Buying a house in Arizona is an exciting milestone, but the process can take some time. Several factors, like your financial situation, market conditions, and the local economy can affect both how long it takes you to find a home and how much it costs you.
For example, homes in Phoenix are hitting the market at $495,000 and selling within 40 days — 11 days faster than the state average! — so you'll need to move quickly if you want to beat out the competition.
However, homes typically stay on the market longer in Sierra Vista, so you'll be able to take your time and potentially find a better deal.
The more you know about the steps to buying a house and Arizona's current real estate trends, the more prepared you'll be to navigate this complicated process as quickly and smoothly as possible.
No matter where you are in your home buying journey, Clever's concierge team can connect you with local real estate pros who will help you purchase your Arizona dream home!
The best part? When you buy with a Clever real estate agent, you could earn a cash-back refund worth up to 0.5% of the home price. On a qualifying $300,000 purchase, you'd get $1,500. That's real money back in your pocket!
Step 1: Save for a down payment
Your down payment is the initial portion of your home's purchase price that you pay at closing. Your mortgage lender will pay the remaining balance.
Typically, mortgage lenders in Arizona want you to contribute 20% of the purchase price as a down payment. That would be $83,074 for a $415,372 home — the typical home value in Arizona.
However, you have options to lower your down payment amount.
Government backed loans, like VA and FHA loans, allow you to contribute 0% and 3.5% of your home's purchase price respectively. Even conventional loans allow for down payments as low as 3-5% (though the minimum varies by lender).
Minimum Down Payment (%)
Down Payment ($)
Based on typical home values from Zillow (February 2022)
But making a down payment of less than 20% comes with some risks.
First, because you're borrowing more money, you'll have a higher monthly payment and pay more in interest over the life of your loan.
Based on a $415,372 home, the typical home value in Arizona (Zillow, February 2022) with a 2.92% interest rate for a 30-year loan.
Second, you may have to purchase mortgage insurance.
Conventional loans require private mortgage insurance (PMI) until your loan balance reaches 80% of the purchase price. FHA loans, on the other hand, require a mortgage insurance premium (MIP) for the life of your loans.
Mortgage insurance costs around 1% of your mortgage balance annually. However, rates vary based on your down payment and credit score. Typically, your mortgage insurance payment is added to your mortgage payment each month.
VA loans don't charge mortgage insurance. Instead, you'll pay a VA loan funding fee at closing, which can range from 1.4% to 3.6% of the purchase price.
Arizona down payment assistance programs
Having trouble securing funds for your down payment?
Don’t worry; there are thousands of down payment assistance programs available for first-time and low-income buyers across the country. In Arizona, resources for homebuyers can include government grants or second mortgages with deferred or forgiven payments.
Each program has unique eligibility requirements, and some may only be available in certain cities or regions. To help you find one that's right for you, here are a few down payment assistance programs available in Arizona:
Home Plus Down Payment Assistance Program
The Home Plus program is the only state-run down payment assistance option that's available in all Arizona cities. Eligible participants must have a credit score of 640 or more and not exceed the maximum income limit. Income limits depend on your county and what kind of mortgage you have.
Although the exact percentage varies based on your mortgage type, the Home Plus program can cover anywhere from 1-5% of the initial mortgage balance. Active military service members and veterans can also receive an additional 1% in assistance.
Home in Five Advantage Program
The Home in Five Advantage Program is specifically for low- and moderate-income homebuyers in Maricopa County. New and existing single-family homes, 2-4 unit homes, condos, and townhomes are eligible for the down payment assistance program.
The Home in Five program may provide between 3-5% in assistance, offering an additional 1% for eligible military service members, veterans, K-12 teachers, and first responders. Participants must have a minimum credit score of 640, complete a homebuyer education course, and not exceed the annual income limit.
U.S. Department of Housing and Urban Development
HUD’s list of alternative programs and city-specific options in Arizona can be found here.
Step 2: Get pre-approved for a mortgage
A mortgage pre-approval letter is an offer to lend you up to a certain amount of money to purchase a home. It shows sellers that you are a serious buyer who is financially qualified to make an offer on a home.
Most sellers in Arizona will require pre-approval before showing you their home.
You don't have to decide on one lender right now. In fact, you should compare interest rates and pre-approval amounts from several lenders to make sure you're getting the absolute best terms when you buy your Arizona home.
Get Pre-approved Today!
Get matched with a lender who can tell you how much house you can afford. To get started, where do you plan on buying?
To get a pre-approved for a mortgage, you'll fill out a mortgage application and provide details about your financial situation. They'll look at the following information to determine your mortgage pre-approval amount:
Lenders need to know that you earn enough to make your mortgage payments each month. Most lenders want your monthly housing costs to be less than 28% of your monthly income.
Lenders also consider your other debts, including credit cards, student loans, auto loans, and personal loans. They use this information to calculate your debt to income ratio (DTI) — or your total debt (including future mortgage) divided by your total income.
While some lenders will approve mortgages for buyers with DTI as high as 43%, it's best to keep your DTI under 36%.
Because of this, you might consider paying off some of your other debts before applying for a mortgage in Arizona.
Mortgage lenders in Arizona want to see that you have enough cash in the bank to cover your down payment and closing costs without completely draining your cash reserves.
While this requirement varies by lender, most want you to keep at least enough to cover two mortgage payments including insurance and taxes.
Step 3: Choose the right location
A house's neighborhood can be just as important as its layout and features. In general, you should consider the following factors when deciding which neighborhood is best for you:
What's your home buying budget?
Once you know your budget (a pre-approval letter will tell you the most you can expect to borrow), you can narrow your search to neighborhoods where homes are selling within your price range.
Also, look at past home value trends. This will give you an idea of how much your home's value could go up over the next few years. You want to choose a neighborhood that's in your budget, but could also lead to a big return when you decide to sell.
To give you an idea of how appreciation could impact what your house is worth in the future, consider these examples from three neighborhoods in Phoenix:
Home value appreciation in Phoenix
Once you have a list of neighborhoods with homes in your budget, you should evaluate how well each one meets your personal needs and preferences. To finalize your list of target areas, consider factors like:
- School districts
- Your daily commute
- Crime rates
- Restaurants and amenities
- Transportation options
Step 4: Find a great real estate agent in Arizona
Your real estate agent will be your main ally during the home buying process. Besides finding and showing you properties, your agent should be an expert on buying a home in Arizona.
They'll help you make offers, negotiate contracts, and navigate the closing process. Plus, they can recommend other service providers like title companies and inspectors to help you buy your home in Arizona.
Don't rush into choosing an agent. Instead, take the time to research and interview multiple real estate agents who have experience in the neighborhoods you're interested in. you should pay attention to a realtor's:
- Years of experience
- Number of transactions in the last year (the more the better!)
- Experience in your price range
- Overall review score
- Individual reviews and complaints
Ask each of them questions about your target neighborhoods, how they prefer to communicate, and their strategy for helping you find and close on your new home. You should feel comfortable with the agent's knowledge, experience, and process before committing to an agent.
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Clever matches you with multiple agents in your area so you can interview, compare, and choose the best one to help you buy your next home.
Step 5: Start house hunting in Arizona
Searching for homes in Arizona is the fun part of the home buying process! You'll get to look at a variety of homes and discover what you really want in a home.
Prioritize your needs vs. wants when buying a home in Arizona
Make a list of everything you want in a home and prioritize them. At the top of the list should be the items that are most important to you. This will help you separate your "must-haves" from your "nice-to-haves."
Your agent can help you understand if your wants are realistic for your budget and favorite neighborhoods or if you need to rethink what you're looking for.
Look at current housing inventory
The timing of your house hunt in Arizona can have a big impact on your number of options. For example, in Arizona, March has historically seen the most homes for sale. Searching in this season could give you more options and a greater likelihood of finding your dream home.
On the other hand, December gives you the fewest choices in Arizona. Historically, there are 20.2%) fewer homes for sale than during Arizona's peak season.
Housing inventory in Arizona by season
New Listings per Month
Based on January 2022 data from Realtor.com
Step 6: Make an offer
Once you find a Arizona house you love, it's time to make an offer. Your real estate agent will help you write a compelling offer that gives you the best shot of convincing the homeowner to sell to you.
Currently, in Arizona, homes stay on the market for 55 days before going under contract. However, every market goes through seasonal changes. During busier months, homes get snatched up more quickly than others.
Historically, Arizona homes sell fastest in October, where the average property is only on the market for 47. If your home search falls around this time, you should be prepared to move quickly and potentially make offers on several homes before yours is accepted.
On the other hand, if you buy in December, you have a bit more time to search. Homes typically stay on the market 11 days longer than Arizona's annual average.
Average time homes spend on market in Arizona
Based on January 2022 data from Realtor.com
What should your offer include?
Your real estate agent can help you decide which of these common options you should include in your offer:
- Seller concessions: You'll have to pay for most of your closing costs out of pocket when you buy a home, but you may be able to ask the seller to cover some of those costs for you. This option may allow you to offer a higher purchase price and essentially include your closing costs in your mortgage.
- Repair credits: If the home is in need of repair, you could ask for credits instead of having the seller make and pay for the repairs. The seller avoids the hassle of waiting for contractors to complete the job, and you get to oversee the repairs in the future to make sure they meet your expectations.
- Inspection contingencies: Most purchase agreements have inspection contingencies that allow you to change your offer (or back out all together) if the inspection turns up major problems. If you have a high degree of certainty about the house's condition (like if the seller can show you a recent inspection report), you can forgo this contingency to give the seller a higher sense of confidence.
- Letter to the seller: Many sellers have a personal attachment to the home. They've lived there for years and want to know the next owner will take care of the property. Writing a letter to the seller can show them how you picture your life in the house and appeal to their sentimental side.
Step 7: Inspections and appraisals
Inspections and appraisals are an opportunity for you to better evaluate the home's condition and value before officially purchasing it. You may have an opportunity after this step to renegotiate the terms of your contract with the seller if something unexpected pops up.
Home inspections in Arizona
Having your Arizona home inspected by a licensed inspector gives you peace of mind about the condition of the property before you commit thousands of dollars to purchase it.
Your inspector should check out the following parts of the property:
- Electrical system
- HVAC system
If the home has a septic system, you should also pay for a septic inspection to make sure it doesn't have any problems that wouldn't be covered in a typical home inspection.
Arizona state laws require sellers to disclose major issues of a property to prospective buyers. A general home inspection will typically reveal most problems, but buyers may want to do additional tests for greater peace of mind. Homebuyers in Arizona are recommended to complete the following inspections:
Radon testing: Sellers are required to disclose known radon hazards, but some may not test their home for the chemical. If a seller is unsure about their property's radon hazards, it's best to complete a test prior to closing. Arizona Radon Professionals makes it easy for Arizona residents to order free radon testing kits. You can order your own kit here.
- Pest inspection: A pest inspection is a standard procedure that should be completed before buying a house. Waiving a pest inspection may lead to unexpected extermination fees and potential health concerns in the future.
Appraisals determine the value of the property. If you're using a mortgage to buy your new home, your lender will order an appraisal to make sure the home is worth the money that it's loaning you.
Step 8: Close on your new home!
Once you finish your inspections and your lender approves your financing, you'll be ready for closing! Closing is the process of finalizing your mortgage and transferring ownership of the property.
Closing on your home in Arizona requires you to review lots of paperwork and pay the closing costs you owe. After these two steps, you'll be an official homeowner!
On closing day, you’ll meet at the title company to sign a series of documents that will finalize the property transfer and iron out your mortgage details. Some important pages to pay attention to will include:
- The mortgage promissory note
- The security instrument
- The deed transfer
After the paperwork is finished, you'll move on to settling closing costs. The title company will collect the total amount you owe and distribute it amongst the various parties involved in your home purchase.
If you're curious about where your money will end up, closing costs can typically be divided into four general categories:
- Lender fees: Costs required for a mortgage company to prepare your loan. Other loan-related expenses may apply, such as appraisal fees or survey fees.
- Title and escrow charges: Charges that the title company requires for its services. These are sometimes split between the buyer and seller.
- Prepaid costs: Ongoing homeownership costs, such as property taxes and homeowners insurance. Most lenders require homeowners to pay these fees up front. The money will then be placed in an escrow account and used to pay the monthly fees.
- Other costs: Miscellaneous costs that can vary depending on each buyer's unique situation. Other costs may cover pest and termite inspections, processing fees, or real estate attorney fees.
Buyers in Arizona typically pay 3-5% of the purchase price in closing costs. For a $415,400 home — the typical home value in Arizona — that's between $12,462 and $20,770!
Frequently asked questions
- Save for down payment
- Get pre-approved for a mortgage
- Choose your preferred Arizona neighborhoods
- Partner with the right real estate agent in Arizona
- Go house hunting
- Make a strong offer
- Inspections and appraisals
- Do a final walkthrough and close
Yes, but it isn't limited to first-time buyers. Arizona's Home Plus Program can offer a 30-year, fixed-rate mortgage of up to $396,680. Buyers in certain counties may also be eligible to receive a down payment assistance grant of up to 3% of the loan amount.
The Home Plus Program is available to borrowers who earn an annual income of $92,984 or less. Participants also need to have a minimum credit score of 680 and a maximum debt-to-income (DTI) ratio of 45%. Maximum home purchase prices apply, but differ by county.