FHA Loans in Arizona

FHA loans in Arizona can make the process home-buying process simpler and more affordable. Many housing counselors can tell you how to get an FHA loan in Arizona, the state does not run this program. Instead, the Federal Housing Authority insures each FHA loan and handles the processes requests. Contrary to popular belief, the Federal Housing Agency does not underwrite or fund any home loans. Instead, qualified lenders fund FHA loans, and the FHA only acts as an insurer in case you default. The FHA provides this service so homebuyers who may not get conventional mortgages can still obtain the home they want without the bank taking on all the risk. Obtaining FHA loans in Arizona means the homebuyer gets a new home with a fair interest rate, FHA collects fees and the bank collects interest without worrying about losing money should you default on the loan. While an FHA loan is designed to help you by reducing the down payment amount and keeping interest rates low, the process of applying for one and understanding FHA loan eligibility can become a little overwhelming. The sections below provide information on how to apply for an FHA loan and how to get an FHA loan to help you understand the FHA application process for loans.

FHA Loan Eligibility in Arizona

Arizona FHA loans have federal requirements that you must meet before you can get a loan. To get an FHA loan in Arizona, you must be a U.S. citizen or permanent resident. When determining eligibility for an FHA loan, the FHA limits the mortgage amount you can receive, based on the area of the home you are requesting a loan for. When applying for an FHA loan, the FHA requires that you meet the minimum required investment (MRI) amount, which is a percentage of the adjusted value of the home. When getting this type of loan, the FHA will only permit you to borrow an amount that meets loan-to-value requirements, based on the type of loan you require. Obtaining an FHA loan also requires a certain credit score, although not meeting the minimum is not necessarily an automatic disqualification. If you want a loan insured by the FHA, you cannot buy the property for investment. To learn more about FHA loan eligibility, click here to download our comprehensive guide.

How to Get an FHA Loan in Arizona

FHA does not fund any FHA loans in Arizona. Instead, it simply qualifies lender for the program and insures any loans these lenders write. The FHA provides a full list of lenders approved to write FHA loans in AZ. You can begin the application process through one of these lenders.

The application process for an FHA loan varies by lender, but most will allow you to apply over the phone, in person or online. Regardless of the way you choose to apply, you will need to gather some preliminary information, including:

  • Total household income.

  • Information on outstanding debts.

  • Employer’s contact information.

  • Previous years’ tax returns.

With this information available, you can begin the application process.

While the FHA’s regulations are concrete throughout Arizona, each lender will have different requirements for FHA loan eligibility. The government requirements act as more of a minimum for the FHA to insure the loan, the lender’s requirements will determine whether you get approved for the loan or not. Since lender requirements vary, you may need to contact several lenders before you find one willing to qualify you for an FHA loan. Learning about the requirements for the application process can help make the FHA loan request as smooth as possible.

Advantages of FHA Loan in Arizona

FHA loans have many advantages for all buyers. The key benefit that draws most buyers to FHA loans in Arizona are the lower down payment requirements. Homebuyers taking advantage of an FHA loan will also pay lower closing costs when compared to traditional loans. Finally, buyers who want to finance a manufactured home or have subprime credit will also find that FHA loans cover these situations. Because first-time homebuyers may not be fully prepared for the homebuying process, they often find these FHA loan benefits especially important. When contemplating an FHA loan, you should get more information about buying HUD homes in your area to see if you are eligible to use an FHA loan on this type of property.

As a first-time homebuyer, you may also be uncertain where to turn for help. In this case, you will also appreciate the FHA-approved HUD advisors who can show you how to apply for an FHA loan and guide you through the Arizona FHA loan process, ensuring that you make a well-educated decision and understand all the information. Getting information about housing counseling agencies can help you make smart home-buying decisions while providing resources for managing debt and other useful services.

Disadvantages of FHA Loans in Arizona

While there are plenty of benefits to getting an FHA loan, they may not benefit all potential borrowers. The biggest disadvantage is the two-step qualification process. With a traditional loan, you only need to qualify through the lender, but FHA loan eligibility involves you first meeting the government’s requirements then the lender’s requirements. This can cause some frustration, as you may meet all the government requirements only to learn that not all lenders will approve your application.

Another disadvantage of FHA loans is the required mortgage insurance. Because FHA loans are risky, they require insurance to protect the lender in case you default. The mortgage insurance premiums vary based on the amount of the loan and the loan to value. The amount of time you must keep mortgage insurance also varies with FHA loan to value. If the LTV is 90 percent or less, you can remove the mortgage insurance after 11 years. If the LTV is over 90 percent, you must keep the mortgage insurance in effect for the duration of the FHA loan, which can be up to 30 years, unless you refinance into another type of loan. Additionally, there is the upfront mortgage insurance premium that adds 1.75 percent of the base loan amount to your loan at closing.

To learn more about the FHA loan process, click here to download our comprehensive guide.



What Kind of Assistance Is Offered by the Arizona HUD?

The Arizona Department of Housing & Urban Development (HUD) provides various services to state residents. However, applicants must meet income requirements established by the HUD to receive housing loans and vouchers. To learn more about the application details regarding housing benefits, download our guide today.


Who Is Eligible to Receive Housing Assistance in Arizona?

Income and residency requirements are established by the AZ Department of Housing and Urban Development for residents to qualify for housing benefits. Details regarding your income and household typically serve as the basis of an application, but requirements vary. To learn more about the criteria you must meet to obtain housing benefits, please download our guide.