ARM vs Fixed Rate in Arizona
With Arizona's median home at $320,000 and conforming limit at $726,200, choosing between an ARM and a fixed-rate mortgage comes down to your time horizon and risk tolerance. Phoenix metro saw among the largest gains in the US 2020-2022, up 50%+, followed by a 2023 correction. Values have stabilized around 2022 peaks.
When an ARM May Make Sense in Arizona
- You plan to sell or refinance within 5-7 years
- You're buying in a high-cost Arizona market where even a small rate reduction meaningfully lowers payments
- Rates are at cyclical highs and expected to fall — ARM initial rates can be 0.5-1% lower than fixed
When Fixed Rates Win in Arizona
- You plan to stay long-term (10+ years)
- Payment certainty matters more than short-term savings
- Arizona's property taxes (0.62%, avg $1,648/year) add enough payment variability without adding rate risk
Closing Costs
Either product incurs similar closing costs (~$2,600 in Arizona). Frequent refinancing to escape an ARM adds these costs repeatedly.
Frequently Asked Questions
Is an ARM or fixed mortgage better in Arizona?
It depends on how long you plan to stay. Arizona's median home of $320,000 with a 5/1 ARM can save on initial payments, but fixed rates offer certainty — especially important given Arizona's property tax rate of 0.62% adds its own payment variability.
What are conforming loan limits for ARMs in Arizona?
ARMs and fixed-rate loans both have the same conforming limit in Arizona: $726,200. Most Arizona counties are at the standard conforming limit. Scottsdale and parts of Maricopa County approach this ceiling.
How much can I save with an ARM in Arizona?
ARM initial rates are typically 0.5-1% below 30-year fixed rates. On a $256,000 loan (20% down on Arizona's median home), that's roughly $100-200/month in savings during the initial period.
What are closing costs for a mortgage in Arizona?
Arizona imposes no mortgage recording tax. Title insurance and escrow fees are the primary closing cost components. Budget approximately $2,600 in total closing costs for either an ARM or fixed-rate mortgage in Arizona.