Before You Pick the Paint
Learn What It Really Costs to Buy a Home in Arizona
Own What’s Next—Learn what you really need to be ready to purchase your new home.
Buying your first home is a big milestone. It can be exciting, emotional, and maybe even a little overwhelming. Between scrolling through listings, planning a move, and daydreaming about decorating, it’s easy to focus on the fun parts. But when it comes to the financial side of things, especially costs beyond the down payment, you might feel a little less prepared. Many first-time buyers are surprised by how many expenses pop up before they get their new keys in hand. In particular, closing costs, like lender fees, escrow services, and title insurance can take you off guard if you’re not expecting them.
This article is designed to help you understand what it really costs to buy a home in Arizona. While every home purchase can vary by the nature of the transaction and contract, you’ll walk away with a clearer picture of what to budget for, how title insurance can protect your investment, and how to feel confident every step of the way.
Understanding Your Home Buying Budget
Before you begin the home search process, it’s important to understand how much you can realistically afford. This starts with getting pre-approved for a mortgage. A pre-approval letter can tell sellers you’re a serious buyer and gives you a clear idea of what a lender is willing to loan you based on your finances and credit. Once you’re pre-approved, you can build a realistic home buying budget. But keep in mind, your monthly mortgage payment is only part of the picture.
You’ll also need cash upfront for:
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Down payment - Typically around 5-10% for first-time buyers, but it can vary.
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Closing costs - Usually 2-6% of the home’s price.
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Emergency fund - Recommended to cover any unexpected costs once you move in (new appliances, repairs, or even just furniture).
When you know what’s coming, you can make better, more confident decisions along the way. Especially when it comes to closing costs.
What Are Closing Costs?
So, what exactly are closing costs? In short, they’re the fees and expenses you pay to finalize your home purchase. These can include:
Approximate costs:
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Loan origination fee - 1% of the loan amount
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Additional lender fees - $500
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Appraisal fee - $500-$750
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Inspection fee - $150-$250
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First loan fee - $125
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Closing Protection Letter - $25
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Escrow/settlement fees - Varies based on the price of the home
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Title Insurance Premium - Varies based on the price of the home
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Endorsements - $300
In Arizona, closing costs can vary based on your contract and the home purchase price, but here’s what you can generally expect. For a $250,000 home in Maricopa County, the escrow fee from First American on a sale with mortgage is currently approximately $1,274, and for a $500,000 home, it is currently approximately $1,624. Typically, the buyer and seller split these costs. The cost of title insurance is also based on the home’s purchase price and can be paid by either party. It's all determined by the terms of your contract. (We’ll dive deeper into title insurance in the next few sections.)
What is Title Insurance, and Why Do You Need It?
Title insurance can protect you from the unexpected. When you buy a home, you’re not just buying the property, you’re buying its history. That means any past ownership issues, unpaid taxes, or claims against the title could suddenly become your problem if they weren’t discovered prior to the buying process. That’s where title insurance comes in.
There are two types of title insurance:
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Lender’s title insurance, which protects the lender’s investment.
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Owner’s title insurance, which protects your investment.
While purchasing lender’s title insurance is typically required by your mortgage company, owner’s title insurance is optional, but strongly recommended. Owner’s title insurance helps protect you from problems that could arise after closing, such as fraud, forgery, unknown heirs, or errors in public records. Without it, you could face costly legal battles or worse, lose your home.
We’ve seen real-life examples of buyers who skipped the owner’s policy and later regretted it. With a First American Owner’s Policy, you’re not only getting protection, but you’re also getting peace of mind. Our experts conduct a comprehensive title search and provide insurance that safeguards your investment long after you’ve moved in.
Title Insurance Costs
Now, you might be wondering: how much does title insurance cost?
Unlike other types of insurance, you only pay for title insurance once, as a one-time premium at closing for your home. The cost is based on the purchase price of your home and varies slightly by state and provider. On average, it ranges from a few hundred to a few thousand dollars. For example, a $250,000 home in Arizona has a current premium of approximately $916 and a $500,000 home has a current premium of approximately $1,365 for the lender policy. The Owner’s policy amounts are currently close to $1,549 and $2,310 respectively.
The lender’s policy is most often paid for by the buyer, whereas an owner’s policy is a commonly negotiated item in Arizona transactions, and in many cases, the seller may offer to cover the cost of the owner’s policy as part of the deal.
Why does that matter? Because if First American issues both the owner’s and lender’s policies, you may qualify for what’s called a simultaneous loan policy, meaning you can currently purchase the lender’s policy for approximately ½ the cost of the owner’s policy. That’s a significant savings and a great value for added protection.
When you look at your full home-buying budget, title insurance is a small piece of the puzzle, but it can play a big role in protecting your financial future.
Final Steps and Feeling Confident About Your Purchase
Buying a home isn’t just about finding the right property, it’s about the right preparation. When you budget properly, plan for closing costs, and invest in title insurance, you’re setting yourself up for long-term success and peace of mind.
At First American, we’ve helped millions of buyers protect their biggest investment. Our team is here to guide you through every step of the closing process with confidence.
Ready to dive into the homebuying process?
Rates effective on qualifying transactions closed on or after 4/1/2024.
This is not a complete Schedule of Fees. To receive a quote, go to facc.firstam.com.
All fees subject to Arizona sales tax as applicable.
As with any insurance contract, the insuring provisions express the coverage afforded by the title insurance policy and there are exceptions, exclusions, and conditions to coverage that limit or narrow the coverage afforded by the policy. Also, some coverage may not be available in a particular area or transaction due to legal, regulatory, or underwriting considerations. Please contact a First American representative for further information. The services described above are typical basic services. The services provided to you may be different due to the specifics of your transaction or the location of the real property involved.
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