Best Mortgage for 2027: Which Loan Fits You (Arizona)

Sal Bossio

7 days ago

6 min read

Updated: 6 days ago

The short answer

There's no single best mortgage for 2027. There's the best one for you. A teacher in Chandler with a 3% down payment, a vet buying in Gilbert, and an investor buying a rental in Mesa should all walk out with different loans.

So here's how I'd think about it, loan by loan. Who each one fits, what's good about it, and the catch nobody mentions until closing. No rate predictions here. Anyone telling you exactly where rates will be next year is guessing.

Conventional loans

Who it fits: People with decent credit, steady income you can document, and some money saved. Not necessarily 20%.

The good: It's the most common loan out there for a reason. Low down payment options exist, and if you put less than 20% down, the mortgage insurance (PMI) can come off once you build enough equity. That's a big deal over the long run.

The catch: Credit matters more here. Lower scores get priced worse, sometimes a lot worse. And there's a cap on how big the loan can be. For 2026 the baseline conforming limit is $832,750 for a one-unit home, and that's the limit in Maricopa County too (FHFA). Go over it and you're in jumbo territory.

FHA loans

Who it fits: First-time buyers, people rebuilding credit, people with higher debt compared to income, or anyone with a thin credit history.

The good: Easier to qualify for. Smaller down payment. More forgiving on credit and debt. Down payment assistance pairs with it often.

The catch: Mortgage insurance. You pay some up front and some every month, and with a small down payment it can stick around for the life of the loan. The only way out is usually a refinance later. FHA also has its own county loan limit, which is lower than the conventional one, so check it before you fall in love with a house. HUD's lookup is here.

VA loans

Who it fits: Veterans, active duty service members, and some surviving spouses who have VA entitlement.

The good: Honestly, it's one of the best loans out there if you qualify. Zero down is possible, there's no monthly mortgage insurance, and the rules are friendly. If you have full entitlement, there's no VA loan limit, as long as you can afford the payment and the appraisal supports the price. You still have to get approved by a lender (VA).

The catch: There's a VA funding fee unless you're exempt (for example, many vets with a service-connected disability rating). The house also has to pass the VA appraisal, which can be picky. And if you've used your entitlement before and still have a VA loan out, your numbers work differently. Ask.

USDA loans

Who it fits: Buyers in eligible rural and some suburban areas who are under the income limit for their area.

The good: Zero down is possible on a primary home.

The catch: Location and income both have to qualify. A lot of the Valley won't. Some outer areas might. Check the address on the USDA eligibility map before you get your hopes up.

DSCR loans (investors)

Who it fits: Real estate investors buying or refinancing rentals, long-term or short-term. Especially self-employed investors whose tax returns look thin.

The good: The loan qualifies off the property's rent, not your personal income. No tax returns, no pay stubs. You can close in an LLC. You can keep buying without hitting a loan count wall the way you can with conventional.

The catch: It's an investor loan, so expect a bigger down payment, higher pricing than a primary home loan, and reserves. Many come with a prepayment penalty, so know your exit before you sign. And the rent has to actually cover the payment. If the deal only works when rates drop, it's not a deal.

Bank statement loans (self-employed)

Who it fits: Business owners, 1099 earners, and gig workers who make good money but write off a lot at tax time.

The good: The lender uses your bank deposits to figure income instead of your tax returns. For a lot of self-employed people, that's the difference between a yes and a no.

The catch: It's a non-QM loan, so pricing and down payment are usually higher than conventional. Most programs want a solid history of self-employment, and the lender will pick through your statements. Transfers between your own accounts don't count as income.

Asset depletion loans

Who it fits: Retirees, people living off investments, or anyone with a lot in the bank but not much regular income.

The good: The lender turns your eligible assets into a monthly "income" number on paper. You don't need a paycheck to qualify.

The catch: You need real assets, and not all of them count the same. Retirement accounts may be discounted. Pricing is usually higher than a standard loan. Guidelines vary a lot from lender to lender.

HELOCs and second mortgages

Who it fits: Homeowners who already have a low rate on their first mortgage and want to tap equity for a remodel, debt payoff, or a down payment on another property.

The good: You keep your first mortgage untouched. A HELOC lets you draw what you need, when you need it, and usually costs less up front than a full refinance.

The catch: Most HELOCs have a variable rate, so the payment can move. When the draw period ends, payments can jump. And it's secured by your house. A cash-out refinance can make more sense if you need one big lump sum and want one fixed payment, but it replaces your whole first mortgage, so do the math on what you're giving up.

How to pick your loan in 2027

Start with you, not the loan. Credit, income type (W-2, self-employed, retired), savings, and how long you'll keep the place.
Primary home or investment? That one answer cuts the list in half.
Check what you're eligible for first. VA if you served. USDA if the address qualifies. Down payment assistance if you're a first-time buyer. Arizona has down payment help, but the programs change and the money runs out. The Arizona Department of Housing's programs open and close as funding allows, so check what's actually available before you count on it.
Compare the total cost, not just the rate. Mortgage insurance, fees, points, prepayment penalties. Ask for a Loan Estimate and read it line by line.
Get fully approved before you shop. Not a quick prequal. A real approval makes your offer look a lot better to a seller.

2027 loan limits (coming soon)

FHFA announces the official 2027 conforming loan limits in late 2026, usually late November. HUD's 2027 FHA limits follow. Some lenders have posted their own early "2027" numbers, but those aren't official.

FHFA usually announces the new conforming limits in late November, and HUD follows with FHA limits. As soon as the official 2027 Maricopa County numbers are out, we'll update them right here.

FAQ

What is the best mortgage for 2027?

It depends on your situation. Conventional usually fits buyers with good credit and documented income. FHA fits buyers with lower credit or a smaller down payment. VA is usually the best deal for eligible veterans. Investors often use DSCR loans, and self-employed buyers often use bank statement loans.

What is the best mortgage for a first-time buyer in Arizona in 2027?

Most first-time buyers end up in FHA or conventional, often paired with down payment assistance. Veterans should look at VA first. Program funding and rules change, so confirm what's available when you apply.

Is FHA or conventional better in 2027?

FHA is easier to qualify for but its mortgage insurance can last the life of the loan. Conventional mortgage insurance can come off once you have enough equity. If your credit is solid, conventional often costs less over time. If it isn't, FHA may be the way in.

Can I get a mortgage if I'm self-employed?

Yes. You can use a regular loan with tax returns, or a bank statement loan that uses your deposits as income. If you write off a lot, the bank statement route is often the one that works.

What is a DSCR loan?

A DSCR loan is an investment property loan that qualifies based on whether the property's rent covers the mortgage payment, not your personal income. It's common for Arizona rental and short-term rental investors.

When will the 2027 loan limits be announced?

FHFA usually announces the next year's conforming loan limits in late November, and HUD announces FHA limits after that. They take effect January 1.