Arizona DPA Forgiveness Guide
HOME Plus's forgivable second is forgiven in full after 60 months. See what happens if you sell or refinance sooner, the non-forgivable option, and PTHS.
HOME Plus, Arizona's statewide down payment assistance, is not a grant. It is a second mortgage that comes in two versions. The forgivable version charges no interest and no monthly payment, and the Arizona Industrial Development Authority forgives it completely after 5 years (60 months). Nothing is forgiven along the way, so selling or refinancing within those 60 months means repaying the second lien. A non-forgivable version is also offered, and it is repaid when you sell or refinance.
The Mechanics: A Silent Second Lien
Key Takeaway: HOME Plus assistance is recorded as a second lien against your home. On the forgivable option you make no monthly payments and pay no interest. The lien does not shrink over time; it is forgiven in one step once month 60 has passed.
Here's what that looks like in practice:
- At closing: The assistance (up to 4% of your loan amount) goes toward your down payment and eligible closing costs. A second lien for that amount is recorded.
- Months 1–60: The full balance stays in place. No payments are due, and none of it has been forgiven yet.
- After month 60: The forgivable second is forgiven completely. The assistance is now permanently yours.
What Triggers Repayment?
On the forgivable option, two events inside the first 60 months trigger repayment:
- Selling the home — the second lien is paid off from the sale proceeds
- Refinancing the first mortgage — Arizona IDA does not subordinate its lien for a refinance, so the second is paid off as part of it
There is no proration. Selling at month 24 or month 59 means repaying the whole second lien, and Arizona IDA says it grants no exceptions to these terms. If you choose the non-forgivable option instead, plan on repaying it whenever you sell or refinance.
HOME Plus vs. PTHS Forgiveness
| Program | When It Is Fully Forgiven | How It Is Forgiven |
|---|---|---|
| HOME Plus forgivable option (statewide) | After 60 months | All at once; repaid in full if you sell or refinance sooner |
| HOME Plus non-forgivable option | Not forgiven | Repaid when you sell or refinance |
| Pima Tucson Homebuyer's Solution | Set by the program's own terms | Ask for the current terms in writing |
Because PTHS forgiveness comes from its own program documents, compare those terms in writing against HOME Plus before you choose — our HOME Plus vs. PTHS comparison walks through the other differences.
Why the Structure Benefits Buyers
A forgivable second lien is easier on a household budget than a repayable DPA loan, which some lender-sponsored programs use. There's no added monthly obligation, so it doesn't affect your debt-to-income ratio the way a payment-bearing second would. And unlike a second that stays due on sale indefinitely, the HOME Plus forgivable option has a fixed end point at month 60.
If you might move or refinance within five years, weigh that before you commit: the DPA calculator shows your estimated assistance, and that full amount is what you would owe back during the first 60 months.
Frequently Asked Questions
Do I make monthly payments on Arizona DPA?
Not on the HOME Plus forgivable option. The second lien carries no monthly payment and no interest, and it is forgiven once 60 months have passed.
What happens if I sell my home after 3 years?
On the forgivable HOME Plus option, year 3 is still inside the 60-month window, so the full second lien is repaid from the sale proceeds. Once you are past month 60, the lien is forgiven and a later sale involves no DPA repayment.
Does refinancing after forgiveness affect anything?
No. After month 60 the forgivable lien is gone, so you can refinance freely. Refinancing before month 60 requires paying off the full second lien, because Arizona IDA does not subordinate it.
Is the forgiven amount taxable?
Tax treatment of forgiven assistance depends on your situation — consult a tax professional. Program details are available from the Arizona Industrial Development Authority.
Can repeat buyers get the same forgiveness terms?
Yes. Forgiveness terms are identical for first-time and repeat buyers — see Arizona DPA for non-first-time home buyers.
Plan Your Timeline
Tanner Cook (NMLS #2090424) and Zac Cook (NMLS #2111496) at Cornerstone First Mortgage (NMLS #173855) can show you exactly how forgiveness applies to your purchase. Take the 60-second quiz to start.
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