Arizona family
What's an FHA Mortgage?

The Federal Housing Administration (FHA) was a creation of the National Housing Act of 1934. The intent of this legislation was to advance home ownership and extend families with refinance possibilities not possible during the great depression.

FHA does not directly lend to prospective Arizona home buyers, but works with approved mortgage companies to provide FHA home loans. Read More

The Federal Housing Administration insures lenders against loss in the event of foreclosure. There are maximum FHA mortgage amounts, and the maximum loan amount will deviate from state to state and county to county. You can see the Arizona FHA loan limits on the FHA Loan Page.
  • The minimum down payment for an FHA mortgage is only3.5%.
  • No first time home buyer requirement
  • No early repayment penalty
What's a jumbo mortgage in Arizona?

To understand a jumbo loan, it is important to understand how banks lend money to home buyers. Prior to 1938, prospective home buyers would go to their bank and request a loan to buy a house. The bank examined the buyer’s qualifications (i.e. employment, savings, down payment, etc.) just as banks do today. Then, the board of directors would approve or turn down the buyer’s application. If the bank accepted the application, the bank would use “its money. . . (the depositor’s money)” to pay the seller. The home buyer would then pay off the bank with interest. But as soon as the vault was empty, the bank quit lending money.

Banking was like a waiter with a water pitcher filling up empty drinking glasses around the dining table until the pitcher ran dry. Only after obtaining more deposits could the bank keep loaning money. Prospective home buyers were forced to travel from bank to bank to look for a bank that would provide them loan financing .

So along comes the great depression. Countless number of Americans are unemployed, banks are foreclosing on home owners, and needless to say, banks are reluctant to loan money to anybody, regardless of whether they’re qualified buyers or not.

In response to the lack of lending, the Federal government created the Federal National Mortgage Association (Fannie Mae) that would buy home loans from banks. Here is how it worked.

The bank would examine the borrower’s ability to payback the bank just like before, and if qualified would loan the money to the home buyer. The bank then sells the loan to the federal government . . . and Uncle Sam reimburses the bank with a commission for generating the loan. With this legislation, banks never run out of money, and the bank can lend, lend, lend.

So what is a jumbo loan?
Congress establishes the maximum loan limit that banks can sell to the federal government. Usually, but not always, the maximum mortgage on a one family (one unit) dwelling that Fannie Mae (and it’s sister agency, Freddie Mac) will buy is $417,000. These loans are also known as conventional or conforming loans. Any amount more than this amount is referred to as a jumbo mortgage and Fannie Mae and Freddie Mac are prohibited from buying these loans from the lenders. Therefore, the lender is obligated to lend it’s money to finance the mortgage greater than the county limit. Interest rates are usually greater on jumbo mortgages.

The lending limits differ from state to state and county to county and the total number of living units (i.e. one unit, two units, three units and 4 units). You can see the county lending limits on the Conventional Loan page

House with a sold sign
What is the median home price for Arizona counties?

See the answer on the HUD Median Home Price

What is a HUD home?
If a homeowner who has an HUD insured mortgage loan cannot pay the payments, the lender forecloses on the home (or condo) . HUD reimburses the bank the remaining balance of the loan, and then HUD takes possession of the house. HUD then sells the home at a discount as soon as possible. Read more

What's the HUD median income for Arizona counties?
Find the answer on the HUD MEDIAN INCOME LIMITS

Frequently Asked Questions

Are mortgage rates higher for second homes?
Yes, and the reason is that lenders believe that second home loans are riskier than loans on owner occupied residences. And they’re right. If a borrower is in financial trouble, which loan is he likely to default on, his personal home or his second home?

At what LTV is mortgage insurance required?
For conventional loans, mortgage insurance is required for loans with less than a 20% down payment. FHA, USDA, and VA home loans all require an upfront mortgage insurance premium (service related disabled vets, receiving compensation are exempt). No amount of down payment will waive the mortgage insurance requirement on government loans.

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