ServicesConventional Loans
Conventional Loans in Georgetown, TX
A conventional loan is the most common way people buy a house, and often the lowest-cost choice over time if your credit and savings fit. We walk you through down payment choices, mortgage insurance and rate options in plain terms, so you know exactly what you are signing up for.
What a conventional loan is, and when it fits
Conventional loans are mortgages with no FHA, VA or USDA guarantee behind them. Most are written to Fannie Mae and Freddie Mac guidelines, so you may also hear them called conforming loans. Without a government agency sharing the risk, the lender puts more weight on your credit, income and down payment.
This type of loan usually makes sense when your credit score is in good shape, your monthly debts are reasonable compared with your income, and you have money saved. First-time buyers can sometimes get in with just 3 percent down. With 20 percent down, private mortgage insurance is off the table entirely.
If your credit history is thin or you served in the military, an FHA loan or VA loan might cost you less. We line the options up next to each other and give you a straight answer on which one works out better for you.
What we handle on a conventional loan
- Side-by-side loan comparison
- Where you qualify for FHA or VA as well, we put those options next to the conventional one. Each shows the monthly payment, cash due at closing and mortgage insurance. You weigh the trade-offs in real numbers, not sales talk.
- Down payment planning
- We show how 3, 5, 10 and 20 percent down change your payment and your PMI. If a relative is chipping in, we explain how those gift funds must be documented so the lender counts them.
- PMI explained and planned
- Private mortgage insurance covers the lender, not you. We show how much it adds each month and how you get rid of it. Once you have 20 percent equity you can request that it be canceled, and on the original payment schedule it ends on its own at 22 percent.
- Fixed or adjustable rate guidance
- Most buyers go with a 30-year or 15-year fixed rate. We explain when an adjustable rate can make sense, such as when you plan a shorter stay, and how its rate caps limit future changes.
- Pre-approval for your offer
- A written pre-approval shows sellers and agents that your income and credit have already been checked. It also gives you a realistic price range before you start touring.
- Conventional refinancing
- A conventional refinance can lower your rate, shorten your term, drop FHA mortgage insurance or turn equity into cash. We run the break-even math on closing costs before you decide.
Signs a conventional loan may be your best fit
Your credit score is 620 or higher
That is the usual starting point. Pricing gets noticeably better as scores climb into the 700s.
You have savings for a down payment
Even 3 to 5 percent down opens the door. The more you put down, the smaller your PMI, and at 20 percent there is none.
You are paying FHA mortgage insurance
Many FHA loans keep charging monthly insurance until the loan is paid off. If your property is worth more now and you have built up equity, a conventional refinance can take that charge away.
You are buying a second home or rental
FHA, VA and USDA loans are meant for the place you live. Conventional loans also cover second homes and investment properties, with larger down payments.
Your debts are modest next to your income
Lenders look closely at your debt-to-income ratio. A lower ratio makes approval smoother and leaves more room in your monthly budget.
What sets your conventional rate and fees
Conventional pricing follows risk, so each quote comes out a little different. A few factors drive your rate and fees, and you can see most of them, and sometimes improve them, before you apply. We label each one in your quote so nothing is a mystery.
Credit score
Lenders price in tiers, and higher scores fall into better ones. Paying down a card balance before you apply can sometimes bump you up a tier.
Down payment
A bigger down payment lowers the lender's risk. In return you usually get a better rate and smaller PMI, or none at all.
Property type and use
A place you will live in gets the best pricing. Condos, second homes and investment properties come with added pricing adjustments.
Discount points
Paying points at closing buys a lower rate. We work out how many months of savings it takes to cover that upfront cost, so you can decide if it pays off for you.
Rate lock timing
Rates change every day. The day you lock and the length of lock you need before closing both show up in the price.
How a conventional loan moves from first call to closing
- 1
Start with a conversation
By phone, on video or at our office, a loan officer asks about your plans, income, debts and savings. You come away with a pre-qualification or rate quotes, along with a clear explanation of what each number means.
- 2
Your application, taken by phone
We go through the loan application with you on a call, one question at a time. Then we ask for recent pay stubs, W-2s or tax returns, and two months of bank statements, and we explain why each one is needed.
- 3
Underwriting and appraisal
An underwriter reviews your file while an appraiser confirms the property's value. If something needs clearing up, we tell you what it is and which document will resolve it.
- 4
Final numbers and signing day
The lender has to send your Closing Disclosure no later than three business days ahead of signing. We go over every line with you so the final figures match what you expected. Texas closings usually happen at a title company, and we let you know where to be and what to bring.
Common questions about conventional mortgages
Is 20 percent down required for a conventional loan?
It is not. Some programs for first-time buyers allow as little as 3 percent down, and many borrowers put down 5 percent. Twenty percent simply takes PMI out of the picture. We will show you the monthly payment at several down payment levels so you can pick the one that sits well with your budget.
Is a conventional loan better than an FHA loan?
It depends on your credit and how much you are putting down. With a strong score, conventional usually costs less over time because its mortgage insurance can be removed. With a lower score, FHA may give you the better payment. We price both and set them next to each other so the difference is easy to see.
How long does a conventional loan take to close?
Many purchases close somewhere around 30 to 45 days after the contract is signed. Having your documents ready early helps the most. Appraisal scheduling and title work also play a part, and we keep you posted as each step wraps up.
Can I use gift money for my down payment?
Yes. On a property you will live in, a family member can usually cover some or all of the down payment as a gift. The lender needs a signed gift letter and records showing the money moving into your account. We tell you exactly what the letter has to say.
Will checking my options hurt my credit?
A full pre-approval requires a credit check, which can dip your score a little for a short time. Scoring models generally treat several mortgage inquiries made within a short window as one. We always let you know before we pull credit, so there are no surprises.
Talk through your conventional loan options
Tell us what you are buying or refinancing, and a loan officer will explain your choices in plain terms and help you start your loan application. Borrowers in Round Rock, Leander and nearby towns are welcome too.