Home Purchase Loans In Glendale

Home buyers in Glendale, Arizona, should anticipate a competitive atmosphere in the present housing market. Glendale homes typically receive three offers and sell in around 34 days. Glendale’s median house sale price increased 3.6% over the previous year. Furthermore, Glendale’s median sale price per square foot has increased by 4.6% from last year. As a result, potential house buyers should brace themselves for a fast-paced market with continually rising prices.

Purchase Loan Programs in Glendale

Multiple mortgage options are available to Glendale home buyers to finance their home purchase. The following are the most commonly observed:

• Conventional Loans

In Glendale, Arizona, a conventional mortgage is a home loan not guaranteed or insured by any government agency. Private lenders such as banks, credit unions, and mortgage companies often offer this type of mortgage. Conventional loans are frequently more challenging than government-insured ones since they typically need better credit scores, bigger down payments, and lower debt-to-income ratios. Conventional loans can either be conforming or non-conforming.

Conforming loans adhere to these GSE rules, which include specific loan size, borrower credit score, down payment, debt-to-income ratio, and loan-to-value ratio requirements. The most prominent feature of a conforming loan is its annual loan limit adjustment.

The 2023 conforming loan limits in Glendale, Maricopa County, are $726,200 for a single-family residence, $929,850 for a duplex, $1,123,900 for a triplex, and $1,396,800 for a quadplex.

Non-conforming loans, on the other hand, do not follow GSE requirements. Loans that exceed the conforming loan limit are called jumbo loans. They often require higher credit scores and bigger down payments than conforming loans. Non-conforming loans usually have higher interest rates due to the higher risk involved. Non-conforming loan lenders are not limited by GSE restrictions, providing them greater latitude in defining their criteria, which can benefit certain borrowers with specific financial conditions.

• FHA Loans

An FHA loan is a mortgage insured by the Federal Housing Administration (FHA), a government agency of the United States Department of Housing and Urban Development (HUD). FHA loans encourage homeownership among people who might not qualify for a traditional loan. These loans are popular because of their more relaxed lending standards and lower down payment requirements than conventional mortgages, particularly among first-time homeowners in regions such as Glendale, Arizona.

The 2023 FHA loan limits in Glendale, Maricopa County, are $530,150 for a one-unit property, $678,700 for a duplex, $820,350 for a triplex, and $1,019,550 for a four-plex.

FHA loans are often more accessible to applicants with lower credit scores and smaller down payment savings, but they all require mortgage insurance, regardless of the amount of the down payment. Conventional loans, while often demanding better credit scores and larger down payments, provide flexibility and potentially lower rates for borrowers who meet their more severe requirements.

• VA Loans

A VA home loan, a vital component of the U.S. Department of Veterans Affairs’ housing-related programs, is a distinct and advantageous choice for military service members, veterans, and their surviving spouses. This loan is intended to encourage homeownership by providing attractive conditions to eligible individuals who have served or are currently serving in the United States Armed Forces. Unlike conventional loans, VA loans have no down payment requirement and do not require private mortgage insurance (PMI). They also have competitive mortgage rates, low closing costs, and no prepayment penalties. VA loans symbolize the federal government’s commitment to assisting military members in reaching homeownership and recognizing their service to the country.

Eligibility for a VA home loan is generally determined by service in the United States Armed Forces, with regulations defining the length and character of service. Active duty military members typically become eligible after six months of service. Still, members of the National Guard and Reserves typically require six years unless summoned to active duty, which may result in quicker eligibility. Veterans must have received a discharge under circumstances other than dishonorable. Unremarried spouses of service members who died in the line of duty or had a service-connected disability are also eligible. Applicants must receive a Certificate of Eligibility (COE) from the Department of Veterans Affairs to show eligibility. While the VA does not need precise credit scores or income levels, private lenders that make the loans may have their own requirements in these areas.

• USDA Loans

A USDA home loan is a mortgage program supported by the United States Department of Agriculture that promotes homeownership in rural and some suburban regions. This initiative intends to support rural development by supporting low- to moderate-income homebuyers in finding affordable homes. USDA loans are renowned for providing 100% financing, which means no down payment is necessary, as well as lower interest rates and mortgage insurance fees than conventional loans. These loans are intended for anyone who wants to buy a property in a rural area approved by the USDA, and they are incredibly tempting to first-time homebuyers or those with little funds.

USDA home loans are classified as either direct or guaranteed. The USDA Direct Loan is intended for individuals with low and very low incomes. These USDA loans are offered directly and frequently have interest rates as low as 1% with subsidies. Direct loan applicants must meet specific income criteria that vary depending on geography and household size, and they are subject to more strict income and property type qualifying standards. On the other hand, USDA Guaranteed Loans are designed for middle-income homebuyers. Unlike Direct Loans, private lenders offer guaranteed loans, with the USDA guaranteeing a portion of the loan. This guarantee lowers the risk for lenders, allowing them to provide better loan terms. Guaranteed loans have higher income limits than Direct loans and are available to a broader range of prospective purchasers. Both loan types require that the property be located in an eligible rural area and serve as the borrower’s principal residence.

• Jumbo Loans

A jumbo mortgage is financing that exceeds the conforming loan restrictions imposed by the Federal Housing Finance Agency (FHFA). These loans purchase high-value properties if the required amount exceeds the maximum conforming loan limit. In 2023, the loan limit in Glendale is $726,200, with higher limits in high-cost areas. Because jumbo loans are not backed by government-sponsored enterprises such as Fannie Mae or Freddie Mac, underwriting standards are more stringent. They are most commonly employed in high-priced real estate markets or for luxury houses that demand more significant loan amounts.

Because jumbo loans carry a higher risk than regular conforming loans, the eligibility standards for jumbo loans are stricter. To be eligible for a jumbo loan, applicants typically need a high credit score, usually 700 or over. Lenders may have different requirements for specific scores. Lenders typically want a lower DTI of less than 43%. This stipulation guarantees that borrowers possess adequate income to oversee loan repayments.

 Jumbo loans frequently require more significant down payments, usually equal to 20% or more of the house’s asking price. This larger down payment is a risk control strategy to give lenders more assurance. To be eligible for a jumbo loan, borrowers typically need sizeable cash reserves. Proof of sufficient reserves to repay several months’ worth of mortgage payments—or even up to a year’s worth—may be required by lenders.

Because jumbo loans carry more risk than regular loans, their interest rates may be higher. However, these rates depend on the state of the market and the borrower’s credit.

• Construction Loans

A construction home loan is financing geared toward people who want to build a new home rather than buy an existing one. These loans cover the costs of acquiring land and building a house. Instead of standard mortgages, which give a single sum for purchasing an existing home, construction loans release funds in phases according to various milestones in the construction process. This stepwise strategy provides the lender with financial certainty by ensuring that funds are handled responsibly and construction proceeds as anticipated. Borrowers frequently transfer to a regular mortgage once construction is completed, and interest is typically levied only on the portion of the loan granted.

Construction home loans are classified into two types: two-time close and one-time close. A two-time close construction loan consists of two independent loans and two sets of loan fees – one for the construction period and one for the mortgage phase. The construction is initially financed using a short-term loan. When the home is finished, the borrower must arrange a new loan, a regular mortgage, to pay off the construction loan. This approach entails two closings, two sets of expenses, and the possibility of changing financial conditions affecting the approval of the second loan.

On the other hand, a one-time close construction loan streamlines the procedure by integrating the construction loan and the mortgage into a single loan. This means there is only one application process, a single set of payments, and a single closing. The loan converts from construction financing to a regular mortgage without the requirement for a second closing. This method provides the simplicity of a single set of paperwork and closing costs, as well as the security of locking in the mortgage rate at the start of the project, protecting against potential rate hikes throughout construction.

Apply for a Home Purchase Loan in Glendale

Capital Home Mortgage provides numerous advantages for homebuyers in the state of Arizona. Capital Home Mortgage assists homebuyers in navigating a challenging mortgage market characterized by historically elevated interest rates. The company specializes in identifying optimal interest rates and conditions, resulting in substantial cost savings of thousands of dollars throughout the loan. Our services encompass loan pre-approval, tailored choices tailored to individual needs, and assistance assessing interest rates and terms for home purchase loans. 

Call (480) 360-6650 to speak with a Glendale Home Loan Specialist.