepare early, pair the right program with the right loan, and present a clean, confident offer. If you want a local team that understands Tempe condos, East Valley neighborhoods, and DPA timelines, we are here to guide you from first call to keys in hand.
Reach out to the Huffman Davis Group for a friendly conversation about your goals and a clear plan to get you home.
FAQs
Does down payment assistance make my offer weaker in Tempe?
- Not necessarily. It can add paperwork and time, but you can stay competitive by securing a DPA pre-commitment, choosing an experienced lender, keeping your offer clean, and being flexible on timing.
Can I use down payment assistance on a Tempe condo purchase?
- Possibly. Many programs allow condos, but loan type and project eligibility matter. For FHA or VA, the condo must meet agency approval rules, so confirm eligibility before you rely on a specific loan and DPA pairing.
Do I have to repay the assistance I receive?
- It depends on the program. Grants can be forgivable over time, deferred seconds repay at sale or refinance, and some second mortgages have monthly payments. Read the program terms closely.
Will down payment assistance change my mortgage rate?
- The assistance does not directly set your rate, but your loan product and subordinate financing can affect pricing. Review lender disclosures and compare options.
Are down payment assistance funds taxable income?
- Repayable loans usually are not treated as income. Some grant types may have tax implications, which is uncommon for down-payment grants. For advice on your situation, consult a tax professional.
