VA and FHA Loans in Arizona: Which Program Is Right for You?

Almost every week I sit across from a buyer who says some version of the same thing: “I think I can only do FHA.” Or, if they served, “I have my VA benefit but I heard sellers don’t like VA offers.” Both statements are usually wrong, and the cost of being wrong is real money — sometimes tens of thousands of dollars over the life of the loan.

So let me lay out how FHA and VA financing actually work here in Maricopa County in 2026: the real limits, the real costs, what each one does to your monthly payment, and which one wins in which situation. I’m a REALTOR, not a lender, so I’m not going to pre-approve you. But I sit at the closing table on these loans constantly, and I can tell you where deals get made and where they fall apart.

Quick framing before the numbers. Government-backed loans are not a fringe product in this market anymore. Nationally, FHA has held more than 24% of purchase mortgages for five straight quarters and VA climbed to 11.7% in early 2026 — its highest share in over a decade — which together is more than a third of everything being financed (reported here). In Phoenix specifically, FHA runs closer to 18–19% of originations. You are not asking for a favor by using one.

The 30-second answer

If you are eligible for VA, use VA. It is the best mortgage product in America and almost nothing beats it. Zero down, no monthly mortgage insurance, no loan limit with full entitlement, and a rate that typically prices within a few basis points of FHA.

If you are not a veteran, service member, or eligible surviving spouse, FHA is your best tool when your credit score is under about 680 or your debt-to-income is stretched. If your score is 720+ and you can put 5% down, run conventional numbers side by side — FHA’s permanent mortgage insurance often makes it the more expensive choice over ten years even though it feels cheaper on day one.

Everything below is the detail behind those two paragraphs.

The 2026 numbers that actually govern your loan

These are the current figures for Maricopa County. They change January 1 every year, so if you’re reading this later, verify before you plan around them.

Item	2026 figure	Source
FHA loan limit, 1-unit, Maricopa County	$557,750	HUD CHUMS CY2026
FHA limit, duplex / triplex / fourplex	$714,000 / $863,100 / $1,072,600	HUD CHUMS CY2026
FHA national floor / high-cost ceiling (1-unit)	$541,287 / $1,249,125	HUD CY2026
VA loan limit with full entitlement	None — capped only by appraised value and what you qualify for	VA.gov
Conforming limit (used for VA partial entitlement math)	$832,750	FHFA, 11/25/2025
FHA minimum down payment	3.5% at 580+ credit; 10% at 500–579	HUD 4000.1
VA minimum down payment	$0	VA.gov
FHA upfront MIP	1.75% of base loan amount	HUD ML 2023-05
FHA annual MIP (loan ≤ $726,200, >95% LTV)	0.55% per year	HUD ML 2023-05
VA funding fee, first use, <5% down	2.15%	VA Circular 26-23-06
VA funding fee, subsequent use, <5% down	3.3%	VA Circular 26-23-06
Seller concession cap, both programs	6% of the lesser of price or appraised value	HUD 4000.1 / VA

One line in that table deserves a flag: the FHA cap of $557,750 in Maricopa County is $275,000 below the conforming limit. FHA is not a luxury-home program here. Once you are shopping above the mid-$500Ks, FHA stops being an option and the conversation becomes conventional versus VA. The county median sale price sits in the $460K–$510K range depending on which cut of the data you use, so most of the market is still inside the FHA box — but Scottsdale and Paradise Valley largely are not. If you’re comparing submarkets, my Phoenix versus Scottsdale breakdown shows how far apart those price points really are.

FHA: what it is good at, and what it costs you

FHA is an insurance program, not a lender. HUD insures the loan so a bank will accept a borrower it otherwise wouldn’t. That’s the whole idea, and it means the qualifying bar is genuinely lower:

• Credit: 580 gets you 96.5% financing (3.5% down). Scores of 500–579 are limited to 90% LTV, meaning 10% down. Below 500 is not eligible. Note that lender overlays are common — plenty of Valley lenders won’t go below 620 even though HUD allows 580.
• Debt-to-income: there is no single FHA maximum. Automated underwriting frequently approves DTIs in the 50%+ range with strong compensating factors; manual underwrites are stricter. This flexibility is FHA’s real superpower, more than the down payment.
• Gift funds: the entire 3.5% can be a documented gift from family. It cannot come from seller concessions.
• Property: must be your primary residence, 1–4 units, and pass FHA appraisal standards.
• Assumability: FHA loans are assumable. In a world where somebody out there is sitting on a 3% note, that matters on resale.

Now the cost. FHA charges mortgage insurance twice: 1.75% upfront (usually financed into the loan) and an annual premium of 0.55% for a typical 30-year, low-down-payment loan, billed monthly. Here’s the part most buyers miss: if you put less than 10% down, that annual MIP lasts the entire life of the loan. It does not fall off at 20% equity the way conventional PMI does. Put 10% down and it drops after 11 years. Anything below that and your only exits are a refinance or a sale.

Down payment	LTV	Annual MIP (30-yr, loan ≤ $726,200)	How long you pay it
3.5%	96.5%	0.55%	Life of loan
5%	95%	0.50%	Life of loan
10%	90%	0.50%	11 years
15%+	≤ 85%	0.50%	11 years

On a $450,000 purchase with 3.5% down, that 0.55% annual premium is roughly $199 a month, forever, on top of principal, interest, taxes, and insurance. Over ten years that’s about $24,000. That’s not a reason to avoid FHA — it’s a reason to have a plan to get out of it once your credit and equity improve.

VA: the best loan in the country, and I don’t say that lightly

If you served, you have access to something no one else can buy. Arizona has roughly 500,000 veterans — about 6.8% of the adult population — and the state closed 13,296 VA loans in FY2024 alone (VA volume reporting). The Phoenix-Mesa-Chandler metro consistently ranks in the national top ten for VA loan activity. Lenders, title companies, and appraisers here know these files cold. That is not true in every market.

• Zero down payment with full entitlement. You still bring closing costs and any earnest money, but no down payment.
• No monthly mortgage insurance. Ever. This is the single biggest financial advantage over FHA, and it is not a temporary one.
• No VA-imposed loan limit if you have full entitlement. The cap is the appraised value and your own qualifying ability. Partial entitlement — if you already have a VA loan outstanding or had a prior default — brings the county conforming limit ($832,750 in Maricopa County for 2026) back into the math.
• No VA minimum credit score. VA doesn’t set one; individual lenders do, usually 580–620. Shop more than one.
• Limits on what you can be charged, including a 1% cap on the lender’s origination fee and a list of non-allowable costs.
• Assumable, and reusable — entitlement restores when you pay off or sell.

The one cost is the funding fee, and it is a one-time charge, not a monthly one.

Scenario	Down payment	Funding fee
Purchase, first use	Less than 5%	2.15%
Purchase, first use	5% or more	1.50%
Purchase, first use	10% or more	1.25%
Purchase, subsequent use	Less than 5%	3.30%
Purchase, subsequent use	5% or more	1.50%
Cash-out refinance	N/A	2.15% first use / 3.30% subsequent
IRRRL (streamline refi)	N/A	0.50%
Loan assumption	N/A	0.50%

And here is the detail I wish more veterans knew: the funding fee is waived entirely if you receive VA disability compensation (or would, but for retirement or active-duty pay), if you are a surviving spouse receiving DIC, if you have a pre-discharge proposed or memorandum rating before closing, or if you’re on active duty and can document a Purple Heart before closing (VA Circular 26-23-19). On a $450,000 loan, a first-use fee of 2.15% is $9,675. Exempt means that’s zero. I have seen buyers pay it because nobody checked their exemption status before closing — and refunds are a hassle. Confirm it on your Certificate of Eligibility before you sign.

If you have a 100% service-connected disability rating, there’s a second Arizona benefit worth thousands a year: your primary residence is fully exempt from property tax under A.R.S. §42-11111, and a surviving spouse can keep the exemption while it remains their primary residence and they don’t remarry. Veterans with a rating below 100% get a partial exemption — a base amount of $4,188 of assessed value, prorated by disability percentage, subject to assessment limits. Given what property taxes in Maricopa County actually run, this is a meaningful line item, not a rounding error. File with the county assessor; it is not automatic.

Head to head: the same house, three ways

Numbers make this concrete. Below is a $450,000 purchase in the Valley — close to the current county median — at rates quoted the morning I wrote this: 6.40% for 30-year FHA, 6.44% for 30-year VA, 6.74% for 30-year conventional (Bankrate, August 31, 2026). Principal and interest only; taxes, insurance, and any HOA are on top and identical across all three.

	FHA	VA	Conventional 5% down
Down payment	$15,750 (3.5%)	$0	$22,500 (5%)
Base loan	$434,250	$450,000	$427,500
Upfront fee financed	$7,600 (1.75% MIP)	$9,675 (2.15% fee, $0 if exempt)	None
Total loan amount	$441,850	$459,675	$427,500
Rate used	6.40%	6.44%	6.74%
Principal & interest	~$2,764	~$2,887	~$2,769
Monthly mortgage insurance	~$199 (0.55% MIP)	$0	~$196 (est. PMI at 95% LTV)
Monthly P&I + MI	~$2,963	~$2,887	~$2,965
Cash needed at signing	$15,750 + closing	$0 + closing	$22,500 + closing
Does the insurance ever stop?	No (life of loan at 3.5% down)	N/A — there is none	Yes, at ~20% equity

Read the bottom rows carefully. VA is the lowest payment and requires no down payment — a $16,000–$22,000 swing in cash at signing. FHA and conventional land within a couple dollars of each other monthly, but conventional gets you out of mortgage insurance in a few years while FHA does not. That’s the trade nobody explains at the open house.

If cash to close is your binding constraint, read my breakdown of the hidden costs of buying a home in Arizona before you set your budget. Down payment is rarely the number that surprises people.

How each program plays with Arizona down payment assistance

This is where FHA and VA quietly become much stronger, and where most online guides go stale. The main statewide program is Home Plus, run by the Arizona Industrial Development Authority. It layers a forgivable second lien on top of an FHA, VA, USDA, Fannie HFA Preferred, or Freddie HFA Advantage first mortgage.

Feature	Home Plus (as of April 2026)
First mortgage types allowed	FHA, VA, USDA-RD, HUD 184 Tribal, Fannie HFA Preferred, Freddie HFA Advantage — all 30-year fixed
DPA amount, FHA / VA / USDA	2%, 3%, or 4% of the first mortgage balance
DPA amount, conventional HFA	3% or 4%
Form of assistance	Second mortgage, forgiven on the 5th anniversary of the loan date — no partial forgiveness before then
Borrower income cap	$155,386 (as of 4/6/2026)
Where it works	Anywhere in Arizona
Lien position	Must be second; the AZ IDA does not subordinate to third position

Two things to notice. First, that income cap is high enough that a dual-income household in Gilbert or Chandler often still qualifies — people self-disqualify constantly. Second, the assistance is a lien that forgives at year five, not a gift. Sell or refinance in year three and it’s payable. Know your timeline.

The other IDA program, Arizona Is Home, offers larger help at up to 100% of area median income, but the eligible-county list — Apache, Cochise, Coconino, Gila, Graham, Greenlee, La Paz, Mohave, Navajo, Pinal, Santa Cruz, Yavapai, Yuma — does not include Maricopa County. If you’re buying in Maricopa County, Home Plus is your statewide option; if you’re looking at Pinal (think Maricopa the city, Casa Grande, San Tan Valley), Arizona Is Home is on the table. There are also city and county programs that come and go. My deeper writeup on down payment assistance programs in Arizona walks through the local layers.

A VA buyer using DPA is a specific and underrated combination: zero down from VA, closing costs largely covered by the second lien, funding fee possibly waived. I’ve had veterans get into a home for under $2,000 out of pocket. Legitimately.

The appraisal is where these loans actually differ in practice

Everything above is math. This next part is where deals live or die, and it’s the reason listing agents sometimes flinch at FHA and VA offers.

Both programs require the appraiser to enforce condition standards, not just value. VA calls them Minimum Property Requirements: the home has to be safe, structurally sound, and sanitary. FHA has parallel minimum property standards. If the appraiser sees peeling paint, a leaking water heater, exposed wiring, missing handrails, or a roof at the end of its life, the appraisal comes back “subject to repair” and someone has to fix it before the loan funds.

Arizona-specific realities:

• Air conditioning is not technically required by VA — but if it’s installed, it must work. In a Phoenix summer, a dead compressor stops your closing.
• Tile roofs get scrutinized. Cracked tiles and failing underlayment are common on 1990s and early-2000s Valley homes, and a re-felt is a five-figure job.
• Pools must have functioning equipment and safe barriers. A green pool is a repair call.
• Well and septic properties on the metro fringe have extra requirements — potability tests, distance rules.
• Appraisers recommend repairs, not inspections. That’s explicit in the VA handbook, and it means the appraiser is not your inspector.

Which is the point: always get your own inspection. The appraiser will not run your HVAC through a cooling cycle or scope your sewer line. I wrote a full piece on what the desert does to Arizona houses and what to look for — it applies double when you’re financing with a program that has condition standards.

Two more practical notes. VA offers you a genuine backstop: if the appraisal comes in low, VA’s amendatory clause and the Notice of Value let you walk and recover your earnest money rather than covering the gap in cash. And if the home you love needs work, both programs have renovation versions — FHA 203(k) Limited handles up to $35,000 of cosmetic work with no HUD consultant, 203(k) Standard handles structural work but requires a consultant, and the VA Renovation loan exists at zero down though only a limited pool of lenders offers it. If you’d rather skip all of it, buying new construction in Phoenix sidesteps most condition issues, and builders here take FHA and VA all day.

Do sellers really hate FHA and VA offers?

Partly, and unfairly. The bias is a holdover from 2021, when there were twelve offers on every listing and a listing agent could simply pick the cash buyer. In the 2026 Valley market — Maricopa County sitting around a 3.6-month supply, roughly 66 to 82 days on market depending on the source, and more than half of active listings taking a price cut — sellers are not in a position to be picky about loan type. They’re in a position to want certainty.

So sell certainty. What I put in a VA or FHA offer:

1. A full underwritten pre-approval, not a pre-qualification letter, from a lender who closes these loans locally and will answer their phone on a Saturday.
2. A short, realistic inspection period. The AAR contract default is 10 calendar days; don’t ask for 17.
3. Proof of funds for closing costs even though the down payment is zero.
4. A note from the lender in writing on expected clear-to-close timing. Government loans are not meaningfully slower than conventional anymore — average purchase loans close in the mid-30-day range — but the seller doesn’t know that unless we say it.
5. Concessions asked for as a specific dollar figure, not a percentage, so the seller can see the net immediately.

Both programs cap seller contributions at 6% of the lesser of price or appraised value (FHA concession rules). That’s a lot of room in a market where sellers are already negotiating — and in the current environment, using concessions for a rate buydown instead of a price cut is often the better deal for both sides. Exceeding the 6% cap is treated as an inducement to purchase and reduces the value used for the loan calculation, so it has to be structured right. If you’re on the other side of this and evaluating an FHA or VA offer on your own home, my Phoenix seller prep checklist covers how to get a home appraisal-ready so program standards are a non-issue.

Common misconceptions I have to correct in person

What people believe	What’s actually true
“VA loans have a limit, so I can’t buy in Scottsdale.”	With full entitlement there is no VA loan limit. The cap is what you qualify for and what the home appraises for.
“You can only use a VA loan once.”	Entitlement restores when you sell or pay off. Second-tier entitlement can even let you carry two VA loans at once.
“FHA mortgage insurance drops off at 20% equity.”	Not at 3.5% down. It lasts the life of the loan. You need 10% down to get the 11-year term.
“FHA requires a 620 score.”	HUD requires 580 for 3.5% down. The 620 you keep hearing is a lender overlay — a different lender may not have it.
“The VA funding fee is unavoidable.”	It’s waived for veterans receiving disability compensation, DIC-receiving surviving spouses, and some others.
“VA/FHA loans take 60 days to close.”	Government loans close on a normal timeline now. Escrow in Arizona typically runs 30–45 days regardless of program.
“FHA loans are only for first-time buyers.”	No such requirement. FHA is for any owner-occupant. Some DPA programs have first-time rules; the loan itself doesn’t.
“I can use FHA for a rental.”	No. Owner-occupancy is required — though you can buy a 2–4 unit, live in one, and rent the rest.

That last row is my favorite loophole, and it’s completely legitimate. FHA insures 1–4 unit properties at the same 3.5% down, with Maricopa County limits of $714,000 for a duplex and $1,072,600 for a fourplex. Live in one unit for a year, rent the others, and your tenants carry a chunk of your mortgage. VA allows the same thing at zero down. It is the cheapest entry into real estate investing that exists, and almost nobody uses it.

So which one is right for you?

Here’s how I actually route people:

• You’re a veteran, service member, or eligible surviving spouse: VA, full stop. Check your funding fee exemption and your disability property-tax exemption at the same time.
• Credit in the 580–660 range, thin savings: FHA, ideally paired with Home Plus DPA. Then plan to refinance out of MIP in three to five years once your score and equity improve.
• Credit 700+, 5% or more available: get quotes on both FHA and conventional. Removable PMI usually wins over ten years.
• Buying above roughly $580,000: FHA is out in Maricopa County. Conventional or VA.
• Self-employed or DTI over 45%: FHA’s underwriting flexibility is often the difference between approval and denial.
• Buying a 2–4 unit as an owner-occupant: either program, and you should be looking hard at this.

The mistake I see most isn’t picking the wrong program. It’s picking a program because one lender told you to, without a second quote. Rate spreads between lenders on the same FHA or VA file routinely run a quarter point, and on a $450,000 loan a quarter point is roughly $70 a month and $25,000 over the life of the note. Get three quotes on the same day — rates move — and compare the total cost, not just the rate. If you’re earlier in the process, start with my guide to buying your first home in Phoenix and the first-time buyer mistakes I see most often here.

And one closing thought for veterans specifically. Your benefit isn’t a coupon. It’s a guaranty that makes a lender treat you as a lower-risk borrower than almost anyone else in the market. Use it, and use an agent and lender who have actually closed a lot of them. Someone who has never handled a Notice of Value will cost you a deal at the worst possible moment.

Frequently asked questions about VA and FHA loans in Arizona

Not sure which program fits? Let’s figure it out before you shop.

I’ll walk through your situation honestly, point you to two or three lenders who actually close VA and FHA files well in this market, and tell you if waiting six months to fix your credit would save you more than buying now. No pressure, no pitch. Reach out here and let’s talk it through.

— Robbie Holycross, RJH Homes Team