Conventional Loans
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Your Good Habits Could Pay Off
If you have solid credit, a steady income, and are ready for a down payment, a conventional home loan might be your ideal fit. Rates for conventional loans can often be more favorable, as borrowers with a strong financial background are seen as a lower risk.
Opportunity to avoid private mortgage insurance (PMI) with a 20% down payment
Various down payment possibilities to suit your budget
Funding available for nearly all property types, from single-family houses and duplexes to condos and even manufactured homes
Learn more about this loan program and your eligibility by connecting with an Edge Home Finance Loan Officer.
Mortgage Guides
Step-by-step buyer blueprints, rate cycle comparisons, and mortgage reference manuals.
How to Get Started
There are several ways to begin the loan process with Team Mullenix.
What Is a Conventional Loan?
A conventional home loan is a type of financing that isn't backed or protected by the federal government. Although the eligibility requirements might be a bit more specific, conventional financing often provides more choices compared to many government-insured home loans. These mortgages are versatile; they can be used for refinancing your current property, and in some cases, they even allow you to purchase a home with as little as a 3% down payment.
Conventional loans come with distinct advantages. While some may involve larger down payments, this often means lower monthly payments as you've invested more upfront. With many types of conventional mortgages available, you can easily compare to find one that perfectly suits your financial needs.
Types of Conventional Loans
Fixed-Rate Loans
Interest remains constant for the entire duration of your mortgage. Many buyers prefer 30-year fixed-rate loans as spreading payments over three decades makes them more manageable. You can also choose shorter terms to pay off your mortgage faster.
Adjustable Loans
Feature interest rates that can change over time. These loans typically begin with a low, set interest rate for an initial period of three, five, seven, or 10 years. After this period, the rate adjusts annually to align with current market conditions.
Conforming Loans
Must meet specific guidelines set by Fannie Mae and Freddie Mac. The standard baseline conforming loan limit is $766,550 for one-unit single-family properties, with higher limits for two to four unit homes.
Nonconforming Loans
Not required to meet federal standards for conforming loans. A common example is the jumbo loan, needed to finance high-value home purchases above the $766,550 conforming limit.
Low Down Payment Loans
Today's requirements are much more flexible; lower down payments are common, sometimes as low as 5% or even 3% through programs like HomeReady.
Renovation Loans
Perfect when you want to save money by purchasing a fixer-upper and need extra financing for home repairs. Finance both the home purchase and renovation costs at the same time.
How to Qualify for a Conventional Mortgage
- Have a down payment or equity in the home: On some conventional mortgages, you only need a down payment of 3%. If you pay at least 20% down, you generally won't need mortgage insurance.
- Have the ability to prove income: You need to show you can comfortably make your mortgage payments. Your lender will require proof of income , pay stubs, tax assessments, and employment history.
- Have assets: It's beneficial to demonstrate ownership of other assets such as savings, investments, or retirement funds. At minimum, assets should cover closing costs and down payment.
- Have a history of paying loans on time: Lenders carefully review your credit score. A higher score can significantly improve your chances of loan approval and help secure a more favorable rate.
Additional Conventional Loan Requirements
- Debt-to-income ratio: Should ideally not exceed 43%.
- Property types: Condos, single-family houses, duplexes, properties with up to four units, and townhouses.
- Property use: Primary residence, secondary home, vacation getaway, or rental property.
- Property value: Loan amount won't exceed the appraised value of the home.
- Mortgage insurance: Required if down payment is less than 20%.
Reduce Your Escrow with the Texas Homestead Exemption
When you purchase a primary residence in Texas using a conventional mortgage, you qualify to file Texas Comptroller Form 50-114 with your county appraisal district. This reduces your school district taxable valuation by $100,000 under Proposition 4 and caps annual appraisal increases at 10%, directly lowering your monthly mortgage escrow payment.
Comparing a 10-Year ARM with a 30-Year Fixed Mortgage?
Conventional financing includes both 30-year fixed loans and 10/6 adjustable-rate options. In our new buyer education guides, Chad Mullenix breaks down SOFR adjustment caps, historical Freddie Mac rate cycles, holding-period data, and an Austin property illustration showing a $526 per month payment difference.
Texas Mortgage Program Comparison Matrix
Compare credit score minimums, down payment guidelines, loan limits, and mortgage insurance terms across Texas home financing options.
| Feature / Guideline | Conventional | FHA Loan | VA Loan | DSCR Investor |
|---|---|---|---|---|
| Minimum Down Payment | 3% to 5% (20% to avoid PMI) | 3.5% (with 580+ FICO) | 0% (Zero Down Payment) | 15% to 25% |
| Minimum Credit Score | 620 (720+ for best rates) | 580 (500 with 10% down) | No VA minimum (580-620 typical) | 640 to 680 |
| Maximum DTI Ratio | 43% to 45% (up to 50% automated) | 50% (with compensating factors) | 41% baseline (flexible with residual) | No personal DTI calculated |
| Mortgage Insurance | Private PMI (cancels at 20-22% equity) | UFMIP 1.75% + Monthly MIP | None (One-time funding fee only) | None required |
| 2026 Loan Limit (1-Unit) | $766,550 conforming baseline | $498,257 to $600k+ by county | No limit with full entitlement | Up to $2,500,000+ |
| Eligible Occupancy | Primary, 2nd home, investment | Owner-occupied primary only | Owner-occupied primary only | Non-owner investment only |
| Income Documentation | W-2s, tax returns, pay stubs | W-2s, tax returns, pay stubs | W-2s, LES, military COE | Property rental cash flow only |
| Wholesale Broker Speed | 14 to 21 days to clear to close | 14 to 21 days to clear to close | 14 to 21 days to clear to close | 14 to 21 days to clear to close |
Guidelines reflect standard Texas agency and wholesale underwriting thresholds as of 2026. Custom portfolio guidelines may vary based on compensating borrower factors.
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Mortgage Broker vs Big Retail Banks
Understand how shopping wholesale conventional mortgages through an independent broker saves thousands in lender fees compared to traditional commercial banks.