Conventional Loans in Austin, Texas — Detailed Reference
Earlier detailed guidance, preserved October 23, 2026. Figures and program descriptions reflect the original material and may have changed. See current options and talk with Adam →
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Start with the decision
When should you compare conventional financing?
Conventional financing is a useful starting point when documented income, credit, assets and the property meet the applicable program requirements. Self-employment alone does not rule it out.
When it may fit
May fit homebuyers with supportable income and funds for the chosen transaction.
When to compare another path
A different program may warrant comparison when loan size, documentation or property characteristics fall outside the available conventional options.
Compare homebuying options · Review your scenario
General consumer reference: CFPB guide to comparing Loan Estimates. Individual lender requirements still govern.
What Is a Conventional Loan?
Conventional loans are the most common type of mortgage in the United States, accounting for roughly 80% of all home loans originated. In Austin's competitive real estate market, conventional financing is often preferred by sellers because it signals a well-qualified buyer and typically offers faster, smoother closings.
Why Austin Buyers Choose Conventional Loans
With Austin's median home price hovering around $450,000 and a market that rewards strong, clean offers, conventional loans give buyers a distinct advantage. The flexibility of conventional financing allows for various property types, competitive terms, and the ability to remove private mortgage insurance once you reach 20% equity.
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Conventional Loan Features
Down Payment Options
Put as little as 3% down with Conventional 97 or HomeReady programs for first-time buyers. Standard options include 5%, 10%, 15%, or 20% down. Putting 20% down eliminates PMI entirely.
Competitive Interest Rates
Conventional loans are priced from credit, down payment, and the loan features. Fixed rates available for 15, 20, 25, and 30-year terms. Adjustable-rate mortgages (ARMs) are also available for even lower initial rates.
Flexible Property Types
Finance single-family homes, condos, townhomes, planned unit developments, and multi-unit properties (2-4 units). Primary residences, second homes, and investment properties are all eligible.
Removable Mortgage Insurance
Unlike FHA loans where mortgage insurance lasts the life of the loan, conventional PMI can be removed once you reach 20% equity. FHA mortgage insurance is structured differently.
Higher Loan Limits
The 2026 conforming loan limit for Travis County is $832,750. This covers the vast majority of Austin homes. For higher amounts, jumbo loan options are available.
Fast Closings
Conventional loans often have fewer agency overlays than some government-backed loans, which can make processing more predictable. The actual closing timeline depends on the property, appraisal, title, documentation, and contract terms.
Conventional Loan Requirements
Meeting conventional loan requirements is straightforward for most Austin homebuyers. Here is what lenders look for:
Credit Score
A minimum credit score of 620 is required for most conventional programs. Scores of 740+ are often priced differently. Borrowers between 620-739 can still qualify but may face higher rates or PMI costs. Need to improve your score? Check out our credit improvement guide.
Debt-to-Income Ratio
Your total monthly debt payments (including the new mortgage) should not exceed 45% of your gross monthly income. Some programs allow up to 50% with strong compensating factors like high credit scores or large reserves.
Employment & Income
Lenders typically require two years of consistent employment history and verifiable income through W-2s, tax returns, or pay stubs. Self-employed borrowers need two years of tax returns showing stable or increasing income.
Down Payment & Reserves
While 3% down is the minimum, your down payment source matters. Savings, gifts from family, employer assistance programs, and Texas down payment assistance programs are all acceptable sources. Lenders may also require 2-6 months of reserves (mortgage payments saved in accessible accounts).
Conventional vs. Other Loan Types
| Feature | Conventional | FHA | VA |
|---|---|---|---|
| Min. Down Payment | 3% | 3.5% | 0% |
| Min. Credit Score | 620 | 580 | No minimum |
| Mortgage Insurance | Removable at 20% | Life of loan | None |
| Loan Limit (Austin, 2026) | $832,750 | $571,550 | No limit |
| Investment Property | Yes | No | No |
| Typical Closing Time | Depends on the file | Depends on the file | Depends on the file |
Not sure which loan is right for you? Contact Adam for a free consultation.
How to Get a Conventional Loan in Austin
Step 1: Get Pre-Qualified
Submit your application online or call us at (512) 956-6010. We review your credit, income, and assets to determine your maximum purchase price and which guideline fits. Once your documents are in, we review them and issue a pre-approval letter.
Step 2: Find Your Home
Work with your real estate agent to find the right property in Austin. Your pre-qualification letter shows sellers you are a serious, qualified buyer. Need a realtor referral? We partner with top Austin agents.
Step 3: Lock Your Rate
Once your offer is accepted, we lock your interest rate and begin processing. We order the appraisal, verify your documentation, and prepare your loan for underwriting.
Step 4: Close & Get Your Keys
After underwriting approval, we schedule closing. You sign your documents, the loan funds, and you receive the keys to your new Austin home. How long that takes depends on the appraisal, title, and when the documents come in.
Conventional Loan FAQ
Most conventional loan programs require a minimum credit score of 620. However, borrowers with scores of 740 or higher are often priced differently. If your score is between 620-740, you can still qualify but may pay slightly higher rates or PMI premiums.
Conventional loans require as little as 3% down for first-time buyers through Conventional 97 or HomeReady programs. Repeat buyers typically need 5% minimum. Putting 20% down eliminates private mortgage insurance (PMI), A conventional loan with less than 20% down usually has monthly mortgage insurance until it can be removed.
The 2026 conforming loan limit for Travis County (Austin) is $832,750 for a single-family home. This means you can finance a home up to that amount with a conventional loan. Homes priced above this limit require a jumbo loan, which has different qualification requirements.
Yes. Conventional loans are one of the few loan types that allow investment property financing. Expect to put 15-25% down for investment properties, and rates are typically 0.5-0.75% higher than primary residence rates. Rental income can be used to help qualify.
How long a conventional closing takes depends on the program, the appraisal, title, and when the documents come in.
Explore Other Loan Programs
Helpful articles: Fixed vs. Adjustable Rates · How Much House Can I Afford? · Closing Costs in Texas · Mortgage Glossary
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