Financing, In Plain English
Before you tour a single house, know what you can actually borrow and what it really costs. Here's the honest breakdown of every major financing path in the Phoenix market — what it's for, and who it's wrong for.
Loan Types
A popular option for buyers who need low or $0 down payments, have lower credit scores, or served in the military. Includes down payment assistance programs and grants.
Best for: first-time buyers, veterans, and buyers short on down payment.
Watch out for: mortgage insurance, property condition requirements, and appraisal standards that rule out heavy fixers.
A popular option for buyers with solid credit who want competitive rates, flexible terms, and the ability to purchase without government-backed restrictions.
Best for: buyers with good credit and a real down payment.
Watch out for: stricter debt-to-income limits and more documentation than a government loan.
Helps Phoenix homeowners buy their next home before selling their current one — short-term financing that removes the timing stress from a move.
Best for: move-up buyers with real equity who can't make two payments comfortably.
Watch out for: carrying two properties longer than you planned if the first one doesn't sell.
Fast, flexible financing used by investors for fix and flips or short-term purchases when traditional loans aren't an option. Underwrites the deal, not just the borrower.
Best for: flips, distressed property, and closings that must happen in days.
Watch out for: rates and points that make it very expensive to hold. If your project runs long, this is where the profit goes.
Debt Service Coverage Ratio loans qualify the property on its rental income rather than your personal income. Built for investors scaling a portfolio.
Best for: investors with strong properties but complicated tax returns.
Watch out for: required coverage ratios, reserves, and prepayment penalties.
Allows self-employed buyers and entrepreneurs to qualify using income shown on bank statements instead of tax returns — making homeownership accessible when write-offs hide real income.
Best for: business owners, 1099 earners, and the self-employed.
Watch out for: higher rates and larger down payment requirements than conventional.
An IRS rule letting investors defer capital gains taxes on the sale of an investment property by reinvesting the proceeds into another like-kind property — preserving equity and letting wealth compound tax-deferred.
Best for: investors trading up without taking a tax hit.
Watch out for: the 45-day identification and 180-day closing deadlines. They do not bend, and the money must go through a qualified intermediary.
Subject-To and seller-carried notes let a deal work when bank financing won't — existing low-rate debt stays in place, or the seller becomes the bank.
Best for: sellers with little equity, and buyers who need terms over price.
Watch out for: due-on-sale clauses, insurance, and documentation. This is where most people get it wrong. Talk to me before you structure one.
Lending FAQ
It depends on your credit, down payment, income documentation, and whether the property is a primary residence or an investment. A buyer with a 620 score and 3% down is a different conversation than a self-employed investor buying a fourth rental. Talk to a lender before you shop — knowing your real number first changes which houses you should even tour.
No. I'm a licensed Realtor® and investor, not a licensed loan originator. I explain the landscape so you walk into a lender conversation knowing what to ask, then I refer you to lenders I've actually closed with. All terms, rates, and approvals come from the lender.
Conventional lending underwrites you — your income, credit, and debt ratios — at lower rates over 15 to 30 years. Hard money underwrites the property and the deal, funds in days instead of weeks, and costs substantially more in rate and points. Hard money is a tool for speed and for properties conventional lenders won't touch. It is an expensive way to hold anything long term.
A Debt Service Coverage Ratio loan qualifies the property on its own rental income instead of your personal income. If the rent covers the payment at the lender's required ratio, it can work — which is why investors with strong portfolios but complicated tax returns use them.
A 1031 exchange is an IRS rule that lets real estate investors defer capital gains taxes on the sale of an investment property by reinvesting the proceeds into another like-kind property. The deadlines are strict and unforgiving, and the funds must go through a qualified intermediary — never your own bank account. Talk to your CPA and a qualified intermediary before you list, not after.
Disclosure: Ashlee Croft is a licensed Arizona Realtor® and real estate investor, not a licensed mortgage loan originator. Nothing here is a loan offer, a commitment to lend, or tax advice. Rates, terms, and approval come from your lender. Consult your CPA before acting on any tax strategy.
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Whether you're selling fast for cash, dispo'ing a contract, or putting capital to work — let's talk. No pressure, no pitch.