Many borrowers want to know how Arizona tax rules and assistance programs work on a home loan. They are concerned that local rules may affect their home loan review. This guide explains what lenders may look for so you can move forward with confidence.
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What Should Arizona Borrowers Know Before Getting a Mortgage?
SHORT ANSWER
Arizona taxes homes on a Limited Property Value that may rise no more than 5% a year, and the state runs two down payment assistance programs through the Arizona Industrial Development Authority. Buying the home does not reset that 5% cap, unlike states that reassess on sale. Smart Loan Savings Educational Content
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| Arizona Home Loan Detail | What Applies |
|---|---|
| Value your property tax is based on | Limited Property Value, not market value |
| Annual limited value increase cap | 5% |
| Owner-occupied assessment ratio | 10% of the limited property value |
| Does buying the home reset the cap | No, a sale is not a reset trigger |
| Home Plus assistance | Up to 4% for down payment and closing costs |
| Home Plus availability | Every Arizona county, city, and zip code |
| Arizona Is Home rate benefit | Below-market 30-year fixed |
| Arizona Is Home exclusions | Maricopa County, Pima County, and Chino Valley |
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| Arizona Detail | How It Works on Your Arizona Home Loan |
|---|---|
| Why Your Tax Bill Is Not Based on Market Value | Arizona voters approved Proposition 117 in 2012, moving the state to a single taxable figure called the Limited Property Value. Your county assessor still calculates a Full Cash Value that estimates market worth, and your tax bill is not levied against it. The Limited Property Value may rise no more than 5% a year and can never exceed Full Cash Value, so in a fast-appreciating market the assessed value behind your bill falls further behind what the home is actually worth. An owner-occupied home is assessed at 10% of that limited figure. |
| What Does and Does Not Reset the 5% Cap | Arizona law lists specific conditions that lift the cap and reset the limited value: a physical change such as new construction, demolition, or a change in land size, a change in the property’s use, or a correction of an erroneous assessment in a prior year. A sale is not on that list. The limited value follows the property rather than the owner, which means the tax history you inherit is the tax history the seller built. Adding a pool, a casita, or significant square footage after you buy is what puts the cap at risk, not the purchase itself. |
| Home Plus and Arizona Is Home Are Two Different Programs | The Arizona Industrial Development Authority runs both, and borrowers often assume there is one state program. Home Plus offers up to 4% toward the down payment and closing costs, reaches every county, city, and zip code in the state, and runs year-round without depleting its funding. Arizona Is Home is a collaboration with the Arizona Department of Housing and pairs 4% assistance with a below-market 30-year fixed rate. It carries a predetermined annual funding limit, and once that funding is exhausted the program pauses until the next year. The Arizona IDA offers both forgivable and non-forgivable structures. |
| The Exclusion That Catches Phoenix and Tucson Buyers | Arizona Is Home is available in every Arizona county except Maricopa and Pima, and it also excludes Chino Valley. Those two counties hold Phoenix and Tucson, which is where a large share of Arizona home buyers are looking. A buyer in Mesa, Scottsdale, Glendale, or anywhere else inside Maricopa County cannot reach the below-market rate that program offers, no matter how well their income and credit line up. Home Plus remains available across all of Arizona, which is why the two programs are worth separating in your head before you start comparing rates. |
| What Else Shapes Your Arizona Payment | Property tax and homeowners insurance both sit in escrow and both count in the housing figure a lender measures against your income. Arizona’s limited value cap makes the tax half of that number more predictable than in states that reassess on sale, which means your year-one escrow estimate is less likely to move sharply in year two. How an escrow account is built, analyzed each year, and adjusted when a shortage appears is covered in our guide to mortgage escrow. |
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| What Lenders Check | How Arizona Rules Affect It |
|---|---|
| Your Escrow Account Setup | Your lender builds the first-year estimate from the current tax bill. In Arizona that figure carries forward more reliably than in states where a sale resets the tax basis. |
| Your Total Housing Payment | Taxes and insurance sit inside the payment measured against your income, alongside principal and interest. |
| Your Down Payment Source | Home Plus assistance may cover up to 4% toward the down payment and closing costs, and the Arizona IDA offers both forgivable and non-forgivable structures. |
| Your Personal Income | Both Arizona IDA programs set an income limit, and the current figure is published by the program rather than fixed in statute. |
| Your Homebuyer Education | Arizona IDA assistance requires a homebuyer education course before closing, which makes it a scheduling item rather than an optional step. |
| Where the Home Sits | Home Plus reaches every Arizona zip code. Arizona Is Home does not reach Maricopa County, Pima County, or Chino Valley, so location decides which program is on the table. |
| Sources Used on This Page | Arizona State Board of Equalization, Property Valuation and Tax Bills — sboe.az.gov | Arizona Department of Revenue, Limited Property Value — azdor.gov | Arizona Revised Statutes §§ 42-13301 through 42-13304 | Arizona Proposition 117 (2012) | Arizona Industrial Development Authority, Home Plus and Arizona Is Home — homeplusaz.com | Arizona Department of Housing — housing.az.gov |
| Arizona home loan guidelines follow federal program standards. Individual lender rules may apply and vary by program. This page is provided for educational purposes only. Smart Loan Savings Educational Content | |
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| People Also Ask | Why These Questions Matter |
|---|---|
| Will my Arizona property taxes go up after I buy the home? | A sale is not one of the conditions that resets Arizona’s limited property value, so buying the home does not by itself lift the 5% annual cap. The limited value follows the property rather than the owner, which makes the seller’s tax bill a more reliable guide than it is in many states. |
| What is the difference between Home Plus and Arizona Is Home? | Home Plus reaches every county, city, and zip code in Arizona and runs year-round without depleting its funding. Arizona Is Home adds a below-market 30-year fixed rate but carries an annual funding limit and pauses once that funding runs out. |
| Can a Phoenix or Tucson buyer use Arizona Is Home? | Arizona Is Home is available in every Arizona county except Maricopa and Pima, which rules out Phoenix and Tucson along with the surrounding metro areas. Home Plus remains available statewide, including throughout both counties. |
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