Any Transferable Interest Qualifies
This statute sets a broad rule: if you can legally transfer an interest in real estate, you can mortgage it. That includes full ownership, partial interests, life estates, and other recognized property rights. The key requirement is that the interest must be capable of being transferred.
Any interest in real property capable of being transferred may be mortgaged.
A.R.S. § 33-701(A)This flexibility matters for estate planning. Families hold property in many different ways. Whether you own a home outright, hold a fractional interest with siblings, or have a life estate, the law allows that interest to serve as collateral for a loan. This applies to conventional loans, FHA loans, and other mortgage types.
Formal Requirements for a Valid Mortgage
A mortgage is not a casual agreement. Arizona requires it to be in writing and executed with the same formalities as a deed. It may also be acknowledged, certified, and recorded, just like a property grant. These legal requirements protect both the borrower and the lender.
A mortgage may be created, renewed or extended only by writing executed with the formalities required of a grant of real property, and may be acknowledged, certified and recorded in like manner and with like effect.
A.R.S. § 33-701(B)When a mortgage is recorded, it becomes part of the public record. For families transferring property into a living trust, understanding mortgage formalities is essential. A mortgage on trust-held property must still follow these same written requirements.
Interest rates, closing costs, and the mortgage insurance premium vary depending on whether you choose a conventional mortgage or an FHA loan. Lenders may also look at your minimum credit score when deciding loan terms. None of those factors change the basic legal requirements for a valid mortgage under this statute.
If you refinance or take out a new loan, the new mortgage must meet the same recording standards. A conventional loan and an FHA loan both require proper documentation. Keeping your mortgage records organized helps your family avoid problems during estate settlement.