Buying your first home in Arizona: a step-by-step guide

Do you count as a first-time buyer?

Probably, even if you've owned a home before. Under HUD's definition, which many programs use, you're a first-time homebuyer if you haven't owned a principal residence in the last three years.

That matters because some loan and down payment assistance programs are designed for first-time buyers. Others, like FHA loans and Arizona's HOME Plus program, aren't limited to them at all.

Step 1: Set a budget you're comfortable with

A lender will tell you the most you can borrow. Your budget should be the payment you can live with. Start with your monthly take-home pay and your current bills, then decide what housing payment still leaves room for savings and surprises.

Your monthly housing cost includes more than principal and interest:

• Property taxes
• Homeowners insurance
• Mortgage insurance, if your loan requires it
• HOA dues, if the home is in a homeowners association

Step 2: Check your credit

Your credit affects which programs you qualify for and the pricing you're offered. Pull your free credit reports at AnnualCreditReport.com and look for errors or accounts you don't recognize.

• Pay every bill on time from now until closing
• Keep credit card balances low
• Hold off on opening new credit cards or loans
• Dispute errors with the credit bureau before you apply

Worried that shopping around will hurt your score? When you shop for a mortgage, multiple credit checks from mortgage lenders within a 45-day window are recorded as a single inquiry.

Step 3: Plan for the cash you'll need

Most buyers need money for four things. How much depends on your loan program and the price of the home.

• Earnest money: a deposit you make when your offer is accepted, usually credited toward your costs at closing
• Down payment: requirements vary by program, and some programs have flexible requirements for eligible buyers
• Closing costs: lender, title, and escrow fees, plus prepaid items like property taxes and insurance
• Reserves: some loans require savings left in the bank after closing

Step 4: Look into down payment assistance

Arizona has down payment and closing cost assistance programs. The best-known statewide option is HOME Plus, offered through the Arizona Industrial Development Authority (Arizona IDA).

• Available throughout Arizona
• You don't have to be a first-time buyer
• Household income limits apply
• One borrower must complete a homebuyer education course before closing
• The assistance is a deferred second mortgage that can be forgiven over time if you meet the program's terms
• The home must be your primary residence, and you must use a participating lender

Some cities and counties offer their own programs, too. Assistance can affect your pricing and loan options, so compare the full picture with and without it.

Step 5: Get pre-approved

A pre-approval means a lender has reviewed your credit, income, and assets and estimated how much you can borrow. Real estate agents and sellers generally expect one before you make an offer.

As a mortgage broker, we take one application and compare programs from multiple wholesale lenders, so you can see your options side by side without starting over with each lender.

Have these ready:

• Pay stubs covering the last 30 days
• W-2s from the last two years, or tax returns if you're self-employed
• Bank statements from the last two months
• Government-issued photo ID

Step 6: Choose the right loan program

Not sure which one fits? Compare all of our loan programs side by side.

Step 7: Make an offer and get under contract

Once your offer is accepted, the clock starts. Your purchase contract sets deadlines for your inspection, your loan, and the appraisal.

1. Deposit your earnest money

   Your agent will tell you how and when.

2. Schedule a home inspection

   An inspector checks the roof, air conditioning, plumbing, electrical, and more. Use your inspection period to ask for repairs or credits.

3. Shop for homeowners insurance

   Your lender needs proof of coverage before closing. If the home is in a high-risk flood zone, flood insurance will be required.

4. Send your contract to your loan officer

   Your file goes to the lender, the appraisal is ordered, and you'll decide together when to lock your rate.

Step 8: Read your Loan Estimate

Within three business days of receiving your loan application, the lender must give you a Loan Estimate. It's a standard three-page form, so you can compare offers line by line.

• Page 1: loan terms, projected payments, and estimated cash to close
• Page 2: closing cost details
• Page 3: comparisons, including the annual percentage rate (APR) and total interest percentage

Step 9: Stay steady during underwriting

Underwriting is where the lender verifies everything in your file. Expect requests for updated documents, and answer them quickly to keep your closing on schedule.

Step 10: Close and get your keys

You'll receive a Closing Disclosure at least three business days before closing. Compare it with your Loan Estimate and ask about anything that changed.

In Arizona, a title and escrow company typically handles the closing. You'll review and sign your documents, send your funds to close, and get your keys once the sale records.

Common first-time buyer mistakes

• Shopping before you're pre-approved. It's easy to fall for a home outside your budget.
• Comparing rates only. Fees, mortgage insurance, and cash to close matter too.
• Draining your savings. Keep a cushion for repairs and moving costs.
• Skipping the inspection. It's your best chance to learn what you're buying.
• Making big financial changes before closing. New debt or a job change can delay or derail your loan.