Arizona Home Buyer Financing

When a buyer decides to buy a home in Arizona they will be asked to verify how they plan to make the purchase before they go to see homes.  Don’t feel insulted when you are asked to do this – you are not being picked on, or not trusted.

Being pre-qualified and pre-approved is particularly necessary in this market, as financing has become more challenging than it was in different markets and times. Lenders tell us that on an average of about 20 applicants who attempt to get loans in this market, there are only about 5 who will be qualified. Even applicants with good jobs and great credit scores can have trouble obtaining a loan approval, at times, in this market. So getting pre-qualified before planning to look at homes is a must. And from a practical standpoint, you do not want to waste your time looking at homes with prices that are not in line with what you can get a loan to cover.


If you are planning to make your purchase with a loan, you will need to have spoken with a lender who is licensed in Arizona who will review with your financial situation and will pre-qualify you for a loan.

We can provide you with names of lenders who we work with who have done a good job for clients and who have a good track record of getting loan documents to escrow on time.  (In full disclosure, we do not get any referral fees from providing you lender referrals – we simply give you names of those who we know have provided good service.)

Please be aware that in this current economy, if you are living in a home and plan to purchase another one before selling the current home, you may be asked by the lender to put in escrow the equivalent to several months of mortgage payments for a period of time. Lenders are often asking for this to try and insure that a buyer is not planning to buy a new home and end up walking away from the other home.

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If you plan to make your purchase with cash you will be asked to provide a current “proof of funds” letter from your bank for the amount of the purchase price you expect to spend. This letter needs to be on your bank’s letterhead and be signed by a bank official and basically say that you “have liquid funds in excess of xxx” (xxx= the amount you plan to spend on a home.)

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Earnest money

When you are ready to actually have a contract written for you, you will need to plan for an initial Earnest Money amount that you will provide at the time the check in written. In this current market, most sellers will insist that the Earnest Money check is in Certified Funds and will not accept a personal check and they will not look at an offer until the Earnest Money if provided, (along with either the lender pre-qualification form, or a proof of funds letter.) Usually a buyer needs to plan on the Earnest money being between 1-3%, and of course the seller can dictate any amount they so choose.

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Closing Costs

A buyer should be prepared to pay closing costs as part of their buyers costs to acquire a home. Generally this amount will be something in the range of a few thousand dollars, depending on the price of the home, any loan fees, such as loan buy-down costs, and other various costs, such as any HOA transfer or other fees not paid by the seller, and any professional service fees that the seller is not paying. All of these costs can vary house to house and situation to situation.

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Misc Costs

Other costs a buyer needs to prepare for are items such as home inspection costs, termite inspection costs and any other inspection fees they may incur for inspections the buyer wants done on the home pre-buying it. If the home is a bank owned /foreclosure or a short-sale, the utilities may not be on to get the inspections done and the buyer will need to turn on utilities in their own name before they own the home, for the purpose of doing inspections.  There may be other buyer costs that will be dependent on the specific property and will come up as a property is identified that the buyer wants to make an offer for.

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