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Compare mortgage rates in Arizona.
Key Points
• Arizona’s mortgage rates have ranged from a high of 7.99% in 2000 to a low of 3.73% in 2012 and typically run a bit lower than the national average.
• Mortgage interest rates are influenced by economic factors, the federal funds rate, and the health of the housing market.
• Higher mortgage rates mean higher monthly payments and reduced home affordability.
• Arizona offers various mortgage types, including fixed-rate mortgages, ARMs, FHA, VA, USDA, and jumbo loans.
• First-time homebuyers in Arizona can benefit from down payment assistance programs and other resources.
Introduction to Mortgage Interest Rates
In a 2024 survey, SoFi asked 500 would-be homebuyers what were the most important factors in choosing a mortgage lender. Interest rates came out on top, with 64% of respondents saying rates were a key consideration.
Mortgage rates are a crucial part of determining the overall cost of purchasing a home. The interest rate represents a percentage of the mortgage amount that borrowers pay over the life of the loan. Understanding how mortgage interest rates are determined and how they affect home affordability can help homebuyers get a good deal that fits comfortably within their budget.
Where Mortgage Rates Come From
Mortgage rates are influenced by such economic factors as inflation, the federal funds rate (set by the Federal Reserve), and the overall health of the housing market. Lenders also consider the credit history of the individual borrower when setting home loan rates, to manage their risk and ensure a fair return on their investment.
How Interest Rates Affect Home Affordability
Mortgage interest rates directly impact the monthly mortgage payments that borrowers must make. A higher interest rate means a higher monthly payment for the same house, making it more challenging to afford a home. Conversely, a lower interest rate results in a lower monthly payment, making homeownership more accessible.
For instance, consider the national median home price of $412,300. With a 30-year, fixed-rate mortgage at 4.00% and a 20% down payment, the monthly payment would be approximately $1,574. However, if the interest rate increases to 6.00%, the monthly payment jumps to $1,977, making the home less affordable.
The mortgage preapproval process can give you a good sense of your mortgage rate and your budget before you go house-hunting.
Should Homebuyers Wait for Interest Rates to Drop?
Predicting future interest rate movements is challenging, and waiting for rates to drop may not always be the best strategy. While rates can fluctuate, they can also remain stable or even increase against expectations.
Perhaps a better approach is for homebuyers to carefully consider their own financial situation, housing needs, and long-term plans when deciding when it’s the right time for buying your first home.
Arizona Mortgage Rate Trends
In the last 25 years, Arizona mortgage rates have ranged from a high of 7.99% in 2000 to a low of 3.73% in 2012. Until recently, Arizona rates typically ran a bit lower than the national average.
| Year | Arizona Rate | U.S. Rate |
|---|---|---|
| 2000 | 7.99 | 8.14 |
| 2001 | 7.00 | 7.03 |
| 2002 | 6.51 | 6.62 |
| 2003 | 5.72 | 5.83 |
| 2004 | 5.73 | 5.95 |
| 2005 | 5.86 | 6.00 |
| 2006 | 6.57 | 6.60 |
| 2007 | 6.46 | 6.44 |
| 2008 | 6.12 | 6.09 |
| 2009 | 5.15 | 5.06 |
| 2010 | 4.81 | 4.84 |
| 2011 | 4.63 | 4.66 |
| 2012 | 3.73 | 3.74 |
| 2013 | 3.85 | 3.92 |
| 2014 | 4.18 | 4.24 |
| 2015 | 3.91 | 3.91 |
| 2016 | 3.76 | 3.72 |
| 2017 | 4.03 | 4.03 |
| 2018 | 4.66 | 4.57 |
Seasonal Trends
Arizona mortgage rates tend to follow seasonal trends, with rates usually being higher in the spring and summer months when demand for housing is higher. Rates tend to be lower in the fall and winter months when demand is lower.
Historical U.S. Mortgage Rates
For additional context, the average mortgage rate in the U.S. has fluctuated from a high of over 18.00% in 1981 to an all-time low of 2.65% in January 2021. The current rate of around 6.00% indicates that rates are relatively moderate — neither very high nor low — compared to the past.
Factors Affecting Mortgage Rates in Arizona
Economic conditions, consumer behavior, and government policies all work together to produce the mortgage rates that lenders offer.
Economic Factors
Economic factors that affect mortgage rates include inflation, unemployment rates, and the overall health of the housing market. When the economy is strong, with low unemployment and stable inflation, mortgage rates tend to be lower. Conversely, economic downturns can lead to higher mortgage rates.
Consumer Factors
Consumer factors that impact mortgage rates include credit scores, down payments, and debt-to-income ratios. A higher credit score generally results in a lower mortgage interest rate, as lenders perceive borrowers with good credit as less risky.
Increasing the down payment can also lower the mortgage interest rate because it reduces the loan-to-value ratio (LTV) and makes the loan less risky for the lender. A lower debt-to-income ratio (DTI) indicates that the borrower has a manageable amount of debt relative to their income, which can also lead to a lower mortgage interest rate.
Types of Mortgages Available in Arizona
Arizona offers various types of mortgage loans to meet the needs of different borrowers, including fixed-rate mortgages, adjustable-rate mortgages (ARMs), FHA loans, VA loans, and USDA loans.
Fixed-Rate mortgages
Fixed-rate mortgages maintain the same interest rate throughout the life of the loan, ensuring that the principal and interest payments remain constant. Fixed-rate mortgages are available in terms of 10, 15, 20, or 30 years.
One of the key benefits of fixed-rate mortgages is the stability of monthly payments, making it easier to budget long-term. Choosing a shorter loan term, like 15 years, can typically offer a lower interest rate than a 30-year mortgage.
Fixed-rate mortgages are ideal for homebuyers who prefer predictable monthly payments and want to lock in a favorable interest rate for the long term.
Adjustable-Rate Mortgages (ARMs)
Adjustable-rate mortgages (ARMs) initially offer a lower rate than fixed-rate loans. This can be beneficial if you’re planning to sell before the fixed period ends.
The interest rate on an ARM can adjust up or down periodically based on an index rate. This means that monthly payments can fluctuate over the life of the loan. ARMs carry the risk of higher payments if interest rates increase after the initial fixed period.
ARMs may be suitable for borrowers who plan to stay in their home for a short period or who are willing to accept the risk of fluctuating interest rates in exchange for a lower initial rate.
FHA Loans
FHA loans are backed by the Federal Housing Administration and typically have more lenient eligibility requirements compared to conventional loans. FHA loans are popular among first-time homebuyers in Arizona due to their lower down payment requirements. FHA loans require a minimum down payment of 3.5% for qualified buyers.
FHA loans often have higher closing costs compared to conventional loans. However, the Arizona Assist program offers up to $10,000 in down payment assistance on FHA, VA, USDA, and Conventional Loans (more on that below).
FHA loans are well-suited for borrowers with lower credit scores or limited savings for a down payment. In SoFi’s survey, however, only 49% of home buyers had heard of FHA loans.
VA Loans
VA loans offer favorable loan terms and are available to veterans, active-duty military members, and some reservists and National Guard members. One of the primary benefits of VA loans is that they do not require a down payment, and they usually come with lower interest rates compared to conventional loans.
VA loans are an excellent option for eligible military personnel and veterans seeking affordable home financing. Borrowers apply to private lenders for these loans, after first obtaining a certificate of eligibility from the VA.
USDA Loans
USDA loans are designed for low-income borrowers to purchase homes in rural areas with favorable terms. These loans are backed by the U.S. Department of Agriculture.
USDA loans have specific eligibility requirements, including limits on income and the property location. Benefits of USDA loans include zero down payment requirements and favorable terms for eligible rural property buyers.
Jumbo Loans
In Arizona, jumbo loans are for home purchases requiring loans greater than $766,550. Jumbo mortgage rates have historically been slightly higher than those of conforming loans.
Popular Places to Get a Mortgage in Arizona
Securing a mortgage often depends on choosing the right location, where home prices, the cost of living, and mortgage terms are favorable. The cost of living in Arizona is about 107% of the national average, and the top marginal state income rate is just 2.5%.
Least Expensive Locations
These are the top locations to live in Arizona, based on SoFi’s guides to the Best Affordable Places to Live in the U.S., and the area’s average home value.
• Tucson $332,847
• Sierra Vista $293,051
• Payson $447,797
• Lake Havasu City $475,159
• Phoenix $418,914
Most Expensive Locations
But Arizona also has its luxury outposts, including Flagstaff, Paradise Valley, Scottsdale, and chi-chi Sedona. Homebuyers shopping in these areas can expect not only higher housing prices but higher average monthly expenses too.
Recommended: The Cost of Living in the U.S.
Tips for Securing a Competitive Mortgage Rate in Arizona
Now that you know how much mortgage rates can affect home affordability, let’s see how borrowers can ensure they receive an optimal rate.
Compare Interest Rates and Fees
Shopping around and comparing interest rates and fees from multiple lenders is vital to securing the best mortgage deal. Lenders may offer different rates and terms, so it pays to compare offers before making a decision. Online mortgage comparison tools can simplify this process.
Get Preapproved
Getting preapproved for a mortgage provides a stronger negotiating position when making an offer on a home and can help secure a lower interest rate. To get preapproved, borrowers should provide the lender with information about their income, assets, and debts. Locking in an interest rate can protect borrowers from rising rates during the loan application process.
Arizona Mortgage Resources
Arizona has a number of programs especially for first-time buyers. Not sure you qualify as a first-time home buyer? Most programs require that you not have owned a primary residence within the last three years. There may also be income limits and credit score and debt-to-income ratio requirements.
Down Payment Assistance
Down payment assistance programs programs can provide financial assistance to help borrowers cover the down payment on a home. These programs may be offered by the state, local governments, or non-profit organizations.
• The Arizona Industrial Development Authority’s Home+Plus Home Buyer Down Payment Assistance Program offers qualifying buyers a 30-year fixed-rate mortgage paired with up to 4% down payment assistance (DPA), which may also be used toward closing costs.
• The Home in Five Advantage program is offered to low- to moderate-income homebuyers in Maricopa County, providing up to 5% of the home’s purchase price through a forgivable second mortgage.
Tools & Calculators
SoFi’s online tools and calculators can help borrowers estimate their monthly mortgage payments, compare loan options, and determine how much they can afford to borrow. These tools can be valuable in planning for homeownership.
Run the numbers on your home loan.
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Mortgage calculator
Punch in your home loan amount and a new interest rate, and we’ll estimate your payoff date.
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Down payment calculator
Enter a few details about your home loan and we’ll provide your monthly mortgage payment.
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Home affordability calculator
Provide us with a few details and see how much you can afford to spend on a home purchase.
Using the free calculators is for informational purposes only, does not constitute an offer to receive a loan, and will not solicit a loan offer. Any payments shown depend on the accuracy of the information provided.
Refinancing Options in Arizona
A mortgage refinance can help homeowners lower their interest rate, reduce their monthly payments, or access cash for home improvements or other expenses. Several refinancing options are available in Arizona, including FHA Streamline Refinances, Interest-Rate Reduction Refinance Loans, and cash-out refinances.
Closing Costs, Taxes, and Fees in Arizona
Buyers in Arizona can expect to pay between 2%-5% of the home’s purchase price in closing costs. These costs include lender fees, title fees, and other miscellaneous expenses. It is important to factor in closing costs when budgeting for homeownership.
The Takeaway
Mortgage rates in Arizona are influenced by various economic factors, consumer behavior, and state-specific regulations. Understanding these factors and shopping around for the best mortgage rate can help homebuyers secure a competitive mortgage and make the homebuying process smoother.
Looking for an affordable option for a home mortgage loan? SoFi can help: We offer low down payments (as little as 3% - 5%*) with our competitive and flexible home mortgage loans. Plus, applying is extra convenient: It's online, with access to one-on-one help.FAQ
What is a mortgage rate?
A mortgage rate is the interest rate charged by lenders for borrowing money to purchase a home.
Will mortgage rates drop in Arizona?
Predicting the direction of mortgage interest rates is challenging, and there is no guarantee that rates will drop in the future.
Will mortgage rates ever go back to normal?
The definition of “normal” mortgage rates is squishy, at best. Mortgage rates have fluctuated throughout history and are influenced by various economic factors. There really isn’t a “normal” mortgage rate.
Will Arizona home prices ever drop?
Arizona home prices are influenced by several factors, including supply and demand, economic conditions, and population growth. Predicting future price trends is challenging and uncertain.
Is it a good time to buy a house in Arizona?
Whether it is a good time to buy a house in Arizona depends on individual circumstances, financial readiness, and market conditions. Factors such as affordability, personal timeline, and housing market outlook should be considered.
How to lock in a mortgage rate?
Locking in a mortgage rate involves obtaining a commitment from a lender to provide a specific interest rate for a certain period. This can be done by getting preapproved for a mortgage and paying a lock-in fee.
How does mortgage interest work?
Mortgage interest rates represent the cost of borrowing money from a lender to purchase a home. They are influenced by various economic factors, including inflation, the federal funds rate, and market conditions.
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SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.
*SoFi requires Private Mortgage Insurance (PMI) for conforming home loans with a loan-to-value (LTV) ratio greater than 80%. As little as 3% down payments are for qualifying first-time homebuyers only. 5% minimum applies to other borrowers. Other loan types may require different fees or insurance (e.g., VA funding fee, FHA Mortgage Insurance Premiums, etc.). Loan requirements may vary depending on your down payment amount, and minimum down payment varies by loan type.
†Veterans, Service members, and members of the National Guard or Reserve may be eligible for a loan guaranteed by the U.S. Department of Veterans Affairs. VA loans are subject to unique terms and conditions established by VA and SoFi. Ask your SoFi loan officer for details about eligibility, documentation, and other requirements. VA loans typically require a one-time funding fee except as may be exempted by VA guidelines. The fee may be financed or paid at closing. The amount of the fee depends on the type of loan, the total amount of the loan, and, depending on loan type, prior use of VA eligibility and down payment amount. The VA funding fee is typically non-refundable. SoFi is not affiliated with any government agency.
¹FHA loans are subject to unique terms and conditions established by FHA and SoFi. Ask your SoFi loan officer for details about eligibility, documentation, and other requirements. FHA loans require an Upfront Mortgage Insurance Premium (UFMIP), which may be financed or paid at closing, in addition to monthly Mortgage Insurance Premiums (MIP). Maximum loan amounts vary by county. The minimum FHA mortgage down payment is 3.5% for those who qualify financially for a primary purchase. SoFi is not affiliated with any government agency.
Non affiliation: SoFi isn’t affiliated with any of the companies highlighted in this article. Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.
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More home loan resources.
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First-Time Homebuyer Guide
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First-Time Homebuyer Programs and Loans
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Mortgage Preapproval Process