Arizona Mortgage Rates

Historical Mortgage Rates in Arizona

Arizona Mortgage Rates Quick Facts

• Median Home Value: $336,300 (U.S. Census Bureau)
• Loan Funding Rate: 58% (CFPB)
• Homeownership Rate: 65.2% (St. Louis Fed)
• Median Monthly Homeownership Costs: $1,545 (U.S. Census Bureau)

The housing crisis hit Arizona’s real estate market hard, but it’s rebounded in the years since. It’s one of the fastest-growing states in the nation and there is a robust demand for housing. Arizona’s annual average mortgage rates have been the same or slightly higher than the national average since 1997.

A financial advisor in Arizona can help you plan for the homebuying process. Financial advisors can also help with investing and financial plans, including tax, retirement and estate planning, to make sure you are preparing for the future.

*The FHFA stopped reporting new data in 2018.

Arizona Mortgages Overview

If you’re shopping for a mortgage in Arizona you should be able to find a relative bargain, depending on what kind of home you need. After the state’s real estate bubble burst, prices dropped significantly in many parts of Arizona. That makes it easier for first-time homebuyers to break into the housing market in Arizona and helps shorten the time needed to save up for a down payment. That also means your monthly mortgage payments will likely be lower than if you bought in many other areas of the country.

There are no Arizona counties that have a conforming loan limit over the standard $726,200 limit. That’s an indication that home prices in Arizona are on the low side. In expensive parts of the country where home prices are high, the conforming loan limit can be as high as $1,089,300.

A conforming loan, is a loan that can be sold on the secondary mortgage market. A loan that exceeds the conforming loan limit is considered a jumbo loan, and will generally come with a higher interest rate.

The Arizona housing market includes a high number of foreclosure properties. If you’re comfortable buying a foreclosure, you may be able to get a great deal on a home in Arizona. However, you’ll need to be prepared to pounce on a listing that appeals to you. If you wait too long to make an offer, the home will probably be snapped up by another buyer. Foreclosed homes move quickly on the Arizona mortgage market.

In general, buyers who can offer cash will be given precedence over those who need to finance their home purchase. And because time is tight on the foreclosure market, there probably won’t be a back-and-forth negotiation, which means a low-ball offer can backfire. Rather than reach out to you and negotiate, the bank may simply give the home to someone else. It’s also important to pay attention to the details of foreclosure listings. Some homes are sold as is, which means that any needed repairs resulting from the home inspection will be the financial responsibility of the buyer, not the bank.

30-Year Fixed Mortgage Rates in Arizona

Unless you’re gifted a home or you pay cash for your home (which is easier to do when it’s a low-price foreclosure), you’ll likely have to get a mortgage to buy a home in Arizona. Most homebuyers opt for a 30-year fixed-rate mortgage. It’s the old standby of mortgages. You have plenty of time - 30 years - to pay back the loan and your interest rate won’t change unless you decide to refinance your mortgage.

The average Arizona mortgage rate for a fixed-rate 30-year mortgage is 6.02% (Zillow, Jan. 2023).

Arizona Jumbo Loan Rates

In most counties, a home loan that’s $726,200 or less is a conforming loan. A mortgage that’s over the conforming loan limit in a given county is considered a jumbo loan. Jumbo loans have higher interest rates than conforming, also known as conventional, loans. The higher interest rates that come with jumbo loans are another good reason to buy a home that’s well within your budget so you don’t have to borrow such a hefty sum.

The average Arizona jumbo loan rate for a 30-year mortgage is 5.71% (Zillow, Jan. 2023).

Arizona ARM Loan Rates

Adjustable-rate mortgages (ARMs) come with an introductory interest rate that’s often lower than the going rate for fixed-rate mortgages. So, if you’re planning to buy a home and live there for a short time, the ARM can be a good option because you can take advantage of the low introductory rate. They’re more popular with people who plan to flip the home they’re buying, or who plan to move on in a few years.

The risk, however, is that you might still be in the home when the interest rate adjusts and your monthly mortgage payments increase after the introductory period ends. An ARM that becomes too expensive is a common reason people become delinquent on their mortgage and, in some cases, face foreclosure. Before you commit to an ARM, it’s important to be clear on how long the introductory period will last (generally between one and 10 years) and what the maximum allowed interest rate increase is for the life of the loan.

The average rate for an 5/1 ARM in Arizona is 5.43% (Zillow, Jan. 2023).

Arizona Mortgage Resources

SmartAsset compiled a list of resources to help turn your Arizona homebuying dreams into reality. The Arizona Department of Housing (ADOH) has resources that can help you with your mortgage. One resource is the “HOME Plus” Home Loan Program. The program offers 30-year fixed-rate mortgages at low rates with assistance that can be put toward closing costs or your down payment. Depending on the loan type you choose (Fannie Mae, Freddie Mac, FHA, USDA, VA) and your credit score, the down payment assistance can be between 0% and 5% of the loan amount.

The program puts limits on the loan-to-value ratio of the homes you can buy. That ratio is the amount of the mortgage divided by the sales price. The minimum ranges from 95% to 100%, depending on the mortgage type. There are also geographical restrictions. The program is not available in Pima County, and the FHA, USDA and VA versions of the program aren’t available in Maricopa or Pima County. To take advantage of the program you must work with a HOME Plus participating lender.

If you’re already a homeowner and you’re behind on your mortgage payments or at risk of foreclosure, you can call the state’s toll-free line for free counseling.

You can also apply for the Save Our Home AZ Program, which offers principal reduction assistance, monthly mortgage subsidy assistance for under- and unemployed Arizonans, second-lien elimination and short-sale assistance to qualified homeowners in the state. The program provides the assistance directly to your lender on your behalf, so your lender must agree to participate. If you need help navigating the above programs or getting ready for homeownership you can contact one of the HUD-approved housing counselors in Arizona.

Arizona Mortgage Taxes

In Arizona, you can deduct your mortgage interest from your state income taxes, even if you didn’t itemize your deductions and deduct your mortgage interest when you filled out your federal income tax return. If you did itemize and deduct your mortgage interest on your federal return you can get a “double deduction” when you fill out your state income tax return.

If you sell your Arizona home, you won’t pay real estate transfer taxes, though you will be on the hook for a flat fee of $2 per deed or contract.

Arizona Mortgage Refinance

When it’s time to refinance your Arizona mortgage you don’t have to go with the same lender you used the first time around. Feel free to shop around for a better deal. The same non-profit, HUD-approved counselors who can help Arizonans with a home purchase can also help them navigate the refinance process. Don’t forget that closing costs are due on completion of a refinance so you’ll need to budget for this extra expense.

Fannie Mae offers its own alternative too. This is called the High Loan-to-Value Refinance Option.