What happens to your DPA second mortgage when you refinance — Arizona program rules
Most buyers don't ask about the refinance mechanics when they take DPA. Then 18 months later they want to refinance and discover the second mortgage either has to be paid off or subordinated — and the program may not let them subordinate.
Forgivable DPA second mortgages — refi rules
Home Plus and Home in Five Advantage seconds are typically forgivable over 3 or 5 years. They sit in second-lien position. When you refinance the first mortgage, the second-lien holder must agree to subordinate (stay in second position) or be paid off.
If the program permits subordination, you continue your forgiveness clock as if nothing happened. If subordination is denied or you sell, the unforgiven balance is due at the refi or sale closing. The assistance amounts and income limits behind each second change year to year, so check the current DPA figures before you plan a refinance.
Pay-back DPA second mortgages — refi rules
Chenoa Fund and similar pay-back programs structure the second as a true loan with payment terms. At refinance, the second is typically paid off from the proceeds — most refinance lenders won't allow it to stay because it complicates underwriting.
If the original program has prepayment penalty (rare in 2026), check the documentation before triggering refi.
Refinance timing strategy
| DPA program | Forgiveness period | Refi before forgiveness done? |
|---|---|---|
| Home Plus | 3 years | Subordinate; balance survives |
| Home in Five | 5 years | Subordinate; balance survives |
| Chenoa Fund 3.5% | 3 years | Usually pays off at refi |
| Chenoa Fund 5% | 3 years | Usually pays off at refi |
| Pathway to Purchase (suspended as of June 2026) | 5 years | Legacy program; out of funds. Existing liens still subordinate, balance survives |
Common questions
Does an IRRRL count as a refinance for DPA purposes?
Yes. The DPA program will evaluate the subordination request the same as any refinance.
Can I refinance to remove PMI without touching the DPA?
Sometimes. If the program permits subordination on the original lien, yes. Otherwise the refinance will require DPA payoff.
What if my home appreciates enough that I no longer need DPA?
Forgivable seconds continue forgiving regardless of appreciation. Pay-back seconds remain a true debt until paid.
Does the lender refinancing me handle DPA subordination automatically?
No — borrower needs to request subordination from the original DPA program. The new lender provides the new mortgage details; you submit the subordination request separately.
Do you have to pay back down payment assistance in Arizona?
Usually no, if you stay in the home. Home Plus and Home in Five give a forgivable soft second with no monthly payment, forgiven over 3 to 5 years. Chenoa Fund is a true repayable loan you pay back. If you refinance or sell before forgiveness completes, any unforgiven balance on a forgivable second is due at closing.
How much down payment assistance can I get in Arizona?
Home Plus gives up to 4% of the loan amount, plus 1% more for Active Duty and Veterans, for up to 5% statewide. Home in Five gives up to 5% plus 1% for teachers, first responders, and military, plus a 0.5% boost, for up to 6.5% but only in Maricopa County. See the current DPA figures for the latest amounts.
What credit score do I need for Arizona DPA?
You need a 620 credit score for Home Plus and 640 for Home in Five. FHA financing on its own allows scores as low as 580, and each DPA program sets its own minimum. If your score is below your program's floor, building it up a few points often unlocks the assistance and is worth the short wait.
Do I have to be a first-time buyer for Arizona DPA?
No. Home Plus and Home in Five both allow repeat buyers, not just first-timers. Where "first-time buyer" rules do apply on certain options, it means you have not owned a home in the past three years. Many Arizona move-up buyers use DPA, so don't rule yourself out because you have owned before.
Is down payment assistance always the right move?
No. DPA can carry slightly higher first-mortgage pricing in exchange for the help, so if you already have savings, compare paying your own down payment against taking the assistance. Mike runs both numbers side by side. Sometimes DPA wins, sometimes your cash wins. The honest answer depends on your scenario, which is why we model it.
How Mike + Cornerstone help
Refi strategy with DPA layered on top is one of the most common scenarios I help Arizona homeowners think through. We model the breakeven, the subordination feasibility, and whether forced payoff of the second wrecks the math. Sometimes the right answer is to wait 12 months for the forgiveness clock to complete first.
Talk to Mike first Get pre-approved
No pressure, no commitment. Free 20-minute consult. Mike will look at your scenario and tell you straight whether this works for you.