Mortgage FAQs for Phoenix-area buyers.

Same day in most cases. With your basic documents (W-2s, pay stubs, bank statements, ID) submitted by noon, you can typically have a verified pre-approval letter by end of day. Most banks and credit unions take 3-7 business days for the same outcome.

Pre-qualification is an unverified estimate based on what you tell the lender — takes 5 minutes online and means almost nothing to a seller. Pre-approval is a verified commitment after the lender pulls credit, reviews documents, and runs the file through underwriting. In a competitive market, only pre-approval letters carry weight.

Yes — practically every Arizona seller and listing agent expects a pre-approval letter to accompany an offer. Without one, your offer typically gets passed over for buyers who have one. The Phoenix and Scottsdale markets move too fast to start the financing conversation after going under contract.

It causes a small, temporary dip — typically 5-10 points from a single hard credit pull. Multiple mortgage inquiries within a 14-45 day window count as one inquiry under FICO scoring rules, so shopping with several lenders won't multiply the impact.

Typically 60 to 90 days. The credit pull is good for 120 days, but income and asset documents need to be refreshed if you take longer than that. We update the letter as needed at no charge.

Yes. Self-employed borrowers typically need 2 years of personal and business tax returns, a year-to-date P&L, and business bank statements. Bank statement loans are an alternative if your tax returns understate your real income — these qualify on 12-24 months of deposits instead of returns.

It varies by program: VA and USDA allow 0% down, FHA needs 3.5%, conventional accepts 3-5% (5% if not first-time), and jumbo typically wants 10-20%. Arizona Home Plus offers down payment assistance up to 5% for first-time buyers who meet income limits.

Yes — most loan programs allow gift funds from family members, employers, charitable organizations, or government programs. The donor must sign a gift letter (no expectation of repayment) and you'll need a paper trail showing the funds came from their account into yours.

Closing costs in Arizona typically run 2-3% of the purchase price — meaning $8,000-$12,000 on a $400,000 home. This includes lender fees (origination, underwriting, appraisal), title and escrow fees, prepaid taxes and insurance, and recording fees. We provide a Loan Estimate within 3 days of application showing every line item.

PMI (Private Mortgage Insurance) is required on conventional loans when your down payment is below 20%. It protects the lender if you default. Typically 0.3-1.5% of the loan amount per year, paid monthly. It can be removed at 80% LTV by request, and auto-removes at 78% LTV by federal law.

Three main options: (1) put 20% down, (2) use a piggyback structure (80% first + 10% second + 10% down), or (3) accept lender-paid PMI in exchange for a slightly higher rate. VA loans never have PMI; FHA has MIP but with different rules.

Yes, within program-specific limits. Conventional caps seller credits at 3% (under 10% down), 6% (10-25% down), or 9% (25%+ down). FHA and VA allow up to 6%. Investment properties are limited to 2%. Seller credits can substantially reduce your cash-to-close.

Minimums vary by program: FHA can go to 580 with 3.5% down (500 with 10% down), VA typically wants 580-620, conventional usually wants 620-640, and jumbo typically requires 700+. Better pricing kicks in at 740+ across all programs.

DTI is your total monthly debt obligations divided by your gross monthly income. Lenders look at front-end (housing only) and back-end (all debt). Most conventional loans cap back-end DTI at 43-50%; FHA can go to 56.99% with compensating factors. The single biggest constraint on how much you can borrow.

Yes — FHA loans accept 580 credit scores with 3.5% down. Some lenders go below 580 down to 500 with 10% down. Your rate will be higher than a 740-score borrower's, but home ownership is fully accessible at 580.

Open collections under $2,000 typically don't need to be paid off for FHA or conventional. Larger collections may need to be paid or settled. Judgments must usually be satisfied or in a structured payment plan. Each situation has a path forward — these aren't automatic disqualifiers.

Yes — your monthly student loan payment counts toward DTI. Even if you're on income-driven repayment with a $0 payment, conventional and FHA may impute a payment of 0.5-1% of the loan balance. We'll calculate the real impact on your purchasing power before you start house-hunting.

FHA: 3.5% down minimum, 580 credit minimum, more flexible DTI, but mortgage insurance (MIP) is typically permanent. Conventional: 3-5% down, 620+ credit typical, PMI removable at 80% LTV. FHA wins on flexibility; conventional wins on long-term cost if your credit and DTI fit.

Active-duty service members, veterans with 90+ days of wartime or 181+ days of peacetime service, National Guard and Reserve members with 6+ years, and certain surviving spouses. Eligibility is verified via your Certificate of Eligibility (COE), which we can pull during the pre-approval.

A jumbo loan is any mortgage above the conforming loan limit, which is $806,500 in most U.S. counties for 2026 (higher in designated high-cost areas like LA County at $1,089,300). Jumbos typically require 700+ credit, 10-20% down, 6+ months reserves, and full income documentation. Rates are usually within 0.5% of conforming.

A loan that exceeds the standard conforming limit ($806,500 in 2026) but stays within the high-cost area limit (up to $1,209,750). Available only in counties designated high-cost — most California, NYC area, Hawaii. Pricing sits between conforming and jumbo.

Yes — USDA loans are available in eligible rural areas of Arizona, which includes parts of Pinal, Yavapai, Cochise, Mohave, and Navajo counties. Income limits apply (typically 115% of area median). 0% down, low MI, but the area must be USDA-eligible — check the official map or ask us to verify.

A 5/1 ARM has a fixed rate for the first 5 years, then adjusts annually based on a market index plus a margin. The initial rate is typically lower than a 30-year fixed. Makes sense if you plan to sell, refinance, or pay off within 5-7 years — and you can absorb the worst-case adjustment.

A non-QM (non-Qualified Mortgage) loan doesn't meet the federal QM standard — usually because of alternative documentation like bank statements, asset depletion, or DSCR. Higher rates than QM loans, but enables financing for self-employed, complex-income, and investor borrowers.

A qualification method that converts liquid assets (investment accounts, savings, retirement) into qualifying income — typically by dividing the assets by 60-84 months. Useful for high-net-worth borrowers without traditional W-2 income, especially in jumbo lending.

A DSCR (Debt Service Coverage Ratio) loan qualifies an investment property based on its rental income, not the borrower's W-2. The formula: monthly rent divided by monthly PITIA. A DSCR of 1.0 means the property covers itself; 1.2+ is what most lenders prefer. No tax returns or employment verification required.

Yes — DSCR loans don't require W-2s, tax returns, or employment verification. You qualify based on the property's rental income and your credit (typically 660+) and reserves (6+ months PITIA). Available for SFR, 2-4 unit, condos, and short-term rentals.

Conventional investment property loans typically want 20-25% down. DSCR loans usually require 20-25%. The lower end (15%) is occasionally available with strong credit and reserves. Higher down payments often unlock better pricing.

Yes — DSCR loans typically allow LLC closings, and even prefer them for asset protection purposes. Conventional Fannie/Freddie investment loans must close in your personal name, but you can transfer to an LLC after closing (though this triggers due-on-sale clauses in theory — most lenders don't enforce on transfers to single-member LLCs).

Yes — DSCR loans are commonly used for short-term rentals. Some lenders use projected income from AirDNA or similar data sources; others require actual rental history. Sedona, Scottsdale, and Flagstaff are active short-term rental markets we work in regularly.

When the math works. Calculate: closing costs divided by monthly savings = break-even months. If you'll stay in the home longer than break-even, refinancing pays off. Other reasons: dropping PMI, shortening term, switching from ARM to fixed, or pulling cash for renovations or investment.

Total closing costs ÷ monthly P&I savings = break-even months. Example: $4,000 closing costs ÷ $150/month savings = 26.7 months break-even. If you'll own the home another 3+ years, the refi makes sense. We run this on every refi conversation before recommending.

A refinance where you borrow more than you currently owe and take the difference in cash at closing. Limited to 80% LTV on conventional, 80-85% on FHA. Common uses: renovations, debt consolidation, investment capital, or college tuition. Generally tax-deductible if used for home improvement.

You can — but you usually don't have to. On conventional loans, you can request PMI removal at 80% LTV (which can come from paying down or appreciation). It auto-removes at 78% LTV. Refinancing to drop PMI only makes sense if rates have improved enough to cover the closing costs.

15-year loans have lower rates (typically 0.5-0.75% less) but higher monthly payments. You build equity faster and pay far less total interest. 30-year keeps your monthly lower with optional principal payments. The right answer depends on your cash flow stability and goals.

Typically 21-35 days for a standard purchase with full pre-approval already done. The process: contract acceptance → inspection (10 days typical) → appraisal (5-7 days) → underwriting clearance → closing disclosure (3 days minimum) → close. Cash deals can close in 7-14 days; complex jumbos 35-45.

Standard package: 2 years of W-2s or 1099s, 2 years of tax returns, 30 days of recent pay stubs, 2 months of bank statements (all accounts), government ID, current mortgage statement and HOA statement (if applicable). Self-employed: add business returns, YTD P&L, and business bank statements.

The appraisal is an independent valuation the lender orders. If it comes in below your contract price, you have three options: (1) renegotiate the price, (2) bring extra cash to cover the gap, or (3) cancel under the appraisal contingency. We see appraisal issues in less than 10% of Phoenix-area transactions in stable markets.

Underwriting is the lender's process of evaluating your full file and approving (or conditioning) the loan. The underwriter reviews credit, income, assets, debts, and the property itself. Issues conditions you must clear before closing — these can include explaining a deposit, providing an updated paystub, or fixing a title issue.

The Closing Disclosure is a 5-page federal form itemizing every cost in your loan — final rate, payment, closing costs, escrows. By law, the lender must deliver it at least 3 business days before closing. Compare it line-by-line against your Loan Estimate; significant changes can trigger a new 3-day waiting period.

Arizona property tax is based on assessed value (not market value), which is typically lower than what you paid. The effective rate averages 0.6% statewide — well below the national 1.1%. Maricopa County typical effective rate is 0.55-0.75%. Your specific rate depends on city, school district, and special assessments.

Arizona Home Plus provides down payment assistance up to 5% of the loan amount for low- and moderate-income buyers. Available statewide for primary residences only. Must use an approved lender (we are one) and meet income limits. The assistance is structured as a forgivable second lien.

Not in your escrow — but yes in your DTI calculation. HOA dues are paid directly by you to the HOA, not collected by the lender. However, lenders include HOA in your debt-to-income, which means a $400/month HOA reduces your purchasing power by roughly $60-75k.

Some — flooding, wind damage, and hail can drive insurance pricing in specific zip codes. Most of metro Phoenix is in low flood-risk zones, so flood insurance isn't typically required. If your property is in or near a wash, you'll want to verify the FEMA flood zone before close.

Yes — but check the rules. Inside Sedona city limits, short-term rentals are restricted to grandfathered properties. Outside city limits (Big Park, Village of Oak Creek), short-term rentals are widely permitted. DSCR loans work well for STR purchases — some lenders use AirDNA projections for qualifying income.

Conventional path: 2 years of personal and business tax returns, plus YTD P&L and business bank statements. Lenders calculate qualifying income from your net (after deductions) — which often understates your real cash flow. Bank statement loans solve this by qualifying on 12-24 months of deposits instead of returns.

A non-QM loan that uses 12 or 24 months of business or personal bank statements as proof of income, instead of tax returns. Built for self-employed borrowers, business owners, and 1099 earners with strong cash flow but heavy write-offs. Typical rate premium: 0.5-1.5% above conventional.

For conventional and FHA: typically yes, with limited exceptions. Some lenders accept 1 year of self-employment if you have a 2-year history in the same field as a W-2 employee before going self-employed. Bank statement loans often accept just 1-2 years of self-employment.

Mortgage interest is paid in arrears, so your first payment is typically due about 30-60 days after closing. Example: close on July 15, first payment usually due September 1. The exact date is on your Closing Disclosure and your servicer will send a welcome packet within 2-3 weeks of close.

Yes. On conventional loans, you can request PMI removal once you hit 80% LTV — either by paying down principal or by an appreciation-based new appraisal. PMI auto-removes at 78% LTV by federal law. FHA's MIP is typically permanent unless you refinance into a conventional loan.

Your loan terms (rate, payment, term) don't change — only the company collecting your payment changes. You'll receive a Notice of Servicing Transfer at least 15 days in advance with the new servicer's information. Federal law gives you a 60-day grace period to send payment to the wrong servicer without penalty.

Yes, with the right structure. Common approaches: (1) sale contingency on the new home, (2) bridge loan secured by the existing home, (3) HELOC on the existing home for the down payment, (4) close on the new home using investment-property guidelines temporarily. We map this with your agent before you make an offer.