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Conventional Loan Limits In Texas For 2021

Find out about Conventional Loan Limits in Texas and how they can affect you

When searching for a home, most potential buyers start by researching conventional loans. As you research for your mortgage, it’s important to understand conventional loan limits in Texas.

Here’s what you need to know about conventional mortgages and the limits on conventional loans.

Conventional Loan Overview

Conventional loans are widely available from most lenders. They provide some of the best rates and options if you have excellent credit and a sizable down payment saved up.

Unlike VA loans or FHA loans, a conventional loan is not guaranteed by the federal government.

Without a guarantee, the lender will have a more difficult time recouping their losses if a borrower defaults on the loan.

Conventional loans lenders tend to be stricter on who qualifies for the best loan rates to hedge the amount of risk the lender takes on.

Conventional Loan Limits In Texas

Conventional loans have a limit on how much you can borrow. These limits are called conforming limits.

Generally, conventional loans have conforming limits of up to $548,250. However, in various counties where the median price of real estate is significantly higher, conforming limits can be as high as $822,375.

2021 Conventional Loan Limits

One-Family Home $548,250
Two-Family Home $702,000
Three-Family Home $848,500
Four-Family Home $1,054,500

Homes that require more financing than the conforming limits of the county require a jumbo loan with a more stringent qualifications and approval process

Qualifications for a Conventional Loan

Unlike many federally backed loans, qualifications for conventional loans tend to be more strict. Many of these qualifications are set nationwide by organizations like Fannie Mae and Freddie Mac.

Your credit score plays a role in both your acceptance and loan rates.

Your credit score plays a role in both your acceptance and loan rates.

To get a conventional loans you will need to have a sizable down payment. A down payment of at least 3% is standard.

However, down payment requirements may be higher depending on your credit score and the specific requirements of the lender you choose.

For a conventional loan, your debt to Income ratio, or DTI must be lower than 43%. DTI compares the amount of money you make to the total debt payments you’re responsible for each month.

You can calculate your own DTI by dividing your monthly bills, including your desired house payment, by your gross monthly income.

Applying for a Conventional Loan in Texas

Applying for a conventional loan in Texas is simple once you have the right documents and personal information collected.

You can fill out an applications at most banks and credit unions. These days, many lending institutions also allow you to apply online. Regardless of how you apply, you will need to prove you meet the minimum standards to qualify for the loan.

In most applications, you will prove your loan worthiness by a mixture of your credit score, your down payment amount, and your financial ability to repay the loan.

The lender will determine your financial ability with pay stubs to showing consistent employment, up to two years of bank statements, a list of assets, and a list of any debts you currently owe.

You do not need to supply a credit report as the lender will request their own. However, it is highly recommended you pull a credit report ahead of time. This allows you to correct any misinformation before applying for a loan.

Each lender often has different standards and fees regarding their loans.

Compare and research various lenders to ensure you’re getting the best offer for your financial situation.