Today's Mortgage Rates in Arizona

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What Affects Mortgage Rates in Arizona

Your personal financial situation and broader economic factors all have an impact on mortgage interest rates in Arizona.

Here's a breakdown of a few major factors influencing your rate:

Federal Reserve policy and inflation: When inflation runs high and the Fed takes steps to curb it and keep borrowing costs tight, rates tend to rise. When inflation slows and the Fed becomes less aggressive, rates can fall.
The wider economy: The housing market, job market, wages, and other economic conditions also affect mortgage rates. Local housing supply and lender competition can also affect rates, meaning rates can even vary within Arizona.
Your situation: Your personal details make a difference on your rate. Your credit score, debt-to-income ratio, down payment size, whether the property your buying is a primary residence or investment property, points, and loan type all influence your final APR.

You can connect with an experienced loan officer to get a personalized mortgage rate based on your circumstances.

Types of Mortgages Available in Arizona

Whether you’re purchasing a home in a major metro like Phoenix or Tucson, or buying in a rural Arizona community, you have access to a number of mortgage options to meet your unique financial needs.

Here are a few common mortgage types for Arizonans:

Conventional Fixed-Rate Mortgages: Fixed-rate mortgages have the same interest rate for the entire loan term, usually 15 to 30 years. That means principal and interest payments are predictable throughout the life of the loan. Private mortgage insurance (PMI) is generally required if your down payment is less than 20%, but it can usually be canceled once you reach sufficient equity.
FHA Loans: FHA loans have flexible credit score and down payment requirements. If you have a credit score of 580 or higher, you may qualify for an FHA loan with a down payment as low as 3.5%. Mortgage insurance premiums (MIP), including both an upfront premium and ongoing monthly payments, are required regardless of down payment size. If your down payment is less than 10%, MIP typically lasts for the life of the loan unless you refinance into a conventional mortgage. If your down payment is 10% or higher, MIP falls off after 11 years.
VA Loans: VA loans have limited eligibility, but competitive terms. They're available to eligible veterans, active-duty service members, and surviving spouses. Down payments and private mortgage insurance are generally not required. VA loans do require a funding fee, but that can usually be financed. Some eligible veterans, like those with service-related disabilities, can have that fee waived.
Adjustable-Rate Mortgages (ARMs): ARMs usually have a fixed interest rate for an initial period followed by periodic adjustments based on a lender-set margin and a benchmark index. That means payments can rise or fall after the introductory period, although ARMs generally have rate caps that limit how much the rate can change. Common fixed rate periods are five and seven years. A 7/6 ARM, for example, has seven years of a fixed rate followed by adjustments every six months. Like other conventional loans, PMI may be required if your down payment is less than 20%
Jumbo Loans: These mortgages that exceed conforming loan limits and typically require stricter underwriting. Conforming limits are higher in high-cost counties, but most Arizona counties conform to a baseline limit set by the FHFA.

Refinancing a Mortgage in Arizona

Refinancing means replacing your existing mortgage with a new one. You might do that to lower your rate, change loan types, or shorten your loan term to pay off your home faster.

Here are a few common types of refinances in the Grand Canyon State:

Rate-and-term refinances: These straightforward refinances replace an existing mortgage with a new loan. You might pursue a rate-and-term refinance to take advantage of lower rates, or to change your loan term.

Cash-out refinances: A cash-out refinance replaces your mortgage with a larger loan and let you take a portion of your equity as cash. Unlike a home equity loan or HELOC, which come as second loans, a cash-out refinance replaces your primary mortgage with a new one.

Does credit score affect mortgage rates?

Your credit score has a major impact on your mortgage rates, with higher credit scores generally meaning lower interest rates.

Your credit score isn't the only thing that affects your mortgage rate, however. Your down payment, debt-to-income ratio, loan term, and other factors will also affect your rate.

Larger factors, like inflation and the broader economy, also have a major impact on your mortgage rate.

How will property taxes and insurance in Arizona
affect my mortgage payment?

Property taxes are often included in your mortgage payment as part of an escrow account. If that's the case, it means your lender will collect property tax payments each month and pay the tax bill for you. Some loan types, like FHA and VA loans, sometimes require escrow accounts.

Arizona has one of the lowest effective tax rates in the nation, according to the Tax Foundation.

Keep in mind property tax can vary significantly within a state, with urban areas generally higher than those in rural areas.

Homeowners insurance can also affect your mortgage payment if it's bundled into your premium with an escrow account. Your home's location, and whether it's in an area that is affected by natural disasters like floods, plays a major impact on your insurance cost. Details about your home, like its size, age, and condition can also affect your payment.