The mortgage limits keep changing from time to time as per the market. Here’s an account of the current loan limits for conventional loans in Texas.
There are different types of mortgage loans that one can apply for, depending on their financial stability, credit score, and other requirements. Mortgage loans can be classified under the following divisions:
- Conventional loans
- Adjustable-rate mortgages
- Fixed-rate mortgages
- Government-backed loans
- Jumbo mortgages
In this article, we will solely focus only conventional loans in Texas, their advantages, and loan limits as per the updated norms. So, without further ado let’s get with it!
Understanding Conventional Loans
Conventional loans are mortgages that are offered by banks and other traditional financial institutions. The primary differentiating factor about the conventional loan is that it is not backed or insured by the federal government. There are two types of conventional loans:
- Conforming loans
- Non-conforming loans
The conforming loans have to follow the maximum limit set by the Federal Housing Finance Agency. We will further discuss the limits as the article progresses. The loans that come without a limit such as the jumbo mortgages are known as non-conforming loans.
Conventional loans require the borrower to get mortgage insurance against it and pay a minimum down payment of 20%.
Benefits of Conventional Loans
Conventional loans come with a bunch of benefits, such as:
- You can use it to buy a primary residence, a vacation home, or investment real estate.
- You can cancel the mortgage insurance once your house equity is 20%.
- The borrowing cost tends to be lower than the other mortgages. However, the interest rates might be a tad-bit higher.
- It allows the sellers to pitch into the closing costs.
Loan Limits for Conventional Mortgages
In this segment, we will discuss the conforming limits or loan limits of conventional mortgages. These limits are only applicable to loans that are not backed by the Federal Government. According to FHFA (Federal Housing Finance Agency), the maximum loan limit in Texas for the year 2021 is $548,250. The amount applies to a single-family home. For multi-family homes the limits are mentioned below:
- 2 unit: $702,000
- 3 unit: $848,500
- 4 unit: $1,054,500
These loan limits apply to all Texas counties and metros, including Dallas, San Antonio, Fort Worth, El Paso, and Houston.
On a concluding note, banks and traditional financial institutions are not the sole places from where you can get on conventional loans in Texas approved. You can also seek out the assistance and expertise of private lenders who can offer you more lucrative and flexible loan products with low-interest rates. So, do your research on all available avenues before applying for a conventional mortgage.
AUTHOR BIO: Joan Gallardo, a Senior Loan Officer with 18+ years of experience, shares with readers, the loan limits for conventional loans in Texas.