Compare mortgage rates in Arizona.

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 $405,300 for Q4 2025. With a 30-year, fixed-rate mortgage at 6.00% and a 20% down payment, the monthly payment would be approximately $1,943. However, if the interest rate increases to 7.00%, the monthly payment jumps to $2,157, 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.

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 US 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

• The Fed: The federal funds rate serves as a benchmark for other interest rates, including mortgage rates.
• Inflation: When inflation rises, the purchasing power of money decreases, making it more expensive for lenders to lend money. As a result, they may increase interest rates to compensate.
• Unemployment rate: A lower unemployment rate can result in higher mortgage rates. A low unemployment rate indicates a strong economy, which typically leads to increased demand for housing. This increased demand puts upward pressure on home prices and, not surprisingly, mortgage interest rates.

Consumer Factors

• Credit score: A higher credit score generally results in a lower mortgage interest rate. Lenders view borrowers with higher credit scores as less risky, making them more likely to offer favorable rates. Conventional loans may require a credit score of 620 or above.
• Down payment: Increasing your down payment may reduce your mortgage rate. A larger down payment lowers the loan-to-value ratio (LTV), the portion of the home’s value financed by the loan. A lower LTV reduces the lender’s risk and may result in a lower interest rate.
• Income and assets: A steady income is important to lenders, who will check your employment history as well as your salary. Assets like investments and emergency savings also reassure lenders that you could still pay your mortgage in the case of a job loss or other financial setback.
• Type of mortgage loan: Certain types of mortgages tend to have lower rates. For instance, adjustable rate mortgages (ARMs) typically offer lower initial rates than fixed-rate mortgages. Some government-backed loans, like VA mortgages, can also have lower rates. And a shorter loan term usually comes with a lower rate than longer terms.

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Types of Mortgages Available in Arizona

Arizona offers various mortgage types 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. 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 $832,750 in 2026. 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 1% above the national average, and the top marginal state income rate is just 2.5%. The average home value in Arizona is $414,914.

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.

• Sierra Vista: $298,883; COLI 91
• Douglas: $179,301; COLI 86
• Bullhead City: $324,023; COLI 94

Most Expensive Locations

But Arizona also has its luxury outposts, including Paradise Valley, Cave Creek, and Flagstaff. Homebuyers shopping in these areas can expect not only higher housing prices but higher average monthly expenses too.

• Paradise Valley: $3,234,351; COLI 200+
• Scottsdale: $785,123; COLI 135
• Sedona: $891,223; COLI 130

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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: Assistance for Homebuyers

Arizona has a number of programs especially for first-time buyers. To qualify as a first-time home buyer usually requires 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 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 6% of the home’s purchase price through a forgivable second mortgage.

Tools and 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.

  Calculate

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  Down payment calculator

  Enter a few details about your home loan and we’ll provide your monthly mortgage payment.

  Calculate

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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.

  Calculate

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: Exploring Your Possibilities

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 and Fees in Arizona: What to Expect

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.

FAQ

What is a mortgage rate?

A mortgage rate is the interest rate charged by lenders for borrowing money to purchase a home. It directly impacts your monthly mortgage payment and the total interest you will pay over the life of the loan.

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 subjective. Mortgage rates have fluctuated throughout history and are influenced by various economic factors. There really isn’t a single “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?

To lock in a mortgage rate, you can get preapproved for a mortgage and request a rate lock from your lender. This guarantees your interest rate for a specific period, typically 30-90 days, while you finalize your home purchase. There may be a fee involved.

How do mortgage interest rates work?

Mortgage interest rates represent the cost of borrowing money from a lender to finance a home purchase. They are influenced by various economic factors, including inflation, the federal funds rate, and market conditions.

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*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.

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.