Arizona is famous for its dry heat and The Grand Canyon. According to the World Population Review, the state’s population has grown by more than half a million since 2010. This tells us people are buying homes in Arizona, making it a solid investment choice. If you are also drawn to the red rocks and sunshine, keep reading to learn what you need to do to buy a house here. A conventional loan, also known as a conforming loan, might be your best bet.
What Is A Conforming Loan?
A conforming loan is a type of mortgage with terms and conditions that meet the dollar amounts set by the Federal Housing Finance Agency (FHFA) and the funding guidelines of Fannie Mae and Freddie Mac. They cannot surpass a specific dollar limit, which changes yearly and can vary per state. In 2023, the limit in Arizona is $726,200 and $929,850 for 2-unit properties. This type of loan typically offers a lower interest rate than other mortgages.
Conforming loan requirements
To qualify for a conforming loan, you’ll need a credit score of at least 620, a debt-to-income (DTI) ratio below 50% and a minimum 3% down payment. Your DTI shows how much money you owe each month to how much you earn. In other words, it’s the percentage of your gross monthly income that pays your rent, mortgage, credit cards, debt, and other expenses.
You’ll also need a loan-to-value ratio of 95% for a 1-unit primary residence. This ratio assesses your lending risk before you’re approved for a mortgage.
It’s important to note that private mortgage insurance, also known as PMI, might be required for your conventional loan. Especially if you make a down payment of less than 20% of the home’s purchase price. This kind of insurance protects the lender if you default on your payments. People typically pay for their PMI with a monthly premium.
2023 Arizona Conforming Loan Limits
A loan limit is the maximum amount of cash that a homebuyer can borrow from a lender using a loan. For your reference, we’ve listed the Arizona conforming loan limits for 2023 by county. This information is from the Federal Housing Finance Agency of the U.S. Department of Housing and Urban Development (HUD).
Apache County Conforming Loan Limits
- One-Family: $726,200
- Two-Family: $929,850
- Three-Family: $1,123,900
- Four-Family: $1,396,800
Cochise County Conforming Loan Limits
- One-Family: $726,200
- Two-Family: $929,850
- Three-Family: $1,123,900
- Four-Family: $1,396,800
Coconino County Conforming Loan Limits
- One-Family: $726,200
- Two-Family: $929,850
- Three-Family: $1,123,900
- Four-Family: $1,396,800
Gila County Conforming Loan Limits
- One-Family: $726,200
- Two-Family: $929,850
- Three-Family: $1,123,900
- Four-Family: $1,396,800
Graham County Conforming Loan Limits
- One-Family: $726,200
- Two-Family: $929,850
- Three-Family: $1,123,900
- Four-Family: $1,396,800
Greenlee County Conforming Loan Limits
- One-Family: $726,200
- Two-Family: $929,850
- Three-Family: $1,123,900
- Four-Family: $1,396,800
La Paz County Conforming Loan Limits
- One-Family: $726,200
- Two-Family: $929,850
- Three-Family: $1,123,900
- Four-Family: $1,396,800
Maricopa County Conforming Loan Limits
- One-Family: $726,200
- Two-Family: $929,850
- Three-Family: $1,123,900
- Four-Family: $1,396,800
Mohave County Conforming Loan Limits
- One-Family: $726,200
- Two-Family: $929,850
- Three-Family: $1,123,900
- Four-Family: $1,396,800
Navajo County Conforming Loan Limits
- One-Family: $726,200
- Two-Family: $929,850
- Three-Family: $1,123,900
- Four-Family: $1,396,800
Pima County Conforming Loan Limits
- One-Family: $726,200
- Two-Family: $929,850
- Three-Family: $1,123,900
- Four-Family: $1,396,800
Pinal County Conforming Loan Limits
- One-Family: $726,200
- Two-Family: $929,850
- Three-Family: $1,123,900
- Four-Family: $1,396,800
Santa Cruz County Conforming Loan Limits
- One-Family: $726,200
- Two-Family: $929,850
- Three-Family: $1,123,900
- Four-Family: $1,396,800
Yavapai County Conforming Loan Limits
- One-Family: $726,200
- Two-Family: $929,850
- Three-Family: $1,123,900
- Four-Family: $1,396,800
Yuma County Conforming Loan Limits
- One-Family: $726,200
- Two-Family: $929,850
- Three-Family: $1,123,900
- Four-Family: $1,396,800
Loans that are greater than $726,200 are called “Jumbo” mortgages. They will usually have higher rates than loans at or below the conforming loan limit. These limits, however, do not determine how much money you can borrow. This figure is based on a buyer’s gross monthly income and current credit and debt commitments.
Apply For A Conventional Loan To Help Secure Your Next Home
As you begin to shop around for homes in Arizona, compare prices in all different parts of the state. This will help you decide how much money you will need to borrow. If your loan amount surpasses $726,200, the loan limit set for 2023, you will need to consider a jumbo loan. See what you qualify for by contacting Arizona Central Credit Union. We can help you take the next steps in getting a conventional loan. Plus, we might even take away some of the stress that comes with home buying. Don’t wait to settle into your next dream home.
