FHA vs. Conventional Loans In Boerne

Thinking about buying a home in Boerne but unsure whether an FHA or conventional loan fits you best? You’re not alone. Different loan rules, insurance costs, and appraisal standards can all affect your budget and your timeline. In this guide, you’ll learn how each loan works, what matters most in Kendall County, and how to choose the path that supports your goals. Let’s dive in.

FHA vs. conventional basics

FHA loans are insured by HUD and built to help buyers with smaller down payments or lower credit scores. They require a specific appraisal process and mortgage insurance.

Conventional loans are backed by private investors and the Fannie Mae/Freddie Mac system. They can be very competitive for buyers with stronger credit or larger down payments, and they often allow more flexibility on mortgage insurance over time.

Both loan types typically expect you to occupy the home as your primary residence. In competitive moments, some conventional loans may qualify for an appraisal waiver through automated systems, which can speed up closing. FHA appraisals cannot be waived.

Down payment and cash to close

• FHA minimum down payment is typically 3.5% for qualifying borrowers. Some borrowers with lower credit may need a higher down payment based on FHA rules and lender requirements.
• Conventional options can go as low as 3% down for certain eligible buyers, though many conventional borrowers choose 5% to 20% down to reduce or eliminate private mortgage insurance (PMI).
• Both programs allow documented gift funds with proper paperwork.
• Seller concessions are allowed for both, but limits differ by program and down payment level. Ask your lender for current allowance caps before you write offers.

If you’re stretching to cover closing costs, FHA’s lower minimum down payment can help. If you have a larger down payment saved, conventional financing can reduce your monthly costs by trimming or removing PMI sooner.

Mortgage insurance costs

FHA loans include an up-front mortgage insurance premium (UFMIP) that can be rolled into the loan, plus an annual mortgage insurance premium (MIP). Depending on your down payment and loan terms, MIP may last a long time.

Conventional loans use PMI when you put less than 20% down. PMI pricing varies by credit score and down payment. The key difference is that PMI can usually be canceled when you reach 80% loan-to-value (and it cancels automatically at 78% in many cases), which can make conventional cheaper over the long run if you build equity quickly.

Credit score and DTI expectations

FHA programs are generally more flexible on credit scores and may allow higher debt-to-income (DTI) ratios when you have compensating factors. Individual lenders often apply their own minimums, so your lender’s overlays matter.

Conventional loans usually require higher minimum scores and are more sensitive to credit tiers for pricing. Typical DTI caps for conventional are around the mid‑40% range, but automated underwriting results can affect what is approved.

Loan limits and Kendall County price points

Both FHA and conventional programs have loan limits that change each year. In Kendall County, those limits determine whether you can use standard conforming products or need a jumbo conventional loan. If your target price is near local limits, your loan type decision becomes even more important.

Action step: verify current FHA county limits and conforming loan limits for Kendall County with your lender before touring higher price points. If your budget exceeds conforming limits, plan for jumbo guidelines such as larger down payments and stronger credit requirements.

Property and appraisal rules in Boerne

Boerne’s housing stock includes newer subdivisions, historic Hill Country homes, some condos and townhomes, occasional manufactured homes, and rural properties with septic or well systems. Each can interact differently with FHA and conventional rules.

Condos and townhomes

• FHA often requires that the condo project meet specific approval criteria.
• Conventional financing may be available if the project meets agency standards. Some projects need extra documentation.
• If your shortlist includes condos, involve your lender early so you understand project-level requirements.

Manufactured homes

• FHA has strict rules on foundation, permanent affixation, title, and home age.
• Conventional lenders may offer separate manufactured-home programs with their own criteria.
• Expect added documentation and timeline planning for either loan type.

Septic and well systems

• FHA appraisals must confirm systems are adequate; failing or unpermitted systems often require remediation before closing.
• Conventional underwriting also looks at functionality and health standards. Some lenders may allow escrowed repairs depending on circumstances.
• Build in time for specialized inspections if the property has a private well or septic.

Floodplains and creek-adjacent lots

• Properties in FEMA flood zones require flood insurance for both loan types.
• Confirm flood status early. Insurance quotes and potential elevation certificates can affect both payment and timeline.

Older Hill Country homes

• FHA appraisers flag safety and structural items that need repair before closing. Things like peeling paint, missing handrails, or significant deferred maintenance can trigger required repairs.
• Conventional appraisers focus on value and basic safety, but lender overlays still apply. Repairs may be escrowed in certain cases.
• If you love a fixer, plan ahead with renovation financing options.

Appraisals and timelines in Boerne

FHA appraisals use a rostered appraiser and require a case number. This can add time, especially if repairs are required before closing. Conventional loans typically order a standard appraisal, and some buyers may receive an automated valuation waiver that shortens the process when the data supports it.

In smaller markets and rural segments of Kendall County, comparable sales can be thin. Both FHA and conventional appraisals may come in below contract price if recent comps do not support the value. Work with your agent on appraisal contingency strategies and plan how to handle a potential gap.

When FHA makes sense

You might lean FHA in Boerne if you:

• Want the lowest practical down payment at 3.5% and need flexibility on credit or DTI.
• Are early in your savings journey and plan to use gift funds for down payment or closing costs.
• Are targeting price points under the local FHA limit where property condition is solid.

When conventional fits better

Conventional may be the better value if you:

• Can put 5% to 20% down and want the option to cancel PMI as you build equity.
• Have strong credit and want better pricing over the long term.
• Are competing for homes where appraisal waivers could speed closing.
• Are shopping above FHA limits or considering jumbo financing.

Renovation financing in Boerne

Buying a home that needs work? You can finance improvements into your mortgage:

• FHA 203(k): Combines purchase and renovation into one loan, with specific escrow and contractor requirements. Expect more documentation and a longer timeline.
• Conventional renovation products: Options like HomeStyle Renovation may fit certain projects and borrowers. Eligibility rules differ from FHA.

If you are eyeing a fixer, talk with your lender early so your offer timeline matches the added steps for renovation loans.

How to choose your best path

Use this simple checklist to move from research to results:

1. Get fully pre‑approved. Ask your lender to compare FHA vs. conventional for your credit score and target down payment. Request a clear monthly payment breakdown including mortgage insurance.
2. Confirm Kendall County limits. Verify current FHA and conforming loan limits for your price range and whether jumbo financing might apply.
3. Model PMI vs. MIP over time. Compare how long you would pay mortgage insurance under each program, and what happens when you reach 80% LTV on a conventional loan.
4. Check property type eligibility. Ask about condos, manufactured homes, septic/well systems, and flood zones for any homes on your shortlist.
5. Plan for appraisal scenarios. Discuss appraisal contingencies, potential repairs, and how to handle a low valuation before you submit offers.
6. Consider renovation options. If a property needs work, evaluate FHA 203(k) or conventional renovation products and adjust your timeline.

Work with a local guide

Choosing between FHA and conventional is easier when you have a neighborhood‑savvy partner who knows Boerne’s inventory, common property quirks, and local lender norms. If you want practical guidance on loan strategy, property fit, and appraisal planning, our team is here to help you move confidently from pre‑approval to closing.

Ready to compare options and tour the right homes for your budget? Connect with Lifestyle Design Realty for step‑by‑step support and local insight.

FAQs

Which loan has the lowest down payment in Boerne?

• FHA commonly allows 3.5% down for qualifying borrowers, while some conventional programs offer 3% down for eligible buyers. Your credit profile and program rules determine eligibility.

Does FHA always cost less than conventional for low down payments?

• Not always. FHA includes upfront and annual MIP that can last a long time. Conventional PMI can often be canceled once you reach required equity, which may lower costs over time.

Can I use an FHA loan on any home in Kendall County?

• No. The property must meet FHA minimum property standards. Certain condos, some manufactured homes, and properties with failing septic systems may require fixes or be ineligible.

Will an FHA appraisal take longer than a conventional appraisal?

• Sometimes. FHA appraisals require a case number and an FHA‑approved appraiser. Required repairs can extend timelines. Some conventional loans may receive appraisal waivers that speed closing.

How do current loan limits affect my Boerne home search?

• Loan limits determine whether you can use FHA or conforming conventional financing or need jumbo. Verify current FHA and conforming limits for Kendall County with your lender before you shop at higher price points.