How Much House Can You Afford With a Conventional Loan in Texas?

Conventional Loan

How Much House Can You Afford With a Conventional Loan in Texas?

Reviewed by the HomeMath editorial team Updated 2026-08-06

Key takeaways

Aim for a total housing payment (principal, interest, taxes, insurance) that does not exceed 28% of your gross monthly income.
Keep all monthly debt obligations, including the housing payment, below 36% of your gross monthly income.
Conventional loans typically require a minimum down payment of 5%; putting down 20% eliminates private mortgage insurance (PMI).
Texas property taxes are generally around 1.5% – 2% of a home's assessed value, so factor this into your monthly payment.

When you’re shopping for a home in Texas with a conventional mortgage, the key question is how much you can comfortably afford. Lenders use a combination of income, debt, and local costs to set a maximum loan amount.

How lenders calculate affordability

Lenders look at two ratios:

Front‑end ratio: This is the percentage of your gross monthly income that goes to housing costs (principal, interest, taxes, and insurance). Most lenders cap this at 28%.
Back‑end ratio: This includes all monthly debt payments—credit cards, student loans, car loans, plus the housing payment. The typical ceiling is 36%.

If your numbers fit within these limits, you’ll likely qualify for a conventional loan.

Key components of a conventional loan payment in Texas

A conventional loan payment is more than just principal and interest. In Texas, you should budget for:

Principal and interest (based on the loan amount and interest rate).
Property taxes—Texas has some of the nation’s higher rates, often between 1.5% and 2% of the home’s value, collected monthly through escrow.
Homeowners insurance.
Homeowners association (HOA) fees, if applicable.

Typical down‑payment and PMI considerations

Conventional loans require as little as 5% down, but putting down less than 20% usually means you’ll pay private mortgage insurance (PMI) until you reach 20% equity. A larger down payment reduces your monthly payment and eliminates PMI.

Sample calculation (illustrative only)

Suppose you earn $6,000 gross per month. Using the 28% front‑end rule, the maximum housing payment would be $1,680. If you have $300 in other monthly debt, the 36% back‑end rule allows a total debt load of $2,160, leaving $1,860 for housing. From that amount, you would subtract estimated property taxes and insurance to determine the principal‑and‑interest you can afford.

This example uses generic percentages and does not reflect current interest rates or exact tax amounts. Your personal situation may differ.

This article provides general information and is not personalized financial advice. Consult a qualified mortgage professional for advice tailored to your circumstances.

FAQ

What credit score is typically required for a conventional loan in Texas?

Most lenders look for a minimum credit score of 620 for conventional financing, though a score of 700 or higher often secures better rates and more favorable terms.

Can first‑time homebuyers in Texas use a conventional loan?

Yes. First‑time buyers can qualify for conventional loans, especially if they meet the down‑payment and credit requirements. Texas also offers state‑run programs that can provide down‑payment assistance alongside a conventional mortgage.

How does Texas’s community‑property law affect my mortgage?

In community‑property states like Texas, any debt incurred during marriage is generally considered joint. This means a lender may evaluate both spouses’ incomes and debts when determining loan eligibility.

What happens if I can’t afford a 20% down payment?

You can still obtain a conventional loan with as little as 5% down, but you’ll likely pay private mortgage insurance (PMI) until your equity reaches 20%. PMI adds to your monthly payment but can be cancelled once you meet the equity threshold.

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