Conventional loans Houston TX buyers use are not backed by a government agency, yet they remain the most widely used loan type across the Houston metro. They can start as low as 3 percent down, carry PMI that drops off once you build equity, and go up to the 2026 Harris County conforming limit of $832,750. Whether they are the right fit depends on your profile, your goals, and how they compare to alternatives like FHA. All figures are subject to qualification and a full loan estimate.

When I sit down with buyers in Houston, the conventional loan question comes up in nearly every conversation. It is the default for a wide range of purchase scenarios, from a Spring Branch craftsman bungalow to a townhome in EaDo, from a move-up buy in Memorial to a first home in Midtown. Understanding conventional loans Houston TX borrowers can access, including who they fit, what they cost, and where they fall short, is the foundation of a smart loan decision. This guide covers all of that, with numbers anchored to the Houston market and links to the companion pieces that go deeper on FHA and the down payment comparison you should read alongside this one. For a broader look at Houston financing options, see the Houston TX home loans guide.

What Are Conventional Loans Houston TX Buyers Use?

A conventional loan is a mortgage that is not insured or backed by a federal agency like the FHA, VA, or USDA. Instead, it meets guidelines set by Fannie Mae and Freddie Mac, the government-sponsored enterprises that purchase loans from lenders and keep the mortgage market liquid. Because there is no government guarantee, lenders typically require stronger qualifications than an FHA loan, but the trade-offs can work in a buyer’s favor once the profile is there.

Conventional loans come in two broad categories: conforming and non-conforming. A conforming conventional loan stays within the loan limits set annually by the Federal Housing Finance Agency. In 2026, the Harris County conforming limit is $832,750 for a single-family home, which covers the vast majority of purchase transactions across Houston, The Heights, Memorial, Spring Branch, EaDo, and Midtown. A non-conforming conventional loan, commonly called a jumbo loan, exceeds that limit and applies to higher-priced purchases in areas like River Oaks, Tanglewood, and parts of West University.

For most buyers in the Houston metro, the conforming conventional loan is the starting point, and the rest of this guide focuses there.

Who May Qualify for Conventional Loans in Houston TX?

Conventional loans generally require a stronger borrower profile than FHA. That said, the bar is not out of reach for a wide range of buyers. Here is what I typically walk people through when we are seeing whether a conventional loan is the right tool.

Income and debt-to-income ratio. Lenders evaluate your gross monthly income against your total monthly debt obligations, expressed as a debt-to-income ratio, or DTI. Conventional guidelines typically allow a back-end DTI up to around 45 percent, though some scenarios may allow slightly higher with compensating factors. Your actual limit is subject to full underwriting review.

Down payment. Conventional loans can start as low as 3 percent down for qualified buyers, often through programs targeting first-time or moderate-income borrowers. More common entry points are 5 percent and 10 percent down, and 20 percent is the threshold that removes private mortgage insurance entirely. See the full breakdown in the Houston down payment guide.

Property type and use. Conventional loans can be used on primary residences, second homes, and investment properties, which FHA cannot. They also cover condos, townhomes, and single-family homes with fewer property condition restrictions than FHA, which tends to matter in Houston’s older inner-loop submarkets where deferred maintenance is common.

Loan amount. Your purchase price and down payment must produce a loan amount at or below the 2026 Harris County conforming limit of $832,750. On a $350,000 Houston median-priced home with 5 percent down, the loan amount is $332,500, comfortably within conforming range. On a $900,000 Memorial home, you would either need a larger down payment to fall within the limit or move to a jumbo product.

Down Payment Range for Conventional Loans in Houston TX

The down payment range on a conventional loan is wider than many buyers realize. Here is the practical map for a Houston purchase.

Illustrative only, based on a $350,000 purchase. All amounts, programs, and eligibility are subject to qualification, credit approval, and a full loan estimate. Fairway Independent Mortgage Corporation, NMLS #2289. Equal Housing Opportunity.

The 3 percent option is the entry floor for conventional financing in Houston, and it makes homeownership reachable for buyers who have steady income and savings but do not have a large cash stockpile. For a higher-priced purchase in The Heights, where the median runs around $678,000, those same percentages scale up: 5 percent is about $33,900 and 20 percent is about $135,600. The program is the same; the dollar amounts shift with the price.

How PMI Works on Conventional Loans Houston TX Buyers Carry

Private mortgage insurance, or PMI, is the cost conventional lenders add when you put down less than 20 percent. It protects the lender against default, not you, and it is folded into your monthly payment. The rate varies based on your loan-to-value, your loan amount, and other qualification factors, so the specific cost for your scenario is subject to a full loan estimate.

The most important thing to understand about conventional PMI is that it is not permanent. Two built-in exit ramps apply. First, once your loan balance reaches 78 percent of the original purchase price, the lender is required to cancel PMI automatically. Second, once you believe you have reached 80 percent loan-to-value, either through payments, appreciation, or a combination of both, you can request early cancellation. In a Houston submarket where values have shown steady movement, that request can sometimes come sooner than buyers expect.

That PMI exit ramp is a meaningful difference from FHA. On most FHA loans with a low down payment originated in recent years, the mortgage insurance premium stays for the life of the loan rather than falling off at an equity threshold. For buyers who have the profile to qualify for conventional, the ability to eventually shed PMI is often a compelling reason to choose conventional over FHA from the start.

The 2026 Harris County Conforming Limit and What It Means for Your Loan

The conforming loan limit for Harris County in 2026 is $832,750 for a single-family home. This figure matters for conventional loan borrowers in a specific way: your loan amount, which is your purchase price minus your down payment, must stay at or below that threshold to qualify as a conforming conventional loan. Loans above it fall into jumbo territory, which typically carries different qualification standards and pricing.

For most Houston buyers, the $832,750 limit covers a wide range of purchase scenarios. On a $700,000 home in Spring Branch or a condo in the Galleria corridor, a 5 percent down payment produces a loan amount of $665,000, well within conforming range. On a $900,000 home, you would need to put down at least $67,250 to keep the loan at or below the limit, or move into a jumbo product. The conforming limit is the same across Harris County, whether you are buying in Cypress, Midtown, or EaDo, because all of those areas fall within the same county designation.

It is also worth knowing that the Energy Corridor and Texas Medical Center, two of Houston’s major employment anchors, draw buyers at a range of price points. A nurse or engineer buying a $425,000 home in Spring Branch or a $550,000 townhome near the Medical Center is well within conforming territory and would use a standard conventional loan rather than a jumbo product. That is the sweet spot where conventional financing is the clearest fit. For a full overview of Harris County financing, see the Harris County home loans guide.

Conventional vs FHA: A Brief Contrast for Houston Buyers

Both conventional and FHA loans are widely used in Houston, and choosing between them is one of the most common questions I get. Here is the short version, with more detail available in the companion FHA vs Conventional Houston TX guide and the FHA Houston TX hub.

Mortgage insurance. Conventional PMI drops off when you reach 80 percent equity and cancels automatically at 78 percent loan-to-value. FHA mortgage insurance premiums on most recent low-down-payment loans stay for the life of the loan. For a buyer who expects to stay in the home for several years and build equity, that difference can add up meaningfully over time.

Property condition. FHA appraisals include property condition requirements that can flag deferred maintenance, peeling paint, roof issues, and other items as repair conditions. Conventional appraisals are generally less prescriptive on condition. In Houston’s inner-loop neighborhoods, where older homes are common, that difference can affect which loan type works for a given property. The Heights and Montrose, where historic bungalows and craftsman homes are part of the appeal, are areas where I sometimes see FHA hit property condition snags that conventional does not.

Loan limits. The 2026 FHA single-family limit in Harris County is $541,287. The conventional conforming limit is $832,750. For buyers targeting the $542,000 to $832,750 range, conventional is the only conforming government-eligible path; FHA is not an option at those loan amounts without a jumbo FHA product, which is uncommon.

Who FHA tends to fit. FHA remains the program of choice in many of Houston’s entry-level submarkets, including the East End, Third Ward, Sunnyside, and Pasadena, where buyers may have thinner down payment reserves or a profile that is not yet at conventional strength. FHA is a solid path for the right buyer. The question is whether it is the right path for your buyer profile.

Houston-Specific Considerations for Your Conventional Loan

Houston has a few market characteristics worth building into your planning before you lock a conventional loan.

Property taxes. Harris County property taxes run about 2.0 to 2.5 percent of assessed value across the combined taxing entities. On a $350,000 home, that is roughly $7,000 to $8,750 per year before any exemptions. Applying the homestead exemption, which now includes a $140,000 school district exemption after the 2025 expanded exemption Texas voters approved, meaningfully reduces the taxable value after your first year. Your lender will model property taxes into your escrow estimate, and those taxes are part of the real monthly cost alongside your principal, interest, and any PMI.

Homeowner’s insurance. Houston’s hurricane and wind exposure drives insurance premiums higher than many other metros. Annual estimates typically run between $2,500 and $4,500 depending on location, coverage, and the home’s age and construction. Flood insurance is separate and is required by lenders if the property is in a Special Flood Hazard Area. Flood risk is a genuine Houston consideration, and I always encourage buyers to check FEMA flood maps before they are under contract, not after.

No zoning. Houston is the only major US city without traditional zoning. Deed restrictions, HOA covenants, and city ordinances govern land use instead. During the option period, buyers should review deed restrictions carefully, especially in older, non-HOA neighborhoods where restrictions vary block by block. A conventional appraisal will not flag deed restriction issues the way a survey or title review would, so that review is the buyer’s and buyer’s agent’s responsibility.

No state income tax. Texas has no state income tax, which is a meaningful net cost advantage for buyers relocating from California, New York, Illinois, and other high-tax states. That advantage does not directly affect your conventional loan qualification, but it often factors into how buyers assess their overall Houston affordability picture. The absence of state income tax is one reason the Energy Corridor and Texas Medical Center pull buyers from around the country.

Frequently Asked Questions About Conventional Loans in Houston TX