VA Loans Arizona

Start Your VA Pre-Approval

Find out what the new Arizona exemption is worth on the house you are actually looking at.

Who You’re Actually Working With

J.D. Peck, NMLS #314883. 25+ years originating, 3,100+ closed loans, Scotsman Guide Top Originator 2026. Lending in 49 states. VA files are not a sideline here. They are the practice.

Arizona has low property taxes, a 2.5 percent flat income tax, no tax on military retirement, and now a full exemption at 100 percent. For a retired veteran, the tax math here is about as favorable as it gets.

No State-Specific VA Overlay

Arizona adds no state-level restriction to VA purchase financing. Federal rules apply as written.

New in 2026: Full Exemption at a 100 Percent Rating

Arizona enacted a full property tax exemption for veterans with a 100 percent service-connected disability on their primary residence, signed in February 2026 and effective for tax year 2026. No income limit. No assessed value cap. The change first shows up on bills due in October 2026.

Below 100 Percent, the Old Prorated Rule Still Applies

If your rating is under 100 percent, the exemption is roughly $4,873 of assessed value scaled by your disability percentage, and it remains income-limited at about $39,865 of household income, or about $47,826 with minor or disabled children. Both figures are adjusted annually.

What Income Does Not Count

The income test excludes Social Security, Railroad Retirement, VA disability compensation, all veterans pensions, workers compensation, and cash public assistance. A lot of veterans assume they are over the limit when the excluded categories put them under it.

Surviving Spouse of a 100 Percent Veteran

An unremarried surviving spouse can continue the full exemption on a primary residence, and it is not locked to the original house.

Widow and Widower Exemption

Separate from the veteran benefit, Arizona provides roughly $4,873 of assessed value for a qualifying widow or widower, subject to the same income limits. Remarriage disqualifies.

Filing Window Is Early and Short

Applications generally run from the start of January through late February with the county assessor. This is a tight window with a hard edge, so calendar it.

Check With Your County Assessor on the New Rule

Many assessor websites still describe the pre-2026 prorated and income-limited scheme because the law changed mid-cycle. If a county page tells you that you make too much money, ask specifically about the 2026 full exemption for 100 percent rated veterans.

Military Retirement Pay Is Fully Exempt

Arizona stopped taxing military retirement pay entirely beginning in tax year 2021. Active duty pay is not taxed either. Social Security is exempt. Private pensions and IRA and 401(k) distributions are taxable, so the picture is good but not unlimited.

Owner-occupied homes are assessed at 10 percent

Arizona applies a 10 percent assessment ratio to owner-occupied residential property, which is low by national standards.

Your assessed value can only rise 5 percent a year

Regardless of what the market does, the limited property value used for most taxes cannot climb more than five percent annually. In a fast-appreciating market that keeps the bill from chasing the price.

There is a constitutional 1 percent cap

Ad valorem taxes on a residential property generally cannot exceed one percent of its full cash value, excluding voter-approved bonds and overrides.

The state pays part of your school tax

Arizona covers half of the primary school district tax rate on owner-occupied residential property, capped at $600 a year per parcel.

No real estate transfer tax

Arizona’s constitution bars a tax or fee on conveying real property. Closing costs are lower here than in most states as a direct result.

Where it matters

Flagstaff, Prescott, Payson, Show Low, Pinetop-Lakeside, and the wildland-urban interface communities in Coconino, Gila, Navajo, and Yavapai counties.

What can happen

Higher premiums, longer binder timelines, and in some cases placement in the surplus lines market. All three affect either your debt-to-income ratio or your closing date.

Arizona has no state FAIR Plan

Unlike California, Colorado, Florida, and North Carolina, Arizona does not operate a state insurer of last resort. State regulators instead maintain a list of carriers willing to write in high wildfire risk areas. That makes early shopping more important here, not less.

Mitigation helps

Defensible space, roof material, and ember-resistant venting can change both availability and price. Worth doing before you apply, not after a declination.

We check insurability before you write

A real quote for the actual address, so a preapproval in the high country holds up.

Rated 100 Percent and Still Being Quoted a Full Tax Bill?

The 2026 Arizona exemption is new enough that most lenders and plenty of county pages have not caught up. We price the payment on the current rule.

No cost. No obligation.

No Minimum Credit Score Overlay

VA publishes no score floor. Most lenders impose one anyway. We do not. A refer from automated underwriting starts a manual underwrite. It does not end the file.

We Know the 2026 Exemption Changed

Most lenders and plenty of county web pages are still describing the old income-limited rule. If you are rated 100 percent, your Arizona property tax line may be zero, and that changes what you can carry.

Retirement Income Counted in Full

Arizona does not tax military retirement pay or active duty pay, and the state rate is a flat 2.5 percent. That is a strong residual income picture and it should be reflected in your approval.

High Country Insurance Handled Early

If you are buying in Flagstaff, Prescott, Payson, or the White Mountains, insurance is the long pole. We start it in week one.

$0 Down, No Monthly Mortgage Insurance

With full entitlement there is no down payment requirement and no monthly MI, ever. That is the structural edge over FHA and low-down-payment conventional financing.

Manual Underwriting Is Routine Here

Bankruptcy, foreclosure, collections, a rough stretch after separation. We run manual underwrites regularly using the compensating factors VA actually recognizes.

Purchase, First-Time Use

2.15% with less than 5% down, including zero down. 1.5% with 5% or more down. 1.25% with 10% or more down.

Purchase, Subsequent Use

3.3% with less than 5% down. 1.5% with 5% or more down. 1.25% with 10% or more down.

VA IRRRL Streamline Refinance

0.5% flat, regardless of prior use.

Exempt Entirely

Veterans receiving VA disability compensation at any rating, veterans entitled to compensation who take retirement pay instead, surviving spouses receiving DIC, and Purple Heart recipients on active duty. It shows on your COE and we verify before you pay anything.

Bucket 1: Your Closing Costs, No VA Cap

The seller can pay all of your normal allowable closing costs. Origination, appraisal, title, recording, credit report, prepaid taxes and insurance at customary levels. No VA percentage ceiling. Market-rate discount points for a permanent rate buydown also sit here, uncapped.

Bucket 2: Concessions, Capped at 4%

Anything of value beyond normal closing costs is a concession, capped at 4 percent of the VA reasonable value. It stacks on top of Bucket 1 rather than replacing it.

Paying Off Your Debt

The seller can retire your credit cards, collections, or an auto loan as a concession. Dropping a high monthly payment lowers your debt-to-income ratio and can turn a denial into an approval on the same contract at the same price.

Paying Your Lease Break So You Can Buy Now

An early lease termination penalty on a rental or on-post housing is an allowable concession. It is how a family stops paying rent and closes this month instead of waiting for a lease to run out. We have structured this many times.

Prepaying Your Mortgage Payments

A seller can prepay mortgage payments on your behalf as a concession. When a seller would rather not cut the price, this is often an easier yes, and it does more for your file.

The Funding Fee and a 2-1 Buydown

Both count toward the 4 percent and both are commonly seller-funded. A concession package is often easier to win than a price cut, and it does more for your approval than the price cut would.

All fifteen Arizona counties use the baseline

$832,750 for a one-unit property in 2026. That includes Maricopa, Pima, and Coconino. Arizona has no high-cost conforming county.

Flagstaff is not a high-cost conforming county

Coconino carries an above-floor FHA limit, which is a different program with different math. People conflate the two constantly. For conforming and for VA entitlement purposes, Coconino is at the baseline.

If a lender calls your loan a VA jumbo

Ask which VA rule they are citing. With full entitlement there is not one. Score minimums and down payments on larger loans are investor overlays, not VA policy.

West Valley and Glendale

Luke anchors the West Valley and it drives steady PCS demand. Glendale, Peoria, Surprise, Goodyear, Buckeye, Litchfield Park, and Avondale. New construction is heavy here, and so is buyer competition.

Tucson and Pima County

Davis-Monthan is in the middle of a significant mission transition that is bringing new units and personnel into Tucson through the end of the decade. Expect sustained relocation demand. Tucson, Marana, Oro Valley, Vail, and Sahuarita.

Sierra Vista and Cochise County

Fort Huachuca anchors one of the most affordable military markets in the Southwest. Sierra Vista, Hereford, Huachuca City, and Benson.

Yuma

Marine Corps Air Station Yuma and the Army proving ground. Yuma, Foothills, and Somerton. Low prices and a strong seasonal population swing.

Phoenix and the East Valley

Mesa, Chandler, Gilbert, Queen Creek, Tempe, and Scottsdale. No major installation, but a very large post-service veteran population and the deepest inventory in the state.

High Country

Flagstaff, Prescott, Prescott Valley, Payson, Show Low, and Pinetop-Lakeside. Higher prices than the desert in some markets, and wildfire insurance is the deciding variable.

1. Pull your Certificate of Eligibility

Electronic, usually seconds. If yours needs manual review because of a discharge upgrade, a Guard or Reserve record, or a prior VA loan never restored, we file the paperwork and follow it.

2. Calculate entitlement, not a loan limit

Full entitlement means no VA cap. If you have a VA loan open elsewhere, we compute remaining entitlement against the $832,750 baseline and give you the exact zero-down ceiling.

3. Establish your exemption status

At 100 percent the Arizona property tax line may be zero starting with tax year 2026. Below 100 percent it is a prorated, income-tested amount. That single input changes the payment materially.

4. Check insurability if you are buying up north

In the high country this is the long pole. In Phoenix and Tucson it is routine. We treat them differently instead of running the same checklist statewide.

5. Underwrite it, manually if the file needs it

A refer from automated underwriting is not a denial. VA allows a manual underwrite and we do them.

6. Close and handle the funding fee

Financed by default, waived entirely with a service-connected rating, and refundable if your rating came through after a prior VA closing.

Credit score

No minimum. VA does not publish one. We have closed VA loans in the 500s. If a lender quoted you 620, that was their rule.

Down payment

Zero with full entitlement. Not a low down payment. Zero.

Mortgage insurance

None, ever. The single biggest month-to-month advantage VA holds over FHA and conventional.

Debt-to-income ratio

No hard cap. VA uses residual income instead. We have closed well past 50 percent DTI when the residual math supported it.

Bankruptcy, foreclosure, short sale

Chapter 7 at two years. Chapter 13 can work mid-plan with trustee approval and twelve months of on-time payments. Foreclosure and short sale at two years, shorter with documented extenuating circumstances.

Property types

Single family, VA-approved condo, townhome, PUD, manufactured on a permanent foundation, and two to four units if you occupy one.

PCS to Luke, Davis-Monthan, Fort Huachuca, or Yuma

Orders in hand, report date set, and you may not have arrived. VA allows closing before you physically occupy, with a reasonable window to move in. We build the timeline around the report date.

You are rated 100 percent and nobody told you the law changed

This is the biggest missed opportunity in Arizona right now. The full exemption took effect for tax year 2026 and first appears on bills due that October. If a lender is escrowing a full tax bill for you, they are working from last year’s rules.

You were told your income was too high

Check what actually counts. Social Security, VA disability compensation, veterans pensions, Railroad Retirement, and workers compensation are all excluded from the income test. Many veterans who assume they are over the limit are not.

Relocating to Tucson with the Davis-Monthan transition

The base is bringing new units and personnel in over the next several years. If you are part of that move, the timing and the market both matter, and we can build the file around your report date.

You retired here and your income changed

Retirement pay, VA disability compensation, and part-time work qualify differently than salary. Disability compensation is not taxable so it gets grossed up, and Arizona does not tax the military pension at all.

You want an investment property

VA occupancy rules require you to live in the home. For a pure rental we use DSCR loans that qualify on the property’s rent instead of your income.

541 credit score, zero down

Declined at another lender’s 620 overlay. VA publishes no score minimum. The file went manual, residual income cleared with room, and it closed. Full write-up on VA loans with a 541 credit score.

Lender escrowed full taxes on a newly exempt veteran

100 percent rating, full 2026 Arizona exemption, and the prior lender escrowed the entire bill because their guidance had not been updated. Corrected, the payment dropped and the file cleared.

High country file that stalled on insurance

A Prescott purchase where the first lender waited until underwriting to shop coverage and then could not place it in time. Started early, mitigation documented, closed on schedule.

Chapter 13 still in repayment

Twelve months of on-time trustee payments plus written trustee approval. VA allows it. Most lenders will not touch it.

Seller paid off the buyer’s auto loan at closing

Dropped the DTI enough to turn a denial into an approval at the same price. Almost nobody in Arizona structures deals this way.

Seller paid the lease break so the buyer could close now

An allowable VA concession, and in the Phoenix rental market it is real money. Details on the VA seller concessions page.

Told No by Another Arizona Lender?

Send me the denial. I will tell you within a day whether it was a real VA rule, an outdated exemption assumption, or that lender’s own overlay.

Down payment

VA: zero with full entitlement. Conventional: 3 to 5 percent minimum. FHA: 3.5 percent.

Mortgage insurance

VA: none, ever. Conventional: PMI until you reach 20 percent equity. FHA: upfront premium plus a monthly premium that usually runs the life of the loan.

Credit score floor

VA: no published minimum. Conventional: generally 620, with real pricing pain under 700. FHA: 580 for 3.5 percent down.

One-time fee

VA: the funding fee, financed, waived entirely with a service-connected rating. Conventional: none, but PMI monthly instead. FHA: 1.75 percent upfront plus the monthly.

Seller-paid costs

VA allows unlimited seller-paid closing costs plus up to 4 percent in concessions, and that bucket can pay off your debt or prepay your payments. Conventional caps at 3 to 9 percent by down payment with no debt-payoff allowance.

Deficiency exposure

Arizona’s anti-deficiency protection applies to qualifying owner-occupied property regardless of loan type, so it is not a VA-specific advantage. It is worth knowing it exists on any Arizona purchase.

Refinancing later

VA: the IRRRL streamline needs no appraisal and no income documentation in most cases. Conventional and FHA require a full refinance. See VA IRRRL.

Myth: Arizona barely gives veterans anything on property tax

That was true until February 2026. A 100 percent rating now brings a full exemption on your primary residence with no income limit and no value cap. Most published information has not caught up.

Myth: The Arizona exemption is income-limited for everyone

Not at 100 percent. The income test still applies to the prorated exemption below 100 percent and to the widow and widower exemption, but not to the new full exemption.

Myth: My Social Security and VA compensation count against the income limit

They do not. Social Security, VA disability compensation, veterans pensions, Railroad Retirement, workers compensation, and cash public assistance are all excluded.

Myth: Flagstaff is a high-cost county for VA loans

It is not for conforming purposes. Coconino sits at the $832,750 baseline. The above-floor figure people cite is an FHA limit, a different program.

Myth: Arizona taxes my military pension

It does not, and has not since tax year 2021. Active duty pay is not taxed either.

Myth: There is a state insurance backstop if carriers decline me

There is not. Arizona has no FAIR Plan. That is precisely why insurance has to be shopped early in the high country.

Myth: You can only use your VA loan once

Entitlement is reusable and restorable. Plenty of Arizona buyers we work with are on their second or third VA loan.

Is there a minimum credit score for a VA loan in Arizona?

No. VA publishes no minimum credit score. Lenders add their own, usually 620. The JD.Mortgage Team does not add one. If automated underwriting refers your file, we run a manual underwrite using the compensating factors VA recognizes: residual income, housing payment history, reserves, and documented explanations for past credit events.

Is there a VA loan limit in Arizona?

No, if you have full entitlement. All fifteen Arizona counties use the 2026 national baseline of $832,750 for a one-unit property, including Maricopa, Pima, and Coconino. That figure only matters when you already have a VA loan open somewhere.

Do 100 percent disabled veterans pay property tax in Arizona?

Not on their primary residence, as of 2026. Arizona enacted a full property tax exemption for veterans with a 100 percent service-connected disability, signed in February 2026 and effective for tax year 2026, with no income limit and no assessed value cap. It first appears on bills due in October 2026.

What if my rating is below 100 percent in Arizona?

The older prorated rule still applies. The exemption is roughly $4,873 of assessed value scaled by your disability percentage, and it remains income-limited at about $39,865 of household income, or about $47,826 with minor or disabled children. Both amounts are adjusted annually, so confirm the current figures with your county assessor.

What income counts against the Arizona exemption limit?

Not as much as people assume. Social Security, Railroad Retirement, VA disability compensation, all veterans pensions, workers compensation, and cash public assistance are excluded from the calculation. Many veterans who believe they are over the limit are actually under it.

My county assessor website says I make too much. Is that current?

It may not be. The law changed in February 2026, mid-cycle, and many county pages still describe the older prorated and income-limited scheme. If you are rated 100 percent, ask specifically about the 2026 full exemption rather than relying on the published page.

Can a surviving spouse keep the Arizona exemption?

Yes. An unremarried surviving spouse of a veteran who qualified for the full exemption can continue it on a primary residence, and it is not locked to the original home. Arizona also has a separate widow and widower exemption of roughly $4,873 of assessed value, subject to the income limits, which remarriage disqualifies.

When do I apply for the Arizona veteran exemption?

The filing window is early and short, generally from the beginning of January through late February with your county assessor. A waiver extension is available in some circumstances, but the window is tight enough that it should be calendared rather than remembered.

Does Arizona tax military retirement pay?

No. Arizona fully exempted military retirement pay beginning in tax year 2021, and active duty pay is not taxed either. Social Security is also exempt. Private pensions and IRA and 401(k) distributions remain taxable, so the picture is strong but not unlimited.

What is the Arizona state income tax rate?

A flat 2.5 percent for 2026, one of the lowest flat rates in the country. Combined with no tax on military retirement, that produces a strong residual income picture for a retired veteran.

Why are Arizona property taxes so low?

Several structural reasons stack up. Owner-occupied residential property is assessed at 10 percent of value, the limited value used for most taxes can rise no more than five percent a year, there is a constitutional cap of about one percent of full cash value on residential ad valorem taxes, and the state pays half of the primary school district rate up to $600 a year per parcel.

Does Arizona have a real estate transfer tax?

No. Arizona’s constitution prohibits a tax or fee on conveying an interest in real property, which makes closing costs here lower than in most states.

Can I get homeowners insurance in Flagstaff, Prescott, or Payson?

Usually, but it takes more work. Wildland-urban interface areas in Coconino, Gila, Navajo, and Yavapai counties see higher premiums, longer binder timelines, and sometimes surplus lines placement. Mitigation like defensible space and roof material can improve both availability and price.

Does Arizona have a FAIR Plan for homeowners insurance?

No. Unlike California, Colorado, Florida, and North Carolina, Arizona does not operate a state insurer of last resort. Regulators instead maintain a list of carriers willing to write in high wildfire risk areas, which makes shopping early more important, not less.

What is Arizona anti-deficiency protection?

If a property is two and a half acres or less and is limited to and used as a one or two family dwelling, a lender generally cannot pursue you for the shortfall after a trustee sale. It is broader than most states because it is not limited to purchase-money loans, though there are carve-outs for certain construction loans and for dwellings never completed or occupied.

Can a seller pay off my debt at closing on an Arizona VA loan?

Yes. VA allows a seller to pay off your credit cards, auto loan, or other debt as part of the 4 percent concession allowance, stacked on top of unlimited seller-paid closing costs. Retiring a high monthly payment lowers your debt-to-income ratio and can turn a denial into an approval on the same contract.

Do I pay the VA funding fee in Arizona?

The funding fee is federal and identical in every state. It is waived entirely if you receive VA disability compensation or hold a service-connected disability rating. Otherwise it is financed into the loan rather than paid in cash. If your rating was granted after you closed a prior VA loan, you may be owed a refund on a fee you already paid.

Get a Real Arizona VA Preapproval

Built on the 2026 exemption rules, not last year’s. If you are rated 100 percent, your payment may be lower than you have been told.