What is a Conventional Mortgage?

Unlike FHA or VA mortgage loans, conventional mortgage loans are not insured against losses by the U.S. Government. Rather, conventional mortgage loans are underwritten based on guidelines issued by the Federal National Mortgage Association, also known as Fannie Mae, and the Federal Home Loan Mortgage Corporation, also known as Freddie Mac.

Conventional Cash-Out Refinance

A conventional cash-out refinance is for homeowners that are looking to refinance their existing mortgage while also converting some of the existing equity in the home into cash.

Conventional Cash-Out Refinance Basics

  • Maximum LTV 95%.
  • Borrowers must meet lender credit and DTI requirements.
  • Current appraised value is used to determine maximum loan amount.
  • Interest rates tend to be slightly higher than those offered on rate/term refinance mortgage
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Conventional Rate/Term Refinance

A conventional rate/term refinance mortgage loan is for homeowners that are looking to refinance their existing mortgage in order to take advantage of lower interest rates, a lower payment, or to shorten the term of their mortgage loan.

Conventional Rate/Term Basics

  • Maximum LTV 95%.
  • Borrowers must meet lender credit and DTI requirements.
  • Current appraised value is used to determine maximum loan amount.
  • Interest rates tend to be slightly lower than those offered on cash-out refinance mortgage loans.

What are the benefits of a Conventional Mortgage?

What are some of the requirements for a conventional mortgage?

What is Private Mortgage Insurance?

Private mortgage insurance (PMI) is a policy that protects lenders against losses that result from defaults on home mortgages and is required on every conventional mortgage loan with an LTV of 80% or higher. Unlike FHA mortgage loans, the amount of the monthly mortgage insurance payment is not based on a percentage of the loan amount but rather is determined by a private mortgage insurance underwriter. The private mortgage insurance underwriter will review your credit score, LTV, and DTI in order to determine the total monthly mortgage insurance payment.

Under what circumstances will I be required to pay PMI?

Private mortgage insurance is required on any conventional mortgage loan with an LTV of 80% or higher.

How long would I have to pay PMI?

Once a borrower’s mortgage loan balance reaches 80% or less of the current value of their home, they can request that the PMI component of their monthly payment be removed. Provided that the value of your home can be confirmed, the PMI Company will remove the PMI requirement from your loan.

Can I get rid of the PMI if I refinance?

Yes,but only if the LTV on your new mortgage loan were 80% or less.

What is the maximum loan amount for a Conventional mortgage?

The maximum loan amount for a conventional mortgage varies by county and property type. The current maximum FHA loan amounts for the state of Arizona are shown below.

County
Single FamilyDuplexTri-plexFour-plex
Apache$417,000$533,850$645,300$801,950
Cochise$417,000$533,850$645,300$801,950
Coconino$417,000$533,850$645,300$801,950
Gila$417,000$533,850$645,300$801,950
Graham$417,000$533,850$645,300$801,950
Greenlee$417,000$533,850$645,300$801,950
La Paz$417,000$533,850$645,300$801,950
Maricopa$417,000$533,850$645,300$801,950
Mohave$417,000$533,850$645,300$801,950
Navajo$417,000$533,850$645,300$801,950
Pima$417,000$533,850$645,300$801,950
Pinal$417,000$533,850$645,300$801,950
Santa Cruz$417,000$533,850$645,300$801,950
Yavapai$417,000$533,850$645,300$801,950
Yuma$417,000$533,850$645,300$801,950