FHA Loans in Texas: Requirements, Limits, and How to Qualify

For a lot of Texas buyers, the wall between renting and owning isn’t the monthly payment — it’s the pile of cash a conventional loan wants up front. An FHA loan is the tool that lowers that wall. Backed by the Federal Housing Administration, it lets you buy a primary residence in Texas with as little as 3.5% down and a credit score as low as 580, with more forgiving debt and credit rules than a conventional loan. The trade-off is mortgage insurance, which we’ll cover honestly below.

FHA loans are popular across Texas for good reason: lower down payment, lower credit floor, and rules built for real households — not just buyers with 20% saved and a perfect score. They also pair cleanly with Texas down payment assistance, which can cover much of that 3.5% and a chunk of closing costs.

Below, we walk through exactly how FHA loans work in Texas: who qualifies, the credit and down-payment rules, the 2026 FHA loan limits by county, how the mortgage insurance actually works, how FHA compares with a conventional loan, and how to apply. Every figure traces back to HUD (which runs the FHA program) or the CFPB. These rules change periodically, so confirm the current numbers with a lender before you apply.

"An FHA Loan Probably Isn’t For Me" — Let’s Check

Four assumptions stop Texas buyers from even looking at an FHA loan. None of them hold up.

• "FHA loans are only for first-time buyers." Not true. FHA has no first-time-buyer requirement — anyone buying a primary residence can use one, including repeat buyers.
• "My credit isn’t good enough." FHA allows a 580 score with 3.5% down, and even 500–579 with 10% down — well below what most conventional loans want.
• "I’d still need a big down payment." The minimum is 3.5%, and Texas down payment assistance can cover much of that, so out-of-pocket is often far less than you expect.
• "The mortgage insurance makes it not worth it." The insurance is real, but FHA’s lower rate and lower entry cost often beat waiting years to save 20% — and you can refinance to a conventional loan later to drop it once you build equity.

If one of those was your reason for ruling FHA out, it’s worth a few minutes to see where you actually stand.

What Is an FHA Loan?

An FHA loan is a mortgage insured by the Federal Housing Administration, part of the U.S. Department of Housing and Urban Development (HUD). The government does not lend you the money — an FHA-approved lender does — but the FHA insures the loan, which lets lenders accept lower credit scores and smaller down payments than they would on a conventional loan. The full rulebook is HUD’s Single Family Housing Policy Handbook 4000.1; the CFPB’s overview of FHA loans is a plain-language starting point.

FHA loans are for primary residences only — one-to-four-unit homes you live in, including many condos and manufactured homes. They are not for investment properties or second homes. In Texas they are one of the most-used loan types for buyers who have steady income but limited savings or a credit history that is still recovering.

FHA Loan Requirements & Qualifications in Texas

Here is what an FHA loan generally requires in Texas, per HUD Handbook 4000.1:

• Credit score: 580 or higher for the 3.5%-down option; 500–579 is allowed with at least 10% down. Many Texas lenders set their own overlay at 600–620, so the lender you choose matters near the floor.
• Down payment: at least 3.5% of the purchase price, which may come from savings, a gift from family, or a down payment assistance program.
• Debt-to-income (DTI): commonly up to about 43%, and higher with compensating factors and automated-underwriting approval. FHA is more flexible on DTI than most conventional loans.
• Steady income & employment: typically a two-year history, verified with pay stubs, W-2s, and tax returns.
• Primary residence: you must intend to live in the home; FHA is not for investment properties.
• FHA appraisal: the property must meet HUD’s minimum property requirements (safe, sound, secure) and appraise at or above the purchase price.

Credit Score & Down Payment: How Low Can You Go?

FHA’s flexibility on credit and down payment is the whole point. The two tiers, per HUD:

• 580+ credit score → 3.5% down. On a $300,000 home, that’s $10,500 down. Down payment assistance can cover much of it.
• 500–579 credit score → 10% down. Still possible, but the larger down payment and lender overlays make this tier harder to use in practice.
• Below 500 → not eligible for FHA financing.

The down payment can be a gift from a family member or come from a Texas down payment assistance program. For context, the average U.S. FICO score is about 715, so a 580 floor is far below average — FHA is built for buyers whose credit is still climbing.

FHA Loan Limits in Texas (2026)

FHA caps how much you can borrow, and the limit depends on the county and the number of units. For 2026, the one-unit FHA loan limit in most Texas counties is the national "floor," with higher limits in the major metros. These figures come from HUD’s published loan limits:

If the home you want costs more than the FHA limit for your county, you would need a larger down payment to bring the loan under the cap, or a different loan type such as a conventional or jumbo loan.

FHA Mortgage Insurance: UFMIP and Annual MIP

This is the honest trade-off of an FHA loan. Because the FHA insures the loan, you pay mortgage insurance premiums (MIP) in two parts, per HUD:

• Upfront MIP (UFMIP): 1.75% of the loan amount, paid at closing or rolled into the loan. On a $290,000 loan that’s about $5,075, usually financed.
• Annual MIP: for most 30-year FHA loans with the minimum down payment, the annual premium is about 0.55% of the balance, billed monthly (the rate HUD set in its Mortgagee Letter 2023-05). On that $290,000 loan, roughly $133/month to start.

One key difference from conventional PMI: on FHA loans with less than 10% down, the annual MIP generally lasts the life of the loan. With 10% or more down, it can fall off after 11 years. Many Texas buyers use FHA to get in the door, build equity, and then refinance into a conventional loan to drop the insurance — a common and legitimate strategy. Verify your projected MIP with a lender, since the rate depends on your loan term, amount, and loan-to-value.

FHA vs. Conventional: Which Fits You?

FHA isn’t automatically better or worse than a conventional loan — it fits a different buyer. The quick comparison:

Pairing an FHA Loan With Texas Down Payment Assistance

FHA + down payment assistance is the most common combination for Texas buyers, and it’s where the out-of-pocket math gets friendly. Texas’s two state agencies — TSAHC and TDHCA — offer assistance worth up to about 5% of the loan amount as a grant or a forgivable second lien. On an FHA loan, that assistance can cover the 3.5% down payment and chip into closing costs, so many buyers reach the closing table with little out of pocket.

See the full picture on our Texas down payment assistance guide. Note that TSAHC and TDHCA both require a 620 credit score for their programs, which is higher than FHA’s 580 floor — so the assistance program, not FHA itself, can be the gating number near the bottom of the credit range.

How to Apply for an FHA Loan in Texas

1. Check your credit and budget. Aim for a 580+ middle FICO score; estimate your price range and the 3.5% down.
2. Get pre-qualified with an FHA-approved lender. A licensed mortgage professional in our partner network confirms your numbers and the FHA limit for your county.
3. See if down payment assistance applies. TSAHC or TDHCA may cover much of the down payment and closing costs if you meet the 620 credit and county income limits.
4. Complete homebuyer education if you use a TSAHC or TDHCA program (a HUD-approved course).
5. Find a home and get the FHA appraisal. The property must meet HUD minimum property requirements.
6. Close on your home. Your upfront MIP is typically rolled into the loan.

ShopDPA is a Texas home loan referral service. We connect Texas buyers with licensed mortgage professionals in our partner network who originate FHA loans and handle any down payment assistance enrollment together. We do not originate, fund, or service loans.

Documents You’ll Need

• Photo ID and Social Security number
• Pay stubs (last 30 days) and W-2s or 1099s for the past two years
• Federal tax returns for the past two years (especially if self-employed)
• Bank and asset statements (last two months)
• A gift letter and paper trail if any of the down payment is a family gift
• Homebuyer education certificate if you use down payment assistance

Texas FHA Loan FAQ

† ShopDPA is an independent Texas home loan referral service and is not affiliated with HUD, the Federal Housing Administration, the CFPB, TSAHC, TDHCA, or any government agency. We do not originate, fund, or service loans. FHA rules, loan limits, credit floors, and mortgage-insurance rates are set by HUD and may change; confirm current details with an FHA-approved lender before applying. Equal Housing Opportunity.