Arizona ConventionalRefinance

Conventional is a category, not a company. Fannie Mae’s glossary defines a conventional mortgage as one that is not insured or guaranteed by a federal government agency — the FHA, HUD, VA, or RD — and loans delivered to Fannie Mae must also be conforming, fitting the agency’s loan limits and eligibility rules. In practice that makes the conventional refinance the default move for borrowers whose loans already fit the box: no upfront funding fee, no government insurer’s annual premium, and guidelines written by Fannie Mae and Freddie Mac.

There are two main paths. A rate-and-term refinance changes your rate, your term, or both without borrowing extra money — the new balance is essentially the old one plus closing costs. A cash-out refinance replaces your mortgage with a bigger one and hands you the difference in cash, at the price of stricter rules: on a one-unit primary residence the new loan tops out at 80% of the home’s value, and at least one borrower must have been on title for six months.

What does it cost? Market surveys put typical refinance closing costs between 2% and 5% of the loan amount — $6,000 to $15,000 on a $300,000 balance, in LendingTree’s current analysis. The heavy lines are origination (roughly 0.5% to 1% of the loan), the appraisal, and title work; the full table below averages out from Urban Institute calculations of Fannie Mae data. The Loan Estimate your lender must send within three business days of application prices your actual deal — that document, not any survey, is the quote that counts.

Whether it pays off comes down to one division: closing costs divided by monthly savings. If a refinance costs $6,000 and saves $200 a month, you break even at month 30 — stay past it and every payment runs ahead. The Federal Reserve’s refinancing guide walks the same math with a wrinkle: it suggests shrinking the savings to after-tax dollars first, which stretches the true break-even out a bit. The worked example below uses the guide’s own monthly payment figures.

Underwriting looks at credit, equity, income, and debt together. One recent change worth knowing: as of November 2025, Fannie Mae no longer applies a minimum credit score to loans approved through Desktop Underwriter, its automated system — eligibility rides on the whole risk picture. Minimums still apply where a human underwrites the file (620 for fixed-rate loans, 640 for ARMs), and most lenders keep their own 620 floor regardless.

Equity drives the pricing. Refinance above 80% loan-to-value and you will usually pay private mortgage insurance; at 20% equity or better you will not — and on a primary residence, federal law cancels PMI automatically once the balance amortizes down to 78% of the home’s original value. That 80% line is also exactly where the FHA-to-conventional switch gets interesting, a comparison this page breaks down below.

Property type moves every ceiling. The loan-to-value figures this page leads with are for a one-unit primary residence; second homes top out lower on rate-and-term refinances, and investment properties run lower still — with pricing that reflects the extra risk. If the loan you are refinancing is not on the house you live in, expect the stricter end of every row in the table below.

Shop before you sign. The Federal Reserve’s guide suggests starting with your current lender — you are a known quantity — then comparing rate, term, and fees from several others, and getting every quote in writing. The standardized Loan Estimate makes that comparison honest: same sections, same categories, so the origination charge on one lender’s sheet lines up cleanly against the next. Lenders know borrowers compare; the ones who want the loan say so with their numbers.