Patrick's Quick Answer
Conventional loans are one of the most widely used mortgage options among first-time home buyers. Eligible buyers may finance with as little as 3% down, some conventional PMI can eventually be requested for removal, and conventional pricing often allows more property-condition flexibility than FHA. In community-property states like Texas, FHA and conventional rules can also treat a non-borrowing spouse's debts differently. Comparing interest rate, APR, monthly payment, cash to close, mortgage insurance, and how long you expect to own the home is how you decide which program fits. FHA may sometimes offer a lower note rate, while conventional may offer advantages elsewhere in the loan structure.
Want the program basics in plain English before the numbers? The conventional loan explainer covers how the program works from the inside out, and the first-time homebuyer roadmap lays out every stage from pre-approval to closing. Here is the short version of why the conventional loan keeps winning for Texas buyers.
Not sure which loan lane is yours?
Patrick runs conventional and FHA on the same house, same down payment, with mortgage insurance shown both ways, so you compare real monthly totals instead of rates alone.
Advantage 1: the down payment floor is lower
A conventional loan accepts as little as 3% down, while FHA starts at 3.5%. Eligible first-time home buyers may qualify for conventional financing with as little as 3% down. Some programs, such as Fannie Mae HomeReady, have income limits; other conventional 97% LTV / 3%-down options may not use the same 80% area-median-income limitation, so it pays to check the specific program rules when you apply. Fannie Mae and Freddie Mac, the agencies that set the guidelines for these low-down-payment conventional options, are the source to verify: HomeReady and Home Possible. For a first-time buyer in San Antonio or the surrounding Hill Country, that lower floor is often the difference between buying now and waiting another year.
Example on a $300,000 home, illustrative as of September 2026
The same house, the same buyer, two loan programs. The only change is the program's minimum down payment.
Illustrative example as of September 2026, not a quote or promise. Eligibility and income limits depend on household size, program guidelines, and the county AMI at the time you apply.
Advantage 2: the mortgage insurance goes away
FHA's mortgage insurance premium (MIP) does not drop on most 30-year loans; it stays for the life of the loan unless you sell or refinance under FHA's rules. Conventional private mortgage insurance (PMI) is generally cancellable: for many borrower-paid conventional PMI loans, borrowers may generally request cancellation when applicable requirements are met around 80% of the home's original value, and automatic termination generally occurs around 78% of original value when applicable requirements are satisfied. Cancellation based on current value and appreciation can involve separate investor and servicer rules, so confirm the specifics with your lender. The CFPB explains the borrower protections that govern when PMI can be removed. The consumer takeaway: conventional PMI may eventually be removable, while FHA mortgage insurance follows different rules.
Example on a $300,000 home, illustrative as of September 2026
Illustrative example as of September 2026, not a quote or promise. Mortgage insurance premiums depend on down payment, credit score, and loan size, and are quoted per file.
The full PMI math on 3% down lives in the real cost of a low down payment guide, and the exact exit rules are in the removing PMI guide.
Advantage 3: the appraisal has more room to breathe
FHA appraisals must follow HUD Minimum Property Requirements (MPR), set out in the FHA Single Family Housing Policy Handbook. Safety issues like a foundation problem, roof leaks, termites, or faulty wiring must typically be repaired before an FHA loan can close. Conventional financing can offer more property-condition flexibility than FHA for that reason. However, conventional loans still have property-eligibility standards, and serious issues affecting safety, soundness, or structural integrity may still require repairs before closing. That flexibility is one reason sellers often prefer a conventional offer over an FHA offer in a multiple-offer situation. For more on inspections and repairs, see the home inspection guide and how repairs get negotiated in the inspection negotiation guide.
Advantage 4: a non-borrowing spouse's debts stay out of the ratio
In community-property states such as Texas, FHA rules may require certain debts of a non-borrowing spouse to be considered when qualifying, subject to applicable rules and exclusions. Conventional treatment can differ depending on borrower liability, agency guidelines, state law, and lender requirements, so there is no universal outcome that applies to every family. Patrick can review your specific situation on either program. If you want the full picture on what counts against you, the debt-to-income ratio explainer walks through it.
The honest trade-off: when FHA wins
No program wins every scenario. FHA may sometimes offer a lower note rate than conventional, while conventional may offer advantages elsewhere in the loan structure. The right call comes from comparing interest rate, APR, monthly payment, cash to close, mortgage insurance, your expected ownership period, refinance assumptions, and total projected cost. There is no universal break-even period that applies to every buyer, so treat any example as an illustration, not a rule. When might FHA still make more sense? When its note rate, qualifying profile, or mortgage insurance fits your credit and budget better, FHA can be the better fit, so run both programs on your actual numbers. The deeper comparison lives in the FHA vs conventional vs VA answer and the best loan for a first-time buyer answer.
The numbers should decide, not the label.
Patrick has 23+ years in loan origination and 19 years in real estate sales, and his dual license means he can structure the offer and the financing together. He will run your actual income cap, your credit, and your hold time through both programs before you choose.
Frequently Asked Questions
Why do first-time home buyers often choose a conventional loan? Tap to expand
Can I get a conventional loan with 3% down in Texas? Tap to expand
How long does mortgage insurance stay on a conventional loan? Tap to expand
Is FHA or conventional better for a first-time home buyer in Texas? Tap to expand
On your side from pre-approval to closing.
Patrick educates buyers on every step, then structures offers to win. Follow the first-time homebuyer roadmap, then start with a pre-approval review or book a discovery call and get the real comparison for your situation.
About Patrick Kevin Fagan, REALTOR®
Patrick Kevin Fagan is a Texas Real Estate Sales Agent (#454749) with AXEN Realty LLC and a Senior Loan Officer (NMLS ID #877741) with NEXA Mortgage, LLC (NMLS #1660690). He brings 23+ years in mortgage lending and 19 years in real estate, serving homebuyers, homeowners, and sellers across Greater San Antonio and the Texas Hill Country.
Answered by Patrick Kevin Fagan
Texas Real Estate Sales Agent #454749, AXEN Realty LLC · Senior Loan Officer, NMLS ID #877741, NEXA Mortgage, LLC
Call or text: 210-317-6514
Dollar figures on this page are illustrative examples as of September 2026, not quotes or promises. Program guidelines (income caps, down payment minimums, mortgage insurance premiums, and rate differences) change, and actual numbers depend on your income, credit, loan size, and lender pricing at the time you apply.
