Listing the Conventional Loan Requirements in Texas

What are the conventional loan requirements in Texas? Brush up on your facts before applying to a lender. Read below for all the essential details.

Is it your first time buying a house? Are you thinking of taking out a mortgage, chances are that you don’t have a clear idea regarding the conventional loan requirements in Texas. Hence, to help you understand the same and to give you some clarity on the subject, we have listed the standard terms of eligibility for conventional loans as per the latest guidelines.

You need to know about these terms because they can often dictate the approval for getting the loan amount from the banks or the lenders. Conventional loans are not the same as government-backed loans like the FHA, VA, or USDA. They are more stringent compared to the latter, and typically offered by banks and traditional lenders. So, without further ado, let’s get you acquainted with the basic loan requirements.

Credit Score

The conventional loan terms require you to have at least a credit score of 620 to get approval for the loan. That is unlike FHA loans where one can get funding with a lower credit score. While some lenders might approve a loan to a lower credit score holder, most lenders require a higher credit score of above 660.

Debt-to-income Ratio

Most lending institutions like the banks and other conventional avenues require the borrower to have a debt-to-income ratio of 28/36. Compared to that FHA loans offer flexibility up to 50.

Down Payment for the Loan

Conventional loans require the borrower to pay a higher down payment compared to government loans. It has to be at least 5%, but usually, more than that is recommended by most conventional lenders. The lower the down payment, the higher would be the interest rates.

Interest Rate

In conventional loans, the interest varies considering the down payment and the credit score of the borrower. Nevertheless, it will be higher than FHA loans. The interest is decided by the conventional lender you are approaching for the loan.

Maximum Mortgage Amount

The maximum mortgage amount for conventional loans varies in each county. It keeps changing, so the borrower would have to consult with the lender on the same. Compared to FHA loans, the mortgage amount tends to be higher in conventional loans.

Hopefully, these will help you understand where you stand in terms of getting approval for conventional loans. If you fall short of the conventional loan requirements in Texas, then don’t worry! It will not interfere with your plans of buying a house. You can always get funding through private lending institutions or government-backed financing options. You only need a knowledgeable loan professional to guide you through the process.

AUTHOR BIO: Joan Gallardo is a Senior Loan Officer with 18+ years of experience with extensive knowledge about the conventional loan requirements in Texas.

Clear Lending is a residential real estate lending services company dedicated to maintain the highest ethical standards to its customers, agencies