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Conventional loans in Texas: what they are and who they fit

A conventional loan is a mortgage that meets Fannie Mae and Freddie Mac guidelines instead of running through a government insurance program.

It can start as low as 3 percent down on a primary home, and once you reach 20 percent equity the mortgage insurance falls off for good. It generally works best for buyers with solid credit who want the lowest cost over the life of the loan. Available to buyers in Austin and Hays County, TX.

Typical timeline

Typically 30 days from contract to close

Check my fit

Reviewed by Jennifer Ferrara, NMLS #2781982Last updated

The short answer

Conventional is where most buyers with solid credit start, and in 2026 a loan stays conventional up to $832,750 in Hays and Travis counties. Above that it becomes jumbo, with different guidelines and pricing. I price conventional across 40+ wholesale lenders so you see the real difference before you commit.

Sources: FHFA 2026 conforming loan limits

The workhorse

Conventional is the workhorse. For buyers with reasonably clean credit it is usually the cheapest total cost over time, mostly because the mortgage insurance falls off once you have built enough equity, rather than following you for the life of the loan.

The part people miss is that conventional is not one product. Different wholesale lenders price the same borrower differently depending on credit tier, property type, occupancy, and how their pricing looks that week. That is the whole argument for a broker: I am running your loan against a panel of more than 40 wholesale lenders instead of handing you one bank’s single answer.

Quick facts

Down payment
As low as 3% for a primary home
Credit guidelines
Varies by lender, often 620 or higher, with better pricing at higher scores
Typical timeline
Typically 30 days from contract to close
Occupancy
Primary, second home, or investment

What it usually takes

  1. Two years of income history, though not always two years at the same job
  2. Credit in reasonable shape, we will look at where you actually stand
  3. Down payment starting around 3 percent for a primary home
  4. Documentation of what is in your accounts and where it came from

Guidelines vary by lender, and I shop across more than 40 of them. Missing one of these is a reason to talk, not a reason to assume the answer is no.

See the estimated math

You can also try: 2-1 Buydown, Rent vs Buy

This is not a commitment to lend. All loans are subject to credit approval, income and property verification. Rates, terms, and programs are subject to change without notice. Nook Lending is powered by MPA Home Loans. Jennifer Ferrara, Loan Officer, NMLS #2781982. MPA Home Loans NMLS #2778343. Equal Housing Opportunity.

Is this loan right for you?

This fits if

Buyers with solid credit who want the lowest long-run cost and want mortgage insurance to eventually go away.

Pros

  • Mortgage insurance drops off automatically at 20% equity
  • Usually the lowest long-run cost for strong credit
  • Works for primary homes, second homes, and investment property

Look elsewhere first if

If your credit is still being rebuilt or your debt-to-income is tight, FHA is usually the easier path in.

Cons

  • Stricter credit and debt-to-income than FHA
  • Larger down payment usually needed for the best rate
  • Mortgage insurance still applies below 20% down

About Conventional

What is the conforming loan limit for a conventional loan in the Austin, TX area?

For 2026, the conforming loan limit for a one-unit home is $832,750 across Travis, Williamson, Hays, Bastrop, and Caldwell counties, per the Federal Housing Finance Agency’s published limits for the Austin-Round Rock-San Marcos metro. Borrow above that in these counties and the loan moves into jumbo territory, with different pricing and reserve requirements. I will confirm the current number before you write an offer.

Can I get a conventional loan with less than 20 percent down in Texas?

Yes, conventional financing can start as low as 3 percent down for a primary home. The tradeoff is mortgage insurance below 20 percent down, which is a real monthly cost, but it comes off automatically once you reach enough equity, unlike FHA. Whether a smaller down payment or waiting to save more makes sense depends on your specific numbers, which is worth running before you decide.

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

There is no single cutoff. Many lenders will consider a conventional loan around 620, but pricing gets meaningfully better as your score climbs, especially above 700. Where you land affects your rate more than whether you qualify at all.

Do all conventional loans require mortgage insurance in Texas?

No, only the ones with less than 20 percent down. Once your down payment or your built-up equity reaches that 20 percent mark, mortgage insurance drops off the loan entirely, which is the main reason conventional usually costs less over time than FHA for buyers with solid credit.

What are the requirements for a conventional loan in Texas?

Lenders look at five things: steady, documented income, a credit score that meets the lender's minimum, a debt-to-income ratio inside the guidelines, a down payment plus cash for closing costs, and a property that appraises and meets standards. The loan also has to fit under the 2026 conforming limit of $832,750 to stay conventional instead of jumbo, and putting less than 20 percent down means paying mortgage insurance. The exact minimums vary by lender, which is why I compare more than 40 on your numbers.

Worth comparing against

Very few situations have exactly one right answer. These are the ones that most often come up alongside this.

Related reading

Where this fits

Sources

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Wondering if Conventional is right for you?

Send me the specifics and I will tell you what actually fits. If a different program serves you better, that is what I will say.

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