Here is Your 14 Step Guide To Buying Your Dream Home in Arizona

If you are thinking about buying a home in Arizona, you will surely take into consideration the climate and the culture – the two main factors that play into architectural design and home necessities in the Grand Canyon State.

But they are also the two factors that lend charm to this beautiful and diverse southwestern treasure.

Native American tribes have occupied this land for 12,000 years, and even today 22 distinct tribes occupy land throughout the state. Their homebuilding knowledge and skill acquired through the centuries of living on this arid land is the foundation of many of the building practices to this day. In addition, the vibrant Latino culture has influenced the architectural design as well as the food and festivals that are such an enticing reason for moving to the state.

The climate is also a big draw, with Arizona enjoying on average 286 sunny days, compared to the U.S. average of 205. But there is a big difference in temperature and rainfall across this geographically diverse state, from the desert southwest to the more mountainous northern climates, so it’s important to consider carefully where you want to live based on your preferences.

To help you navigate the ins and outs of homebuying in Arizona, we spoke with Antonio Moreno, a top real estate agent who specializes in single family home sales throughout the Tucson, Sahuarita, and Green Valley regions in Southern Arizona.

Let’s dive into the steps of buying a house in Arizona:

1. Assess your readiness

Before you start looking for homes in Arizona, you want to determine if you’re ready to purchase one. Consider factors such as how long you plan to be in the area, if you have steady employment, and if you have enough money saved for not just the down payment, but for closing costs, maintenance, property taxes, and more. Homebuyers in Arizona pay $4,701, including taxes, on average in closing costs when purchasing a home.

During this time, review your credit score and determine if it’s considered excellent, good, fair, or poor. Typically, the higher your credit score, the lower your interest rate will be, which saves you money over the life of the loan. You may want to pay off any collections accounts, dispute errors on your credit report, and pay down your credit card balances before you start shopping for a home.

One of the overall challenges for homebuyers this year, according to Moreno, is inflation.

“We are seeing a little tightening in terms of credit, but we are also seeing challenges in terms of the buyer’s commitment due to inflation because of how that is going to play into their monthly budget,” he explains. “They may have felt comfortable with a $2,000 a month payment before, but now that is a stretch for them because of the reality of the current cost of living.”

2. Saving for your down payment

The median home price in Arizona is $492,000, as of August 2022. So, expect to spend somewhere around that number depending on what part of Arizona you’re purchasing in, the home’s age and condition, and the size of the property, among other factors.

Different loan programs will require different down payment amounts, but you do not always need to put 20% down when buying a home. A survey completed by the National Association of Realtors found that first-time homebuyers put just 7% down on average in 2021.

“We typically see 5% to 10% for a down payment from our buyers,” Moreno notes. “We are also sometimes seeing buyers come in with additional cash to get their monthly payment in a range they are comfortable with. They are also using funds to buy down the interest rate to lower that monthly payment and save money over the life of the loan.”

He is also seeing sellers more willing to cooperate with paying a portion of the buyer’s closing costs , rather than reducing the overall price, which can help buyers as well.

Consider the following down payment assistance programs in Arizona:

• Home Plus Arizona Homebuyer Down Payment Assistance is administered by the Arizona Industrial Development Authority (Arizona IDA) and offers a 30-year fixed-rate mortgage combined with down payment assistance (DPA) ranging from 0% – 5% of the purchase price depending upon the new first mortgage. The DPA can be used toward the down payment, closing costs, or a combination of the two. The DPA is only available in conjunction with a HOME+PLUS mortgage.
• Tucson/Pima County “HOME” Down Payment Assistance Program is available for first-time homebuyers purchasing throughout Tucson and Pima County (excluding Tribal lands). Assistance may be up to 10% of the contract sale price and is determined based on affordability. If combined with other approved DPA resources, this program may cover up to the remaining balance to equal 20% total subsidy to remove PMI on a conventional mortgage loan.
• Pima Tucson Homebuyer’s Solution Program provides 3%, 4%, or 5% of a buyer’s purchase price in down payment assistance that acts as a grant if the buyer lives in the home for more than three years. This program is made possible by the Industrial Development Authorities of the County of Pima and the City of Tucson, Arizona — through partnerships with local lenders, they offer some of the lowest interest rates in the state of Arizona.
• Phoenix ​Homebuyer Assistance offers down payment and closing costs loans administered by homeownership counseling agencies who partner with the city. First-time low- and moderate-income homebuyers interested in buying a home in the city of Phoenix may be eligible to participate in the loan program.
• The Home in Five Advantage Program helps low- to moderate-income individuals and families buy a home in Maricopa County. Qualified homebuyers receive up to 5% of the loan amount for down payment and closing costs, plus a mortgage loan with a competitive interest rate. An additional 1% of assistance is also available to K-12 teachers, first responders, U.S. military personnel, veterans, and income-qualified borrowers.

3. Get preapproved for a mortgage

Getting preapproved for a mortgage will help you determine how much you can afford, which will then inform your home search. It’s always smart to shop around for the best rates and terms, so be sure to research a few different lenders during this process.

You can also ask family, friends, your buyer’s agent, and attorneys for mortgage lender recommendations. When choosing a mortgage lender, ask for a detailed cost breakdown, review the terms you are being offered, and compare loan types.

According to the US Consumer Financial Protection Bureau (CFPB), there are three general categories of mortgage:

Conventional

Conventional loans, the most popular type of mortgage loan, are loans that are not backed by the federal government. Under the conventional loan umbrella are two subcategories called “conforming” and “non-conforming.” Conforming loans are given to buyers who fit into the qualification guidelines set by the entities Fannie Mae and Freddie Mac, who purchase loans after they are originated.

Non-conforming loans are for borrowers who do not fit into the guidelines set by Fannie and Freddie and are not eligible to be purchased by them — jumbo loans are an example of this because they offer loan amounts above the limits set by Fannie and Freddie.

FHA loans

FHA loans are geared toward borrowers with lower income and have more lenient credit score and down payment requirements than conventional loans. These government-backed loans can be a great option for borrowers who meet the requirements, however, they do require mortgage insurance.

Similar to conventional conforming loans in this way, FHA loans have loan limits that vary from county to county. For example, in Maricopa County, Arizona the maximum loan amount is $441,600, while in Pima County, Arizona, the loan limit is $420,680.

Special programs

VA loans: For veterans, service members, and surviving spouses. Loans backed by the VA offer 0% down payments for those who qualify. Different lenders will have different requirements; however, VA-backed loans do not have a universal maximum DTI requirement.

USDA loans: These loans are backed by the United States Department of Agriculture and are for lower income borrowers in “rural areas.” To determine if the area you are purchasing in is eligible for a USDA home loan, use this eligibility map. These loans also offer 0% down for qualified borrowers.

4. Research the market and determine where you would like to buy

Now that you know more about preparing to purchase a house and down payments, it’s time to decide where you want to live. Consider work commute times, average house prices, and things to do in each area that you’re thinking about living in.

Arizona is divided into three major geographic regions. The Colorado plateau, home to the Grand Canyon National Park, covers more than a third of the northern part of the state and includes the cities of Sedona and Flagstaff.

Just south of the plateau is the Transition Zone, a narrow strip of land featuring several of Arizona’s mountain ranges and incorporating the city of Prescott.

The southern portion of Arizona is called the Basin and Ridge Region and includes the cities of Phoenix, Tucson, and Yuma. This area of the state is made up of several mountain ranges separated by fertile valleys that produce lettuce, melons, and citrus fruits.

Let’s take a look at a few of the cities in these regions.

The Colorado Plateau: Sedona

The city of Sedona, located on the county line between Coconino and Yavapai counties, is best known for its spectacular vistas of red rocks and deep canyons. It enjoys a temperate semi-arid climate with temperatures in winter averaging 57 degrees while reaching an average of 97 degrees in July.

One of the most expensive regions in Arizona and a big tourist area, homes were selling for a median price of $946,261 as of September 2022.

The Transition Zone: Prescott

Located in the Bradshaw Mountains at an elevation of 5,400 feet, Prescott experiences one of the highest annual rainfalls in Arizona at 16 inches per year, with a summer wet season that gives it a more humid subtropical climate, with highs generally not exceeding 90 degrees in the summer, dropping to the 50s in the colder months. This more temperate climate makes Prescott another hotspot for tourism.

Home prices in Prescott are down 4% from July 2022 to August 2022, selling at a median price of $604,666.

The Basin and Ridge Region: Phoenix

If the smaller northern towns are not to your liking, consider looking at homes in the busy and bustling – and less expensive – Phoenix area. Although home sales have slowed in Phoenix this year – 1,606 sold in August compared to 2,311 in the same month in 2021 – prices were still up 10.3%, selling for a median price of $430,000.

The population of Arizona’s state capitol is 1.6 million, but the larger metropolitan area, called The Valley of the Sun, is home to more than 4.8 million people.

But you’d better love the heat! Phoenix has a desert climate with more than 100 days a year reaching 100 degrees.

The Basin and Ridge Region: Tucson

If you like it a little bit cooler, consider Tucson or one of the many beautiful and affordable communities surrounding this lovely city just south of Phoenix. The county seat of Pima County, Tucson is home to the University of Arizona and is the second largest city with a population of 542,629.

The median home price was reported at $340,000 in August, up more than 14% over spring of 2021. Some of the suburban areas you may want to consider include Oro Valley northwest of the city, Sahuarita south of the city, and South Tucson just south of downtown.

Moreno says that while demand has softened in some regions of Arizona in recent months, demand is still pretty strong in the Tucson area.

“In the markets we work in, there is still big demand from out-of-state buyers, especially from the east coast and Midwest,” he notes. “It is especially appealing to buyers who want to get out of major cities and who are looking for more land, more space between neighbors. Tucson is not overly developed yet and a bit less expensive, so demand remains very strong.”

5. Find a local Arizona agent

Real estate agents almost always appreciate it when their clients come to them to start home shopping after getting preapproved for a mortgage. This typically means that a buyer is ready to go and can start making offers. Choose a knowledgeable agent that specializes in representing buyers in the area you want to purchase in.

Your buyer’s agent will be able to help you create a wishlist, set up viewing appointments for you, tell you more about what’s going on in the neighborhood, negotiate on your behalf, and connect you with other vendors such as a title company, insurance agent, and home inspector. Real estate agents are also incredibly knowledgeable on the homebuying process as a whole and can hold your hand throughout the process to keep closing on track.

A Top Agent Can Help You Find Your Dream Home in Arizona

Arizona has a lot to offer its potential homeowners, from the desert of Phoenix to the mountains in Prescott. If you are looking to purchase a home, an expert buyer’s agent will be your homebuying MVP. HomeLight analyzes over 27 million transactions and thousands of reviews to connect you with the best agents in your selected homebuying area.

Find a Buyer's Agent

6. Start shopping for homes in Arizona

Much of Arizona’s architecture is born out of its many cultural influences over the centuries, so you will come across beautiful homes that are artistically appropriate to the landscape itself.

The most iconic is the Pueblo Revival or adobe style homes, influenced by the architecture of the 8th Century Pueblo Indians and well adapted to the climate of the Southwest. Typical features include flat roofs, stucco walls painted in earth tones, and large, projecting wooden roof beams called vigas.

A bit more decorative than its Pueblo cousin, Spanish Colonial architecture features flat or low-pitched clay tile roofs, smooth stucco walls, terracotta ornamentation, archways, and small balconies.

There are also plenty of ranch style homes in Arizona, a western style architecture usually presented as an L- or U-shaped, one-story home featuring an open concept with attached decks or patios.

And finally with the steady migration to Arizona, you will find plenty of contemporary designs among the newest developments throughout the state, employing modern and environmentally friendly features to make living in Arizona’s arid climate comfortable and enjoyable.

7. Make a strong offer

Working with your buyer’s agent to craft a winning offer can sound overwhelming. In competitive markets, cash offers could be more likely to be accepted by sellers with multiple interested buyers.

Moreno notes, however, that he has seen a change from the aggressive buyers of recent years, where sellers in Arizona may have had 15 or 20 offers to choose from.

“That is no longer the case,” he says. “Now we can expect to get two solid offers. Buyers are still coming in with a strong offer, however the buyers are pickier and more demanding when it comes to what they are willing to accept and negotiate.”

He notes that in the past, appraisal or inspection contingencies may have been waived to get a deal done, but they are back in the mix. Buyers are also not as willing to negotiate with sellers on a move in date, and sellers in Arizona are now more open to contingencies in order to allow a buyer to sell their existing home.

“Now I feel there is a better balance and fairer deals between the buyer and the seller,” Moreno says.

Components of an offer when buying a house in Arizona include:

• Purchase price
• Closing date
• Earnest money deposit amount
• Contingencies: Financing, home inspection, and appraisal
• Closing cost stipulations: Who pays for what, and if you’re asking the seller for a credit to use toward closing costs
• Home warranty
• Personal property: Such as appliances or furniture

8. Send your earnest money deposit

Your earnest money deposit, also known as a “good faith deposit,” is an amount of money you agree to pay the seller to indicate that you are serious about purchasing the home. This is usually between 1% and 3% of the purchase price. However, a higher deposit can be more attractive to sellers and make your offer stand out in competitive markets.

Whether or not you get your earnest deposit money back if you decide to back out of the sale depends on the contract. If you decide to back out of the purchase for any reason not specified in the contract, you could forfeit your earnest money. Be sure to review the contract with your real estate agent and attorney before making any decisions.

9. Order a title search

Ordering a title search can be done any time after your offer is accepted, but it’s a good idea to do it as soon as possible because it may take a couple weeks for the title search to come back, especially if the title company is backed up. Who customarily chooses the title company can vary by state and even county — but if it is the buyer’s choice, your real estate agent or mortgage lender will likely have a recommendation.

The title company will issue a preliminary title report that will be reviewed by all parties including your lender and will include items such as property tax information, easements, CC&Rs, deed restrictions, liens, and any judgments against the title of the home. Any liens, encumbrances, or judgments against the property will need to be removed before the buyer can close on the property.

10. Shop for homeowners and specialty hazard insurances

Homeowners insurance is always recommended, and it is almost always required if you’re financing your home with a mortgage.

The average yearly cost of homeowners insurance in Arizona is $1,614, which is just slightly below the U.S. average of $1,680.

11. Order inspections and appraisal

If you’re applying for a mortgage, your lender will most likely order the appraisal and you will pay for it. You will be responsible for ordering your own inspections with the help of your buyer’s agent, again, at your own cost. Your agent can recommend a licensed home inspection company if you don’t have one. The home inspector will schedule a date and time to inspect the house and depending on its size, it may take a couple of hours to complete.

Some special concerns that arise for homebuyers in Arizona are the age and condition of the HVAC system, the health of the roof, and termites.

“Because of our weather, everyone is concerned that the home has a good AC system,” Moreno says. “The roof is also a concern. However, with the new construction, you see a lot of tiled roofs where there is less maintenance. Termites are another issue homebuyers should be aware of, it’s advisable to get a separate inspection.”

12. Negotiate repairs

Remember that everything is negotiable. If you have an inspection contingency in your contract, and the inspection report comes back with tens of thousands of dollars of necessary repairs, it’s time to negotiate.

Talk to your buyer’s agent and come up with a plan for what to ask for during negotiations. Do you want a credit for the leaky roof or would you rather a licensed contractor repair it prior to settlement? If the house needs two new toilets, are you willing to walk away if the seller refuses to budge during negotiations? Keep the bottom line in mind, but don’t nitpick. Home inspectors are meant to be thorough. Focus on major repairs that need to be done ASAP and are going to be costly.

13. Final walkthrough

This is to verify that agreed-upon repairs have been completed and the condition of the home is satisfactory. The final walkthrough is usually done a day or two before the closing date. With the help of your agent, check that all plumbing, electrical, and HVAC units are on and working. If personal items such as the dining room chandelier and the washer and dryer were included in the contract, make sure they’re still in the house.

If you find that the necessary repairs were not made, or that there were damages left behind by the seller, notify your agent immediately so they can rectify the situation before closing.

14. Closing time!

Real estate closings in Arizona are conducted at the title and escrow office, where buyers and sellers come in separately to sign their final documents. Typically, in Arizona, a closing can take up to 90 minutes, which allows time for the closing agent to explain in detail the purpose of each of the documents you are signing.

Moreno says that since the advent of the COVID pandemic, he has seen a lot more mobile notary signings where the notary will meet the parties at their homes or offices to finalize the paperwork.

“This has worked very well because post-COVID, many people are working from home,” Moreno says, noting that he has also seen more remote online notarizations (RON) via video, another option that has grown more popular since the pandemic.

After the paperwork is signed, the closing agent compiles all of the documents into the loan package, which is returned to the lender for a final review. Once the lender is satisfied that everything is in order, the mortgage funds are wired to the title and escrow company for distribution to the appropriate parties as listed in the Closing Disclosure. The title company then records the necessary documents with the county recorder’s office.

Once that is accomplished, your real estate agent will be notified that the transfer is complete, and you will be provided with the keys to your new home.

There are wonderful communities throughout the state of Arizona to choose from, and an experienced real estate agent can be especially helpful in pointing you in the right direction to find your dream home.

Header Image Source: (Ian Dziuk / Unsplash)