A “conventional” (conforming) mortgage is a loan that conforms to established guidelines for the size of the loan and your financial situation. A fixed-rate mortgage comes with an interest rate that won’t change for the life of your loan. Conventional fixed-rate mortgage often features with lower interest rates. Monthly payments on a conventional fixed-rate mortgage remain the same for the life of the loan, making it an attractive option for borrowers who plan to stay in their home for several years. In addition, conventional mortgages often require less documentation than FHA loans or VA loans, which could speed up the overall processing time.
Requirements and Qualifications
- Loan amount – The loan amount for a conforming mortgage in Texas is limited to $647,200 in 2022 for a single-family home. Jumbo loans allow you to exceed the conforming loan limit to borrow for a higher-priced home.
- Down payment – Most conventional loans will require at least 5 percent (and optimally 20 percent or more) as a down payment. For loans with less than 20% down-payment, will require pay private mortgage insurance (PMI).
- Credit history – Conventional loans are a good choice for borrowers with excellent credit (FICO score of 740 or higher). There are also established guidelines for income and other personal financial information.