ServicesConventional Loans
Conventional Loans in Pflugerville
Conventional financing is the standard home loan for buying or refinancing without a government program behind it. We go over your credit, income and savings, tell you straight whether it fits, and walk the file to closing. Then we call back to explain what to watch on the loan.
Conventional Financing in Plain Terms
Conventional means the loan is not backed by the FHA, VA or USDA. Most of these loans follow guidelines from Fannie Mae and Freddie Mac. Those guidelines cap the loan amount and set credit and debt limits, but they are flexible about the property. You can buy or refinance a primary residence, a second home or a rental with one.
This loan usually works best for borrowers with steady work, solid credit and some money in the bank. Certain first-time buyers can put down just 3 percent. If you put down less than 20 percent, you carry private mortgage insurance, and unlike FHA insurance, it goes away as your equity grows. If your credit history is short or you have military service, take a look at our FHA Loans or VA Loans page first.
Our loan officers bring 11 years in the mortgage industry, and we have been NMLS licensed for 10 years. In that time we have seen many borrowers sign happily at closing and then forget about the loan by the next year. That is why we keep calling after you get the keys and tell you what your options are.
What You Get From Us
A straight pre-qualification
We go over your income, debts and credit on the phone. You hear what price range makes sense and whether conventional is the right loan, or if another one fits better.
A loan estimate we read with you
Every lender hands you a loan estimate. We go line by line so you know the rate, the fees and the cash you need to close.
Rate lock timing
We explain how long a lock lasts and what it costs to extend one. You pick the timing with the facts in front of you.
Appraisal and underwriting follow-through
We order the appraisal, answer the underwriter's questions and tell you right away when we need a new document. No guessing where the file stands.
A closing you understand
Before you sign, we compare the final numbers to your estimate and point out anything that moved.
A check-in once you move in
We call when you are settled. We cover your first payment, escrow for taxes and insurance, and when you can ask to remove mortgage insurance.
When Conventional Financing Makes Sense
- A score of 620 or better
- That is the usual floor for a conventional loan. Above it, every step up in score can lower your rate.
- Money set aside
- Twenty percent down is not required. Still, a few percent down, plus closing costs and some reserves, makes approval smoother.
- Buying a getaway place or a rental
- FHA, VA and USDA loans only cover the place you live. A conventional loan can finance a vacation property or an investment property too.
- Paying FHA insurance with no end date
- On many FHA loans, the insurance lasts as long as the loan. With enough equity built up, refinancing to conventional can stop that payment.
- Wanting mortgage insurance that ends
- On conventional financing you can request removal of private mortgage insurance at 80 percent of the original value. At 78 percent it stops on its own.
How the Loan Moves From Call to Keys
- 1
Phone call and pre-qualification
We talk through your goals and your numbers. You hang up knowing roughly what you qualify for.
- 2
Documents and pre-approval
You send pay stubs, W-2s, bank statements and tax returns. We pull credit and issue a pre-approval letter you can hand to your agent.
- 3
Signed contract, appraisal and review
With a signed contract in hand, we order the appraisal and set your rate lock whenever you say go. The underwriter reviews the whole file, and we track down any open items. Many loans close in about 30 to 45 days.
- 4
Closing day
You sign at the title company. We go over the closing disclosure with you a few days ahead so nothing at the table catches you off guard.
- 5
We check back
Once the loan funds, we call to make sure the first payment is set up right. We also tell you what to watch: escrow changes, mortgage insurance removal, and when a refinance might make sense.
What Pushes Your Rate and Closing Costs Up or Down
Conventional pricing is built from a handful of pieces. Some come from your file, some from the property, and some from the market on the day you lock. We lay each one out in writing so you can see which part moves your number.
- Credit score
- Pricing runs in score bands. Climb into a higher band and you usually get a better rate and lower mortgage insurance.
- Down payment
- Putting more down shrinks your loan-to-value. That can trim the rate and reduce or remove mortgage insurance.
- How you use the property
- The best pricing goes to a place you live in full time. A second home, a rental, a condo or a two-to-four-unit building typically prices higher.
- Term and points
- Choosing 15 years instead of 30 typically gets you a better rate, though the monthly payment is larger. Paying points at closing is another way to lower the rate.
- Lock length and closing costs
- A longer lock can add cost. Title fees, the appraisal and the starting escrow deposit for taxes and insurance also go into the cash you need at closing.
Questions Borrowers Ask About Conventional Loans
- How little can I put down?
- Some first-time buyers can get in with 3 percent down. Other borrowers need 5 percent or more, based on the loan. Closing costs come on top of that, so we figure out both amounts on your first call.
- Can a relative give me money for the down payment?
- Yes, on a primary residence gift funds are allowed. The person giving the money signs a gift letter, and we have to see the deposit land in your account. We handle that paperwork with you early so underwriting keeps moving.
- How do I get mortgage insurance taken off?
- Once your balance reaches 80 percent of the original value and your payments have been on time, you can ask your servicer to drop it. At 78 percent it ends automatically. When we call after closing, we give you an estimated date for hitting that mark.
- Should I go conventional or FHA?
- Your score and the cash you have saved decide most of it. Borrowers with good credit often pay less over the years on conventional, since the mortgage insurance can come off. If your score is on the low side, FHA may cost less at the start. We price out both and put them next to each other so you can compare.
- Can I switch to a conventional loan down the road?
- Yes. A lot of borrowers start with FHA, build up equity, then refinance into conventional to get rid of the insurance. We watch for that point and let you know when the math works.
Find Out Where You Stand
A short call tells you if a conventional loan fits and what price range to shop in. We stay in touch once you close, too.