Conventional Loans
Conventional loans are mortgages that are not insured or guaranteed by the government, making them a popular option for buyers with strong credit. They often offer competitive rates, flexible terms, and down payments as low as 3%, making them a solid choice for both first-time buyers and those looking to move up to their next home.
Key Requirements & Features
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Minimum credit score: 620 for most conventional loans; 580 for cash-out refinances (though better scores typically unlock lower rates and reduced mortgage insurance costs)
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Down payment: As low as 3% for qualified first-time buyers; otherwise 5% for other borrowers
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Private Mortgage Insurance (PMI): Required if putting down less than 20%, but can be removed once you reach 20% equity, unlike some government-backed loans where mortgage insurance lasts for the life of the loan
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Debt-to-income (DTI) ratio: Generally up to 45-50%, depending on the lender and overall loan profile
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Loan limits: Standard conforming loan limit for Arizona is $832,750 for a single-family home. High-balance conforming loans are available for amounts between $832,751 and $1,249,125, covering higher-cost purchases without requiring a jumbo loan.
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Property types: Primary residences, second homes, and investment properties may all qualify (unlike some government loans restricted to primary residences only)
Who Conventional Loans Are Best For
Conventional loans tend to be the best fit if you:
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Have a credit score of 620 or higher, the stronger your score, the better your rate and terms
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Can put down at least 3-5% and want to avoid the funding fees that come with some government-backed loans
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Plan to buy a second home or investment property, conventional loans allow this, while FHA and VA loans generally don't
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Want the option to remove mortgage insurance once you reach 20% equity, rather than paying it for the life of the loan
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Are a move-up buyer or repeat homeowner with an established credit history and stable income
Not the best fit if: you have a lower credit score, minimal savings for a down payment, or need more flexible qualifying guidelines. In those cases, a government-backed loan (FHA, VA, or USDA) or one of our alternative loan programs may be a better starting point.
Frequently Asked Questions
What credit score do I need for a conventional loan in Arizona?
For most conventional purchase loans, 620 is the typical minimum. If you're doing a cash-out refinance, the minimum is usually 580. In either case, buyers with 700+ scores typically see meaningfully lower rates and cheaper mortgage insurance, it's worth checking where you stand before you start shopping.
How much down payment do I actually need, is 20% required?
No. That's one of the most common myths about conventional loans. Many buyers qualify with as little as 3% down, especially through first-time buyer programs.
When does PMI go away on a conventional loan?
Once your loan balance drops to 80% of your home's original value (20% equity), you can request PMI removal or it's automatically canceled at 78%. This is different from FHA loans, where mortgage insurance can last the life of the loan.
Can I use a conventional loan to buy a rental property or vacation home?
Yes, this is one area where conventional loans are more flexible than government-backed options like FHA or VA, which are largely restricted to primary residences.
What if the home I want costs more than the conventional loan limit?
In Arizona, the standard conforming loan limit is $832,750. If your loan amount falls between $832,751 and $1,249,125, you may qualify for a high-balance conforming loan which offers many of the same benefits as a standard conventional loan, without needing to go the jumbo loan route. We can help you determine which option fits your purchase price.
Should I get a conventional loan or an FHA loan?
It depends on your credit score and down payment savings. (link to FHA page once built)
How do I get started?
As a licensed Arizona mortgage broker, we compare conventional loan offers across our network of lenders, reach out for a free pre-approval consultation.
Not sure a conventional loan is right for you? Explore all our Arizona loan programs to compare your options.
Ready to See Your Options?
Tell us a little about what you’re looking for, and one of our Arizona loan officers will reach out. No pressure, just options.
