Business > Real Estate

Debunking all the Latest Myths about Conventional Loan in Texas

Worried whether conventional loans are a good choice because of all the things you hear? Let’s dispel the truth here!


Purchasing a home in the current real estate market is no mean feat. Yes, there is a myriad of loan options but the popularity of conventional loans is yet to be diminished. Conventional loan rates are low now and this makes the ideal time to buy a home. However, many individuals steer away from applying for conventional loan Texas due to myths and misconceptions. For this reason, let’s debunk the myths about conventional mortgages.


Myth #1: Gift Funds are not Allowed for Conventional Loans

Many individuals think that only FHA loans allow gift funds; however, conventional loans also let borrowers receive gift funds. Homebuyers applying for Freddie Mac and Fannie Mae can get down payments as gifts from their close friends or family members. You’d be surprised to know that 50% of first-time homeowners get closing costs and down payments as gift funds from friends or relatives. Just like FHA loans, the same applies to conventional loans.


Conventional lenders allow sourced and eligible funds. You need to get a sign from the donor that they have provided the fund for a particular purpose. Therefore, the gift letter must indicate that the gift is for a loan and not for anything else. The donor of the gift fund must show a 30-day bank statement before the amount is deposited into the borrower’s account.


Henceforth, the down payment does not necessarily need to come from you. You can choose any down payment, and there is no restriction on the gift fund either. Make a 20% down payment because it will get rid of the private mortgage insurance.


Myth #2: 20% Down Payment is not the Sole Option

Countless borrowers think that a 20% down payment is only allowed for conventional loans. However, this is not the truth. This is high time that we debunk the myth. Down payments for conventional loan programs are available in all sizes. In 2019, 12% of first-time homebuyers put down 6% of the loan value. Besides this, buyers who want to purchase again, put down 16% of the loan amount. This means there is no thumb rule about the loan down payment — it is not mandatory to make a 20% down payment.


Let’s think of this scenario — the average price of a home is $272,100. With a 6% down payment, you have to pay $16,320. A lower down payment makes the loan process significantly easier. Moreover, the down payment varies between 3% and 6% for conventional loan programs. 

Joan Galardo


Residential Commercial Mortgage Loan Originator at Clear Lending.

Article comments

Leave a Reply

Popular Authors

Crypto Knowledge (8)

As a digital agency, understands that change is the only constant and we are reinventing ourselves to resonate with the changing times.

JollyHires Inc. (5)

If you are keen on finding jobs near me, then the geo-location feature of the JollyHires app gives you a view of all the jobs near me in a jiffy.

Pelatihan Sertifikasi K3 Kemenaker RI (3)

Ahli k3 umum,Ahli k3 Kimia, Ahli k3 listrik Trainers Management Indonesia (TMI) adalah Perusahaaan yang bergerak dibidang jasa Pelatihan, Pembinaan dan sertifikasi K3 (Keselamatan dan kesehatan kerja). Memiliki 10 bidang SKP;

Latest Articles