A Conventional loan is a mortgage not insured or guaranteed by the government (like FHA, VA, or USDA loans).
Instead, it’s backed by private lenders and often follows guidelines set by Fannie Mae and Freddie Mac.
Conventional loans are the most common type of mortgage in Texas and are ideal for borrowers with stable income, good credit, and at least 3%–5% down.

You may qualify if you:

Have a minimum credit score of 620 or higher

Can provide a down payment of at least 3%

Maintain a debt-to-income (DTI) ratio below 45% (50% in some cases)

Have steady income and employment history

Plan to purchase a primary residence, second home, or investment property

Down Payment: Conventional Loan is 3% (first-time buyers) vs. 3.5% for an FHA Loan.

Credit Score Minimum: Conventional Loan is 620 vs. 580 for an FHA Loan.

Mortgage Insurance: Conventional Loan mortgage insurance can be removed at 20% equity, while FHA mortgage insurance is permanent for most loans.

Loan Type: A Conventional Loan is backed by Fannie Mae/Freddie Mac, while an FHA Loan is insured by HUD/FHA.

Property Use: A Conventional Loan can be used for primary, secondary, or investment properties, while an FHA Loan is for primary use only.
A Conventional loan typically saves you money long-term since you can cancel mortgage insurance once you’ve built equity.

Down payment minimums vary by borrower type:

3% down for first-time homebuyers (HomeReady® or Home Possible® programs)

5% down for repeat buyers

10%+ down for second homes

15%–25% down for investment properties

Higher down payments can reduce your monthly mortgage insurance or eliminate it altogether.

For 2025, the conforming loan limit for all counties in Texas is:

$832,750 for a one-unit property

Higher limits apply for multi-unit homes (up to 4 units). Since there are no designated high-cost areas in Texas, any loan amount above this limit is considered a Jumbo loan.

A 620 FICO is the minimum for most lenders.
However, scores of 740 or higher generally qualify for the best rates and lowest PMI costs.
Strong income, low DTI, and a higher down payment can offset a slightly lower score.

Low down payment options (as little as 3%)

PMI that can be removed once you reach 20% equity

Available for all property types — including second homes and investments

Competitive rates for strong-credit borrowers

Flexible loan terms (10–30 years)

Streamlined refinances available through Fannie Mae and Freddie Mac

Yes, if your down payment is less than 20%, you’ll pay Private Mortgage Insurance (PMI).
However, PMI can be removed once your loan-to-value (LTV) reaches 80%, or automatically at 78% by law.
This makes Conventional loans a better long-term value compared to FHA loans.

Conventional loan rates vary based on:

Credit score

Down payment size

Loan term (15-year vs. 30-year)

Property type and occupancy

Generally, borrowers with excellent credit and 20% down receive the most competitive interest rates.

Conventional loans are available for:

Single-family homes

Condos and townhomes

2–4 unit properties

New construction homes

Second homes or vacation properties

Investment properties

Yes, Conventional loans are eligible for:

Rate-and-term refinances (to lower your rate or payment)

Cash-out refinances (to access home equity)

Streamlined refinances for eligible borrowers under Fannie Mae or Freddie Mac guidelines

Most Conventional lenders allow a DTI up to 45%, but some will go as high as 50% with strong credit, reserves, or other compensating factors.

Yes, gift funds from family or employers are permitted, especially for first-time buyers.
A gift letter and proof of transfer are typically required for documentation.

Standard Conventional loans do not have income limits.
However, income caps apply to HomeReady® and Home Possible® programs, which are designed for moderate-income borrowers.

Yes — most condos are eligible if the project is warrantable under Fannie Mae or Freddie Mac rules.
You’ll need to verify that the HOA is financially stable, has adequate reserves, and meets occupancy requirements.
For condos that don’t meet these standards, Non-Warrantable Condo Loans are available under Non-QM programs.

Typically 25–35 days, depending on appraisal timing and documentation.
Working with a local Texas lender, like myself, helps speed up the process through faster verification and local appraisal partners.