What is a Conventional Loan?
A conventional loan is a mortgage that isn’t backed by the federal government, unlike FHA, VA, or USDA loans. Instead, the lender assumes the risk, which means borrowers must meet specific credit, income, and financial requirements. These loans often offer competitive rates and flexible terms, making them a great option for many homebuyers
Who is eligible for a Conventional Loan?
To qualify for a conventional loan, borrowers must meet certain criteria, including a good credit score, stable income, and a low debt-to-income ratio. While requirements vary based on the loan type, most lenders require a minimum credit score of 620, though a higher score may be needed for better rates. You'll also need to provide proof of income, such as pay stubs, W-2s, and tax returns. Meeting these qualifications can help you secure competitive rates and flexible loan terms.
Borrow more than government-backed loans since there are no set loan limits.
Typically lower than FHA and other government-backed loans, saving you thousands over time.
Avoid private mortgage insurance (PMI) by putting down at least 20%, reducing monthly costs.
Choose from a variety of loan terms and options tailored to your financial needs.
The most common type of conventional loan is a fixed-rate mortgage, which provides stable monthly payments with a locked-in interest rate for the life of the loan. Another popular choice is an adjustable-rate mortgage (ARM), which offers a lower initial interest rate that can fluctuate over time. For buyers purchasing higher-priced homes, jumbo loans are available, allowing them to borrow beyond the conforming loan limits of a standard mortgage.
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CONSUMERS WISHING TO FILE A COMPLAINT AGAINST A MORTGAGE BANKER OR A LICENSED MORTGAGE BANKER RESIDENTIAL MORTGAGE LOAN ORIGINATOR SHOULD COMPLETE AND SEND A COMPLAINT FORM TO THE TEXAS DEPARTMENT OF SAVINGS AND MORTGAGE LENDING, 2601 NORTH LAMAR, SUITE 201, AUSTIN, TEXAS 78705. COMPLAINT FORMS AND INSTRUCTIONS MAY BE OBTAINED FROM THE DEPARTMENT’S WEBSITE AT WWW.SML.TEXAS.GOV. A TOLL-FREE CONSUMER HOTLINE IS AVAILABLE AT 1-877-276-5550.
THE DEPARTMENT MAINTAINS A RECOVERY FUND TO MAKE PAYMENTS OF CERTAIN ACTUAL OUT OF POCKET DAMAGES SUSTAINED BY BORROWERS CAUSED BY ACTS OF LICENSED MORTGAGE BANKER RESIDENTIAL MORTGAGE LOAN ORIGINATORS. A WRITTEN APPLICATION FOR REIMBURSEMENT FROM THE RECOVERY FUND MUST BE FILED WITH AND INVESTIGATED BY THE DEPARTMENT PRIOR TO THE PAYMENT OF A CLAIM. FOR MORE INFORMATION ABOUT THE RECOVERY FUND, PLEASE CONSULT THE DEPARTMENT’S WEBSITE AT WWW.SML.TEXAS.GOV.
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