DPA + Conventional Loan in Arizona — When It Beats FHA
Conventional 3%-down loans (Fannie HomeReady, Freddie Mac Home Possible) paired with DPA can be cheaper than FHA + DPA over 7+ years because conventional mortgage insurance drops off automatically at 80% LTV. Here's when conventional + DPA is the right call for Arizona buyers.
By Mike Certo, Cornerstone First Mortgage · NMLS #260555 · Updated 2026-06-08
Why conventional + DPA can beat FHA + DPA
FHA loans require mortgage insurance for the life of the loan (unless you refinance into conventional later). That MI premium is roughly 0.55-0.85% annually depending on LTV — that's $185-$285/month on a $400K loan, every month, until you refinance.
Conventional 3%-down loans (Fannie HomeReady or Freddie Mac Home Possible) require Private Mortgage Insurance (PMI) too — but PMI drops off automatically when your loan balance reaches 80% LTV (typically year 7-10 for a buyer making standard payments). After that, your monthly cost drops substantially.
For buyers planning to stay in the home 7+ years, the math on conventional + DPA can produce lower total cost than FHA + DPA — even after factoring in the slightly larger DPA second mortgage typically required.
The two conventional 3%-down loan types
Fannie Mae HomeReady
3% down. Income cap at 80% AMI. Credit score 620+. Lower PMI cost than standard conventional. Designed for buyers at the entry-level price range.
Freddie Mac Home Possible
3% down. Income cap at 80% AMI. Credit score 660+. Allows non-occupant co-borrowers (useful for buyers using a parent's income to qualify).
Arizona DPA programs that pair with conventional
Home Plus (statewide AZ)
Home Plus pairs with conventional primary mortgages including HomeReady and Home Possible. Provides 1% to 5% of the loan amount in down payment assistance. Income cap varies by tier — typically aligns with the 80% AMI cap that HomeReady/Home Possible require.
Home in Five Advantage (Maricopa)
Home in Five Advantage pairs with conventional. The 4% grant + 1% public-servant bonus covers down payment plus closing costs. Particularly clean math when the buyer's income fits 80% AMI for HomeReady.
Pima Tucson Homebuyer's Solution
Pima HBS pairs with conventional primary mortgages. Useful for Tucson buyers who qualify for HomeReady/Home Possible's 80% AMI cap.
5-year cost comparison example
On a $400K Maricopa County purchase with similar DPA assistance applied:
| Cost element | FHA + DPA | Conventional 3% + DPA |
|---|---|---|
| DPA amount (illustrative) | 4% | 3% |
| Down payment after DPA | $0-$2,000 net | $0-$4,000 net |
| FHA MI / Conventional PMI year 1 | ~$210/mo (FHA MIP) | ~$130/mo (HomeReady PMI) |
| PMI status at year 7 | Still required (FHA) | Likely dropped (LTV at 80%) |
| Estimated 5-year housing cost delta | Baseline | $3,500-$6,000 lower vs FHA |
Illustrative example only. Actual costs depend on credit profile, exact program version, rate environment, and property scenario.
Who conventional + DPA fits best
- Credit score 700+ (best pricing)
- Household income at or below 80% AMI
- Long planned homeownership horizon (7+ years)
- Buyers willing to wait through the slightly tighter underwriting in exchange for long-term savings
Conventional + DPA in Arizona — frequently asked questions
Do you have to pay back down payment assistance in Arizona?
It depends on the program. Home Plus and Home in Five both use a forgivable or deferred soft second with no monthly payment, so you don't repay it on schedule like a normal loan. Most are forgiven over time or come due only if you sell or refinance early. Always confirm the exact lien terms for your program version before you close.
How much down payment assistance can I get with a conventional loan?
Home Plus provides up to 5% of the loan amount statewide (4% plus a 1% add-on for Active Duty service members and Veterans). Home in Five provides up to 6.5% in Maricopa County (5% plus a 1% public-servant bonus for teachers, first responders, military, and Veterans, plus a 0.5% boost). Both pair with HomeReady and Home Possible 3%-down loans.
What credit score do I need for Arizona DPA with conventional?
You need a 620 credit score for Home Plus and 640 for Home in Five. The conventional first mortgage itself can start lower (HomeReady at 620, Home Possible at 660). There is no single DPA credit score; it depends on the program. If your score sits in the low 600s, your loan officer can map out the path to your program's floor.
What are the income limits?
Home Plus caps borrower income at $155,386 ($146,503 when paired with FHA, VA, USDA, or conventional HFA pricing). Home in Five caps household income at $157,360 as of June 10, 2026. HomeReady and Home Possible add their own 80% AMI income cap, so your conventional + DPA combo has to clear both the program limit and the AMI limit.
Do I have to be a first-time buyer?
No. Home Plus and Home in Five both allow repeat buyers, so you can use conventional + DPA even if you've owned before. Where "first-time buyer" status matters for a specific program tier, it means no ownership interest in a primary residence during the past 3 years, not that you've literally never owned.
Can I combine two DPA programs?
No. Arizona DPA programs do not stack with each other, so you choose one DPA program per home purchase. The DPA layers with your conventional first mortgage (HomeReady or Home Possible), but you can't run Home Plus and Home in Five together. We help you pick the single program that fits your county, income, and savings best.
Does DPA work with FHA, VA, USDA, and conventional?
Yes, all four. Home Plus and Home in Five layer with FHA, VA, USDA, and conventional first mortgages including Fannie Mae HomeReady and Freddie Mac Home Possible. This page focuses on the conventional pairing because conventional PMI drops off at 80% LTV, which can make conventional + DPA cheaper than FHA + DPA for buyers staying 7+ years.
Is DPA always the right move?
No. The DPA second can come with slightly higher first-mortgage pricing, so it isn't automatically the cheapest path. If you already have savings for a down payment, compare conventional + DPA against putting your own money down. We'll tell you honestly when DPA isn't the right call for your scenario.
See the current Arizona DPA figures for the source-of-truth income caps, credit minimums, and assistance percentages.
Next step
Run the FHA + DPA vs. Conventional + DPA math on your specific scenario — credit, income, target home, planned tenure. Schedule a free consultation or call (480) 296-6513.