PMI is removable
Once you reach 80% loan-to-value (by paydown or appraisal), PMI drops off. Unlike FHA MIP, you do not pay it for the life of the loan.
Conventional loans in Texas.
The flexible standard. As little as 3% down with 620+ FICO — and PMI you can drop, not pay forever.
- 3% down with 620+ FICO (first-time buyers)
- PMI removable at 80% LTV
- Up to $766,550 conforming in most Texas counties
A privately-funded mortgage backed by Fannie Mae or Freddie Mac.
A conventional loan is any mortgage not insured by the federal government — meaning not FHA, VA, or USDA. The vast majority of conventional loans in the United States are written to standards set by Fannie Mae or Freddie Mac (collectively, the Government-Sponsored Enterprises) so they can be sold on the secondary market. That standardization is why conventional loans tend to have the lowest long-term cost for borrowers with strong credit and stable income.
How a conventional loan goes from inquiry to keys.
- 01
Soft-pull pre-qualification
We pull a soft credit report — no FICO impact — and run quick income and assets math. You leave with a realistic price range and the right program shortlist.
- 02
Full pre-approval
We collect pay stubs, W-2s, two years of tax returns, and bank statements. We run the file through automated underwriting (Desktop Underwriter or Loan Product Advisor) before issuing the letter.
- 03
House hunting
You shop with a pre-approval that listing agents trust. We coordinate with your agent on offer terms, financing contingencies, and inspection windows.
- 04
Contract and appraisal
Once the offer is accepted, we order an appraisal. For some loans we can use an appraisal waiver if the AUS allows — a real timeline benefit.
- 05
Underwriting and conditions
The file goes to a conventional underwriter. We hand you a single conditions list with deadlines, not a rolling stream of new requests.
- 06
Clear-to-close and funding
We send the closing disclosure at least three business days before close per TRID. You sign at title, funds wire, and you get keys.
The lowest long-term cost for borrowers with strong credit.
For buyers with FICO 720+ and stable income, conventional usually beats FHA on total cost — lower base rates, lower PMI, and PMI that drops off when you reach 80% LTV. The trade-off is a stricter credit and DTI review. Our job is to optimize your file before it hits underwriting: down-payment strategy, MI structure, and, for first-time buyers, the right Fannie/Freddie low-down product (HomeReady, Home Possible, or standard 97% LTV).
Conventional is the right tool when:
- Your FICO is 720 or higher and you want the lowest total cost
- You can put 5%–20% down and want PMI you can remove
- You are a first-time buyer with strong credit and prefer 3% down over FHA
- You are buying a primary residence, second home, or investment property
- Your loan amount is at or under the conforming limit (typically $766,550 in Texas)
Why conventional wins for strong-credit Texas buyers.
Lower base rates for strong credit
Conventional pricing is risk-adjusted by FICO and LTV. Borrowers above 740 FICO with 20% down typically see the lowest rates available in the market.
Investment and second homes
Conventional is the only mainstream program that allows non-owner-occupied properties. FHA, VA, and USDA require primary residence.
Appraisal waivers possible
On well-qualified files, the AUS may approve an appraisal waiver — saving a week of timeline and ~$600 in fees.
Higher loan amounts
Conforming loan limits run up to $766,550 in most Texas counties (higher in some). Above that, conventional jumbo programs take over.
Flexible property types
Single-family, townhouse, condo (warrantable and limited non-warrantable), 2–4 unit, and manufactured homes on permanent foundation.
3%
Minimum down (first-time buyers)
Conventional loan questions, answered.
How is PMI different from FHA mortgage insurance?
Private Mortgage Insurance (PMI) is required on conventional loans when you put less than 20% down. Crucially, PMI drops off automatically once you reach 78% loan-to-value (by amortization) and is removable on request at 80% LTV. FHA MIP, by contrast, generally runs for the life of the loan unless you put 10%+ down or refinance into conventional. That removability is the single biggest long-term cost advantage of conventional over FHA.
Do I really need 20% down to avoid PMI?
No — you need 20% down to avoid PMI at closing, but PMI is removable as your equity grows. Putting less down (3% to 19%) just means you pay PMI for a few years until you hit 80% LTV via paydown or appreciation. For most buyers in appreciating markets, putting 5%–10% down with PMI is mathematically better than waiting years to save 20%.
What is the conforming loan limit in Texas?
For 2024, the baseline conforming loan limit in most Texas counties is $766,550 for a single-unit property. Some high-cost counties have a higher limit. Above the limit, the loan is considered "jumbo" and follows different underwriting rules (typically higher down payment and reserves required). 2025 limits update annually each November — we check the current limit on every file.
Conventional vs FHA — which is better?
Conventional is usually better above ~720 FICO with stable W-2 income — lower rate, removable PMI, lower long-term cost. FHA is usually better below ~680 FICO or with DTI above 45%, because the program is more forgiving on both. We model both side by side before recommending one. Often the answer is "FHA for your first house, conventional for your refinance two years from now once your equity and credit have improved."
Can I use a conventional loan for an investment property?
Yes — conventional is the only mainstream program that allows non-owner-occupied financing. The trade-offs: typically 15%–25% down, slightly higher rates (~0.5%–1% above primary residence), and stricter DTI / reserves requirements. We finance investment-property conventional loans regularly.
How long does a conventional loan take to close?
Typical conventional close is 25–30 days from a fully ratified contract. We have closed in 18 days when the file is clean and an appraisal waiver is approved. The biggest variable is the appraisal — without a waiver, the timeline is governed by appraiser availability in your area.
Ready to see if conventional is your best fit?
Conventional loan requirements at a glance.
- FICO 620+ (best pricing at 740+)
- Down payment from 3% (first-time buyers) to 25%+ (investment)
- DTI typically up to 45% (some programs allow up to 50% with strong factors)
- Two-year work history (or schooling counted toward it)
- Two years of tax returns (or W-2-only for salaried borrowers)
- Two months of bank statements; large deposits sourced
- PMI required below 80% LTV; removable at 80% LTV by request, automatic at 78%
Conventional vs FHA vs VA at a glance.
| Conventional | FHA | VA | |
|---|---|---|---|
| Minimum down | 3% (first-time buyers) | 3.5% (580+ FICO) | 0% |
| Minimum FICO | 620 (best at 740+) | 580 (or 500 with 10% down) | 580–620 (lender overlay) |
| Mortgage insurance | PMI — removable at 80% LTV | MIP — usually for life of loan | No PMI; one-time funding fee |
| Best for | Strong-credit buyers; investment / second homes | First-time and credit-rebuilding buyers | Veterans, active-duty, qualifying spouses |
Ready to move on a Conventional Loan?
Get a soft-pull pre-approval in minutes. No credit hit, no surprises.