Short answer: You do not need 20% down and you do not need perfect credit. In Arizona a first-time buyer can get in with 3.5% down on FHA, 3% on conventional, 0% on USDA in eligible rural areas, or 0% on VA if you have served. The down payment can be a documented gift, and the seller can contribute toward closing costs. The real barrier is almost never the down payment — it is not knowing the order to do things in.
Start with the number that actually stops people
Ask ten renters why they have not bought and nine will say the down payment. Then ask what they think they need, and almost all will say 20%. That figure is not a rule. It is the threshold above which a conventional loan stops charging mortgage insurance — nothing more.
Here is what the programs actually require in Arizona, and what that means in dollars on a $300,000 home.
| Program | Minimum down | On a $300,000 home | Who it suits |
|---|---|---|---|
| USDA Rural | 0% | $0 | Eligible rural addresses within income limits |
| VA Loan | 0% | $0 | Veterans, active duty, Guard and Reserve |
| Conventional | 3% | $9,000 | Stronger credit, wants to drop mortgage insurance later |
| FHA | 3.5% | $10,500 | Lower credit scores or tighter debt ratios |
Now the part most guides leave out: that money does not have to be yours. FHA and conventional both allow the entire down payment to come from a documented gift, usually from family. Pair a gift with seller-paid closing costs and the cash you personally bring to the table can be remarkably small.
The order to do things in
Most first-time buyers do these steps in the wrong sequence, and it costs them either money or the house. This is the order that works.
- Get your real credit pulled by a lender — not a free app, which shows a different scoring model and is usually 40 to 60 points higher than what a mortgage lender sees.
- Get a full pre-approval, not a pre-qualification. Pre-qualification is a conversation. Pre-approval means income, assets and credit were actually reviewed.
- Learn your true monthly payment including taxes, insurance and any HOA — not the principal-and-interest figure an online calculator shows.
- Then start looking at homes. Not before. Falling in love with a house outside your range is the most common way this process goes wrong.
- Make offers with a lender who will call the listing agent on your behalf. In a competitive situation this frequently decides who wins.
- Do not open any new credit between application and closing. Not a car, not a store card, not financed furniture.
Which loan actually fits you
There is no universally best program. There is only the one that fits your credit, your cash and the property.
| If this is you | Look at | Why |
|---|---|---|
| Credit under about 680 | FHA | FHA mortgage insurance is not priced off your credit score, so it is often cheaper than conventional at lower scores |
| Credit 700+ | Conventional | Mortgage insurance can be cancelled at 20% equity; FHA generally cannot |
| You have served in the military | VA | No down payment and no monthly mortgage insurance at all |
| Buying in a rural area | USDA | Zero down within household income limits, address by address |
| Self-employed or seasonal income | Depends | Documentation strategy matters more than program choice — talk to a broker first |
What credit score you actually need
FHA financing is generally available from 580 with the 3.5% minimum down payment, and between 500 and 579 with 10% down. Conventional typically starts at 620. VA sets no minimum at all — individual lenders do.
Two things about credit that first-time buyers consistently get wrong. First, lenders pull all three bureaus and use the middle score, not the best one; with two borrowers, the lower of the two middle scores usually prices the loan. Second, paying off an old collection right before applying can reset its date of activity and briefly drop your score — ask before you pay anything.
The costs beyond the down payment
This is where first-time buyers get caught out, because nobody itemises it for them until they are already under contract.
- Earnest money — a good-faith deposit when your offer is accepted, credited back to you at closing.
- Home inspection — optional but strongly recommended, and paid out of pocket regardless of whether you buy the home.
- Appraisal — required by the lender, sometimes collected upfront.
- Closing costs — lender fees, title and escrow, recording. Frequently negotiable onto the seller.
- Prepaid items — the first year of homeowners insurance plus several months of taxes and insurance funded into escrow.
- Moving and immediate repairs — the cost everyone forgets until the week they move in.
A realistic plan accounts for all of these. A good lender gives you the full figure at pre-approval rather than at signing.
Arizona-specific things worth knowing
Arizona is a deed-of-trust state, so the closing process runs through escrow and a trustee rather than a court — generally faster and cleaner than in many states. Property taxes are billed in two instalments and assessed on a limited property value, and they are collected monthly into your escrow account.
Statewide down payment assistance programs exist and can pair with FHA or conventional financing, subject to income limits, minimum credit scores and a homebuyer education course. Funding and terms change periodically, so the only figure that matters is what is actually open the month you buy.
Local property types matter too. Manufactured homes make up a large share of the housing stock in parts of the state including Yuma County, and financing depends on whether the home is permanently affixed and titled as real property. Ask before you write an offer, not after.
How long the whole thing takes
From pre-approval to keys, a typical first purchase runs four to eight weeks, and most of that is finding the house rather than financing it. Once you are under contract, our files average roughly 14 days to close. What causes delays is almost always appraisal scheduling or documents coming back slowly — both manageable.
Frequently asked questions
Q: Do I really need 20% down to buy my first home in Arizona?
A: No. That figure is only the point at which a conventional loan stops charging mortgage insurance. FHA starts at 3.5% down, conventional at 3% for qualified buyers, and both VA and USDA can require nothing at all. The down payment can also come entirely from a documented family gift.
Q: What credit score do I need as a first-time buyer?
A: FHA financing is generally available from 580 with 3.5% down, and from 500 with 10% down. Conventional typically begins at 620. VA sets no minimum, though individual lenders apply their own. Because lenders use the middle of your three bureau scores, the number you see in a free app is usually higher than the one that counts.
Q: What is the difference between pre-qualification and pre-approval?
A: A pre-qualification is an estimate based on what you tell the lender. A pre-approval means your income, assets and credit were actually reviewed and documented. Listing agents in Arizona know the difference, and in a competitive situation a genuine pre-approval carries far more weight.
Q: Can my parents give me the down payment?
A: Yes. FHA and conventional both permit gift funds from an eligible donor, most commonly a family member. It requires a signed gift letter and a clear paper trail showing the transfer. It cannot secretly be a loan you are expected to repay.
Q: Do I have to be a first-time buyer to use an FHA loan?
A: No. There is no first-time buyer requirement in the FHA program at all. It is popular with first-time buyers because of the low down payment and flexible credit rules, but repeat buyers use it regularly.
Q: How much should I have saved beyond the down payment?
A: Plan for earnest money, a home inspection, the appraisal, closing costs and prepaid taxes and insurance, plus moving costs. Seller concessions can cover much of the closing costs, and we give you the complete cash-to-close figure at pre-approval so there are no surprises.
Q: What is the biggest mistake first-time buyers make?
A: Shopping for houses before getting pre-approved. It leads to falling for a home outside your range, or losing one because your offer was not credible. The second biggest is opening new credit between application and closing, which can undo an approval entirely.
Q: Can I buy a home if I have student loans?
A: Usually yes. Student debt counts in your debt-to-income ratio, but how the payment is calculated varies by program, especially for deferred or income-driven plans. A borrower declined at one lender for student debt is sometimes approved at another using a different calculation method.
Q: How long do I need to be at my job?
A: Lenders generally look for a two-year employment history, not two years with one employer. Changing jobs within the same field is normally fine, gaps can be explained, and recent graduates can often count schooling toward the requirement.
Q: Is it cheaper to keep renting?
A: That depends on how long you plan to stay and what rents are doing locally. Buying carries costs renting does not — maintenance, taxes, insurance — but it also builds equity and fixes your principal and interest payment. We will run the real comparison for your numbers rather than guessing at it.