Arizona mortgages: home prices, property tax limits and buyer programs

#Prices vs paychecks in Arizona

Arizona’s median home value ranks 16th-highest among the states and DC and sits above the US median of $360,600. Incomes haven’t kept the same pace: the median household earns $81,486, just below the national $81,604 and 21st-highest in the country. That leaves a typical home at 5.2 times income, against 4.4 nationally.

The housing itself is unusually young. Half of Arizona homes were built in 1994 or later — the 3rd-newest housing stock in the country and 13 years newer than the US median of 1981. Newer homes tend to need fewer big repairs in the first years, but many sit in planned communities with homeowners association dues, which count in your debt-to-income ratio just like the mortgage.

Renting isn’t cheap either: the median gross rent of $1,672/mo is the 11th-highest among the states and DC. The rent vs buy calculator compares both paths with Arizona’s median price and rent.

#What the median Arizona home costs each month

To keep that payment within Freddie Mac’s 30% guideline, a household would need about $125,200 a year. At the state median income, the same guideline allows $2,037 a month, enough for about $277,000 — $149,000 short of the median home value. The affordability calculator runs your own income at four debt-to-income limits, and the mortgage payment calculator opens with Arizona’s median price and tax rate.

#Arizona Is Home and HOME Plus

Two state-run programs offer down-payment help through participating lenders:

Arizona Is Home also has a mortgage program with below-market rates for lower-income buyers, offered outside Maricopa and Pima counties. Ask a participating lender which option fits — and whether funds are available — before you lock a rate.

See how these compare with federal programs in the first-time buyer programs guide.

#Arizona’s constitutional limits on property tax

Census data put the median Arizona property tax bill at $1,828 a year, or 0.43% of home value. Two rules in Article 9, Section 18 of the Arizona Constitution help keep it there:

• A cap on the tax itself. Taxes on residential property generally can’t exceed 1% of the property’s limited value.
• A cap on the taxable value. The limited value used for taxes can rise no more than 5% a year, and never above full cash value — so even when market prices jump, the taxable value catches up gradually.

Because the cap applies to the limited value, a home whose market value has outrun it can carry a tax bill well below what the price suggests. When you budget, use the current bill from the county treasurer rather than applying a rate to your purchase price. County assessors also handle exemptions for widows, widowers and people with total and permanent disabilities, subject to value and income limits.

#Closing costs without a transfer tax

The Arizona Constitution prohibits new taxes on the sale or transfer of real property, so there is no state transfer tax (0%) and no state mortgage tax. Closing costs come down to lender fees, title insurance, escrow and recording fees, and prepaid taxes and insurance; in planned communities, HOA transfer or capital-contribution fees are common. The closing cost estimator lays out a typical list.

For the Phoenix market — prices, taxes and city programs inside the state’s largest city — see the Phoenix guide.