City of Cottonwood
Jeanne Frieder
Cities of Sedona & Cottonwood Housing Manager
102 Roadrunner Dr., Sedona, AZ 86336
Program · Cottonwood & Verde Valley
Cottonwood Homeownership Programs
The City of Cottonwood funds two related down payment assistance programs for first-time homebuyers in the Verde Valley. Both offer up to $40,000 with a generous 4-to-1 match on your own funds — but they have different employer eligibility rules. Administered by Housing Solutions of N. Arizona (HSNA).
Two programs, side by side
| Detail | Cottonwood CHP | Cottonwood EAH |
|---|---|---|
| Who qualifies | Any employee working ≥29 hrs/week within City of Cottonwood limits | City of Cottonwood municipal employees only (non-temporary, ≥29 hrs/week) |
| Maximum assistance | Up to $40,000 | Up to $40,000 |
| Match | 4 to 1 on borrower funds | 4 to 1 on borrower funds (up to $10,000 of your contribution) |
| Income limit | ≤150% AMI (Yavapai County, by household size) | No explicit income cap |
| FTHB requirement | Yes — first-time Verde Valley buyer (no AZ home in Yavapai/Coconino counties in 3 years) | Yes — same definition |
| Performance review | Not applicable | Most recent performance evaluation must meet or exceed expectations; not on a performance work plan |
| Form | No-interest deferred-payment loan, 2nd lien | No-interest deferred-payment loan, 2nd lien |
| Forgiveness | Never forgiven — always repayable | Never forgiven — always repayable |
| Retention period | 5 years (separation triggers full repayment within 6 months) | 5 years (same) |
Remote/virtual employees who can work from anywhere are not eligible for either program. The employer must verify on-site presence requirement of at least 29 hours/week.
Where you can buy — Verde Valley zip codes
Both CHP and EAH require the home to be in one of these zip codes. The geographic eligibility is checked by zip code, not by city/town name — so verify the zip on any specific listing.
| Zip Code | Area |
|---|---|
| 86322 | Camp Verde |
| 86324 | Clarkdale |
| 86325 | Cornville / Page Springs |
| 86326 | Cottonwood / Verde Villages / Bridgeport |
| 86331 | Jerome |
| 86335 | Rimrock / Beaver Creek / Lake Montezuma / McGuireville |
| 86336 | Sedona |
| 86351 | Sedona |
Eligibility details — both programs
| Requirement | Detail |
|---|---|
| Employment | ≥29 hrs/week, on-site (not remote). CHP: any Cottonwood-area employer. EAH: City of Cottonwood only. |
| First-time homebuyer | No primary residence ownership in Yavapai or Coconino counties within the prior 3 years. |
| Property location | Verde Valley zip codes only (see above). |
| Property type | Permanently affixed home. Manufactured homes meeting FHA/Fannie Mae standards eligible. Land-only purchases not eligible. |
| Owner occupancy | Required. Continuous absence >60 days = default; repayment triggered. |
| Citizenship/legal status | U.S. citizen or lawfully admitted permanent resident. |
| Housing ratio | CHP: 25–35% of gross monthly income. EAH: ≤35%. (Lower may be allowed in specific cases.) |
| Debt-to-income | ≤45% of gross monthly income (both programs). |
| Need test (CHP only) | Liquid assets after closing ≤6 months PITI (excludes retirement assets). |
| Home price ceiling | Cannot exceed 1.3× the median home sales price for the area. Cannot exceed appraised value. |
| Homebuyer education | 8-hour HSNA-approved class required (~$50 with HSNA coupon code; available in English and Spanish via EHome America). |
| One-on-one counseling | HUD-standards housing counseling with HSNA required (free). |
| Closing-cost assistance cap | Of total assistance, up to 3% of purchase price can go toward closing costs. |
2022 income limits — Cottonwood CHP (Yavapai County)
| Household size | 150% AMI (CHP cap) |
|---|---|
| 1 person | $75,000 |
| 2 person | $85,650 |
| 3 person | $96,300 |
| 4 person | $106,950 |
| 5 person | $115,650 |
Limits shown are 2022 figures from the program guidelines. HUD updates AMI charts annually — verify current numbers with HSNA before relying on a specific limit. Income includes all adult household members, even those not on the loan, per 24 CFR Part 5.
First mortgage requirements
The Cottonwood programs only work with safe, conventional first mortgages. Specifically not allowed:
- Negative amortizing loans
- Pre-payment penalties
- Interest-only loans
- Balloon payments
- Sub-prime mortgages
Closing costs and borrower fees must be reasonable and customary. Interest rates must be competitive. Each loan is reviewed by HSNA's Homebuyer Assistance Programs Committee (local lenders + real-estate experts) before approval.
How repayment works
The assistance is never forgiven. It's a deferred loan that becomes due on a triggering event:
- Sale of the home
- Cash-out refinance
- Property no longer owner-occupied
- Change in title
- Separation from qualifying Cottonwood employment during the 5-year retention period (CHP and EAH)
For market-rate purchases, the repayment amount is the higher of:
- The original assistance amount, or
- The original assistance percentage applied to the home's current sale price or value
So if you got $40,000 in help on a $400,000 home (10% of value), and later sell the home for $500,000, you repay $50,000 (10% of the new value). This shared-appreciation feature is how the program protects city funds against appreciation.
For Land Trust or deed-restricted purchases, repayment is just the original assistance amount.
The City of Cottonwood also records a Right of First Refusal on the property, separate from the deed of trust — giving the city the option to purchase the home if you sell.
Process & timeline
- 1
Pre-qualify with us
20-minute call. We confirm Verde Valley zip code eligibility and run loan-program math (FHA/conventional first mortgage, paired with CHP or EAH).
- 2
HSNA counseling intake
One-on-one housing counseling with HSNA. They verify employment, household income, and need (CHP). Free service.
- 3
Homebuyer education
8-hour HSNA class via EHome America online ($50 with coupon). Required before funding reservation.
- 4
Loan pre-approval
We issue a pre-approval letter with the first mortgage. You receive an HSNA award letter once HSNA's HAP Committee approves.
- 5
Find a home
Verde Valley listings only. 1.3× median price cap applies. Inspection strongly recommended.
- 6
Close
HSNA staff coordinate with title and Cornerstone. Funds are reserved on a first-come-first-served basis once the City issues a Notice to Proceed.
Program contacts
Housing Solutions of N. Arizona
Devonna McLaughlin, CEO · devonnam@housingnaz.org
Angela Koder, Housing Programs Manager · angelak@housingnaz.org
1500 E. Cedar Ave # 86, Flagstaff, AZ 86004 · (928) 214-7456
FAQ
What's the difference between Cottonwood CHP and Cottonwood EAH?
CHP is for anyone employed in Cottonwood city limits at least 29 hours per week. EAH is only for City of Cottonwood municipal employees. Both offer up to $40,000 with a 4:1 match on borrower funds. CHP has a 150% AMI income cap (Yavapai County); EAH does not have an explicit income cap.
Where can I buy with CHP or EAH funds?
The home must be in the Verde Valley area: zip codes 86322 (Camp Verde), 86324 (Clarkdale), 86325 (Cornville/Page Springs), 86326 (Cottonwood/Verde Villages/Bridgeport), 86331 (Jerome), 86335 (Rimrock/Beaver Creek/Lake Montezuma/McGuireville), 86336 (Sedona), or 86351 (Sedona).
Is the Cottonwood DPA forgiven over time?
No. CHP and EAH are interest-free deferred-payment loans that are never forgiven. Repayment triggers: sale, cash-out refinance, change in title, end of owner-occupancy, or separation from qualifying employment during the 5-year retention period.
How does the 4-to-1 match work?
You contribute up to $10,000 of your own funds. The program matches that 4:1, providing up to $40,000 in assistance. Total cap is $40,000 per household. Borrower funds may be a documented gift if the first mortgage lender allows it.
What happens if I leave my Cottonwood employer within 5 years?
For both CHP and EAH, separation from qualifying employment during the 5-year retention period triggers full repayment of the assistance within 6 months. After year 5, repayment is only triggered by sale, cash-out refinance, change in title, or end of owner-occupancy.
Can remote employees qualify?
No. Both programs require on-site work — the employer must verify the role can't be done remotely and that ≥29 hours/week of physical presence is required. This is intended to support local workforce, not remote workers who happen to live in the Verde Valley.
How much can go toward closing costs?
Up to 3% of the purchase price from the assistance can be used for closing costs. The rest goes to down payment.
Can I use this with FHA, VA, or USDA?
Yes — both CHP and EAH layer on top of standard first mortgages (FHA, VA, USDA, conventional) as long as those loans meet the program's restrictions (no negative am, no pre-payment penalties, no interest-only, no balloon, no sub-prime). We'll model the right pairing for your scenario.
What if the home has appreciated significantly when I sell?
You repay the higher of your original assistance amount or your original assistance percentage applied to the new home value. Example: $40,000 on a $400,000 home (10%) becomes $50,000 due if the home sells for $500,000.
Working in Cottonwood? Let's see if you qualify.
20 minutes — bring your employer, household income range, and rough credit. We'll confirm CHP vs EAH fit and run real numbers on a Verde Valley purchase.