Conventional Loans Built Around You.
The most common loan type in Arizona: fixed or adjustable, 3% down for first-time buyers, drop PMI at 80% LTV. We shop 50+ wholesale lenders to find the right pricing for your credit and down payment.
- 3% down for first-time buyers
- Fixed or ARM options
- Drop PMI at 80% LTV
Fixed vs. Adjustable Rate
The single biggest decision inside conventional. The right answer depends on how long you'll stay in the home.
Fixed-Rate (15 / 20 / 30 yr)
Same rate, same payment, every month. Predictable.
- Best for buyers staying 7+ years
- Most popular: 30-year fixed for affordability
- 15-year for faster payoff and lower rate
- No surprise rate changes ever
- Refinance later if rates drop materially
Adjustable-Rate (5/1, 7/1, 10/1)
Lower initial rate for 5-10 years, then adjusts annually.
- Best for buyers planning to move or refi within 5-10 years
- Initial rate often 0.5-1% below 30-year fixed
- Caps limit how much the rate can adjust per year and over the life
- Most current ARMs are SOFR-indexed (replacing LIBOR)
- Risk: rates can adjust upward if you stay too long
When PMI Drops Off
Conventional's biggest long-run advantage over FHA: PMI is removable. FHA's lifetime MIP isn't.
- PMI required when LTV is above 80% (less than 20% down)
- PMI cost: typically 0.3-1.5% of the loan amount per year
- You can request PMI removal at 80% LTV
- PMI drops automatically at 78% LTV by federal law
- Appreciation can drop you to 80% faster than payoff alone
- Get the home reappraised if values have moved up
On a $400,000 conventional loan with 5% down, PMI runs ~$150-$200/month. Once you cross 80% LTV, that disappears, meaning your effective payment drops without refinancing. This is why conventional usually wins for buyers who can come in with 5%+ down and have credit at 680+.
Loan Size Cutoffs
Anything above the conforming limit becomes a jumbo loan, which has different underwriting standards. Most Arizona purchases stay inside conforming.
- Single-family conforming limit (most AZ counties, 2026): $806,500
- 2-unit conforming limit: $1,032,650
- 3-unit conforming limit: $1,248,150
- 4-unit conforming limit: $1,550,775
- Above these = jumbo loan territory (separate underwriting)
- Conforming limits update annually, so confirm with us at offer time
Frequently Asked Questions
What's the difference between a conventional loan and an FHA or VA loan?
Conventional loans are not insured or guaranteed by the federal government. They conform to Fannie Mae or Freddie Mac standards and are funded by private lenders. FHA loans are federally insured (lower bar to qualify, lifetime mortgage insurance on most). VA loans are federally guaranteed (eligible service members, no down payment, no PMI). Conventional is the most common loan type in Arizona for buyers with 5%+ down and 680+ credit.
How does PMI work on a conventional loan?
Private mortgage insurance (PMI) is required when you put less than 20% down. It typically costs 0.3-1.5% of the loan amount per year, paid monthly. Once your loan-to-value (LTV) reaches 80%, through paying down the balance or appreciation, you can request PMI removal. At 78% LTV, PMI drops automatically. This is a key reason conventional often beats FHA in the long run for buyers who can put 5%+ down.
What's the conforming loan limit in Arizona?
For 2026, the conforming limit for a single-family home is $806,500 in most Arizona counties. Multi-unit limits are higher (2-unit: $1,032,650; 3-unit: $1,248,150; 4-unit: $1,550,775). Loans above these limits become jumbo loans, which have different underwriting standards.
Should I choose a fixed-rate or ARM conventional loan?
Most Arizona buyers choose fixed-rate conventional loans (15-year or 30-year) for predictability. Your rate and payment never change. ARMs (adjustable-rate mortgages) start with a lower rate for an initial period (typically 5, 7, or 10 years), then adjust annually. ARMs make sense if you expect to sell or refinance before the adjustment period, but if you stay long enough for the rate to adjust upward, the math can flip on you.
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