Arizona DSCR loans

WHERE INVESTORS BUY

Arizona markets at a glance

Most investors buy near where they live, so they can take care of the property. Here’s the data for the Arizona markets investors ask us about most. Rural properties usually take an LTV adjustment down.

Typical home value and rent: Zillow, September 2026 (*Tucson: January 2026). Price-to-rent is home value ÷ a year of rent. Renter share: U.S. Census ACS 2020–2024. Appreciation: FHFA House Price Index, Q2 2016 to Q2 2026.

THE REAL CHALLENGE

Rent versus price

Arizona prices grew faster than rents. Across the cities above, a year of rent covers about 4% to 5% of the home’s value, versus about 6% nationally. Rent covers less of the payment, so Arizona deals are more sensitive to purchase price, leverage and rate.

The flip side: prices have been flat to slightly down for the past year, and Phoenix is still about 5% below its 2022 peak on the Case-Shiller index. That gives buyers room to negotiate. Run the deal in our DSCR calculator at the price you can actually buy it for, not the list price.

PROPERTY TAXES

Low taxes, with one rental penalty

Arizona’s effective property tax rate is about 0.48% of home value, one of the lowest in the country. Rentals are assessed at the same 10% ratio as owner-occupied homes, but they don’t get the state school-tax credit, which is worth up to $600 a year per parcel.

The good news for investors: taxable value can rise no more than 5% a year, and unlike Florida, that cap doesn’t reset when you buy. And since January 1, 2025, cities can no longer charge rental tax on long-term rentals of 30 days or more. Rentals do have to be registered with the county assessor.

INSURANCE

Moderate, except in wildfire country

Insurance won’t break most Arizona deals the way it can in Florida. Average premiums actually paid run below the national average ($1,018 vs. $1,569 a year, NAIC 2022 data), though 2026 quote surveys disagree on where Arizona lands today.

Watch wildfire areas. Non-renewals cluster in the wildland-urban interface in Coconino, Navajo and Gila counties. Arizona has no FAIR plan, so a property standard carriers won’t write goes to the surplus-lines market at a higher cost. Get a landlord policy quote before you write the offer, and put it in the DSCR math.

CASE STUDY

A Phoenix rehab, refinanced right

An investor finished a rehab in Phoenix carrying a $415,000 hard money first and a $31,000 second. We refinanced both into one $450,000 DSCR loan on a $600,000 appraisal. Because the payoff was the existing debt, it closed as a rate-and-term refinance instead of a cash-out, and that lowered the rate.

Structure matters: the same deal labeled as a cash-out would have priced higher. See DSCR cash-out refinance for when cash-out is the right call.

AIRBNB AND VRBO

Short-term rental rules in Arizona

State law stops Arizona cities from banning short-term rentals or capping occupancy. Cities can require a permit (the fee is capped at $250), a 24/7 emergency contact, notice to neighbors, at least $500,000 of liability insurance, and the permit number on every listing. Every short-term rental also needs a state transaction privilege tax (TPT) license and collects lodging tax: 7.27% state and county in Maricopa County, plus city tax.

• Scottsdale: annual license, $250 per property.
• Phoenix: permit, $250, with notice to neighbors and HOAs within 600 feet.
• Tempe: annual city license for each property.
• Sedona: a permit for each unit; about 19% of Sedona’s homes are permitted short-term rentals.
• Flagstaff: license fee rising from $185 to $250 in 2026, plus guest registry checks.
• Tucson: a 10% city short-term rental tax since March 2026.

About 27% of Arizona homes are in an HOA, and HOA rules can be stricter than the city’s, so read the documents before you buy. A 2026 bill to let cities cap occupancy passed the House but stalled in the Senate, so keep an eye on the legislature. Financing an STR? See Airbnb, VRBO and STR DSCR loans.

LANDLORD-TENANT

A generally landlord-friendly state

• Nonpayment: a 5-day notice to pay, then the landlord can file.
• Speed: eviction hearings are set 3 to 6 days after filing.
• Deposits: capped at 1.5 months’ rent, returned within 14 business days.
• No rent control: it’s banned statewide.

RURAL AND WATER

Check the water before you buy rural

Rural properties usually take an LTV adjustment down, and in Arizona the water source matters. Some rural lots rely on hauled water or shared wells. For sales of five or fewer parcels in unincorporated areas, the seller must give a recorded affidavit of disclosure covering access, water source, septic and flood zone. Read it before you’re committed. In the Phoenix area, new subdivisions that depend on groundwater have been paused since 2023, which limits new supply.