Conventional Loans in Houston
Traditional mortgages backed by Fannie Mae and Freddie Mac.
As low as 3% down with competitive rates and flexible terms.
3% Down
First-time buyers can put as little as 3% down
Best Rates
Competitive rates for borrowers with 740+ credit
Removable PMI
PMI drops off automatically at 78% LTV
What is a Conventional Loan?
A conventional loan is a traditional mortgage backed by Fannie Mae or Freddie Mac, not insured by a government agency. With down payments as low as 3% for first-time buyers and the ability to remove PMI once you reach 20% equity, conventional loans offer flexibility and potentially lower long-term costs compared to government-backed loans.
In Houston's diverse real estate market, conventional loans are ideal for buyers with good credit (680+) who want competitive rates and flexible property options. Whether you're buying your first home in Katy, investing in rental properties in Sugar Land, or purchasing a second home in The Woodlands, conventional financing provides the versatility you need with potentially the lowest overall costs.
Is a Conventional Loan Right for You?
You're a Great Fit If...
- Your credit score is 680 or higher.
- You want to remove PMI as soon as possible.
- You have a down payment of 5% or more.
- You are buying a second home or investment property.
You Might Reconsider If...
- Your credit score is below 640.
- You have limited funds for a down payment (less than 3-5%).
- A recent bankruptcy or foreclosure is on your record.
Houston Success Story
“A couple in The Woodlands with excellent credit wanted to buy their dream home but avoid PMI. By putting 20% down on a conventional loan, they secured a fantastic rate and have no monthly mortgage insurance, saving them hundreds every month.”
Conventional Loan Requirements
Minimum Credit Score
620 minimum | Best rates at 740+
Down Payment
3% for first-time buyers | 5-20% standard
Debt-to-Income Ratio
Up to 45% DTI (higher with compensating factors)
Mortgage Insurance
Required below 20% down, removable at 80% LTV
Property Types
Primary residence, second home, or investment
Documentation
Full income and asset verification required
Types of Conventional Loans
Conventional 97 (3% Down)
Perfect for first-time buyers with good credit. Only 3% down payment required with competitive rates.
Standard Conventional (5-20% Down)
Traditional financing with 5-20% down. PMI required below 20%, but removable at 80% LTV.
High-Balance Conventional
Loan amounts up to $766,550 in Harris County. Ideal for higher-priced Houston homes.
Investment Property Conventional
Finance rental properties with 15-25% down. Build your real estate investment portfolio.
Benefits of Conventional Loans in Houston
Frequently Asked Questions
What credit score do I need for a conventional loan in Houston?
The minimum credit score is 620, but you'll get the best interest rates with a score of 740 or higher. If your score is between 620-740, you can still qualify but may pay slightly higher rates. We can help you understand your rate based on your specific credit profile.
How is PMI different on conventional loans vs. FHA?
With conventional loans, PMI can be removed once you reach 20% equity through payments or appreciation. FHA's MIP stays for the life of the loan (if you put less than 10% down). Additionally, conventional loans don't have an upfront mortgage insurance premium like FHA's 1.75% charge.
Can I use a conventional loan for an investment property?
Yes! Unlike FHA and VA loans which are for primary residences only, conventional loans can finance investment properties. You'll typically need 15-25% down and have slightly higher interest rates compared to primary residence loans. This is perfect for building a rental property portfolio in Houston.
What are the conventional loan limits in Houston for 2024?
For 2024, the conforming loan limit in Harris County (Houston) is $766,550 for a single-family home. Loans above this amount are considered jumbo loans and have different requirements. Higher limits apply for 2-4 unit properties ($981,500 for duplexes).
Should I choose conventional or FHA with less than 20% down?
It depends on your situation. If you have a credit score of 680+ and can afford 5-10% down, conventional often has lower monthly costs since PMI is cheaper and removable. If your credit is 580-680 or you only have 3.5% down, FHA might be better. We'll help you compare both options to find the best fit.
Ready to Apply for a Conventional Loan?
Our Houston mortgage experts will help you find the perfect conventional loan for your situation. Get pre-approved with competitive rates today.
Quick Facts: 3% down available • Removable PMI • Up to $766,550 loan limit • Competitive rates • Fast Houston closings • Expert guidance • Licensed in Texas • NMLS #2701989