Arizona is a great place to call home — you might be drawn there by its weather or the Grand Canyon. Whether you’re stationed in Arizona or you’ve decided to retire there, a VA loan can help you buy the perfect home. Here’s what you need to know about a VA loan if you live in the Grand Canyon State.
The Best VA Loans in Arizona:
- Best Overall in Arizona: Veterans United
- Best for Quick Closing: Quicken Loans®
- Best for First Time Home Buyers: Bank of America
- Best for Military Focus: USAA
- Best Credit Union: Navy Federal Credit Union
What is a VA Loan?
The Department of Veterans Affairs oversees and insures VA loans. You can use a VA loan to:
- Purchase a home
- Build a new home
- Refinance an existing mortgage
Private lenders offer VA loans. The VA approves each lender. VA loans offer several benefits, including:
- Flexible credit requirements
- Flexible down payment requirements
- Minimum property requirements
The VA doesn’t require a down payment. Lenders do have the option to require a down payment.
Requirements for a VA Loan
You must meet specific requirements to qualify for a VA loan. These include service requirements and underwriting requirements.
- Service requirements: Veteran service requirements vary depending on whether you served in war or peacetime.
- World War II, Korea and Vietnam: Veterans must have served at least 90 days with a discharge other than dishonorable. Veterans who served less than 90 days due to a service-related disability may also be eligible.
- Gulf War: Veterans must have served 24 months with a discharge other than dishonorable. At least 90 days may be acceptable in some circumstances, and less than 90 days is acceptable if the discharge was due to a disability.
- Peacetime: Veterans must have served at least 181 days unless they left service due to a service-related disability.
- Current service members: Current service members are typically eligible after 90 days of service.
- Reserve members: Reserve members may be eligible after 6 creditable years of service.
- Surviving spouses: An unmarried spouse of a veteran who died in service or is missing or a prisoner of war may be eligible.
- Underwriting requirements: Lenders evaluate potential borrowers to decide how risky it is to lend them money. Keep in mind that while the VA has minimum underwriting requirements, lenders may have additional requirements or higher standards. Lenders will consider:
- Income: You must show you have enough income to pay for the loan. Lenders will consider whether you have enough income to cover the mortgage, your other debts and your living expenses.
- Your credit history: Lenders review your credit report. They consider whether you’ve filed for bankruptcy, whether you have accounts in collections and your overall payment history. Something negative in your credit history won’t necessarily disqualify you. It all depends on how long ago the event happened and what the circumstances were.
- Your loan amount: The VA doesn’t limit how much you can borrow. There is a limit to how much you can borrow without a down payment. In most areas, the limit is $453,100. A lender can help you determine whether that’s the loan limit in your area.
An experienced lender can help you determine whether you meet eligibility requirements.
Lender Specifics for VA Loans
Each lender sets minimum standards for VA loans. For example, the VA doesn’t have a minimum credit score requirement, but various lenders might. Here are the requirements for several Arizona VA lenders.
| Lender | Minimum Credit Score | Loan Servicing | Minimum Down Payment |
|---|---|---|---|
| Bank of America | 620 | In-house | $0 |
| Caliber Home Loans | 580 | In-house | $0 |
| Citibank | 620 | In-house | Not specified |
| Flagstar | 620 | In-house | $0 |
| Homebridge Financial Services | 620 | In-house | $0 |
| Rocket Mortgage® | 620 | In-house | $0 |
Interest Rates for VA
When you contact VA lenders for a refinance or purchase quote, you may see fixed and adjustable interest rates. Here’s what those terms mean:
- Adjustable rate: An adjustable-rate mortgage (ARM) has an interest rate that changes. This means that your monthly payment can change too. Lenders adjust rates up or down based on market conditions. ARMs typically start with an introductory period. This initial period has a fixed rate. Let’s say you have a 5/1 ARM. This means you have an initial 5-year period with a fixed rate. After that, the interest rate — and your monthly payment — change once per year.
- Fixed-rate: A fixed-rate mortgage has the same interest rate for the entire term. For example, a 30-year fixed-rate mortgage would have the same interest rate and the same monthly payment for all 30 years.
An adjustable-rate mortgage may have a lower introductory rate than a fixed-rate mortgage. Keep in mind that the interest rate will change. If you only plan to own the home for a few years, an adjustable-rate mortgage might make sense, but it depends on your situation.
Do You Need Mortgage Insurance?
One of the benefits of a VA mortgage is that you won’t pay for mortgage insurance. Some types of mortgages require you to pay for mortgage insurance if you make a down payment of 20% or less.
Mortgage insurance doesn’t protect you — it protects your lender. Let’s say you can’t make your payments and the lender forecloses on your home. The lender will sell the home to recover its costs. The home may not sell for enough to cover the mortgage balance, but when this happens, mortgage insurance helps to make up the difference to the lender.
Mortgage insurance can cost 0.5% to 2% of your loan amount per year. For a $150,000 mortgage, this can be as much as $3,000 per year. A VA loan doesn’t require this type of insurance and saves you a significant amount of money.
How to Apply for a VA Loan in Arizona
Before you get a purchase or refinance quote for a VA loan, take steps to get ready to apply. Here’s how the VA loan process works:
- Apply for your Certificate of Eligibility (COE). You can apply for your COE online or by mail. If you’re a veteran, you will need to provide a copy of your discharge papers. If you’re an active-duty service member, you will need to provide a statement of service.
- Gather your financial documents. Potential lenders will need to verify your income and assets. Gather your recent tax returns, bank statements and other financial information.
- Choose a lender. Contact multiple Arizona VA lenders to get the best rate. Once you find one, get preapproved.
- Shop for a home. Look for a home that fits your budget. An experienced real estate agent can help with your search. When you find the perfect home, put in an offer.
- Apply for your VA loan. Finish the application process. The lender may request additional information. Respond to lender requests as quickly as possible to keep the mortgage process moving along.
- Close on your mortgage. Your lender will provide you with closing documents at least 3 days before closing. Review your documents and ask questions. At closing, you’ll sign your mortgage documents and pay for any closing costs.
Ask your lender any questions you have so you find the right house and mortgage for your needs.
6 Best Lenders for VA Loans in Arizona
An experienced VA lender can help simplify the process. Here are the 6 best mortgage companies in Arizona for VA loans:
- Current Service Members
1. Veterans United: Best for VA Loans
If you’ve logged some time in the military, Veterans United’s loans will likely be the best deal. Unlike other veteran-marketed loan programs, Veterans United only accepts active duty and veteran military members.
In addition to no-down-payment loans, you’ll also eliminate the private mortgage insurance you’ll have to pay with other mortgages.
Veterans United is also more forgiving of lower credit scores. Interest rates are lower than average.
- Online Service
2. Best for Quick Closing: Quicken Loans®
Quicken Loans® combines technology with outstanding customer service. Quicken Loans® is a great choice for VA loans. You can complete the entire process online, which simplifies paperwork.
You also can reach a loan officer 7 days per week by phone or chat. Quicken Loans® posts its rates online so you can easily compare rates. It offers 15-, 25- and 30-year fixed-rate VA mortgages. It also offers FHA, USDA and conventional mortgages.
- Broad Range of Mortgage Loans
3. Best for First Time Home Buyers: Bank of America
Bank of America has branches throughout Arizona — it’s one of the top lenders for first time buyers. Working directly with a loan officer can help take the guesswork out of the process.
Bank of America offers excellent service and technological tools. You can choose from VA loans, FHA mortgages, conventional mortgages and proprietary mortgage products.
- Veterans and Direct Family Members
4. Best for Military Focus: USAA
USAA is a financial services company that exclusively works with service members and their families.
This means it has extensive experience with the unique needs of military families and it has a reputation for outstanding customer service. It also posts its rates online so you can compare USAA with other lenders. Its mortgage products include fixed-rate and adjustable-rate VA loans, conventional loans and a first time homebuyer loan.
- Military Personnel and Their Families
5. Best Credit Union: Navy Federal Credit Union
Credit unions are nonprofit financial institutions that have competitive rates.
Navy Federal Credit Union has been serving service members and their families since 1933. It offers excellent service and a dedicated loan officer.
You can check out its rates online to get a sense of how it stacks up against other lenders. Navy Federal Credit Union offers VA loans with 10- to 30-year terms, proprietary mortgages, conventional mortgages and FHA loans.
Choose the Best Arizona VA Lender
Take the time to contact at least 3 VA lenders. This gives you the best chance of finding the lowest rate. A difference as small as 0.05% can add up to thousands over the life of your loan. Check into each lender’s customer service outreach. Some lenders may also offer discounts or incentives — look for those when you review quotes, too.
Frequently Asked Questions
Q: How do I get pre-approved?
First, you need to fill out an application and submit it to the lender of your choice. For the application you need 2 previous years of tax returns including your W-2’s, your pay stub for past month, 2 months worth of bank statements and the lender will run your credit report. Once the application is submitted and processed it takes anywhere from 2-7 days to be approved or denied. Check out our top lenders and lock in your rate today!
Q: How much interest will I pay?
Interest that you will pay is based on the interest rate that you received at the time of loan origination, how much you borrowed and the term of the loan. If you borrow $208,800 at 3.62% then over the course of a 30-year loan you will pay $133,793.14 in interest, assuming you make the monthly payment of $951.65. For a purchase mortgage rate get a quote here. If you are looking to refinance you can get started quickly here.
Q: How much should I save for a down payment?
Most lenders will recommend that you save at least 20% of the cost of the home for a down payment. It is wise to save at least 20% because the more you put down, the lower your monthly payment will be and ultimately you will save on interest costs as well. In the event that you are unable to save 20% there are several home buyer programs and assistance, especially for first time buyers. Check out the lenders that specialize in making the home buying experience a breeze.
