Loan Program FAQs: Conventional, FHA, VA, Jumbo

The right program depends on four things: your down payment, your credit score, how your income is documented, and how long you plan to keep the home. Comparing two or three structures side by side is more useful than asking which is 'best.'

A buyer with 20 percent down and strong credit almost always lands on conventional financing. A buyer with limited down payment and a credit score in the 600s may do better with FHA. An eligible veteran with no down payment usually has no better option than VA. A borrower buying above conforming limits in Paradise Valley or North Scottsdale is looking at jumbo.

The useful exercise is a side-by-side comparison of total monthly payment, cash to close, and cost over the period you actually expect to own the home. Jim builds that comparison before you commit to a direction.

Browse loan programs

A conventional loan is any mortgage not insured by a government agency. Down payments start as low as 3 percent for qualifying first-time buyers, and private mortgage insurance can be removed once you reach sufficient equity.

Conventional loans follow guidelines set by Fannie Mae and Freddie Mac. They generally reward stronger credit with better pricing, and they allow mortgage insurance to be cancelled once the loan reaches a defined equity threshold — a meaningful long-term advantage over FHA.

The 3 percent down programs carry income or first-time-buyer conditions. At 5 to 15 percent down, private mortgage insurance applies but is priced by credit score and loan-to-value, so a strong credit profile can make a low-down-payment conventional loan surprisingly competitive.

FHA loans are government-insured, allow down payments as low as 3.5 percent, and are more forgiving on credit and debt-to-income than conventional financing. The trade-off is mortgage insurance that generally stays for the life of the loan.

FHA exists to make homeownership reachable for buyers who do not fit conventional credit boxes. It permits lower scores, higher debt ratios in many cases, and generous treatment of gift funds. FHA loan limits vary by county, and Maricopa County has its own published limit that changes annually.

The cost is two layers of mortgage insurance: an upfront premium usually financed into the loan, and an annual premium collected monthly. On most FHA loans originated today, that annual premium does not fall off with equity — refinancing into a conventional loan later is the usual exit.

For eligible veterans and service members, VA loans allow zero down payment, require no monthly mortgage insurance, and typically price competitively. It is usually the strongest option available when you qualify.

The VA guaranty replaces the role that mortgage insurance plays in other programs, which is why there is no monthly MI even at 100 percent financing. Most borrowers pay a one-time VA funding fee, which can be financed and is waived for veterans receiving compensation for a service-connected disability.

Arizona has a large veteran population, and the Phoenix metro — Luke Air Force Base communities in the West Valley in particular — sees heavy VA volume. Entitlement can also be restored or used a second time in some circumstances, which surprises many veterans who assume it is a one-time benefit.

A jumbo loan is required when the loan amount exceeds the conforming limit for the county. In much of Paradise Valley, North Scottsdale and parts of Arcadia, that threshold is crossed regularly.

Conforming loan limits are set annually and vary by county. Above that limit, the loan is jumbo and is underwritten to the individual investor's guidelines rather than agency guidelines — which typically means more scrutiny of reserves, credit depth and income stability.

Jumbo pricing is competitive and, for strong borrowers, sometimes better than conforming. Because guidelines vary meaningfully between wholesale investors, this is an area where working through a broker with access to multiple sources tends to matter most.

Yes. Self-employed borrowers qualify using tax returns, and when write-offs make tax returns unrepresentative, bank statement and profit-and-loss programs use deposits instead.

The conventional path averages two years of net business income from your returns. That works well for business owners who show strong net income, and poorly for those who legitimately write down income for tax purposes.

When returns understate real cash flow, non-QM options qualify you on 12 or 24 months of business or personal bank deposits, or on a CPA-prepared profit and loss statement. Rates are higher than conventional, but the loan exists — and many owners refinance into conventional financing later once returns support it.

Investment property loans require larger down payments, price higher than owner-occupied loans, and often use the property's rental income rather than your personal income to qualify.

Conventional investor financing typically expects 15 to 25 percent down depending on unit count, with pricing adjustments tied to credit and loan-to-value. Reserves requirements are higher, and existing rental income has to be documented on returns or leases.

DSCR loans take a different approach entirely: qualification is based on whether the property's rent covers the payment, not on your personal debt-to-income. For Phoenix-area investors with multiple properties or complex returns, that structure often unlocks purchases that conventional guidelines would block.

An ARM can make sense when you have a defined horizon shorter than the fixed period — a planned relocation, a career move, or an intent to refinance. If you might keep the home a decade, a fixed rate is usually the safer structure.

Modern ARMs carry a fixed period, then adjust on a schedule with caps limiting how far the rate can move at each adjustment and over the life of the loan. The initial rate is often lower than a comparable fixed rate.

The honest test is whether you can absorb the payment at the maximum adjusted rate. If the answer is no, the savings are not worth the exposure. If you know you are leaving in five years, the math can be genuinely favorable.

No. Builders may offer incentives tied to their preferred lender, but you are legally free to finance with any lender. Compare the incentive against the total cost of the loan before deciding.

New construction is a large share of activity in Buckeye, Queen Creek, Surprise, Goodyear and the Gilbert and Peoria fringes. Builders frequently offer closing cost credits or rate buydowns for using their affiliated lender, and sometimes those incentives are genuinely worth taking.

Sometimes they are offset by a higher rate or higher fees. The way to know is to get an outside quote and compare the Loan Estimates line by line. Jim does that comparison honestly — including telling you when the builder's offer is the better deal.