Texas Conventional Loan Requirements: What Actually Disqualifies People

What Actually Disqualifies People

The 620 score is the easy part. These are the things that actually stop files — and most of them are fixable if you catch them early enough.

1. Debt-to-income, once the real numbers show up

Most online pre-qualifications run on estimated taxes and insurance. In Central Texas both of those land higher than the estimate almost every time. When the real escrow figures arrive, the ratio moves — and files that looked comfortable stop working. This is the most common reason a pre-approval falls apart later, and it's entirely avoidable by using real numbers up front.

2. Deposits you can't document

Every large deposit that isn't payroll needs a paper trail. Cash you'd been saving. Venmo from a family member. Selling a truck without a bill of sale. Underwriting isn't questioning that it's your money — it's asking you to prove where it came from, and "I just had it" is not an answer the file can use. Stop making undocumented deposits about two months before you apply and most of this problem disappears.

3. Waiting periods after a credit event

These are set by Fannie Mae and Freddie Mac, and on a conventional loan they are not negotiable:

• Chapter 7 bankruptcy — four years from discharge
• Chapter 13 — two years from discharge, four from dismissal
• Foreclosure — seven years
• Short sale or deed-in-lieu — four years

If you're inside one of these windows, conventional isn't the conversation — FHA has shorter periods, and that's worth knowing before you spend three weeks on the wrong loan.

4. One thirty-day late in the last twelve months

Particularly a housing payment. People are genuinely surprised by this one — a single missed payment on an otherwise spotless file can move it from approved to declined, or into pricing that makes the loan not worth doing. If you've had one, tell me at the start. There are ways to work around it that only exist if I know early.

5. Your own tax return, if you're self-employed

Every deduction your CPA fought for comes back off your qualifying income, and two years of returns get averaged. Excellent tax planning and workable mortgage math are frequently opposite things. This is common enough that there's a whole separate route for it — see self-employed and bank statement programs.

6. A job change at the wrong moment

Moving from W-2 to 1099, or into a different industry, generally restarts a two-year history clock — even for more money. Same employer, same field, a raise: fine. Newly self-employed six weeks before applying: not fine. If a change is coming, the order you do things in matters more than the change itself.

7. The property, not you

Your file can be flawless and the building can still kill the loan. Non-warrantable condos, projects with heavy investor ownership, active HOA litigation, appraisal condition issues. Nothing about this is your fault and none of it shows up until you're already under contract — which is exactly why it's worth checking the project before you write the offer, not after.

8. Debt that isn't really yours

A car you co-signed for your kid counts against you, even though they make the payment. So do student loans in deferment. Both have documented workarounds — twelve months of proof that someone else pays it, in the co-signer case — but only if you raise it before underwriting finds it.