How they work: Conventional mortgages are “plain vanilla” home loans. They follow fairly conservative guidelines for:

• Borrower credit scores.
• Minimum down payments.
• Debt-to-income ratios.

What’s good: Conventional mortgages generally pose fewer hurdles than Federal Housing Administration, US Department of Agriculture, or Veterans Affairs mortgages, which may take longer to process.

What’s not as good: You’ll need stronger credit to qualify for the best interest rates.

More About Conventional Mortgages: A conventional mortgage is a loan guaranteed by either Fannie Mae or Freddie Mac (unlike an FHA loan which is guaranteed by HUD, or a VA loan which is guaranteed by the Veterans Administration.

Because these loans have more options and flexibility, they are a little more difficult to qualify for. Several factors will determine whether you qualify for a conventional home loan: financial history, income, credit score, down payment, and the price of the home. You will be required to provide proof of income, and the lender will check your credit score to determine best loan options.Your credit report will tell the lender several things, including your debt-to-income ratio and your payment history. A history of late or missed payments and a high debt-to-income ratio will make it more difficult to get conventional approval.

Conventional home loans typically offer better terms with lower mortgage insurance costs and rates based on credit rating. Additionally, conventional home loans offer the ability for borrowers to finance multiple properties including second homes as well as investment properties. The amount you want to finance may play a role in whether you get financing. Because many mortgage companies choose to sell loans to Freddie Mac or Fannie Mae on the secondary market, they must make sure the loan conforms to their guidelines. Still have questions about Texas Home Loans and available options? Give us a call today to speak to one of our local Texas conventional mortgage experts!