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Texas Conventional Home Loans
Who they’re for: Conventional mortgages are ideal for borrowers with good or excellent credit, and offer rates based on credit. These are conforming loans which have different criteria from FHA, USDA, and VA home loans in Texas. The conventional home loan limits are up to $424,100, but high limits can be reached by combining them with a second lien, provided the minimum investment is still meet.
How they work: Conventional mortgages are “plain vanilla” home loans. They follow fairly conservative guidelines for:
- Borrower credit scores.
- Minimum down payments.
- Debt-to-income ratios.
What’s good: Conventional mortgages generally pose fewer hurdles than Federal Housing Administration, US Department of Agriculture, or Veterans Affairs mortgages, which may take longer to process.
What’s not as good: You’ll need stronger credit to qualify for the best interest rates.
More About Conventional Mortgages: A conventional mortgage is a loan guaranteed by either Fannie Mae or Freddie Mac (unlike an FHA loan which is guaranteed by HUD, or a VA loan which is guaranteed by the Veterans Administration.
Because these loans have more options and flexibility, they are a little more difficult to qualify for. Several factors will determine whether you qualify for a conventional home loan: financial history, income, credit score, down payment, and the price of the home. You will be required to provide proof of income, and the lender will check your credit score to determine best loan options.Your credit report will tell the lender several things, including your debt-to-income ratio and your payment history. A history of late or missed payments and a high debt-to-income ratio will make it more difficult to get conventional approval.
Conventional home loans typically offer better terms with lower mortgage insurance costs and rates based on credit rating. Additionally, conventional home loans offer the ability for borrowers to finance multiple properties including second homes as well as investment properties. The amount you want to finance may play a role in whether you get financing. Because many mortgage companies choose to sell loans to Freddie Mac or Fannie Mae on the secondary market, they must make sure the loan conforms to their guidelines. Still have questions about Texas Home Loans and available options? Give us a call today to speak to one of our local Texas conventional mortgage experts!
- Down Payment
- 3% (Restrictions Apply)
- 5% to 20% is Typical
- Up to $453,100 Loan Value
- Lower Mortgage Insurance
- Primary, Second Homes, and Investment Properties
- Lower Rates and Better Terms
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More About Conventional Loans
The qualifying criteria for a government-backed loan and a conventional loan aren’t much different, but conventional Texas home loans are likely to be harder to get and more stringent on qualifications. The standard down payment for a conventional loan is 20 percent of the cost of the home. If you are unable to put down this amount, there are many ways around the requirement. One is purchasing mortgage insurance, which is tacked onto your monthly payment until the amount you owe on the home is less than 80 percent. Another is to choose a loan program that requires a smaller down payment or no down payment at all. You will probably have to have a great credit score to qualify for such a loan. But putting down a sizable down payment is the best way to create equity in your home.