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FHA Loans In Texas | First Time Home Buyers

Unlocking Homeownership: Navigating Texas FHA Loans for First-Time Buyers


FHA Loans in Texas

Texas FHA loans could be a game-changer if you're looking to buy a home but are concerned about your credit score. Initiated by the Federal Housing Administration in 1934, Texas FHA loans are designed to support potential homeowners with less-than-ideal credit scores, having helped over 40 million Americans purchase homes. 

Confused about your mortgage loans and where to start? The Best FHA Loan Texas guide unravels the secrets of FHA loans, answering your burning questions like: 

  • What is a Texas FHA Loan? 

  • Mortgage lenders 

  • How Can I Qualify for an FHA Loan in Texas? 

  • What is the minimum down payment for an FHA loan? 

  • What are the FHA Property Standards in Texas? 

  • What is the FHA Loan application process in Texas? 

  • What are the Current Mortgage Rates in Texas? 

What is a Texas FHA Loan? 

An FHA loan is a government-backed mortgage, insured by the Federal Housing Administration, designed to lower down payments and make homeownership more attainable for many. These loans help more Texans purchase homes. 

FHA Approved Lenders in Texas 

How Can I Qualify for an FHA Loan In Texas? 

Credit Score: 

The 580 threshold: This is the minimum credit score needed to qualify for the low 3.5% down payment. However, a higher score can translate to better interest rates and loan terms. FHA loans can be suitable for borrowers who may have lower credit scores and are often preferred by consumers interested in purchasing their first homes. 

Lower scores are possible for those with less than perfect credit: Scores between 500-579 can still qualify, but you'll need a 10% down payment. Remember, improving your credit score before applying can save you thousands in the long run. Making a larger down payment can help Texas residents secure a loan for their dream property. 

Debt-to-Income Ratio (DTI): 

The 50% rule: This means your total monthly debt payments shouldn't exceed 50% of your gross income. So, if you earn $5,000 per month, your debt payments shouldn't be more than $2,500. 

Exceeding 50%: Some lenders may allow a DTI ratio as high as 56.99% with compensating factors, like a large down payment or strong credit history. 

Employment and Income: 

Stable employment history: Lenders want to see consistent employment for at least two years, ideally in the same field. 

Sufficient income: Your income should be enough to comfortably cover the mortgage payment, property taxes, homeowner's insurance, and other housing costs. Lenders typically look for a ratio of your income to housing expense (TIH) below 43%. Also, it is important to work with your lender to calculate your projected monthly mortgage payments. 


FHA Loans in Texas
FHA Loans in Texas

Citizenship and Property Use: 

U.S. citizen or permanent resident: This is a requirement for an FHA loan. 

Primary residence: The property you purchase with an FHA loan must be your primary residence. 

Additional factors to consider: 

Minimum Down payment: While 3.5% is the minimum, putting down more can reduce your mortgage insurance premium and improve your eligibility. 

Loan limits: FHA loans have borrowing limits depending on your location and property type. In Texas, these limits range from $498,257 to $1,099,150 for single-family homes and fourplex, respectively. (Source:

Mortgage insurance: FHA loans always require mortgage insurance, to protect the lender in case you default. This premium is added to your monthly payment. 


Upfront Mortgage Insurance Premium (UFMIP)
The Upfront Mortgage Insurance Premium (UFMIP) is a one-time fee charged by lenders to borrowers who obtain loans insured by the Federal Housing Administration (FHA). This fee is paid at the time of closing and is designed to protect the lender in case the borrower defaults on the mortgage. 

The UFMIP is a percentage of the loan amount, and while it can vary, it is typically 1.75% for most FHA loans. Borrowers have the option to finance the UFMIP into their mortgage, allowing them to pay it off over the life of the loan rather than upfront. This insurance premium is part of the FHA's efforts to make homeownership more accessible to individuals with lower down payments and credit scores, by reducing the risk to lenders. 

FHA Loans in Texas
FHA Loans in Texas

What is the FHA Loan Application Process in Texas? 

Start by gathering necessary documents like pay stubs, tax returns, existing mortgage amount, and bank statements. Choosing the right FHA-approved lender is vital; consider local Texas lenders familiar with the state's real estate market like Herring Bank NMLS #415783 and Member FDIC. They will guide you through the application, ensuring you secure competitive rates and terms suitable for your situation. 

What are FHA Property Standards? 

FHA loans have specific property standards designed to ensure the home is safe, secure, and structurally sound. This protects both you and the lender. Key areas assessed include: 

  • Roof: No leaks, damage, or missing shingles. 

  • Foundation: Level and free of cracks or major repairs. 

  • Electrical and plumbing systems: Functioning properly and up-to-code. 

  • Heating and cooling systems: Functioning safely and adequately. 

  • Interior and exterior: No major damage, health hazards (like lead paint), and/or other accessibility issues. 

  • Appliances: Major appliances (e.g., oven, range) in working order. 

Remember, FHA standards address essential functionality, not cosmetic aspects. Minor repairs or updates might be needed, but they won't necessarily prevent FHA approval. 

Texas FHA Loan Limits 2024 

In Texas, the maximum amount you can borrow with an FHA loan differs by county and adjusts annually with property value fluctuations. These are commonly called an FHA Loan Limit. A majority of counties in Texas set the maximum loan amount above the cap at $498,257 for single-family homes. However, in areas where living costs are above average, the loan limits are higher. An FHA full loan amount also must be less than 115% of the median home price in the county. 


FHA Loans in Texas
FHA Loans in Texas

Lubbock Single Family FHA Loan Limits 

  • CROSBY County - $498,257 

  • LUBBOCK County - $498,257 

  • LYNN County - $498,257 

FHA Loans in Texas
FHA Loans in Texas

Dallas - Ft. Worth Single Family FHA Loan Limits 

  • COLLIN County - $563,500 

  • DALLAS County - $563,500 

  • DENTON County - $563,500 

  • ELLIS County - $563,500 


What are the Benefits of FHA Loans in Texas? 

Minimum Down Payment: One of the biggest draws for first-time buyers is the low down payment requirement. Some borrowers may only need to put down as little as 3.5%. 

Down Payment Help: Texas offers financial help for homebuyers through the Texas Department of Housing & Community Affairs, which provides down payment and closing cost assistance. The U.S. Department of Agriculture Rural Housing Service also offers help for those buying in rural areas. Each program has its own rules, so borrowers need to look into these options on their own. 

Using Gift Funds: Money gifted by family or friends can be used towards your down payment. 

Flexible Debt-To-Income Ratios: FHA loans allow for a higher debt-to-income ratio, up to 57%, making it easier for more people to qualify compared to conventional loans, which typically cap the ratio at 45%. 

No Minimum Income Required: While your income needs to be steady and verifiable over the last two years, FHA loans don't set a minimum income threshold for eligibility. 

Multiple Loan Options: FHA provides various loan types, including Streamline Refinance and FHA 203(k) loans, although availability may vary by lender in Texas. Note that Cash-Out Refinancing isn't offered in Texas. Also note that an fha reverse mortgage could be a viable option for homeowners. 

Seller-Paid Closing Costs: With FHA loans, sellers can cover up to 6% of the sales price towards the buyer’s closing costs, which often range from 2% to 5% of the purchase price and can include various fees. 

Assumable Loan: FHA loans can be transferred from the seller to the buyer, allowing the new homeowner to take over the original loan's terms and rates. 

Wide Range of Eligible Properties: FHA loans can be used for various types of properties, including single-family homes, multi-unit properties, condos, townhomes, and manufactured homes. As long as the property is less than 115% of the median home price in that county. 
No Early payment penalties: Unlike some conventional mortgages — borrowers won't be charged penalties if they pay off their mortgages early. 
Also note: The Texas Department of Housing & Community Affairs offers programs for down payment assistance and closing cost assistance. 

Additional Resources

Texas Housing Market Overview - FHA Loan Texas 

In the current Texas market, we see a slight increase in home prices and a growing inventory, FHA loans are a strategic option for many prospective buyers. Given the market's modest 1.3% rise in median home prices and the 6.8% increase in available homes, FHA loans in the Texas could offer an accessible path to homeownership. (Source:


FHA Loans in Texas
FHA Loans in Texas

Lubbock, Texas FHA Loan 

The Lubbock market has shown a slight increase in median home prices, up 0.4% from last year, reaching $231K. Despite this growth, the median sale price per square foot has seen a significant decrease. Homes in Lubbock are selling faster than the previous year, indicating a robust demand. This dynamic market suggests that FHA loans could be an advantageous route for prospective buyers, offering a more accessible entry point into homeownership in Lubbock, TX. (Source:

FHA Loans in Texas
FHA Loans in Texas

Dallas, Texas FHA Loan 

The Dallas market is experiencing a significant surge, according to the Data, with median sale prices increasing by 20.6% over the last year, reaching $410K. Even as homes sell slightly slower than the previous year, with an average of 41 days on the market this shows a robust amount of growth. This dynamic market could explain the appeal and accessibility of an FHA loan in Dallas, providing an opportunity for buyers to leverage these loans' benefits in a competitive environment. (Source:


Who is the Federal Housing Administration? 

The Federal Housing Administration (FHA) is a federal government agency that was established in 1934 as part of the National Housing Act. Its primary purpose is to improve housing standards and conditions, provide an adequate home financing system through insurance of mortgage loans, and stabilize the mortgage market. This government-backed insurance makes it easier for borrowers to qualify for loans with lower down payments and less stringent credit requirements, thereby promoting homeownership among a broader spectrum of the American population.