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FHA Loans Texas

The Texas housing market is strong. It has an increase in listings of 4.8% year-over-year, and it keeps attracting new residents from all over the United States. Learn how an FHA loan from District Lending can help you achieve homeownership in the Lone Star State.
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With the median Texan household income of $73,035, most people need a loan to purchase a home but are limited by mortgage requirements. An FHA home loan lets borrowers with less-than-perfect credit scores and minimum savings purchase a home.

FHA loans are an excellent option for purchasing single-family homes, apartments, condos, or manufactured homes in Texas. With an FHA mortgage from District Lending, you no longer have to put off buying your dream home.

Texas FHA Loan

FHA loans can help Texas residents achieve homeownership with less strict requirements than when compared to conventional loans. The Federal Housing Administration (FHA) was designed to make homeownership a reality for today's buyers.

Essentially, the federal government insures FHA loans, which minimizes lending risk. Texas mortgage companies are more willing to offer home buyers better interest rates and lending requirements, knowing the loan amount is insured. Buyers find purchasing easier with lower down payment and credit score requirements.
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Texas FHA Mortgage Loan Requirements

If you want to buy a home in Texas, an FHA loan may be one of the best options. However, while the lending requirements on FHA loans may be less strict, this doesn't mean that everyone will qualify. Lenders want to ensure you can afford your mortgage payment, meaning they will check various factors. Texas FHA loan requirements typically include the following:
  • Credit Score

    Your credit score lets the FHA lender learn about your previous payment history. In Texas, the average FICO score is a high 695, which would qualify borrowers for most loans. To qualify for a conventional loan, borrowers need at least a 620 credit score, while Texas FHA loans typically require at least a 580.

    Some FHA mortgage companies may allow lower credit scores in return for a good payment history or high income, sometimes as low as 500. A better credit score doesn’t just increase your chances of approval but can also earn you more competitive interest rates.

  • Down Payments

    Most mortgage lenders are only willing to finance a percentage of the property you want to buy. This is because borrowers with financial interest are more likely to make their payments. Traditional down payment requirements may be as high as 20%, but some FHA loans in Texas require as little as a 3.5% down payment.

    A smaller down payment requirement means you can buy and become a Texas homeowner much faster. Some lenders also offer down payment assistance programs, which can help cover that 3.5%.

  • Personal Finances

    FHA loans don’t have maximum and minimum income requirements, but Texas FHA loan borrowers need proof of steady employment, valid US residency, and minimum debt-to-income ratio (DTI.) In most cases, the FHA lender will require a maximum debt-to-income ratio of around 40%, although the maximum FHA-set limit is 57%.

    FHA loans in Texas are also designed for primary residence, meaning they cannot be used to purchase commercial property or investments. Most lenders will also require borrowers to be at least a few years out of bankruptcy or foreclosure to qualify for an FHA loan.

  • Closing Costs

    Mortgage loans include extra costs, such as real estate commissions, title transfers, credit checks, and appraisals. Closing costs on an FHA loan can be between 2 and 6% of the loan amount. Texas allows the seller to pay a portion (up to 6%) of the closing costs on an FHA loan, which can be negotiated into the home sale.

  • Real Estate Market

    Texas has a vibrant housing market with ample demand but is still lacking on the supply end. To ensure you get the home you want, your lender must be fast and efficient. Also, the real estate market in a given area determines the FHA mortgage limit, meaning it may be challenging for borrowers to purchase in more expensive counties.

    The average home price in Texas ranges between $200,000 to $399,999, with the median home price being $245,000. Some Texas counties, like Dallas-Fort Worth, are among the country’s top housing markets, with an increase of 2.3% monthly in home sales volumes. Dallas-Fort Worth, Houston, Austin, and San Antonio are some of the largest homebuilding markets in the US, attracting buyers from all over the country.

    Selling a home in Texas is taking longer, slowly shifting the market benefits away from the buyer. The average number of days a home was on the market increased from 31 to 48 from 2022 to 2023. Home sales were down 0.9%, helping to level out the average cost of Texas homes.

Texas FHA Loan Limits

FHA loans in Texas have maximum limits on the amounts you can borrow. These limits are set by the federally backed mortgage industry and the state and county in Texas where you want to buy.
  • Credit Score

    Many FHA lenders in Texas require at least a 620 credit score. However, the FHA program itself accepts credit scores as low as 500. However, the average credit score Texas homeowners needed in 2023 to purchase a home was 620. Your credit score for a Texas FHA loan affects your loan eligibility and interest rate.

    Quick Pre-Qualification with District Lending

    A pre-qualification is the first step in buying a home in Texas. A preapproval shows realtors and sellers that you’re ready to buy. It can also speed up home-buying, which is especially important in competitive markets.

     

  • Down Payment Requirements

    The FHA loan program requires a 3.5% down payment. A higher down payment on your loan can result in lower payments and a better interest rate. Payment assistance programs may be available if you don’t have 3.5%.

    Payment Assistance Programs in Texas

    Payment assistance programs can help Texas buyers purchase faster, while some borrowers may qualify for FHA loan assistance through the US Department of Agriculture and Rural Housing.

    Here are other payment assistance programs in Texas:

    • Texas Department of Housing and Community Affairs

    • Homeownership Across Texas Program

    • My First Texas Home Program

    • Texas State Affordable Housing Corporation

    Assistance programs may also be available at the county or city level. Contact your Texas lender to find the perfect downpayment and closing costs assistance programs.

  • Mortgage Insurance

    With an FHA loan, you don’t need private mortgage insurance, but you do need to have FHA mortgage insurance, also known as the mortgage insurance premium (MIP). The annual MIP depends on your loan-to-value ratio, term, and loan size.

    However, since the federal government insures FHA loans, this insurance rate tends to be less than conventional. An upfront mortgage insurance premium of 1.75% may also be rolled into your FHA mortgage, which can add to your monthly mortgage payments.

  • FHA Loan Limits

    FHA loan limits are generally lower since the Federal Housing Administration program was designed to make homeownership easier. The 2024 FHA loan limit in most Texas counties is $498,257 for one-family properties.

    Some counties have higher FHA loan limits:

    • Travis – $571,550

    • Atascosa – $557,750

    • Bandera – $557,750

    • Bastrop – $571,550

    • Collin – $563,500

    • Comal – $557,750

    • Guadalupe – $557,750

    Hays, Hunt, Johnson, Kaufman, Kendall, Medina, Parker, Rockwall, Tarrant, Williamson, Wilson, and Wise counties in Texas also all have slightly higher FHA loan mortgage limits. See the full list of FHA mortgage limits for all Texas counties and property sizes.

    Texas FHA loans may also limit the homes you can purchase, requiring you to live in at least one. The FHA program requires homes to be habitable. An appraisal and inspection are requirements to qualify for an FHA loan. FHA may also require you to make necessary repairs before closing the loan.

How District Lending Can Help

Mortgage rates in Texas, on average, were up 1.47% (from 5.34% to 6.81%) from the year-end of 2022 to the end of 2023, making it more important than ever to choose the right lender. District Lending offers Texas home buyers affordable, streamlined FHA loans. Let us help you achieve your dream of owning a home in Texas with an FHA loan. First-time homebuyers and those looking to expand can benefit from an FHA loan’s low down payment and less strict credit score requirements.

District Lending offers conventional, jumbo, and VA loans if an FHA loan isn’t for you. We can even help you refinance your mortgage to qualify for a better rate. We aim to help make Texas homeownership easier, and we invite you to check out our helpful online tools. Use our mortgage calculator to find out what you can afford. You can also request a free quote today and take the first step toward owning a home in Texas.

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Buy
Home Purchase
Why District
Read about all the benefits
Process overview
Simplified and easy to understand
Apply now
Start your application
Get a quote
See your rate with no commitment
Perks
Free refinance for 3 years
Refinance with no closing costs
No closing costs
Zero costs options, what it means
Realtor credits
Get .5% towards your closing costs
18 Day closing
2X more likely to get your offer accepted
Price match guarantee
We beat competitors’ rates by .125% or more
Rate defense
Never miss out on rates dropping
Refinance
Rates
About
Reviews
Hear from our customers
Contact
Answers within 2 business hours
Meet the crew
Our experts, mission, and values
Careers
Join us in making a difference
Learn
Blog
Our knowledge at your convenience
Mortgage secrets
Short videos with tips&tricks
Video library
A short description can be here
Calculator
Calculate your mortgage payment
Apply nowGet a quote