Texas Homebuyers: Comparing Jumbo and Conventional Home Loans

Howdy, mortgage seekers in Texas! Are you looking for a new home and want to know what’s the most popular loan type out there? Do you want to know about qualifying for a mortgage in Houston?

You may have heard about conventional and jumbo loans and are wondering what the difference is between the two.

Conventional loans are one of the most popular loan types you can find, while jumbo loans are loans that exceed the conventional loan limit.

Let’s explore the key differences between jumbo and conventional loans so that you can decide which one fits your specific financial situation.

Join us as we dive into the world of mortgages.

What’s the difference between jumbo and conventional loans?

Choosing the right type of loan can be overwhelming if you are buying a home for the first time. A jumbo loan in Houston can help finance your new home, especially if you are buying a high-end luxury property. 

A jumbo loan exceeds the loan limits set by the Federal Housing Finance Agency. The limit for a conventional loan in Texas is $726,200 for a one-unit home and $929,850 for a two-unit home. A jumbo loan is a good option if the home you are eyeing is more expensive than the conventional loan limits.

Conversely, conventional loans are under the guidelines set by Fannie Mae and Freddie Mac and have loan limits when you apply.  

Loan requirement differences between jumbo and conventional loans.

Applying for a jumbo loan in Houston is the same as a conventional loan in Houston but with stricter requirements. Take a look at some of the loan requirements below:


Due to the higher loan amounts involved, jumbo loans typically require a larger downpayment versus conventional loans. Expect to pay between 10% to 30% of your loan amount. You also don’t pay for mortgage insurance for jumbo loans, which is another reason for the more significant downpayment required.

For conventional loans, you can find lenders who require as low as a 3% downpayment.

Credit Requirements

Jumbo loans require a higher credit score since lenders take on a larger risk. You need to prove that you are financially stable to get approved for a jumbo loan. Conventional loans, on the other hand, give you more flexibility with credit scores.


A more expensive loan requires bigger monthly payments. Earning more money is a must when applying for a jumbo loan. Lenders want to see stable and predictable income proven by proper documentation.

Debt to Income Ratio

A jumbo loan typically requires a DTI of 45% or lower, while conventional loans may be had with a DTI of 50%. 

Cash Reserves

Lenders usually require up to 6 months of cash reserves for a conventional loan and a minimum of 12 months for a jumbo loan. 

Which is better, a jumbo loan or a conventional loan?

There is no “better” loan between the two. The choice between a jumbo loan and a conventional loan will vary from one borrower to another. It will depend on your financial situation, needs, credit score, and downpayment size.

Consider all factors before making a decision. You wouldn’t want to get a loan and default since you can’t afford to make monthly payments.

Is there a way to avoid a jumbo loan?

Here are steps to avoid a jumbo loan:

  1. Ask your lender about the conventional loan limits in your location. Limits may vary depending on your area so you can look for a home priced below the conforming loan limit.

  2. A larger downpayment can reduce the amount you need to borrow, which may lower the loan amount and meet the conventional loan limit.

  3. Higher credit scores allow better interest rates and terms, eliminating the need for a jumbo loan.

Jumbo loans can be a good option for specific borrowers. 

The Bottom Line

As a trusted lender in Texas, Reliance Financial Group knows that finding the best loan for your new home purchase is essential for first-time homebuyers.

Our loan officers at Reliance Financial Group of Houston are here to help you with all your conventional or jumbo loan needs.

Our jumbo loans are outstanding for those buying luxury homes in Houston. With higher loan amounts, you can finance your dream home. We offer the best rates, flexible payment terms, and a simple and fast application process to make your journey to owning your new home as smooth as possible.

Our conventional loans are perfect for those buying a modest home in Texas.

Call or message to get started today!


* Specific loan program availability and requirements may vary. Please get in touch with your mortgage advisor for more information.