What Is a Grant?
If you’re thinking about buying your first home in Arizona, you may have heard the term “grant” used when talking about down payment assistance. But what exactly is a grant? And how is it different from other types of financial help like loans or “silent second” mortgages?
In this article, we’ll break it all down in simple terms. We’ll explain what a grant is, how it can help you buy a home, and how it compares to other types of down payment assistance. Whether you’re just starting your home-buying journey or already searching for the right house, understanding grants could help you get the keys to your first home a lot sooner than you thought.
Let’s dive in.
What Is a Grant?
A grant is money that is given to you for a specific purpose — and best of all, you don’t have to pay it back (as long as you meet the rules). In the case of buying a house, some programs offer grants to help cover your down payment or closing costs.
It’s kind of like a gift, but it comes with conditions. For example, you may have to live in the home for a certain number of years or stay current on your mortgage to keep the grant from turning into a loan. But if you meet those conditions, the money stays free and clear.
Grants are not loans. They’re not something you’ll make monthly payments on. And they don’t charge interest. They are designed to help people become homeowners who otherwise might not be able to afford it.
What Is a Down Payment Grant?
A down payment grant is a special kind of grant that goes toward the money you need upfront when buying a home. Most home loans require a down payment — this is your “skin in the game,” and it usually ranges from 3% to 20% of the home’s purchase price.
For example, if you’re buying a $300,000 home, a 3.5% down payment (common for FHA loans) would be $10,500. That’s a lot of money for many people to save, especially first-time buyers.
A down payment grant helps by covering some or all of that amount so you can move forward with the purchase.
In Arizona, several programs offer forgivable down payment grants, which we’ll explain next.
What Is a Forgivable Grant?
The term “forgivable grant” can be a little confusing. If it’s a grant, why does it need to be “forgiven”?
Well, here’s the key: Some grants come with conditions. You may need to stay in the home for a certain number of years, usually between 3 to 5 years, to keep the money as a grant. If you sell or refinance the home too soon, you might have to repay some or all of the money.
But if you follow the rules — typically just living in the home as your primary residence for the required time — the grant is forgiven, and you don’t owe anything back.
Example:
Let’s say you get a $10,000 grant to help with your down payment. The program says you need to stay in the home for five years. If you move or sell after two years, you might have to repay part of the money — maybe $6,000, depending on the program. But if you stay for all five years, the full $10,000 is forgiven.
That’s why it’s called a forgivable grant. The money starts out as a “loan” on paper, but if you meet the conditions, it becomes a gift.
Where Do Grants Come From?
Grants for homebuyers come from several sources:
- Government Agencies
Federal, state, county, and even city governments offer grant programs to support first-time buyers. In Arizona, there are programs supported by:
• The Arizona Department of Housing
• Local counties like Maricopa and Pima
• Municipal programs in cities like Phoenix, Mesa, and Tucson
These programs are designed to increase homeownership, especially in areas where housing costs are high or where homeownership rates are low. - Housing Finance Agencies
Some grant programs are run by Housing Finance Agencies (HFAs) — state or regional organizations that help make housing more affordable. Arizona has several HFA-backed programs, including the HOME+PLUS program, which offers a forgivable grant for down payment assistance. - Nonprofits and Charities
Some nonprofit organizations provide grants as part of their mission to help families build wealth through homeownership. These groups often work in partnership with government programs or lenders. - Lenders Partnering with Programs
Certain lenders are approved to offer loans with built-in grant assistance through partnerships with grant programs. These are often FHA, VA, or conventional loans combined with down payment help.
Who Can Get a Grant?
Grant programs often have eligibility rules. They are designed to help buyers who need the assistance — not investors or wealthy buyers.
Here are some common requirements:
• You must be a first-time homebuyer (which usually means you haven’t owned a home in the past 3 years).
• You need to live in the home as your primary residence.
• Your income must fall under a certain limit, based on where you live.
• The purchase price of the home must be under a set limit.
• You must take a homebuyer education class (usually online and free or low-cost).
Each program is different, so it’s important to work with a loan officer who understands Arizona grant programs and can guide you through the rules.
How Grants Are Different from Other Down Payment Assistance
Grants are one type of down payment assistance. Let’s compare them to two other common options: silent second mortgages and repayable loans.
Grants vs. Silent Second Mortgages
A silent second is a loan that doesn’t require monthly payments and usually charges no interest. It’s called “silent” because there’s no regular payment — but it’s still a loan, and you typically have to pay it back later.
Here’s how it works:
• The silent second loan helps cover your down payment or closing costs.
• You don’t make payments on it while you live in the home.
• But when you sell, refinance, or move out, the full amount is due.
So, while it may feel like free money, it’s not. A silent second adds debt to your home purchase, even if it’s delayed.
Grants, on the other hand, don’t add to your debt if they are forgiven. You never owe them back as long as you meet the requirements.
Grants vs. Repayable Down Payment Loans
Some programs offer down payment assistance in the form of a repayable loan, just like a second mortgage.
These loans often come with:
• Monthly payments
• Interest charges
• Terms of 10 to 30 years
While they can be helpful, especially if you don’t have the funds saved, you are still taking on more debt. It can increase your monthly costs and make qualifying for your main mortgage a little harder.
In contrast, a grant doesn’t add to your monthly bills or affect your debt-to-income ratio, which is important for loan approval.
Why Grants Are a Great Option for First-Time Buyers
For many first-time buyers in Arizona, down payment grants are one of the best tools to get into a home. Here’s why:
✅ No Monthly Payments
You don’t have to budget for an extra loan payment each month.
✅ May Be Forgiven Completely
If you stay in the home and follow the rules, you may never have to pay it back.
✅ Lower Upfront Costs
You don’t have to wait years to save up a big down payment. That means you can buy sooner.
✅ Builds Wealth Faster
Homeownership builds long-term wealth. With a grant, you can start building equity without draining your savings.
✅ Less Risk Than a Loan
Grants don’t usually come with interest or long-term obligations.
What You Should Know Before Accepting a Grant
Grants can be a fantastic help, but it’s important to understand the fine print:
• Make sure you know the forgiveness period — how long you have to stay in the home.
• Understand what happens if you sell, refinance, or move out early.
• Find out if the grant creates a lien on your home — this could affect refinancing.
• Work with a loan officer who knows how to properly pair the grant with your mortgage.
Most importantly, ask questions. Grants are meant to help you — not surprise you with unexpected rules.
Popular Grant Program: The EPM Empowered DPA Program
One exciting option available to many homebuyers is the Empowered DPA Program, offered by Equity Prime Mortgage (EPM). This program is a great choice for buyers using an FHA loan who need help with their down payment — and it works in most states, including Arizona.
What Is It?
The Empowered DPA Program is a completely forgivable grant equal to 2% or 3.5% of the home’s purchase price. This means it can cover either part or even all of your required down payment.
As long as you meet the program’s rules, you don’t have to repay this money. It’s a true grant — not a loan, and not a silent second. That makes it one of the best tools available to first-time buyers.
Key Benefits
• No repayment required (grant is fully forgivable).
• Covers 2% or 3.5% of the purchase price.
• Can be combined with up to 6% in seller-paid closing costs.
• No resale restrictions — you’re free to sell when you choose.
• Available in most states, including Arizona.
Who Is Eligible?
You qualify if you meet just one of these four categories:
- First-Time Homebuyer
o You haven’t owned a home in the past 3 years. - Community or Public Service
o You work or volunteer in roles like teacher, EMT, firefighter, nurse, military, or other civil service. - Income-Based
o Your household income is 140% or less of the median income for your county. - Buying in an Underserved Area
o The home is located in a federally defined “underserved” census tract.
If any one borrower on the application meets one of those conditions, the household can qualify.
Who Can Use It?
• Minimum credit score of 580 (with automated approval).
• Available for FHA purchase loans only.
• Works for:
o Single-family homes
o Condos (FHA-approved)
o Manufactured homes (including singlewide)
o PUDs (planned unit developments)
• Not available for refinances, jumbo loans, or non-FHA loan types.
How It Works
• You apply for the grant through your lender at the same time you apply for your FHA loan.
• The grant shows up as a gift on your loan paperwork.
• You’ll take a homebuyer education course (often online).
• If you meet all conditions, the money is forgiven automatically — no strings attached.
Extra Support
In addition to the grant, EPM may also:
• Credit up to $100 for your homebuyer education fee.
• Credit up to $700 of your appraisal fee back toward your closing costs.
How to Get Started
Getting a grant isn’t as hard as you might think, but it does require planning. Here’s how to start:
- Talk to a mortgage expert who is familiar with Arizona grant programs.
- Get pre-qualified to understand your price range.
- Take a homebuyer education course (often required).
- Explore which grants you qualify for based on income, location, and loan type.
- Apply for the grant at the same time you apply for your mortgage.
At ArizonaFirstTimeHomeBuyerPrograms.com, we specialize in helping buyers navigate this exact process. We can connect you with the right program, the right loan, and the right people to help you every step of the way.
Final Thoughts
Grants are a powerful way to open the door to homeownership — especially if saving for a down payment feels out of reach. They aren’t magic, and they aren’t always simple, but they are real, and they are helping people across Arizona buy homes every day.
Whether you’re a teacher, nurse, veteran, or just someone trying to give your family a better future, there may be a grant program out there for you.
So now that you know what a grant is — and how it differs from loans or silent seconds — the next step is easy:
Reach out, learn your options, and take the first step toward owning your own home.
We’re here to help.
