| Loan Type | Rate | APR |
|---|---|---|
| 30-year fixed | 6.567% | 6.646% |
| 15-year fixed | 6.007% | 6.139% |
| 7/1 ARM (adjustable rate) | 7.07% | 7.508% |
| 5/1 ARM (adjustable rate) | 6.728% | 7.432% |
Have you always loved the idea of living in a beautiful desert landscape like Arizona? Or maybe you already live there and you’re planning to purchase or refinance a home in the Grand Canyon State. Here’s a crash course on the mortgage rates Arizona lenders can offer you.
Best Mortgage Lenders in Arizona for Rates:
- Best Overall in AZ: Rocket Mortgage®
- Best for First Time Home Buyers in Arizona: loanDepot
- Best for FHA Mortgages: NOVA Home Loans
- Best for Refinancing: Bank of America
- Best for Customer Service: guaranteedRate
- Best for VA Loans: Veterans United
What Is a Mortgage Rate?
Amortgage, as you already know, is a home loan. You can use a mortgage to purchase a single-family home, a multi-unit property, a condo or a manufactured home. You can also use a new mortgage to refinance your current mortgage, get a better rate or through a refinance.
Your mortgage rate is the interest rate your lender charges for lending you money. When you review mortgage quotes, you might see an interest rate and an annual percentage rate (APR) when you review mortgage quotes. The interest rate refers to the interest on your mortgage balance.
The APR is your annual percentage rate. It includes your interest rate as well as other costs like fees, private mortgage insurance, discount points and closing costs. This is why the APR is higher than the interest rate, and you should consider both when comparing refinance or purchase quotes.
What Factors Impact Your Mortgage Rate?
Lenders base their interest rates on broad, economic factors and the financial health of their borrowers. Lenders consider factors such as:
Inflation
Inflation is when the cost of consumer goods increases or decreases. For example, the price of a loaf of bread has gone up significantly over time. This increase is due to inflation. Lenders need to make sure their rates keep up with inflation.
Economic Growth
Economic measurements like the gross domestic product and the unemployment rate also impact mortgage rates. Typically, when the economy is doing well, interest rates increase since more consumers can afford to buy homes. When the economy dips, interest rates dip, too.
Your Down Payment
You may get a lower interest rate if you can make a higher down payment. A bigger down payment reduces a lender’s risk, and lenders want to take the least amount of risk possible.
Your Credit History
Lenders use your credit history to decide how likely you are to keep up with your mortgage payments. Let’s say you’ve filed for bankruptcy in the past or if you have accounts in collections. Lenders will see you as a higher risk and offer you a higher interest rate.
Your Debts and Income
Lenders also look at the relationship between your debts and your income. This is called your debt-to-income ratio. Lenders want to make sure you have enough money in your budget to pay your mortgage consistently. They add up all your debt payments, including your potential mortgage payment, any car payments, your credit card minimum payments and your student loans. Next, they compare your debt payments to your pre-tax income. Lenders prefer that your debt is around 43% or less of your monthly pre-tax income. Some will also allow you to have debt that hovers around 50%.
Interest rates vary from lender to lender, so it’s essential to shop around and get multiple quotes. Make sure you’re comparing the total cost of each mortgage, including any fees or discounts.
What Is a Mortgage Type?
A mortgage type refers to the varieties of mortgages on the market. Common types of mortgages include:
Conventional Loans
Conventional mortgages are a broad category that includes any mortgage that isn’t insured by a government agency. They can be conforming or non-conforming. Fannie Mae and Freddie Mac, two government-sponsored agencies, can back conventional mortgages that meet specific requirements. These loans are called conforming loans.
Fannie Mae and Freddie Mac are both private companies that were chartered by Congress to help stabilize the mortgage market. Jumbo mortgages are non-conforming and too large for Fannie Mae and Freddie Mac to insure.
FHA Loans
The Federal Housing Administration insures FHA mortgages. FHA mortgages have low down payment requirements and low credit score requirements.
These features make FHA mortgages a popular option for first time homebuyers. FHA mortgages have a fixed rate, which means the interest rate stays the same for the life of the mortgage.
USDA Loans
The U.S. Department of Agriculture backs USDA loans. These loans have a maximum income limit and you must purchase a home in a designated rural area. You can buy a home with no down payment if you meet the requirements.
VA Loans
The Department of Veteran Affairs insures VA loans. VA mortgages help current and retired service members purchase or refinance homes. You can buy a home with no down payment if you meet the requirements for this loan, too.
Private lenders who are approved by the appropriate government agency offer FHA, USDA and VA loans. These loans tend to have extensive documentation requirements, so it’s best to choose a lender familiar with the type of loan you prefer.
What Is a Mortgage Term?
Your mortgage term is how long your mortgage will last if you just pay the required monthly payment. At the end of your mortgage term, you won’t owe any more money and you’ll own your home. Here are a few common mortgage terms:
30-Year Fixed
A 30-year fixed-rate mortgage has the same mortgage rate and monthly payment for the entire term. Your home will be paid off in 30 years if you pay the minimum required monthly payment.
15-Year Fixed
A 15-year fixed-rate mortgage will be paid off in 15 years. These loans typically have a lower interest rate than 30-year fixed-rate mortgages, as there is less risk to the lender. Your payment stays the same with this option as well.
5/1 ARM
An ARM is an adjustable-rate mortgage. Adjustable-rate mortgages typically start with an introductory period with a fixed rate. A 5/1 ARM has a fixed rate for the first 5 years. After the introductory period, the interest rate adjusts once per year based on market conditions. The interest rate could go up or down. An ARM offers affordability during the introductory period, but it’s important to keep in mind that interest rates could increase after that. Your monthly payment will increase when the interest rates increase.
Depending on market conditions, a 5/1 ARM may have a lower interest rate than a 30-year or 15-year fixed-rate mortgage during the introductory period.
Current Mortgage Rates in Arizona
Mortgage rates can change daily, or even multiple times per day. These adjustments are often small but even a small change can make a big difference in how much you pay on your mortgage over time. Benzinga updates these rates frequently to ensure you see the most relevant data available.
| Loan Type | Rate | APR |
|---|---|---|
| 30-year fixed | 6.567% | 6.646% |
| 15-year fixed | 6.007% | 6.139% |
| 7/1 ARM (adjustable rate) | 7.07% | 7.508% |
| 5/1 ARM (adjustable rate) | 6.728% | 7.432% |
Calculating Interest in AZ
Your monthly mortgage payment goes toward your loan balance, your loan interest and other expenses like insurance and property taxes. Your lender calculates your interest each month. At the beginning of your mortgage, most of your monthly payment goes toward interest.
As your loan balance gets smaller, your lender will charge less interest and more of your payment will go toward your balance. This process is called amortization. The longer your mortgage term, the more interest you will pay because it takes longer to pay down your balance.
Here are some sample rates from 4 Arizona cities so you get an idea of how much you will pay in interest over time.
| City | Average Home Value | Loan Term | Current Rate | Downpayment (20%) | Monthly Payment | Total Interest Paid |
|---|---|---|---|---|---|---|
| Phoenix | $244,600 | 30-year fixed | 6.656% | $48,920 | $1,256.97 | $256,829.20 |
| Tucson | $193,000 | 30-year fixed | 6.91% | $38,600 | $1,017.91 | $212,047.60 |
| Scottsdale | $483,500 | 30-year fixed | 0% | $96,700 | $0.00 | -$386,800.00 |
| Mesa | $254,200 | 30-year fixed | 6.656% | $50,840 | $1,306.31 | $266,911.60 |
Lender Credit Score Minimums in AZ
Your credit score also has an impact on your mortgage rate. Credit scoring companies such as FICO or VantageScore develop credit scoring models, and these models generate your score. Lenders use credit scores to get a baseline understanding of your credit history.
Credit scores typically range from 300–850, and the higher your credit score is, the better your interest rate will be. Scoring companies use your credit payment history, the age of your credit accounts and whether you have any accounts in collections to determine your score.
Lenders have a minimum credit score requirement. Let’s say your credit score is below the minimum. You may have trouble securing a mortgage until you improve your score. Paying your bills on time and working out payment arrangements with creditors are 2 ways you can improve your credit score. Here are a few examples of minimum credit scores from Arizona lenders.
| Lender | Minimum Credit Score Required |
|---|---|
| Bank of America | 620 |
| Chase | 620 |
| Citibank | 620 |
| Flagstar | 620 |
| Rocket Mortgage® | 620 |
- Online Mortgages
6 Best Mortgage Lenders in Arizona
It takes time to find the best purchase or refinance quotes that fit your needs. At Benzinga, we’ve researched the best mortgage companies for Arizona homebuyers to bring you the 5 best options.
1. Best Overall: Rocket Mortgage®
Rocket Mortgage® offers award-winning customer service and entirely online experience. You can talk with loan officers by phone or chat too, of course.
Their online process makes the closing process speedy, with an average loan closing speed of 30 days.
- Comparing Lenders
2. Best for First Time Home Buyers: loanDepot
loanDepot offers a combination of online lending and in-person service — it’s one of the best lenders for first-time buyers.
You can complete as much of the process as you need to online, but you also have a dedicated loan officer you can talk to in person for advice. loanDepot offers conventional and government-backed loans.
3. Best for FHA Mortgages: NOVA Home Loans
NOVA Home Loans is a top Arizona loan originator and it works extensively with FHA mortgages.
FHA mortgages have unique requirements, so it helps to work with a lender who knows how to navigate the process.
NOVA is headquartered in Arizona and has branches throughout the state.
- Broad Range of Mortgage Loans
4. Best for Refinancing: Bank of America
Bank of America offers a wide range of refinancing options, including fixed-rate refinance loans, adjustable-rate refinance loans and cash-out refinance loans.
You can complete a significant amount of the process online, and some Bank of America customers qualify for reduced origination fees.
- Personalized support
5. Best for Customer Service: guaranteed Rate
guaranteed Rate focuses on customer service, with a goal of providing an outstanding experience to every borrower.
guaranteed Rate has offices throughout Arizona, and it also offers a digital-only mortgage and mobile app. It offers fixed-rate mortgages, adjustable-rate mortgages and FHA and VA mortgages.
- Current Service Members
6. 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.
Get an Arizona Mortgage
It can take time to find the best Arizona mortgage for you, but it's essential to shop around. Talk to at least 3 lenders and try to talk to them on the same day since mortgage rates change so frequently. Compare costs and your experience with each lender and go with the one that suits you the best.
Frequently Asked Questions
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!
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.
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.
