Rosie on the House: Financing your home purchase

Start with the numbers 

In Arizona, it’s easy to fall in love with a house quickly — a shaded patio, a sparkling pool, and mountain views at sunset are all very convincing. Before touring homes, though, it's important to get clear on your budget. Most financial professionals suggest keeping total housing costs at or below 30% of your gross monthly income.

That total includes your mortgage payment, property taxes, homeowners' insurance, and, if applicable, HOA dues, which are common in many Arizona communities, especially newer developments.

Arizona property taxes are relatively moderate compared to some other states, but they still need to be factored into your monthly affordability.

Online calculators can help you estimate what your monthly payment looks like based on home price, interest rate, and down payment. Also, according to Harold Perkins of Galaxy Lending Group, at the beginning of escrow, the buyer will receive a loan estimate outlining the terms and costs so they can decide whether to proceed with the transaction.

“It's important for the borrower to compare the initial loan estimate with the final loan terms on the closing disclosure,” he said.

The down payment

You've probably heard that you need 20% down to buy a home. In reality, many Arizona buyers put down much less, especially first-time buyers.

Conventional loans may allow down payments as low as 3 to 5%, depending on qualifications. Loans backed by the Federal Housing Administration can allow even lower down payments for buyers who meet certain credit criteria. For eligible veterans and active-duty service members, loans through the U.S. Department of Veterans Affairs may allow you to purchase with no down payment.

That said, putting more money down can reduce your monthly payment and potentially eliminate private mortgage insurance. It can also make your offer more competitive in Arizona markets.

Beyond that, remember to budget for closing costs, which typically range from 2 to 5% of the purchase price. Arizona closing costs often include lender fees, appraisal fees, title insurance, and escrow charges.

And you'll want some savings left over for move-in expenses and the occasional surprise repair, right? Desert homes, especially older ones, can come with HVAC systems that work hard in triple-digit summers, so a reserve fund is wise.

The credit score

Your credit score plays a major role in the mortgage rate you'll be offered. Even a slightly lower interest rate can save you thousands of dollars over the life of a loan.

Before applying for a mortgage, review your credit reports and check for errors. Pay down high credit card balances and avoid opening new lines of credit during the mortgage process. Lenders are looking for stability and responsible debt management.

"In Arizona's competitive market, strong financing isn't just about getting approved; it's about positioning yourself to win," Perkins said. "A well-structured loan and solid pre-approval can make all the difference when sellers are reviewing offers."

The mortgage

Understanding your loan choices can feel overwhelming at first, but each option exists for a reason. Conventional loans are the most common and are offered by banks and mortgage lenders throughout Arizona. They typically require solid credit and steady income.

FHA loans, insured by the Federal Housing Administration, can be a strong option for buyers who may not have a large down payment saved. VA loans, backed by the U.S. Department of Veterans Affairs, are especially valuable in Arizona, which has a large veteran population.

In more rural parts of the state — areas outside of Prescott, Casa Grande and parts of Pinal County — buyers may even qualify for USDA Rural Development loans.

The right loan depends on your financial profile, long-term plans, and comfort level with monthly payments. A reputable local lender who understands Arizona's market can help guide you through the pros and cons.

Getting pre-approved before you start house hunting is essential. Pre-approval means a lender has reviewed your income, assets, and credit and has conditionally approved you for a specific loan amount. It's stronger than pre-qualification and shows sellers that you're serious and financially prepared.

In a competitive market, that pre-approval letter can be the difference between winning and losing a home purchase.

The true cost

Your mortgage payment is only part of the financial picture. Arizona homeowners should plan for ongoing expenses that include property taxes, homeowners' insurance, utilities, and maintenance.

Summer electric bills can be significant, particularly in homes lacking updated insulation or energy-efficient systems. Pool maintenance, desert landscaping, and HOA dues for master-planned communities are also considerations.

Unlike renting, homeownership means you're responsible for repairs. Roof coatings, AC replacements and irrigation systems are part of desert living. Budgeting for maintenance from the start keeps your finances steady and your stress low.

From offer to closing: What to expect

Once your offer is accepted, your lender will order an appraisal to confirm that the home value aligns with your loan amount. An inspection is highly recommended to ensure no major surprises are hiding behind freshly painted stucco.

During escrow, you'll receive a closing disclosure outlining your final loan terms and costs. Review it carefully and ask questions if anything looks unclear. Arizona closings often take around 30 to 45 days, depending on the loan and market conditions.

On closing day, you'll sign the paperwork, fund your down payment and closing costs, and receive the keys. It's a moment that feels equal parts relief and excitement.

"Buying a home is one of the biggest financial decisions most people will ever make," Perkins said. "It's not just about the interest rate, it’s about having the right guidance so you can move forward with confidence.”

Taking the time to understand your budget, improve your credit, compare lenders, and prepare for long-term costs ensures that your home remains a blessing, not a burden. The desert sun may be strong, but so is the opportunity to build something that lasts.