Understanding VA Loans in Phoenix, AZ: Benefits, Eligibility, and What They Don’t Cover

VA home loans are a powerful benefit for veterans, active-duty military members, and surviving spouses looking to purchase a home in Phoenix, Arizona. Backed by the U.S. Department of Veterans Affairs, these loans offer unique advantages that make homeownership more accessible—especially in competitive markets like Phoenix.

What Is a VA Loan?

A VA loan is a government-backed mortgage that allows eligible buyers to purchase a home with no down payment, no private mortgage insurance (PMI), and often lower interest rates than conventional loans. They’re designed to honor the service of military personnel by making homeownership more affordable.

Key Benefits of VA Loans in Phoenix, AZ

• $0 Down Payment: Finance 100% of your home’s purchase price.

• No PMI Required: Save on monthly payments.

• Competitive Interest Rates: VA loans typically come with lower rates.

• Flexible Credit Guidelines: Easier approval for buyers with lower credit scores.

• Limits on Closing Costs: Sellers can pay up to 4% in closing costs.

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What VA Loans Do Not Cover

While VA loans provide many cost-saving benefits, it’s important for homebuyers in Phoenix to understand that some expenses are not covered by the loan itself. These include:

1. Closing Costs

While the VA limits what lenders can charge in fees, buyers are still responsible for certain VA loan closing costs in Arizona, such as:

• Appraisal Fees

• Title insurance

• Loan origination fees

• Recording fees

• Discount points (if chosen)

Pro Tip: Phoenix homebuyers often negotiate with sellers to cover some or all of these costs—up to 4% of the loan amount.

2. Home Inspection

A general home inspection is not required by the VA, nor is it covered. This inspection is crucial to uncover potential issues and usually costs between $300–$500 in the Phoenix area.

3. Appraisal

The VA appraisal is a mandatory step in the VA loan process to ensure the home meets VA property standards and is worth the purchase price. However, the cost of the appraisal (typically $500–$700 in Phoenix) must be paid by the buyer upfront—it is not covered by the loan.

4. Repairs Required by the VA

If the appraisal reveals deficiencies, the cost of repairs may fall on the buyer if the seller will not agree to complete them. VA loans won’t fund properties that don’t meet minimum standards unless repairs are made first.

5. Homeowners Insurance

Buyers must purchase hazard/homeowners insurance, which is not covered by the loan. It’s required to finalize the mortgage and protect your property.

6. HOA Fees & Transfer Charges

If you’re purchasing in a Phoenix community with an HOA, monthly dues, transfer fees, and setup costs are your responsibility—not the VA’s.

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Eligibility for a VA Loan in Phoenix

You may be eligible if you meet at least one of the following:

• Served 90+ days of active duty during wartime

• Served 181+ days during peacetime

• Served 6+ years in the Reserves or National Guard

• Are a surviving spouse of a service member who died in the line of duty

A Certificate of Eligibility (COE) is required and can be obtained through your lender or directly through the VA.

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Using a VA Loan in the Phoenix Housing Market

Phoenix’s fast-growing housing market can be competitive. Having a VA loan pre-approval can help you stand out when making an offer. Pairing your VA loan with local programs like the Home in Five Advantage Program can provide extra support with down payment and closing cost assistance.

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Final Thoughts: Is a VA Loan Right for You?

For qualified buyers, VA loans in Phoenix, AZ offer a smart, affordable path to homeownership. Just remember to budget for items not covered by the loan, such as closing costs, inspections, and insurance.

If you’re ready to buy a home in Phoenix and think you may qualify for a VA loan, reach out to a local VA-approved lender or your Phoenix Realtors The Araizas to get started.