Arizona ConventionalHome Loans
Arizona's most versatile home loan — 3% down for first-time buyers, cancelable PMI, and competitive rates for good credit. Finance your Phoenix, Scottsdale, or Tucson home with the most widely-used loan in the country.
What is a Conventional Loan?
A conventional loan is a mortgage not backed by a government agency like FHA or VA. That distinction gives it broader flexibility: you can use one to buy a primary home, second home, or investment property across Arizona.
Conventional loans follow guidelines set by Fannie Mae and Freddie Mac, giving lenders the ability to offer a wide range of terms, rate structures, and property types — from a Mesa starter home to a Scottsdale investment condo.
For buyers with a 620+ credit score and steady income, conventional financing typically delivers the best combination of rates, flexibility, and long-term cost.
Conventional Loan Benefits
From low down payments to cancelable PMI, here's why most Arizona buyers choose conventional.
Flexible Down Payment
First-time Arizona buyers can put as little as 3% down. Repeat buyers qualify with 5% down. Put 20% down and skip PMI entirely.
PMI Cancellation
Unlike FHA mortgage insurance, conventional PMI is cancelable. Once your loan reaches 80% LTV — whether from payments or rising Arizona home values — you can request removal.
Multiple Property Types
Buy a primary residence in Phoenix, a vacation home in Sedona, or an investment property in Mesa — conventional loans cover all Arizona property types.
Competitive Rates
Borrowers with good credit typically get the most favorable rates on conventional loans — and a strong 740+ score can unlock the best pricing tiers available.
Fixed or Adjustable
Lock in a 30-year fixed for predictable payments, or consider an ARM if you plan to move or refinance within 5–7 years. We'll help you choose what fits your Arizona plans.
Higher Loan Limits
The 2026 conforming loan limit is $832,750 in all Arizona counties. Loans above that threshold require jumbo financing — we handle both.
Conventional vs. Government Loans
Conventional
- 3-20% down payment
- 620+ credit score
- PMI removable at 20% equity
- All property types
- No upfront funding fee
FHA
- 3.5% minimum down
- 580+ credit score
- MIP for life of loan
- Primary residence only
- 1.75% upfront MIP
VA
- 0% down payment
- No minimum (lender varies)
- No PMI ever
- Military only
- 2.15% funding fee
Conventional vs. FHA: The Full Comparison
The most common question we hear: "Should I go conventional or FHA?" Here's the side-by-side answer.
| Feature | Conventional | FHA |
|---|---|---|
| Minimum Down Payment | 3% | 3.5% |
| Credit Score (typical) | 620+ (740+ for best rates) | 580+ (500 with 10% down) |
| Upfront Mortgage Insurance | None | 1.75% of loan amount |
| Monthly Mortgage Insurance | PMI (removable at 20%) | MIP (often for life of loan) |
| Debt-to-Income Ratio | Up to 50% with factors | Up to 57% |
| Property Standards | Flexible | Stricter HUD requirements |
| Investment Properties | Yes | No (primary only) |
| Loan Limits (2026) | $832,750 conforming | $541,287 (floor) |
| Best For | Good credit, long-term savings | Lower credit, smaller down payment |
| Government Backing | No (private + GSEs) | Yes (FHA insured) |
Data from CFPB, Fannie Mae, and HUD
How Conventional Loans Work
From application to closing — here's what to expect.
Pre-Approval
Get pre-approved to know your budget and show sellers you're serious.
Home Search
Find a property within conforming loan limits ($832,750 standard).
Underwriting
Lender verifies income, assets, credit, and property value.
Closing
Sign documents, pay closing costs (2-5% of loan), get keys.
Loan Sold to GSE
Your lender sells the loan to Fannie Mae or Freddie Mac. You keep the same terms.
Credit Score Tiers & Pricing
Best rates available — the top pricing tier.
Very good rates. Small pricing adjustment.
Good rates. Moderate pricing adjustment.
Qualifying range. Higher rates and/or PMI costs.
Pro tip: One point can matter. A 739 pays more than 740. Check your score before applying and dispute any errors.
Conventional Loan Requirements
Credit Score
A minimum 620 credit score is required for most conventional programs. The best rate tiers kick in at 740+. We'll show you where you stand and what it takes to get there.
Down Payment
First-time Arizona buyers need as little as 3% down. Repeat buyers need 5% minimum. Putting 20% down eliminates PMI and reduces your monthly payment immediately.
Debt-to-Income Ratio
Maximum 45% DTI for most conventional borrowers. Strong compensating factors — like significant reserves — can allow up to 50% with Fannie Mae Desktop Underwriter approval.
Employment Verification
Two years of consistent employment or income history is standard. Self-employed Arizonans and business owners are welcome — we'll work through your documentation to build the strongest possible file.
Property Appraisal
The property must appraise at or above the purchase price. Conventional appraisal standards are less restrictive than FHA, making it easier to buy fixer-uppers or older Arizona homes.
Reserves
Some conventional programs require 2–6 months of mortgage payments held in verified savings after closing. Higher reserve balances can also help offset a higher DTI ratio.
Is Conventional Right for You?
Good fit if:
- Credit score 680+ (ideally 740+)
- Stable income with 2+ years history
- Can document assets clearly
- Want PMI to go away eventually
- Buying a primary, second home, or investment property
Consider alternatives if:
- Credit below 620
- Recent bankruptcy or foreclosure
- Debt-to-income ratio of 45% or higher
- You need maximum flexibility on appraisal issues
- You're a veteran eligible for a VA loan (0% down, no PMI)
Our Position
We'd rather lose a deal than put you in the wrong loan. If conventional isn't right for you today, we'll say so — and help you find what is.
Your Rights as a Borrower
Federal law protects you throughout the mortgage process. Know your rights.
Loan Estimate
Within 3 business days of application, you must receive a Loan Estimate showing rates, fees, and monthly payment.
CFPB: Loan Estimate ExplainerNo Steering
Lenders cannot steer you toward loans that benefit them over you. You have the right to shop and compare.
CFPB: Consumer Resources3-Day Review
You have 3 business days to review your Closing Disclosure before signing. Don't be rushed.
CFPB: Closing DisclosureTypical Closing Costs
Typical fees on a conventional purchase — so there are no surprises at the closing table.
| Fee Type | Typical Range | Notes |
|---|---|---|
| Origination Fee | 0.5% - 1% of loan | Negotiable. Some lenders offer "no origination" with a higher rate. |
| Appraisal | $400 - $700 | Required. You can request a copy of the report. |
| Title Insurance | $1,000 - $2,500 | Varies by state. Shop for title companies. |
| Underwriting | $300 - $600 | Administrative fee. Sometimes waived. |
| Recording Fees | $100 - $250 | Government fee to record the deed. |
| Prepaid Interest | Varies | Daily interest from closing to your first payment. |
| Escrow Deposit | 2-3 months | Property tax and insurance reserves. |
Wire Fraud Alert
Never wire closing funds based on email instructions alone. Always call your title company using a verified phone number to confirm wiring details. Scammers intercept emails and steal down payments.
Conventional Loan FAQ
Ready for a Conventional Loan?
Get pre-approved in as little as 24 hours and make offers in Arizona's competitive market with confidence. Our local team is ready to help you move fast.