ServicesConventional Loans
Conventional Loans in Taylor, TX
A conventional loan is the most common way to buy or refinance, and it often costs the least over time if your credit and income line up. We walk you through the guidelines in plain words so you know where you stand before you apply.
How Conventional Financing Works and Who It Suits
A conventional loan is a home loan with no backing from a government program like FHA, VA or USDA. Most of these loans follow guidelines published by Fannie Mae and Freddie Mac, which set the credit, income, debt and down payment standards a borrower has to meet. Some of those standards are firm and some leave room, and sorting out which is which is where we spend most of our time.
This kind of loan usually makes sense when your credit is solid, your income is steady and documented, and you have savings set aside for a down payment and closing costs. It also works for second homes and investment property, which the government programs mostly leave out.
We tell you which guidelines apply to your situation and what each one means in practice. If an FHA loan, a VA loan or another option would work better for you, we tell you that plainly.
What We Handle on a Conventional Loan
- 01
A rate quote you can compare
We price the loan on your credit score, down payment and property type, and explain what each one does to the rate. You get the numbers by phone and in writing so you can compare them side by side.
- 02
Pre-qualification and pre-approval
We look over your income, savings and credit to set a price range you can actually afford. A pre-approval letter tells a seller and their agent that a loan officer has already reviewed your paperwork.
- 03
Mortgage insurance explained
With less than 20 percent down, a conventional loan usually carries private mortgage insurance. We show you how it is priced and when it can be removed, since unlike some government programs it does not have to last the life of the loan.
- 04
Appraisal and underwriting follow-through
We order the appraisal, answer underwriting conditions and keep you posted on anything still open. If the underwriter asks for a document, we explain the reason behind the request.
- 05
Disclosures you understand
Federal rules call for a Loan Estimate soon after you apply and a Closing Disclosure no later than three business days before signing. We walk through each page with you, so the figures at the closing table are ones you have already seen.
Questions about Conventional Loans?
Call(512) 601-6937Signs a Conventional Loan Fits Your Plans
Your credit score is in good shape
Conventional pricing rewards a high score more than most other programs do. If your credit is strong, this is often the cheapest way to borrow over the life of the loan.
You have 5 percent or more saved to put down
A few conventional programs go lower, but putting more down trims the rate adjustments and shrinks your mortgage insurance cost.
The property is a vacation place or an investment
FHA, VA and USDA financing is meant for the place you will live in full time. A conventional loan can also finance a getaway property or a rental you plan to lease out.
You would like mortgage insurance with an end date
Private mortgage insurance on a conventional loan can come off once you have enough equity, either when you ask for it or automatically on the original schedule.
You are tired of paying FHA premiums
If your FHA loan has built up equity, refinancing into a conventional loan may let you stop those premiums. We can compare the payments to see whether the move actually saves you money.
How a Conventional Loan Moves From Call to Closing
- 1
A first conversation
You call, we ask about your goals, income and timeline, and we give you a rate quote and a rough price range. This can happen at our office or by phone or video.
- 2
Paperwork and pre-approval
We ask for your most recent pay stubs plus W-2s, or tax returns if you are self-employed, along with a couple of months of bank statements. After we go through them and pull credit with your okay, you get a pre-approval letter to shop with.
- 3
Contract, appraisal and underwriting
Once you are under contract, we lock your rate when you are ready and order the appraisal. The underwriter checks the file against the guidelines, and we work through any conditions with you.
- 4
Clear to close and signing
After final approval, you receive your Closing Disclosure and we review it together. Then you sign at the title company and get your keys.
What Shapes Your Conventional Loan Cost
Conventional pricing is built from a few inputs, and each one moves the rate or the fees. We show you how your file scores on each before you commit. That way the number you see on your Loan Estimate makes sense to you.
- Credit score
- Higher scores earn better pricing. Even a modest bump before you apply can change the rate.
- Down payment and loan-to-value
- The more you put down, the less risk the lender carries. That lowers rate adjustments and the cost of mortgage insurance.
- Property type and use
- A primary residence prices best. Condos, multi-unit property, second homes and rentals each carry their own adjustments.
- Points and lock period
- You can pay points upfront to buy the rate down, or take a higher rate with lower costs. A longer rate lock can also add cost, so we time it with your closing date.
- Closing costs and title
- Appraisal, title insurance, recording fees and prepaid taxes and insurance all show up at closing. We itemize them so you know what is lender cost and what is third-party.
Common Questions About Conventional Financing
Do I really need 20 percent down for a conventional loan?
No. Qualified borrowers can get conventional financing with a much smaller down payment through certain programs. Going below 20 percent usually adds private mortgage insurance to the monthly payment. We can price that cost for you so you can compare buying now with waiting and saving more.
When does private mortgage insurance come off?
Once you have paid the loan down to 80 percent of the original property value and your payment record is clean, you can request that it be dropped. If you never ask, it falls off on its own when the original amortization schedule hits 78 percent. In some cases a fresh appraisal showing a higher value can get you there sooner.
Is conventional better than FHA?
That comes down to your credit score and how much you can put down. Borrowers with strong credit often pay less over the life of a conventional loan. With a lower score or thinner savings, an FHA loan can come out ahead, and we will lay the two out next to each other so you can see the difference.
Can I use gift money for the down payment?
Yes. For a primary residence, the guidelines generally allow gift funds from a family member. You will need a signed gift letter and records that trace the money from the giver into your account. We give you a short list of exactly what to gather.
What if the appraisal comes in low?
Your loan amount is based on whichever is lower, the purchase price or the appraised value. Your options include asking the seller to lower the price, covering the gap with extra cash, disputing the appraisal with stronger comparable sales, or backing out if your contract permits. We help you weigh each one.
Find Out What a Conventional Loan Looks Like for You
Tell us your goals and we will give you a rate quote, explain the guidelines that apply, and help you decide on next steps. We work with buyers in Taylor, Hutto, Round Rock and nearby.