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 refinances 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 refinances 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. From consolidating debt to taking equity out of a home in the form of cash, 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 Pre-Qualification

Obtaining a pre-qual means your mortgage lender gives you the green light to shop for a home. In other words, they reviewed your credit, income and assets and supporting documents. As a result, they determined you pre-qualify for a specific loan and loan scenario.

PRE-QUALIFICATION PROCESS OUTLINE

The process is typically simple and quick. Our team often completes pre-qualification within 24 hours. The timing largely depends on our review and how quickly supporting documents are provided.

Pre-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.