Now that the housing market is finally calming down after the pandemic, buyers are facing a new challenge: Soaring mortgage rates.
In Arizona, the average 30-year fixed mortgage rate is 5.52% — up from 2021's historic lows. This raises the average monthly mortgage payment to $1,970 (assuming a 20% down payment at the median home value).
But buying a home in Arizona is still possible, even for first-time home buyers. Many markets are seeing frequent price drops and fewer offers, giving motivated buyers the upper hand in negotiating for the best price.
In this guide, you’ll learn how to buy a house in Arizona with confidence no matter what the market brings. Learn why you can trust our advice.
Whether you're actively house hunting or just starting to browse homes on Zillow, it's never too early to find a great local realtor to guide you on your search. An experienced agent can help you navigate a tricky housing market, explore your financial options, and negotiate the best deal possible.
Best of all, hiring a real estate agent comes at no extra cost to you — since the seller typically pays both their listing agent and your buyer's agent.
Ready to find a great local realtor, but not sure where to start? The best (and easiest!) option is to try a free agent matching service like Clever Real Estate. Answer a few simple questions about your home buying goals, and Clever will match you with hand-picked agents from Keller Williams, RE/MAX, and other top brokerages in your area. Find a top local agent and make your home buying dreams a reality today!
Step 1: Save for a down payment
Your down payment is the first part 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 $86,570 for a $432,850 home — the typical home value in Arizona.
However, you have options to lower your down payment amount.
Government backed loans, like VA and FHA loans, allow you to contribute 0% and 3.5% of your home's purchase price respectively. Even conventional loans allow for down payments as low as 3-5% (though the minimum varies by lender).
Minimum down payment (%)
Down payment ($)
Based on typical home values from Zillow (August 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 home values from Zillow (August 2022) and a 5.52% 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
There are many 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: 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 will 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
Step 3: Get preapproved for a mortgage
A mortgage preapproval 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 preapproval before showing you their home.
You don't have to decide on one lender right now. In fact, you should compare interest rates and preapproval amounts from several lenders to make sure you're getting the absolute best terms when you buy your Arizona home.
Step 4: Choose the right location
Currently, the typical home value in Arizona is $432,850, but don't worry if that doesn't perfectly match your budget. Home prices vary dramatically from city to city and even from neighborhood to neighborhood!
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.
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
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.
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 33.1% fewer homes for sale than during Arizona's peak season.
Housing inventory in Arizona by season
New listings per month
Based on data from Realtor.com (September 2022)
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 days. 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 data from Realtor.com (September 2022)
» LEARN MORE: What should an offer include?
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!
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 $432,900 home — the typical home value in Arizona — that's between $12,987 and $21,645!
Frequently asked questions
Arizona does not require you to hire a real estate attorney to buy a home. However, depending on your circumstances, you might consider hiring one anyways. If you do, treat the process similarly to hiring an agent. Interview multiple attorneys and proceed with the one that best meets your needs.
- 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.
Federal Reserve. "Housing Market Tightness During COVID-19: Increased Demand or Reduced Supply?." Accessed October 11, 2022. Updated July 08, 2021.
Consumer Protection Financial Bureau. "The Fed is raising interest rates. What does that mean for borrowers and savers?." Accessed October 11, 2022. Updated March 17, 2022.