Conventional loan requirements in Texas for 2026, in plain English

What is a conventional loan, exactly?

A conventional loan is any mortgage that is not insured by a government agency. Government loans like FHA and USDA are insured by an agency. Conventional loans are not, and almost all of them are written to Fannie Mae or Freddie Mac guidelines so they can be sold after closing.

That matters for you because those guidelines set the floor for every requirement below. Individual lenders can add their own stricter rules on top, called overlays, and that is a big part of why I place loans across more than 40 lenders instead of one. Two lenders can look at the same file and give two different answers.

What credit score do you need for a conventional loan in Texas?

For years the answer was 620. That changed in November 2025, when Fannie Mae removed the hard 620 minimum for loans run through its automated underwriting system, Desktop Underwriter, following Freddie Mac, which had already dropped its own. The system now weighs your full credit history, income, debts, and the property instead of stopping at one number.

In real life, 620 is still where most lenders and mortgage insurance companies draw their line, and your score still drives what the loan costs and what mortgage insurance costs. A score in the mid 700s and a score in the low 600s can both be approved and still look very different on paper. If your score is close to a line, I would rather know before we pull anything so we can talk about what moves it.

How much do you need to put down on a conventional loan?

Less than most people expect. The lowest minimum goes to first-time buyers, which for this purpose means no one on the loan has owned a home in the last three years. Fannie Mae’s HomeReady and Freddie Mac’s Home Possible offer that same low minimum to buyers under the area income limit, even if they have owned before.

Outside those programs, a primary home needs a little more down, and a larger down payment is what removes mortgage insurance entirely. I give you your exact numbers in writing once I know the price range and the program. Gift money from family can cover the down payment and closing costs on a single family home you will live in, and Fannie Mae does not require any minimum from your own pocket in that case. I closed a loan where exactly that made the difference. My buyers needed more cash to close than they had, a family member gifted the rest, and that is what got the loan approved. We also negotiated seller credits on that deal, and between the gift and the credits, part of the money went toward buying down their rate.

The two work differently, and it helps to know how. Seller credits can pay closing costs and buy down your rate, up to a limit set by the loan program, but they cannot be your down payment. Gift money can go toward the down payment, closing costs, or buying down the rate. The lender will need a signed gift letter and a paper trail showing where the money came from.

If you are wondering whether the person giving owes gift tax: in 2026 someone can give up to $19,000 to each person without filing a federal gift tax return. A bigger gift usually just means the giver files a return, not that tax is owed, because it counts against a lifetime exemption of $15 million. Texas has no state gift tax. For anything specific to your family, talk to your CPA.

What debt to income ratio do you need?

Debt to income is your monthly debts, including the new house payment, divided by your gross monthly income. Fannie Mae’s automated underwriting can approve up to 50 percent when the rest of the file is strong. Files that have to be underwritten by hand are held to tighter limits.

Here is the Texas part people miss. Our property taxes are some of the highest in the country, and they go straight into your monthly payment through escrow. Kyle’s combined rate runs about 2.15 percent, so a $400,000 home there carries roughly $8,600 a year in property tax before any exemption. That money counts against your debt to income just like a car loan does, so the same income qualifies for less house here than it would in a low tax state. The affordability calculator on this site has Central Texas tax rates built in for exactly this reason.

What is the conventional loan limit in Texas for 2026?

The 2026 conforming loan limit for a one unit home is $832,750, set by the FHFA. That is the limit in every Texas county, including Hays and Travis, because no county in Texas is designated high cost. Two to four unit properties have higher limits.

Above that number the loan is jumbo, which comes with its own rules on credit, reserves, and down payment. In Dripping Springs and Driftwood that line comes up often, and structuring a purchase to stay just under it can be worth a real conversation.

How does PMI work on a conventional loan, and when does it come off?

With a smaller down payment, a conventional loan carries private mortgage insurance. The cost depends mostly on your credit score and how much you put down, which is one more reason the score matters even when it is high enough to qualify.

The good news is that conventional PMI does not last forever. Under the federal Homeowners Protection Act, you can ask to remove it once your balance reaches 80 percent of the home’s original value, and it ends automatically at 78 percent if you are current on payments. That is a real difference from FHA, where on most loans the annual mortgage insurance stays for the life of the loan.

The Texas parts nobody outside Texas mentions

Title insurance premiums in Texas are set by the Texas Department of Insurance, so the base premium is the same no matter which title company you use. You shop title companies here for service, not price on the policy itself.

If you are buying a resale home, the seller’s existing survey can often be reused with a T-47 affidavit instead of paying for a new one. And in newer neighborhoods, a MUD or PID assessment can add to your tax bill in a way the list price never shows, which is why I always look up the specific address. Property tax rates here change block to block, so before you write an offer, send me the address and I will run the real tax rate, real insurance, and real HOA for that exact home. Texas property taxes are a big difference from most states, so if you are relocating here, this is the part to understand first. Rates change between neighborhoods and between inside and outside city limits, and with rates higher, the tax bill can change what you qualify for, or whether you qualify at all. HOA fees are common here too, and they count the same way.

One more for later: once the home is your homestead, any future cash out refinance follows the Texas Section 50(a)(6) rules, including the 80 percent cap. Nothing about that changes how you buy, but it is worth knowing before you plan on pulling equity out down the road.

What I look at first

I spent 14 years on the agent side before I started writing loans, and I have been in the middle of plenty of deals that almost fell apart. A lot of preapprovals come from a quick online form with no documents and a number that is not tied to the house you actually want. Right now the biggest thing I talk about with buyers is affordability. Not how many bedrooms you can get, but what the monthly payment will actually be and whether it lets you live the life you want. A lot of buyers are shopping Kyle, Buda, and San Marcos because the starter homes there are smaller but still reasonably priced, and sellers are offering real concessions, including rate buydowns. Even so, with rates where they are, the payment on a lower priced house can still be high, and that is usually what decides whether someone qualifies. So I walk through the total payment and cash to close before I ever pull credit.

When someone asks me if they qualify for conventional, I look at three things before anything else: where the credit score sits against the lines that matter, how much the Texas property taxes on the actual address add to the payment, and how much is going down. Right now a lot of my buyers are going FHA, and those three things are what decide whether conventional or FHA costs less for you, so I run both side by side on the same house so you can see it in dollars.