Conventional mortgages are the most common loan type. With several down payment and term options, Conventional financing covers primary residence, vacation home and investment property purchases.
Arizona Conventional Mortgage
Conventional home loans provide variety of financing options. In addition, Conventional mortgages provide lower down payment options than FHA financing. In this home loan section of our site you learn more about:
Knowing the benefits of Conventional financing is important when buying or refinancing. This financing type offers so much. However, many long standing and out-dated beliefs do not accurately represent Conventional mortgage options.
Down Payment Options
Conventional loan down payment options surprise many consumers. Depending on occupancy and other details, the down payment needed is as low as 3%.
The 3% down option pertains to eligible primary residence transactions only. However, vacation home transactions allow 10% down. Additionally, financing an investment property requires just 15% down.
Types of Conventional Home Loans
Conventional loans finance many kinds of different scenarios. From 3% down payment primary residence purchases to cash out refinances1 on rental property, Conventional loans cover a lot of ground.
Occupancy Types Allowed
- Primary Residence
- Second Home
- Rental Property
Loan Types
In addition to financing Primary, Secondary and Investment property Conventional loans allow for different types of transactions. From purchases, refinances, cash out refinances1 and renovation loans consumers have several options.
Purchase
Conventional home loans top use involves financing a home purchase. Whether buying an existing home or a new build, Conventional financing provides home-buyers with several different loan strategies and options.
For example, borrowers choose from different fixed terms to Adjustable Rate Terms. Also, required down payments range from 3% on up on Conventional loans. There are multiple ways to structure mortgage insurance payments for purchases with less than 20% down. The flexible options allow home-buyers to customize their Conventional loan to meet their personal needs and goals.
No Cash Out Refinance
Homeowners seeking a lower rate, shorter loan term and/or a new loan term use a Conventional as well. Additionally, no cash out refinance options exist for all 3 occupancy types listed above. The key to a no cash out refinance is that the borrower does not receive more than the allowed “incidental cash out” amount from the refinance at closing.
However, the interest rate and loan to value vary based on occupancy type. For example, all things being equal – the interest rate on a no cash out refinance of an rental property is higher than on a primary residence.
Cash Out Refinance
Conventional cash out refinance loans assist in many ways. You will receive a lump sum of cash that you can use however you like. Cash out refinances help access equity in the home. Cash out refinances are allowed on all 3 occupancy types listed above.
In addition, interest rate and loan to value both vary based on occupancy type. For example, the loan to value on a primary residence cash out refinance is higher than an investment property. In other words, all factors being equal – you can borrow more on a primary residence cash out than an investment cash out refinance.
Renovation / Rehab Loan
Conventional renovation home loans or “rehab loans” finance reno or repair costs into a mortgage. Escrow hold-backs fall into this category as well. However, they represent a smaller scale version of a Renovation loan.
In short, renovation loans not only finance rehab costs they also facilitate renovation work being done AFTER the loan closes. All 3 occupancy types listed above have a renovation loan option. Also, interest rate and loan to value vary based on occupancy type.
Conventional Loan Qualification**
Mortgage loan qualification is what starts the homebuying process. You’ll provide information on your credit, income, assets and debts so we can give you an estimate of the size of a loan you can afford. There’s never a charge to get qualified with us.
PRE-QUALIFICATION PROCESS OUTLINE
The process is typically simple and quick. Our team often completes the qualification within 24 hours. You’ll save time by only looking at houses within your price range, and sellers are likely to prefer your offer over a buyer who is not qualified, giving you negotiating power.
Qualifying is the ideal way to shop for a home. Seller’s want to know how “strong” or qualified a buyer is. Showing them your official Lender Pre-Qualification letter conveys both your strength and ability to qualify for a home loan. Having one is the next best thing to shopping with cash.