ServicesConventional Loans
Conventional Loans in Smithville
A conventional loan often carries the lowest total cost for borrowers with steady income and decent credit. Before we suggest a down payment or rate, we review your credit report, income documents and assets, then tell you plainly what qualifies.
What a Conventional Loan Is and Who It Fits
A conventional loan is a mortgage with no government agency backing it. Most follow Fannie Mae or Freddie Mac guidelines, which set the credit, debt-to-income and documentation rules, and the loan amount has to stay within the conforming limit published each year.
It usually fits borrowers with a credit score in the mid-600s or higher, a reliable two-year income history and some money saved for the down payment and closing. It also covers second homes and investment property, which FHA, VA and USDA loans generally do not.
We do not lead with a product. We read your file first, compare a conventional loan against FHA Loans, VA Loans or USDA Loans where you might qualify, and show you the numbers side by side so the choice rests on your own figures.
What We Do on a Conventional Loan
- Credit report review
- We pull your tri-merge credit report and go line by line. A late payment, a high card balance or a reporting error can shift your rate tier, so we point out anything worth fixing before you lock.
- Income calculation
- We calculate qualifying income the way the underwriter will. Salaried pay is simple; overtime, bonus, commission and self-employment income need a two-year average, and we show you that math.
- Debt-to-income check
- We add your proposed payment, including taxes, insurance and any mortgage insurance, to your monthly debts and measure it against your income. You see the ratio before the automated underwriting system does.
- Down payment and PMI options
- We lay out what changes at different down payment levels, including when private mortgage insurance applies and how it can be removed later.
- Rate and points comparison
- We quote the rate with and without discount points so you can see how long it takes for paying points upfront to break even.
- Refinance analysis
- For a rate-and-term or cash-out refinance, we compare your current loan to the new one, including closing costs, so you know whether it actually saves money.
Signs a Conventional Loan May Be the Right Fit
Your credit is in good shape
Conventional pricing rewards higher scores more directly than FHA pricing does. If your score is solid, a conventional loan often costs less over the life of the loan.
You can put down 20 percent or more
At 20 percent down there is no mortgage insurance at all. Even with less down, conventional PMI can be canceled, unlike most FHA mortgage insurance.
You are buying a second home or rental
Government-backed programs are built for primary residences. A conventional loan is the usual route for a weekend place or an investment property.
You have a lot of equity to work with
If the property has gained value, a conventional refinance can lower your rate, drop PMI or take cash out within Texas cash-out rules.
Your income is documented and steady
W-2 pay, tax returns and bank statements that line up make a conventional file move cleanly. If your income runs through a business, our Bank Statement Loans page may fit better.
What Moves the Cost of a Conventional Loan
Your rate and closing costs come from your own file, not a posted number. We explain each factor that applies to you after we review your credit and the property, and you get your quote by phone with the reasons behind it.
Credit score and loan-to-value
Fannie Mae and Freddie Mac apply loan-level price adjustments based on your score and how much you put down. A higher score or a larger down payment usually moves you into a better tier.
Mortgage insurance
With less than 20 percent down, PMI is added to the payment. Its cost depends on your score and down payment, and it can be canceled once you reach enough equity.
Property type and occupancy
A primary residence prices best. Second homes, investment property, condos and multi-unit buildings carry added adjustments.
Discount points and lock period
Paying points lowers the rate in exchange for cash at closing. A longer rate lock offers more protection but can cost slightly more.
Cash-out and closing costs
Cash-out refinances price higher than rate-and-term ones. Title, appraisal and prepaid taxes and insurance also affect the cash you need at closing.
How Your Conventional Loan Moves From First Call to Closing
- 1
Initial conversation and file review
On the first call we talk through your goals and gather basic figures. We then review credit, income and assets and tell you what we found, including any weak spots, before recommending anything.
- 2
Pre-approval
We run your file through Fannie Mae's Desktop Underwriter or Freddie Mac's Loan Product Advisor. The findings give you a pre-approval letter that sellers and agents in Bastrop County and beyond take seriously.
- 3
Rate lock and appraisal
Once you have a contract, we lock your rate for a set period and order the appraisal. The appraiser confirms the property supports the loan amount and meets condition standards.
- 4
Underwriting and conditions
The underwriter reviews everything and may ask for items such as a letter explaining a large deposit or an updated pay stub. We tell you exactly what is needed and why.
- 5
Closing
You get your Closing Disclosure at least three business days before signing, and we walk through it with you line by line so nothing on the final figures is new.
Conventional Loan Questions
What credit score do I need for a conventional loan?
Most conventional programs start around 620, but pricing improves noticeably as the score rises. We look at your actual report and tell you whether a small change, such as paying down a card balance, could move you into a better tier before you lock.
Do I really need 20 percent down?
No. Some conventional programs allow as little as 3 percent down for qualifying buyers. Putting down 20 percent removes PMI, but many borrowers choose a smaller down payment and keep cash in reserve, and we show you both payments.
How do I get rid of PMI later?
You can ask to cancel PMI once your balance reaches 80 percent of the original value, provided your payment history is clean. It drops off automatically at 78 percent on the original schedule. A new appraisal after the property gains value can sometimes get you there sooner.
Is a conventional loan better than an FHA loan?
It depends on your score and down payment. FHA can be easier to qualify for with lower credit, but its mortgage insurance often lasts the life of the loan. We price both from your file so you can compare the real numbers.
Can I use a conventional loan for a cash-out refinance in Texas?
Yes. Texas limits cash-out refinances on a homestead to 80 percent of the appraised value and has its own disclosure and waiting-period rules. We explain those steps and calculate how much cash the numbers allow.
See What Your File Supports
Tell us what you are buying or refinancing, and we will review your credit, income and assets before recommending a program. You will hear what we found and what it means for your rate.