Have you been preparing for a conventional loan in Texas? Are you aware of the requirements?
When you are looking for a mortgage, a conventional loan Texas is the best option to look at. Conventional loans are guaranteed by private lenders; and they are likely to be a lot different from the government-sponsored programs such as VA, FHA, and USDA. You can choose the type according to your requirement. Adjustable and fixed-rate conventional loans are commonly found.
Before you decide on the loan terms or types, you need to go through the basics first. So, let’s take a look below!
Qualifying for a Conventional Loan in Texas
Borrowers who have strong credit are the ones capable of meeting conventional loan requirements. The government does not ensure the program; as a result, you might face stricter requirements than other government-backed home loans. The Federal Housing Administration insures the FHA loans; the U.S. Department of Agriculture runs USDA programs; the Department of Veterans Affairs guarantees a part of VA loans.
However, conventional loans are eligible to determine requirements that are more stringent than FHA loans. So, if you have had a history of bankruptcy and foreclosure, you might be in trouble passing the requirements.
Different Types of Conventional Loans
Conforming and non-conforming are the two types of conventional loans you need to know about. Fannie Mae and Freddie Mac fixed a loan limit for refinancers and home buyers according to the conventional loan requirements. This year, the loan limit was $548,250 in most counties; however, the expensive neighborhoods saw a spike in the limit, too. If the conventional loans are under Fannie Mae and Freddie Mac limits, they are classified as conforming loans.
In case you need to borrow more than the loan limit, you have to apply for a jumbo loan. Fannie Mae and Freddie Mac cannot help you with jumbo loans; hence, you will have a rocky ahead. If you look at the current scenario, many lenders want to hold onto non-conforming loans for an extended period instead of selling them. Nevertheless, jumbo loans typically have a higher down payment and interest rate. At times, we only see borrowers with high income be eligible for the mortgages only.
Talk to your lender about the qualifying guidelines for a conventional mortgage. The home loan makes sense when you want to achieve your much-coveted dream of homeownership. If you are not sure whether you will be able to pay down the loan, you should find a co-signer.