Trying to decide between an FHA or a conventional loan for a home in New Braunfels? You are not alone. Many buyers weigh credit score, down payment, and monthly costs before they even start touring homes. In this guide, you will learn how each loan works, what matters most in Comal County, and simple steps to choose the best fit for your budget. Let’s dive in.
FHA vs conventional basics
FHA loans are insured by the Federal Housing Administration. They are popular if you have limited savings or a lower credit score. You can qualify with a smaller down payment, but you will pay mortgage insurance and the home must meet FHA property standards.
Conventional loans are offered by private lenders and often follow rules from Fannie Mae or Freddie Mac. They can be a better long-term fit if you have stronger credit and at least some money down. Private mortgage insurance is required with less than 20 percent down, but you can remove it later under federal law once you meet loan-to-value rules.
The best choice depends on your down payment, credit, the condition of the home, your timeline in the home, and whether you need seller help with closing costs.
What matters most in New Braunfels
In Comal County, most single-family homes fall within conforming loan limits, which means both FHA and conventional options are usually available. If the price is above conforming limits, you will likely need a jumbo conventional product. FHA limits vary by county and property type, so always verify the current FHA county limit before you write an offer.
You should also factor in Texas property taxes and homeowners insurance when you compare monthly payments. Texas does not have a state income tax, but property taxes and insurance make up a large share of your monthly cost. Use estimates from the Comal County Appraisal District and an insurance quote so your comparisons are realistic.
Eligibility and down payment
- FHA minimums: 3.5 percent down with a credit score of 580 or higher. Borrowers with scores from 500 to 579 may qualify with 10 percent down, subject to lender guidelines.
- Conventional minimums: Many lenders offer as little as 3 percent down for certain eligible first-time or income-qualified programs. More common options start at 5 percent down, and 20 percent avoids mortgage insurance entirely.
Lenders can add their own overlays on top of these program rules. It is smart to talk to more than one lender so you know your true options.
Credit, DTI, and approval
- FHA credit: FHA is more flexible on credit scores, using the thresholds above. Lenders may still prefer higher scores.
- Conventional credit: Many lenders look for a minimum around 620. You usually get better rates with scores in the 700s.
- Debt-to-income ratio: FHA commonly targets about 43 percent, with potential exceptions for strong files. Conventional automated systems often allow around 45 percent, sometimes higher with compensating factors. Your lender will run the numbers based on your income and debts.
If your credit is still building, FHA may get you into a home sooner. If your credit is strong, conventional pricing and future PMI removal can lower total cost over time.
Mortgage insurance differences
- FHA: You will pay an upfront mortgage insurance premium that is often financed into the loan, plus an annual mortgage insurance premium paid monthly. For loans originated on or after June 3, 2013, the duration depends on your down payment. With less than 10 percent down, the annual mortgage insurance usually remains for the life of the loan. With 10 percent or more down, it typically lasts 11 years.
- Conventional: Private mortgage insurance is required when you put less than 20 percent down. PMI cost depends on your credit score, loan-to-value, and program. You can request cancellation at 80 percent loan-to-value and it will automatically terminate at 78 percent under the Homeowners Protection Act, if you are on schedule and in good standing.
If you plan to hold the home for several years and your credit is strong, conventional can reduce lifetime insurance cost because PMI can be removed. If your priority is qualifying with a smaller down payment and more flexible credit, FHA may be the path to purchase.
Property condition and appraisals
- FHA: The property must meet HUD minimum property standards. Health, safety, and soundness issues are typically repaired before closing. This is important if you are considering an older home or a property listed as is.
- Conventional: Appraisals focus on value and marketability. Minor repairs are less likely to block closing, though major issues can still be flagged by the lender or insurer.
If you are shopping for turnkey homes, either route may work. If you want to consider homes that need repairs, conventional may be more flexible.
Seller concessions and closing costs
- FHA: Seller contributions toward buyer closing costs are allowed up to program limits. Historically this has been up to 6 percent of the price for eligible items.
- Conventional: Seller contributions are allowed, but the maximum depends on your down payment and the type of mortgage. Ask your lender for the current caps tied to your loan-to-value.
If you need help with closing costs, FHA’s higher concession limit can make a difference. Conventional can still work, but the allowed amount may be smaller depending on your down payment.
Loan limits and price points
Conforming loan limits are set each year by the Federal Housing Finance Agency. FHA loan limits are set by county and unit count by HUD. In Comal County, many homes are within conforming limits, so both FHA and conventional loans are common. Always confirm the current limits for your price range before finalizing your plan.
If your target price is above conforming limits, you will use a jumbo conventional product. FHA does not cover that range.
Condos and property types
FHA can finance single-family homes, certain multi-unit owner-occupied properties, and condominiums in approved projects. FHA condo approval can be more restrictive, so check the project’s status early.
Conventional loans also finance condos, often with different project requirements. If you are condo shopping, have your agent and lender verify the project’s eligibility upfront to avoid delays.
Local assistance programs
Texas state and local programs may offer down payment or closing cost assistance that can pair with FHA or conventional loans, depending on the program rules. Examples include programs offered by the Texas Department of Housing and Community Affairs, local housing counseling resources in Comal County, and certain lender-administered assistance options. Eligibility can depend on income, credit, and the property location.
Some buyers in the region may also qualify for USDA Rural Development loans or VA loans. USDA eligibility depends on geography and income. VA loans are available to eligible service members and veterans and do not require mortgage insurance.
Talk to a local lender who participates in these programs so you understand which option pairs best with FHA or conventional for your situation.
Taxes, insurance, and monthly payment
When you compare FHA and conventional, include a full monthly estimate. Ask the lender to itemize principal and interest, property taxes, homeowners insurance, and mortgage insurance. Use current tax estimates from the Comal County Appraisal District and an insurance quote for the property type you are targeting.
This full view helps you compare two or three real loan scenarios on equal footing. It also reduces surprises when you get to closing.
Quick decision checklist
Use this shortlist to decide which loan to explore first:
- Down payment available now
- Less than 5 percent: Compare FHA and any eligible 3 percent down conventional program.
- 5 to 19 percent: Conventional is often competitive. Compare PMI to FHA mortgage insurance.
- 20 percent or more: Conventional usually offers the best long-term cost with no mortgage insurance.
- Credit score snapshot
- Below 580: FHA may be more realistic.
- 580 to 620: Both paths may be possible. Shop lenders.
- 620 and above: Conventional becomes more accessible, with better PMI pricing at higher scores.
- Property condition
- Needs repairs or is listed as is: Conventional may be more flexible.
- Move-in ready: Either loan type can work.
- Time in the home
- One to three years: Weigh upfront costs and monthly insurance carefully.
- Five years or longer: Conventional can reduce lifetime insurance cost, especially if you remove PMI.
- Need seller help with costs
- FHA often allows higher seller contributions, which can help if cash is tight.
Real buyer scenarios
- Scenario A: First-time buyer with limited cash and a credit score around 600. FHA can help you buy with 3.5 percent down, but expect upfront and annual mortgage insurance and an appraisal that checks for repairs.
- Scenario B: Buyer with a 720 credit score and 5 to 10 percent down. Conventional can be preferable due to lower mortgage insurance cost and the ability to cancel PMI when you reach required loan-to-value.
- Scenario C: Buyer eligible for VA or USDA. These may offer 0 percent down with different insurance structures. Always compare these against FHA and conventional if you qualify.
Steps before you tour homes
- Get pre-qualified or pre-approved with at least two lenders, one that offers FHA and one that offers conventional. This gives you firm monthly payment estimates for each option.
- Ask for itemized estimates that show principal, interest, property taxes, homeowners insurance, and mortgage insurance separately. You want apples-to-apples comparisons.
- Verify the current FHA county limit for Comal County and the current FHFA conforming limit for your target price.
- If you are shopping for a condo, check FHA condo approval status early and confirm conventional project requirements.
- Run an affordability check that includes HOA dues where applicable and uses local property-tax estimates.
How Marti Realty Group can help
You want clear numbers, fast answers, and a smooth path from pre-approval to closing. Our team helps you line up the right financing path before you start touring so your offers are stronger and your budget is accurate. We can coordinate with local lenders, help you evaluate FHA versus conventional estimates, and focus your search on homes that fit your loan type and timeline.
If you are value-focused, ask about our buyer rebate programs that can help reduce your out-of-pocket costs at closing, subject to lender and program rules. Ready to compare scenarios for homes in New Braunfels and Comal County? Connect with the local team at Marti Realty Group to run the numbers and see your options.
FAQs
What is the main difference between FHA and conventional loans in New Braunfels?
- FHA is government-insured and more flexible on credit and down payment, while conventional is lender-backed and can offer lower long-term insurance cost, especially if you remove PMI later.
What credit score do I need for an FHA or conventional loan in Comal County?
- FHA allows 3.5 percent down with scores of 580 and above, and 10 percent down for scores from 500 to 579, while many conventional lenders look for around 620 or higher for standard eligibility.
How does mortgage insurance work for FHA vs conventional in Texas?
- FHA requires upfront and annual mortgage insurance, with duration tied to your down payment, while conventional uses PMI that you can request to cancel at 80 percent loan-to-value and that automatically ends at 78 percent if you meet requirements.
Will FHA appraisal repairs delay my closing in New Braunfels?
- They can if the property has health, safety, or soundness issues that must be fixed before closing, so ask your lender and agent to flag potential repairs early if you are using FHA.
Can seller credits cover my closing costs with FHA or conventional loans?
- FHA generally allows higher seller contributions, historically up to 6 percent, while conventional limits vary by your down payment and loan type, so confirm the current caps with your lender.
How do property taxes in Comal County affect my FHA vs conventional choice?
- Property taxes significantly impact your monthly payment, so use current estimates from the Comal County Appraisal District when comparing quotes to see the full monthly cost under each loan type.
