What you need to know when buying a home in Arizona

Arizona offers a lot of assistance to first-time homebuyers.

Some may plan to receive special mortgage programs or homebuyer education and counseling. Even better, the state has several generous down payment assistance programs that can help bridge the gap between your savings and your down payment and closing cost needs.

Here's how to get started:

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Overview of Arizona Home Buyers

According to Arizona Realtors, the median home sales price in Arizona in January 2024 was $345,385, an increase of 9.2% from the previous year.

Although housing inflation is slowing, first-time home buyers in Arizona may still find it difficult to save up for a down payment on a new home. However, the Grand Canyon State offers a lot of help with its homeownership assistance programs.

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Arizona Home Buyer Statistics

The down payment amount is based on the state's most recent average home sales price. The “minimum” down payment assumes a 3% down payment on a conventional mortgage with a minimum credit score of 620.

If you qualify for a VA loan (backed by the Department of Veterans Affairs) or a USDA loan (backed by the United States Department of Agriculture), you may not need a down payment at all..

Arizona First Time Home Buyer Loans

First-time home buyers in Arizona can qualify for low-interest conventional loans with a 20% down payment. You also don't have to pay private mortgage insurance (PMI).

Of course, very few first-time buyers have enough savings for 20% down. But the good news is that you don't need that much. It's not a far off story. When a borrower takes advantage of one of the low down payment mortgage programs, they often allow him to live in a new home with a down payment of just 3% and in some cases 0%.

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• Conventional 97: From Freddie Mac and Fannie Mae. 3% down payment and minimum credit score of 620.You can usually stop paying mortgage insurance after a few years
• FHA loan: Supported by the Federal Housing Administration. Eligibility requirements include 3.5% down and a minimum credit score of 580. But you'll have to pay mortgage insurance premiums (MIP) until you refinance to a different type of mortgage, move, or pay off your loan.
• VA loan: Only available to veterans, active duty military, reservists, and National Guard. Zero down payment required. Minimum credit scores vary by lender, but are often 620. There is no ongoing mortgage insurance after the transaction closes.These are probably the best mortgages available, so apply if you qualify
• USDA loan: For low- to moderate-income buyers who purchase in designated rural areas. Zero down payment. Credit score requirements vary by lender, but are often 640. Buyers must also meet income limits, which vary by location and household size.lower mortgage insurance rates
• Home Plus AZ: Competitive interest rates and mortgage insurance packages may be included and can be used with down payment assistance and closing cost assistance.See below for more details

Keep in mind that government loan programs (including FHA, VA, and USDA mortgages) require you to purchase a primary residence. This means that these loans cannot be used for vacation homes or investment properties.

Additionally, most programs allow you to use gifted money or down payment assistance (DPA) to cover your down payment and closing costs. Depending on your mortgage, you may be able to move into your new home with minimal cash.

If you're not sure which program to choose for your first mortgage, your lender can help you find the right program based on your financial situation and homebuying goals.

Arizona First Time Home Buyer Program

The Arizona Department of Industrial Development administers Home Plus AZ, a mortgage program available to first-time homebuyers throughout Arizona.

The Home Plus program offers a 30-year fixed-rate mortgage that can be combined with up to 5% down payment assistance. Home Plus mortgages can be traditional FHA, VA, or USDA loans. Plus, it comes with discounted mortgage insurance, which helps keep your monthly payments low.

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You must choose a lender from a list of approved partners and take a homebuyer education course, which are common requirements for such programs. Income restrictions are also the same, and people with high household incomes cannot participate.

With the Home Plus program, you may pay a slightly higher mortgage rate compared to other mortgage programs. However, that is usually offset by lower mortgage insurance premiums offered.

Check the annual percentage rate (APR) on your loan quote to see how much you'll actually pay and compare it to loan quotes you get from other lenders outside the program.

Home Plus AZ's minimum credit score starts at 640, which is a bit tougher than the 620 minimum for Fannie Mae and Freddie Mac home loans. This is also a much higher threshold than the minimum standard for FHA loans, which is 580. So if you have problems with your credit score, you may need to look elsewhere. Check out the resources section below. Home Plus AZ Web pages and FAQs.

Arizona First-Time Home Buyer Grants

Home Plus AZ does not offer subsidies. However, we do provide down payment assistance in the form of a second mortgage with an interest-free and forgivable three-year loan term. Depending on the type of mortgage you choose and your personal circumstances, you may be able to borrow up to 5% of the purchase price of your home.

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• These forgivable loans do not require monthly payments. The loan balance will be reduced by 1/36 of the loan amount every month.So at the end of 3 years you don't owe anything
• If you sell before the end of the loan term, you will have to repay the unforgiven portion of the original debt. Also, if you refinance within that period, you may need to repay the loan.Even so, 3 years is a short time.

Home Plus AZ may not be the only homebuyer assistance program in your town, city, or county. So be sure to check out local down payment assistance programs to see if something is right for you.

Below is a list of city programs. But try searching on the internet.[your city or county] Don't miss out by taking advantage of our down payment support.

Buy a home in Arizona's major cities

It's no wonder home prices in Phoenix, Mesa, and Tucson are higher than the average for Arizona as a whole. However, some cities offer their own assistance programs in addition to those run by the state.

Here's what you can expect when you buy in one of Arizona's three largest cities.

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First Time Home Buyers in Phoenix

According to Realtor.com, the median list price in Phoenix in January 2024 was $519,500, up 15.7% annually.

If you want to buy a home at that median price, your down payment options are:

• $15,585 with 3% down payment
• $103,900 For 20% down payment

of city ​​of phoenix says it will offer down payment assistance to homebuyers whose household income is at or below 80 percent of the median income (AMI) in the area of ​​purchase.Please check Median annual income table Check your eligibility in the resources section.

But the city's website has little other information. For more information, please call (602) 262-3111.

Additionally, Maricopa County also offers the Home in Five Advantage program. Qualified low- and moderate-income buyers can receive up to 5% assistance for down payment and closing costs. If you are a qualified educator, first responder, veteran, or active military, that assistance jumps to her 6%.

To qualify, you must be a first-time buyer in Maricopa County and have a minimum credit score of 640. For more information, please see the helpful resources section below for the program. Website.

Tucson first time home buyers

According to Realtor.com, Tucson's median list price in January 2024 was $385,000, up 8.5% from a year ago.

If you want to buy a home at that median price, your down payment options are:

• $11,550 with 3% down payment
• $77,000 For 20% down payment

The City of Tucson's HOME Down Payment Assistance (DPA) program is administered by Pima County and is available countywide.

This program provides financing of up to 10% of the purchase price with no monthly payments. In fact, it states, “When stacked with other approved his DPA resources, HOME may cover the remaining balance equal to 20% of the total grant to remove PMI.” Masu. [private mortgage insurance] With a conventional loan. ”

Mr. Pima DPA fact sheet According to , when you sell your home, transfer your mortgage, or refinance your main mortgage, there is a “payback period” during which you must repay the loan. However, the otherwise informative fact sheet does not specify how long that period is or whether interest will be charged.

For more information, call the Pima County Housing Center at (520) 724-2471.

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Mesa first time home buyers

According to Realtor.com, the median list price in Mesa in January 2024 was $475,000, an increase of 5.6% from the previous year.

If you want to buy a home at that median price, your down payment options are:

• $14,250 with 3% down payment
• $95,000 For 20% down payment

No trace of down payment assistance was found. City of Mesa website. Mesa Housing and Community Development (HCD) once offered a Home Ownership Assistance Program (HOA), but that program has disappeared.

Still, first-time home buyers in Mesa have access to the statewide Home Plus program.

Alternatively, you can contact Mesa officials directly to see if there are any housing programs you may have missed. The phone number is 480-644-3536.

Where to get help buying a home in Arizona

All of the organizations listed above should feel free to offer advice to first-time homebuyers in Arizona or the region.

In addition to our selection, the U.S. Department of Housing and Urban Development (HUD) provides a list of statewide, regional, and local resources.

Check your eligibility to buy a home in Arizona.start here

Resources for first-time homebuyers across Arizona and locally.

City and County Home Buyer Resources

What are the current mortgage interest rates in Arizona?

Find today's mortgage rates in Arizona here.

When you're ready to start the homebuying process, try our mortgage calculator to see how your down payment and interest rate will affect your mortgage payments. Next, get independent interest rate quotes from at least three to five mortgage lenders.

Don't just look at the prices advertised online. Apply for pre-approval and compare the interest rates and fees offered. Because that's the only way to know if you're getting the best possible terms on your new mortgage.

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¹Source: Arizona Association of Realtors housing report

²sauce: Experian.com Examining 2021 and 2020 data

³Based on a review of DPA grants available to states at the time this was written.