California ADU Construction Loan Rules: Fannie Mae Guidelines A permitted backyard ADU can add flexible living space and potential rental income to a California primary residence. Corey Friedrich, NMLS #2746546 | Best Deal First If you’re building an accessory dwelling unit in California, the financing question usually comes down to three things: which loan structure fits, whether projected rent can help you qualify, and whether the finished ADU will receive value from the appraiser. I’ll walk you through the California ADU mortgage financing rules for 2026, including Fannie Mae HomeStyle Renovation, projected rental income, as-completed appraisal math, and the permitting issues that can make or break the loan. My approach is straightforward: Total Transparency, no hidden costs, and no assumptions that an ADU automatically pays for itself. 1. Primary Residence ADU Financing: Renovation Loans vs. Second Mortgages California homeowners generally have four financing paths for an A...
Arizona HOME Plus Program: $0 Down Payment Rules in 2026
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| Arizona homebuyers may use down payment assistance to preserve savings for reserves, inspections, moving expenses, and early homeownership costs. |
Corey Friedrich, NMLS #2746546 | Best Deal First
Buying a home in Arizona with little or nothing down may be possible, but “$0 down” does not mean “no financial responsibility.” Down payment assistance can come with income limits, education requirements, credit standards, funding limits, and a lien against the property.
In this 2026 guide, I’ll explain how the statewide HOME Plus program works, what Maricopa County’s Home in Five Advantage program currently offers, and how the WISH matching grant may help eligible first-time Arizona buyers.
Total Transparency matters here: there are no hidden costs. Before you rely on any assistance amount, ask your approved lender for a written breakdown of the first mortgage, second mortgage, interest rate, mortgage insurance, closing costs, and repayment conditions.
1. Statewide HOME Plus Assistance: Up to 4% Second Mortgage Options
The Arizona Industrial Development Authority, commonly called the Arizona IDA, administers the statewide HOME Plus program. HOME Plus is available throughout Arizona and is designed to help eligible buyers cover part of their down payment and closing costs.
The program pairs a 30-year fixed-rate first mortgage with a second mortgage that can provide up to 4% assistance.
Key HOME Plus points for 2026 include:
✔ Assistance is provided as a zero-interest, deferred second mortgage.
✔ The second mortgage may provide up to 4% toward eligible down payment and closing costs.
✔ The statewide income limit is $155,386 for all Arizona counties, based on current 2026 program information.
✔ HOME Plus does not require first-time homebuyer status.
✔ One borrower must complete an approved homebuyer education course before closing.
✔ The underlying first-mortgage interest rate is market-based and may vary by program option and lender.
✔ Credit score and debt-to-income requirements are determined through the selected loan program and participating lender.
According to the official Arizona HOME Plus program information, the second mortgage is forgiven over a five-year, zero-interest schedule. The balance is forgiven in stages across 60 months, with approximately 20% of the original balance forgiven each year.
HOME Plus example: $400,000 Arizona purchase
Assume you purchase an Arizona home for $400,000 and qualify for the full 4% assistance amount:
- $400,000 × 4% = $16,000 HOME Plus second mortgage
- Approximate annual forgiveness: $16,000 × 20% = $3,200
- Approximate monthly forgiveness: $16,000 ÷ 60 months = $266.67
The balance would work out approximately as follows:
✔ After year one: $3,200 forgiven; approximately $12,800 remains.
✔ After year two: $6,400 forgiven cumulatively; approximately $9,600 remains.
✔ After year three: $9,600 forgiven cumulatively; approximately $6,400 remains.
✔ After year four: $12,800 forgiven cumulatively; approximately $3,200 remains.
✔ After 60 months: approximately $0 owed, assuming you remain in the home and keep the loan current under the program terms.
Here is the important catch: selling or refinancing before the five-year period ends can trigger repayment of the remaining second-mortgage balance. A lender must review your specific documents because the assistance is still a lien, even though it may ultimately be forgiven.
Do not confuse HOME Plus with Arizona Is Home
Arizona Is Home is a separate Arizona IDA program with different rules. The distinction between forgivable and non-forgivable assistance is critical.
Arizona Is Home generally provides:
✔ A 4% non-forgivable second mortgage that must be repaid in full when the property is sold or refinanced.
✔ Availability in 13 rural Arizona counties, subject to current program boundaries.
✔ A first-time homebuyer requirement, with exceptions for qualifying veterans and purchases in targeted areas.
✔ Income limits based on 100% of county-specific Area Median Income.
✔ A below-market 30-year fixed first-mortgage rate set by the Arizona IDA.
✔ A generally required minimum credit score of 620.
You can review the separate Arizona Is Home program details before deciding which program deserves a closer look. Ask your lender in writing: “Is this second mortgage forgivable, or must the full balance be repaid?” That one question can prevent a costly surprise later.
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| The right low-down-payment structure depends on your income, credit profile, property, and long-term plans, not just the headline assistance percentage. |
2. Maricopa County "Home in Five" Grants for Phoenix & East Valley Buyers
The Home in Five Advantage program serves buyers purchasing homes in Maricopa County, including Phoenix and many East Valley communities. The Maricopa County Industrial Development Authority states that eligible buyers may receive up to 6% assistance toward down payment and closing costs, depending on the available option and qualification profile.
However, the program’s funding status in 2026 requires careful attention.
As of June 25, 2026, funds for the Home in Five Advantage seven-year forgivable down payment assistance option paired with a 30-year first mortgage were fully utilized, and additional funds were not expected at that time.
Also, as of June 9, 2026, all Home in Five Platinum funds had been utilized and the waitlist was closed.
That means Home in Five is not an open tap of guaranteed money. Other Home in Five Advantage assistance options may remain subject to market availability, but an approved lender must confirm what is actually available before you count on it for an offer.
The Maricopa County Industrial Development Authority homebuyer assistance page identifies Home in Five as a Maricopa County program. General qualification guidelines include:
✔ Minimum 640 FICO score.
✔ Maximum 50% debt-to-income ratio, subject to program and underwriting requirements.
✔ Completion of an 8-hour HUD-approved homebuyer education course.
✔ Purchase of an eligible owner-occupied home in Maricopa County.
✔ Approval through a participating Home in Five lender.
✔ Assistance availability confirmed before relying on the funds.
✔ Funding allocated on a first-come, first-served basis when a particular option is available.
The most common mistake is treating a past program summary as if it guarantees current funds. Program caps, second-lien terms, rates, and available assistance options can change quickly. Before you submit an offer in Phoenix or the East Valley, ask the lender to verify the current program status and provide the applicable second-loan documents.
The headline amount also does not tell you whether the assistance is forgivable, deferred, amortizing, or repayable at sale or refinance. Read the terms. It’s better to slow down for five minutes than to discover the repayment rules at closing.
3. WISH Program 4-to-1 Matching Grants for First-Time Arizona Buyers
The WISH program, or Workforce Initiative Subsidy for Homeownership, is administered by FHLBank San Francisco through participating member financial institutions in Arizona.
WISH is different from HOME Plus because it is a 4-to-1 matching grant. For every $1 of qualifying buyer contribution, the program may provide $4 in grant funds for down payment and closing costs.
Here is the requested math:
- Buyer contribution: $2,000
- WISH match: $2,000 × 4 = $8,000
- Total toward the purchase: $2,000 + $8,000 = $10,000
The maximum WISH grant for 2026 is $32,837. Reaching that maximum requires an approximate buyer contribution of:
- $32,837 ÷ 4 = $8,209.25
So, a buyer contribution of roughly $8,209 may support the maximum matching amount, subject to the program’s actual documentation and participating lender approval.
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| For first-time Arizona buyers, matching-grant programs can turn disciplined savings into a much larger pool of funds for closing and upfront homeownership costs. |
The official FHLBank San Francisco WISH page lists these core eligibility requirements:
✔ First-time homebuyer status under the program definition.
✔ Household income at or below 80% of HUD Area Median Income.
✔ Completion of a qualifying homebuyer counseling program.
✔ A required contribution from the buyer’s own qualifying funds.
✔ Purchase of an eligible owner-occupied primary residence in Arizona.
✔ Application through a participating Arizona member financial institution.
✔ Funds available at the time of enrollment and reservation.
WISH funds are limited and awarded on a first-come, first-served basis. You do not apply directly to FHLBank San Francisco as an individual buyer. The participating Arizona financial institution enrolls eligible buyers, reserves funds, and handles the grant process.
One more protective point: WISH assistance may carry retention and repayment requirements if you sell, transfer, refinance, or otherwise change ownership during the applicable period. Ask for the retention rules before assuming the grant is permanently yours.
How to Qualify with an Approved Arizona Lender
Down payment assistance is not obtained by simply filling out a general state or county application. You must originate the mortgage through a participating or approved Arizona lender for the specific program.
I recommend following this sequence:
✔ Confirm program participation. Ask whether the lender currently offers HOME Plus, Home in Five Advantage, WISH, or more than one option.
✔ Verify income using the correct standard. HOME Plus uses the current statewide limit of $155,386. Arizona Is Home uses county-specific limits tied to 100% AMI. WISH uses the household limit of 80% HUD AMI.
✔ Review credit requirements. Home in Five generally requires 640 FICO. Arizona Is Home generally requires 620. HOME Plus requirements vary by the first mortgage and lender.
✔ Complete education early. Plan for the required homebuyer education course, including the eight-hour course associated with Home in Five when applicable.
✔ Confirm funds before making an offer. Do not write an offer based on an assistance amount that has not been checked and reserved through the lender.
✔ Understand the lien. Assistance is commonly secured by a second mortgage. It can affect a future sale, refinance, payoff, or transfer.
✔ Ask whether the second mortgage is forgivable. Get the answer in writing. HOME Plus and Arizona Is Home are not interchangeable.
✔ Compare the full payment. Review principal, interest, taxes, insurance, mortgage insurance, lender fees, and any second-lien terms, not just the assistance percentage.
✔ Keep reserves. Even with assistance, you may need funds for earnest money, inspections, appraisal costs, prepaid items, repairs, moving expenses, and emergency savings.
For related reading, see my guide to FHA and conventional low-down-payment loan structures.
Bottom Line: Arizona Assistance Requires the Right Match
The Arizona HOME Plus program may provide up to 4% assistance statewide, with a $155,386 income limit and a five-year forgiveness schedule. Home in Five Advantage may provide up to 6% in Maricopa County, but key 2026 funding pools have already been utilized. WISH may provide a powerful 4-to-1 match, but it requires first-time buyer status, income qualification, counseling, buyer contribution, and available funds through a participating Arizona institution.
The best move is not to chase the largest advertised percentage. It is to compare the complete loan structure and understand every lien, deadline, rate, and repayment condition before you commit.
I provide one-on-one guidance directly, no call center and no gatekeepers. If you want to review an Arizona purchase scenario, schedule a consultation through my calendar.
Corey Friedrich, NMLS #2746546
Mortgage Loan Officer | Remote Online Notary
Best Deal First | Powered by Mortgage X Inc.
Direct Line: 909-550-1146 (Call or Text)
Email: Corey@BestDealFirst.com
Website: www.BestDealFirst.com
Schedule Consultation: My Calendar
Equal Housing Lender | NMLS: 2569359
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