Today’s Arizona Mortgage Rates: What to Know Before Making an Arizona Home Purchase

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Although the real estate market in Arizona has seen a steady increase in home prices and a decrease in home affordability over the past several years, that trend has begun to change in recent months. 

Data from the Arizona Regional Multiple Listing Service show that the median price of a home was just $120,000 in January of 2012, and rose to $475,000 as recently as June 2022. With such a large increase in home prices, homebuyers have had to either save for a larger down payment or find a way to get approved for a larger mortgage loan

Fortunately, home prices have begun to drop. Since April, the median sales price has dropped from $475,000 to $445,000. Dina Maeweather, a licensed real estate agent with Keller Williams, explains that when interest rates are low and getting a mortgage is inexpensive, there can be a rush from buyers to purchase a home, which ultimately drives up home prices. Now that interest rates have risen, home prices have dropped

First-time homebuyer programs can also help cover down payment and closing cost requirements. If you’re thinking about buying a home, take them into consideration as you could end up being able to afford more than you think. 

What Are Today’s Mortgage Rates in Arizona?

For Friday, November 25, 2022, here are the current mortgage rates in Arizona. The average 30-year fixed mortgage rate is 6.770%. The average 30-year fixed mortgage refinance rate is 6.700%. Today, the average 15-year fixed mortgage rate is 6.100%.

Looking at variable rate loans, the average 5/1 adjustable-rate mortgage (ARM) rate is 6.380%. 

This information is from Bankrate’s latest survey of the nation’s largest mortgage lenders.

Current Mortgage Rates in Arizona

Loan TypeRate
30-year Fixed6.770%
15-year Fixed6.100%
5/1 ARM6.380%
30-Year Refi6.700%

How Much of a Mortgage Do You Need to Buy a Home in Arizona

To get a mortgage, you’ll typically need to have a down payment, a percentage of the sales price of the house you’re looking to buy. This can be a significant amount of cash that varies based on the type of loan you’re getting. 

Conventional loans can require as little as 3% for the down payment. FHA loans require 3.5% but offer additional flexibility in terms of credit and income requirements. And if you are eligible, a VA loan requires no down payment at all. 

If housing prices continue to fall, it reduces the financial stress on homebuyers because the down payment amount is directly linked to the sales price of a property. With the median sales price of a home having dropped $30,000 since June, the reduced down payment requirement can be used by buyers for other things, like moving expenses or home repairs. 

Metro AreaMedian Home Price3.5%10%20%
Phoenix$474,500$16,607.50$47,450$94,900
Tucson$360,300$12,610.50$36,030$72,060
Source: National Association of Realtors (NAR) data for Q1 2022

Types of Home Loans Available in Arizona 

The type of loan you choose will affect whether or not you get approved, as well as what your total costs will be. You can shop with a number of mortgage lenders in the Grand Canyon state, including online lenders, credit unions, banks, and mortgage brokers. Chances are you’ll find many of them offering different types of loans, including conventional loans, FHA loans, and VA loans

Conventional 

A conventional loan is a popular choice for many borrowers, requiring as little as a 3% down payment. But with less than 20%, be prepared to have an additional monthly expense of private mortgage insurance (PMI). PMI is not permanent, and can be removed once you obtain 20% equity, so the larger the down payment you have, the more quickly you can eliminate this expense. 

Conventional loans can offer highly competitive rates and fees. You’ll generally need to have a credit score of at least 620 and a debt-to-income ratio below 45% to qualify, although in rare instances, your specific loan could have additional requirements. 

FHA 

FHA loans are insured by the Federal Housing Administration. These loans allow for more flexibility when it comes to credit and income requirements. With a 3.5% down payment, you can qualify for an FHA loan with a 580 credit score or higher. With a 10% down payment, the credit score requirement drops to 500. 

If you don’t qualify for a conventional loan, an FHA loan could be worth exploring. However, these loans can be more expensive as you’ll have to pay a one-time fee for upfront mortgage insurance, in addition to monthly mortgage insurance premiums. Unlike with PMI on a conventional loan, you’ll have to refinance to get rid of FHA mortgage insurance.

VA 

VA loans are insured by the Department of Veterans Affairs, and require you to have qualifying military service in order to be eligible. However, for those who are eligible, VA loans can end up saving a significant amount of money. There is no down payment requirement, nor are there any expenses for mortgage insurance.  

First-Time Homebuyer Programs in Arizona

Regardless of whether you need financial assistance, first-time homebuyer programs can save you a significant amount of cash. These programs can provide funds for down payments and closing costs. Not all of them require a monthly payment, and some are even forgiven after you live in the property for several years. 

Here are some of the programs available if you’re looking to purchase a home in Arizona:  

  • Home Plus: Home Plus offers down payment assistance in the form of a three-year, no interest loan with no monthly payments. After three years, the loan can be fully forgiven. Eligible borrowers must have an annual income of $122,100 or less, complete a homebuyer education course, and have a minimum credit score of 640. The program can be combined with a conventional loan, FHA loan, VA loan, or USDA loan and may also offer reduced mortgage insurance payments for certain loan programs.   
  • Home in Five Advantage: The Home in FIve Advantage Program offers up to 5% in financial assistance that can be used for down payment and closing costs. To qualify, you must have a minimum credit score of 640, an annual income that does not exceed $112,785, complete a homebuyer education course, and have a debt to income ratio below 50%. You must also occupy the home within 60 days as your primary residence, and the property must be a new purchase located in Maricopa County. 
  • Home in Five Advantage (for qualifying professions): Borrowers who work in a qualifying profession can receive an additional 1% in assistance for the Home in Five Advantage program. Currently, qualifying professions include K-12 teachers, first responders, U.S. military personnel, veterans, and individuals who earn up to $39,500 annually. 
  • Home in Five Advantage BOOST: As part of the Home in Five Advantage program, those looking to buy a home in qualified neighborhoods can receive an additional 0.5% in assistance. To determine your property’s eligibility, you can speak with a participating lender.

Pro Tip

Many first-time homebuyer programs limit benefits to those who are below a specified household income figure. Ask your lender about your eligibility.