Apply with Arizona Mortgage Specialists, Inc.

Loan Options

Conventional loans, also called conforming loans, offer down payments as low as 3%, and are backed by Fannie Mae (FNMA – Federal National Mortgage Association) and Freddie Mac (FHLMC - Federal Home Loan Mortgage Corporation), the largest purchasers of mortgage-backed securities in the United States.

Maximum loan amounts vary for single-family, duplex, triplex or four-plex homes. Some high-cost counties in California and other states have higher limits and are called high-balance loans.

In Arizona for 2019, conforming loan limits are currently set at $484,350 for one-unit properties such as single-family residences, condos and townhomes.  High balance limits for numerous high cost counties California and other states is $726,525.  Loan amounts above the conforming loan limits are called ‘jumbo” loans, or non-conforming loans, and usually require 20% down.

At Arizona Mortgage Specialist, we have a 10% jumbo product with No Mortgage Insurance up to the high balance limit of $726,525 – which is a unique option most lenders don’t offer!

Conventional loans can be used to purchase or refinance primary residences, second homes, or investment properties. Conventional typically require 5% down, but there are options for 3% with some income and/or census tract limitations. Interest rates can vary depending on the amount of down payment, property type and FICO score.  When the down payment is less than 20%, Private Mortgage Insurance (PMI) is usually required.  Mortgage insurance premiums also vary depending on the percentage of down payment, property type, occupancy and FICO score among other factors.

Advantages: the 3% minimum down payment requirement is less than FHA, and the funds for the down payment can come from a family gift, similar to FHA.  The overall cost of mortgage insurance is usually less expensive than FHA, but is higher for lower FICO scores.  PMI can also be removed over time when the balance is paid down, or if the appreciation of the home is considered.

Disadvantages: Rates are incrementally higher for conventional loans with FICO scores less than 740, and the minimum FICO is 620 for a standard 5% down conventional loan. Low down payment options only allow seller contributions of 3% toward closing costs for lower down payment loans.
Federal Housing Administration, or FHA loans, have a minimum down payment of 3.5% which can come from your own savings, a gift from a relative or from an acceptable charity/non-profit down payment assistance organization.  The maximum loan amount for 2019 is $314,827 for most counties in Arizona. At Arizona Mortgage Specialists, we have No Lender Fees on our FHA loans!

FHA is not a lender, it is the largest government insurer of mortgages in the world.  FHA insures lenders against the risk of default by charging mortgage insurance, both a 2.75% Up-Front Mortgage Insurance Premium (UFMIP - usually financed into the loan amount) as well as an annual premium of .85% which is paid monthly as part of the total payment.

Advantages:
* No Lender Fees with Arizona Mortgage Specialists!
* More flexible regarding credit issues with FICO scores down to 580 or lower, and shorter waiting periods after a significant credit event like BK or foreclosures.
* Allows up to a 6% seller contribution toward closing costs.
* Medical collections and charge-offs don’t have to be paid and are not considered.
* Collection accounts up to $2,000 in aggregate don’t need to be paid off.
Disadvantages:
* Expensive mortgage insurance premiums that usually exist for the entire term of the loan.
* More repair items might be required to be completed prior to closing because FHA appraisals may require minor maintenance items to be repaired.
* Max loan amounts per county limits the property purchase prices to $326,000 for minimum 3.5% down loans for most AZ counties. Any sales price over that amount can be purchase but would just require the difference in additional down payment.
Jumbo loans, or non-conforming loans, usually require a 20% down payment for loan amounts higher than $484,350. However, we have a unique program that allows only a 10% down payment for loan amounts up to $726,525 without any mortgage insurance!

Combo-loan options are another solution to avoid the full 20% down. A combo usually has a 1st mortgage of 80% Loan-To-Value, with a simultaneous 10% LTV 2nd mortgage so the down payment is only 10% of the purchase price. The 2nd lien is usually a HELOC, or Home Equity Line of Credit that has a low interest-only payment for 10 years before converting to a 20 year fixed amortization.
A VA Loan is one of the few loan programs that still offers 100% financing up to the 2019 limit of $484,350!  No down payment is the biggest benefit of VA financing to help veterans more easily purchase a home.  Instead of mortgage insurance, the VA may require a Funding Fee that is financed into the loan amount which insures lenders against the risk of default.  By including it only in the loan amount, monthly payments are lower for VA borrowers than either conventional or FHA minimum down programs.

VA loans also have better rates than minimum down conventional loans. Additionally, the VA is more lenient with regard to qualification standards than FHA or conventional loans with shorter waiting periods from significant credit events like a BK or foreclosure.
Based on a veteran’s eligibility, a borrower may be able to finance well above the maximum loan amount of $484,350 with a much smaller down payment than a typical Jumbo Loan requires.  A formula is used to determine the maximum eligibility based on the limits per county set by the VA.

The following is an example of how a veteran purchasing a custom home can put just over 10% down, rather than the 20% usually required for Jumbo Loans:

Borrower has full VA entitlement available and wants to purchase a property in Maricopa County with a $700,000 sales price.

$700,000 x 25% = $175,000 entitlement required

$484,350 x 25% = $121,087 maximum entitlement per county limit

$175,000 – $121,087 = $53,913 down payment required, or only 7.7%!

Credit Waiting Periods

Below are the waiting periods for each program required for foreclosures, short sales and bankruptcies.

Foreclosures require 7 years seasoning from the date the deed was transferred back to the bank.

Short Sales and Deed In Lieu of Foreclosures both require 4 years seasoning.

Chapter 7 Bankruptcies where debts are discharged require 4 years from the discharge date.
Foreclosures and Deed In Lieu of Foreclosures require 3 years seasoning from the date the deed was transferred back to the bank.

Short Sales also require 3 years seasoning with the exception that there is NO waiting period if the borrower had no late payments on any mortgages and consumer debts within the 12 months preceding the short sale.

Chapter 7 Bankruptcy requires 2 years from the date of discharge.
Foreclosures and Deed In Lieu of Foreclosures require 2 years seasoning from the date the deed was transferred back to the bank.

Short Sales require 1 year of seasoning with the exception that there is NO waiting period if the borrower had no late payments on any mortgages and consumer debts within the 12 months preceding the short sale and they are clearly not taking advantage of declining market conditions.

A Chapter 7 Bankruptcy requires 2 years seasoning from the date of discharge.