FHA Loans in Texas: A Complete Buyer’s Guide for 2026
FHA loans are the most commonly used low-down-payment mortgage program in Texas, and for good reason. In 2025, FHA loans accounted for roughly 15% of all purchase mortgages originated in the state, according to HMDA data. The program gives buyers who do not have 20% saved, or who have credit histories that are still rebuilding, a viable path to homeownership.
Here is a clear breakdown of how FHA loans work in Texas in 2026, what they cost, and who benefits most.
What Makes FHA Loans Different from Conventional
FHA loans are insured by the Federal Housing Administration, a division of the U.S. Department of Housing and Urban Development (HUD). That insurance is the key difference from conventional loans. Because the government backs the loan against default, lenders are willing to accept lower credit scores and smaller down payments than they would for a conventional program.
In practice, this means FHA loans are accessible to buyers who might not qualify for conventional financing. The flip side: FHA loans require mortgage insurance regardless of down payment size. With conventional loans, private mortgage insurance (PMI) disappears once you reach 20% equity. With FHA, the rules are different, and insurance can follow the loan much longer.
FHA Loan Limits in Texas for 2026
FHA sets loan limits by county based on local median home prices. For 2026, the baseline limit for a single-family home in most Texas counties is $524,225. In higher-cost areas like Travis County (Austin), the limit is $571,550. In the Dallas-Fort Worth metro, limits vary by county: Collin and Denton counties are at $571,550, while Tarrant and Dallas counties sit at $524,225.
Here are the 2026 FHA single-family limits for the major Texas metros:
- Austin (Travis County): $571,550
- Dallas (Dallas, Tarrant): $524,225
- Dallas suburbs (Collin, Denton): $571,550
- Houston (Harris, Fort Bend, Montgomery): $524,225
- San Antonio (Bexar): $524,225
- El Paso (El Paso County): $524,225
If you are buying above the FHA limit in your county, you will need to look at conventional loans or jumbo financing. Homes above FHA limits are common in central Austin and the higher-priced Dallas suburbs.
Credit Score and Down Payment Requirements
FHA loans have two down payment tiers based on credit score:
- Credit score of 580 or above: minimum 3.5% down payment
- Credit score of 500 to 579: minimum 10% down payment
- Credit score below 500: not eligible for FHA financing
These are HUD minimums. Individual lenders often layer on their own “overlays,” meaning they may require a higher minimum score than HUD mandates. Many FHA lenders in Texas prefer 580 minimum, and some set 620 as their floor. Shopping lenders matters here, especially if your score is between 580 and 619.
Down payment funds can come from personal savings, a gift from a family member, or an employer assistance program, with proper documentation. The 3.5% minimum at a $350,000 purchase price is $12,250, which is far below the $70,000 a 20% down conventional loan would require on the same purchase.
FHA Mortgage Insurance: What You Will Actually Pay
FHA mortgage insurance comes in two parts:
Upfront mortgage insurance premium (UFMIP): 1.75% of the loan amount, paid at closing or rolled into the loan. On a $340,000 loan (after 3.5% down on a $352,000 purchase), that is $5,950 added to your loan balance if you roll it in.
Annual mortgage insurance premium (MIP): For most borrowers in 2026, this is 0.55% of the loan balance per year, divided into monthly payments. On a $345,000 loan, that is roughly $1,897 per year, or $158 per month added to your payment.
The key question buyers ask: when does FHA MIP go away? The answer depends on when you got the loan and your down payment:
- If you put down 10% or more: MIP cancels after 11 years
- If you put down less than 10%: MIP stays for the life of the loan
For buyers who plan to refinance into a conventional loan once they build equity, the life-of-loan MIP is not permanent. But it is a cost to factor in until that refinance happens. I work with clients in Houston, Dallas, and San Antonio who have successfully refinanced out of FHA after 2 to 3 years once their home value increased and their credit improved. You can read about the Texas closing process for refinances at my post on closing day in Texas.
Debt-to-Income Ratios for FHA in Texas
FHA guidelines allow total debt-to-income ratios (DTI) up to 57% in some cases, which is higher than the 45% to 50% ceiling on most conventional loans. This is meaningful for buyers in Texas metros where housing costs are high relative to income.
In practice, most FHA lenders in Texas prefer a front-end ratio (housing payment only) under 31% and a back-end ratio (all monthly debt including housing) under 43% to 45%. Borrowers above those thresholds may still qualify with compensating factors like cash reserves, a long employment history, or a higher credit score.
Property Requirements for FHA Loans in Texas
FHA has minimum property standards that appraisers check during the appraisal. The property must be safe, sound, and secure. Specific issues that can cause FHA appraisal problems include:
- Peeling paint on homes built before 1978 (lead paint risk)
- Missing handrails or broken steps
- Roof that is at or near the end of its useful life
- Evidence of active pest infestation
- Water intrusion or drainage issues
Sellers in Texas sometimes resist FHA offers because they worry about property condition requirements. Buyers using FHA can address this by getting a pre-inspection before submitting an offer, or by negotiating seller concessions to cover any required repairs. Texas’s option period is a useful tool here. My post on earnest money and the option period in Texas covers how to protect yourself while you assess the property.
Who Benefits Most from FHA in Texas
FHA loans serve several buyer profiles particularly well:
- First-time buyers with limited savings who need the low down payment
- Buyers with credit scores in the 580 to 660 range where conventional pricing becomes unfavorable
- Buyers who have recovered from a past bankruptcy or foreclosure (FHA’s waiting periods are shorter than conventional in most cases)
- Buyers purchasing older homes in established neighborhoods where conventional appraisals may be tighter
FHA is not always the cheapest option for buyers with strong credit. Borrowers with scores above 720 and 5% or more to put down often pay less overall with a conventional loan, because conventional PMI rates at higher scores are lower than FHA’s fixed MIP rate. Running both scenarios before committing is always worth the time. My post on title insurance costs in Texas also covers what to expect at closing for either loan type.
Frequently Asked Questions
What is the minimum credit score for an FHA loan in Texas?
HUD’s minimum is 500, with 10% down required between 500 and 579, and 3.5% down available at 580 and above. Most FHA lenders in Texas add their own overlays and prefer 580 or 620 as the practical floor. If your score is between 580 and 619, you may need to shop lenders to find one that will work at that range.
How much down payment do I need for an FHA loan in Texas?
The minimum is 3.5% of the purchase price with a credit score of 580 or above. On a $350,000 home, that is $12,250. You can also put down more to reduce your loan amount and monthly payment. Putting down 10% or more changes the MIP cancellation rule from life-of-loan to 11 years.
What are the FHA loan limits in Texas for 2026?
Most Texas counties are at the 2026 baseline of $524,225 for a single-family home. Higher-cost counties including Travis (Austin), Collin and Denton (Dallas suburbs) are at $571,550. Multi-unit limits are higher: $671,200 for a duplex and $811,275 for a triplex in baseline counties.
Does FHA mortgage insurance ever go away?
It depends on your down payment. With 10% or more down, FHA annual MIP cancels after 11 years. With less than 10% down, MIP stays for the life of the loan. Many borrowers refinance into a conventional loan once they reach 20% equity to eliminate MIP entirely.
Can I use an FHA loan to buy a duplex or triplex in Texas?
Yes. FHA allows financing for 1- to 4-unit properties, as long as you occupy one of the units as your primary residence. Multi-unit FHA loans have higher loan limits than single-family: $671,200 for a duplex in baseline counties in 2026. Rental income from the other units can sometimes be counted toward qualifying income, subject to lender guidelines.
How long after a bankruptcy or foreclosure can I get an FHA loan in Texas?
FHA’s standard waiting periods are 2 years after a Chapter 7 bankruptcy discharge and 3 years after a foreclosure, assuming you have re-established credit and meet all other FHA standards. Conventional loans typically require 4 years after bankruptcy and 7 years after foreclosure. The shorter FHA timeline is one reason buyers with past credit events often start with FHA.
Are FHA loans good for first-time buyers in Texas?
FHA is often a strong fit for first-time buyers with limited savings or credit scores below 720. The 3.5% minimum down payment is the main draw. For buyers with scores above 720 and 5% or more available, conventional loans are worth comparing because PMI rates at higher scores can be lower than FHA’s fixed MIP rate.
If you are weighing FHA versus conventional or trying to figure out whether you qualify in your price range, I am happy to run the numbers with you. Reach out directly and let’s talk through your situation, no cost, no pressure.
Anthony Ferrando | Mortgage Loan Originator | NMLS# 1919613 | Ferrando Financial LLC NMLS# 2403080 | Licensed in Texas. This is not a commitment to lend. Loan approval is subject to credit, income, and property qualifications. FHA loan limits cited are based on HUD’s 2026 published figures; verify current limits at hud.gov. Any payment figures cited are illustrative and not a rate quote. Equal Housing Lender.
