ServicesConventional Loans
Conventional Loans in San Marcos
A conventional loan is the standard mortgage most buyers and refinancers use. We walk you through the down payment, PMI and the property coverage your lender requires at closing, so you can compare real numbers before you decide.
What a conventional loan is and who it fits
A conventional loan is not backed by a government agency. Most follow Fannie Mae or Freddie Mac guidelines, which set the credit, income and property rules. Because no FHA, VA or USDA guarantee sits behind the loan, pricing leans heavily on your credit score and how much equity you put in.
It tends to fit borrowers with a credit score in the mid-600s or higher, steady documented income and some savings. Some first-time buyers can put down as little as 3%. With 20% down there is no PMI at all, and below that the PMI can come off later, unlike the lifetime premium on many FHA loans.
If your credit is thinner, you served in the military or you are buying in a rural pocket outside Kyle or Lockhart, we will tell you plainly when FHA, VA or USDA would cost you less.
What we handle on a conventional loan
- 01
Rate quote with full costs
We quote the rate along with points, lender fees and estimated PMI. You see the monthly payment and cash to close side by side, not just a headline rate.
- 02
Pre-qualification and pre-approval
We review credit, income and assets up front. A pre-approval letter backed by documents carries more weight with sellers than a quick estimate.
- 03
PMI explained in plain terms
We show what private mortgage insurance costs at your down payment and when it can come off. You can request removal at 80% loan-to-value, and it drops automatically at 78% on the original schedule.
- 04
Hazard and flood coverage guidance
Your lender requires a hazard policy in place before closing, and flood coverage if the property sits in a mapped flood zone. We explain the coverage the loan requires so you can shop policies early. We do not sell policies or act as an adjuster.
- 05
Refinance and cash-out options
Conventional loans also cover rate-and-term refinances and cash-out refinances. We compare those against a HELOC when you want to tap equity without touching your first mortgage.
Questions about Conventional Loans?
Call(512) 812-9583Signs a conventional loan is the right call
Your credit score is solid
Conventional pricing rewards higher scores. Above roughly 700, the rate and PMI often beat an FHA loan with its upfront and annual premiums.
You have 5% or more saved
Even short of 20%, a larger down payment cuts the PMI rate and the loan balance. Gift funds from family can count toward it with the right paperwork.
You want PMI that ends
If you plan to stay a while, PMI that drops off as you pay down the balance or as values rise can save real money over the life of the loan.
You are buying a second home or rental
Conventional guidelines allow second homes and investment properties, which government loans generally do not. Down payment and reserve rules are stricter there.
How the loan moves from first call to closing
- 1
First call and rate quote
We talk through the price range, down payment and timeline, then quote rates and estimated costs. No documents needed yet.
- 2
Documents and pre-approval
You send pay stubs, W-2s or tax returns, bank statements and permission to pull credit. We run the file through underwriting guidelines and issue a pre-approval.
- 3
Contract, appraisal and coverage
Once you are under contract, we order the appraisal and lock your rate when you are ready. You bind a hazard policy and send us the declarations page so the lender can verify coverage.
- 4
Underwriting and closing
The underwriter clears conditions, sometimes asking for a letter explaining a deposit or job change. When the file is clear to close, you review the Closing Disclosure at least three business days before signing at the title company.
What moves your rate and closing costs
No two conventional quotes are priced the same, because the loan is priced on your risk profile and the property. Here is what changes the numbers. We itemize each one in writing so nothing shows up at closing unexplained.
- Credit score
- Fannie Mae and Freddie Mac apply price adjustments by score bracket. A jump of 20 points can lower both the rate and the PMI premium.
- Loan-to-value
- The less you borrow against the price, the lower the risk. Crossing thresholds like 80%, 85% or 90% changes pricing and PMI.
- Points and lock period
- Paying discount points buys the rate down. A longer rate lock costs more because the lender carries the risk longer.
- Property type and use
- Condos, multi-unit properties and investment purchases carry added adjustments. A primary residence prices best.
- Escrow for taxes and coverage
- Hazard premiums, any flood policy and property taxes are collected into escrow. They do not change the rate, but they change your monthly payment and cash to close.
Conventional loan questions
How much do I really need for a down payment?
Some first-time buyers qualify with 3% down, and most others with 5%. You will pay PMI below 20%. You also need closing costs and sometimes reserves, so we map out total cash, not just the down payment.
Is PMI the same as my owner's insurance?
No. PMI protects the lender if the loan defaults and comes off once you reach enough equity. An owner's policy protects the property against damage like hail or fire, and your lender requires it for as long as the loan exists.
What if the property is in a flood zone?
If the flood map places the property in a special flood hazard area, the lender will require flood coverage. We check the flood determination early so the premium is in your numbers before you commit.
Can I use a conventional loan to refinance?
Yes. You can lower your rate or term, drop the FHA premium by moving to conventional, or take cash out. We run the break-even so you know how long it takes to recover the closing costs.
What credit score do I need?
Most conventional programs start around 620. Pricing improves noticeably above that, so we sometimes suggest paying down a card balance before we pull credit for the application.
See your conventional numbers before you shop
Tell us the price range and what you have saved, and we will quote the rate, PMI and cash to close. We work with buyers across San Marcos, Buda, New Braunfels and Wimberley.