Conventional Loans

One-line summary: Standard conforming mortgage loans backed by Fannie Mae or Freddie Mac, the most common home loan in the U.S., with competitive rates, flexible terms, and the option to drop mortgage insurance once you reach 20% equity.

Best for

Borrowers with credit scores of 620 or higher, stable documented income, and at least 3–5% down available. The default option for most homebuyers, the program to beat for borrowers who fit conventional qualifying.

Key terms (typical)

Attribute	Typical Range
Eligible properties	1–4 unit primary residences, second homes, or investment properties
Down payment	As low as 3% (first-time buyers) or 5% (otherwise); 20% to avoid PMI
Credit score	620 absolute conforming minimum (best tier pricing triggers at 740+)
Loan limits	Baseline conforming limit is $832,750 statewide across all Texas counties
Mortgage insurance	PMI required below 20% equity; cancellable at 20%
Term	10, 15, 20, 25, or 30 years fixed; ARM options available
Debt-to-income	Up to 45–50% with strong compensating factors

Why borrowers choose this program

• Best rates for qualified borrowers. Conventional pricing is typically the most competitive for borrowers with strong credit and full documentation.
• PMI is cancellable. Unlike FHA, conventional mortgage insurance drops off automatically at 22% equity (or earlier on request at 20%), reducing monthly payment over time.
• Property type flexibility. Conventional can finance primary residences, second homes, and investment properties. FHA, VA, and USDA cannot.
• Loan amount flexibility. Loan limits are higher than FHA in most areas; jumbo programs pick up where conventional ends.
• No upfront fee. Unlike FHA and VA, conventional has no upfront funding or insurance fee added to the loan.

Considerations

• Stricter qualifying than government programs. Conventional underwriting requires stronger credit, lower DTI, and full income documentation. Borrowers who don’t fit may need FHA, non-QM, or another alternative.
• Down payment matters more. Below 20% means PMI; below 5% closes off most conventional options. Government programs typically allow lower down payments.
• Property condition matters. Appraisals can flag issues that need to be addressed before closing, though conventional is generally more flexible than FHA/VA on property condition.