Buying a home is an exciting milestone, but saving up for the down payment can often be the biggest hurdle, especially for first-time homebuyers. That’s where FHA loans can help. An FHA mortgage requires just a 3.5% down payment, making homeownership more accessible.
In this comprehensive guide we’ll cover all the key details on FHA loan down payment options and requirements specific to Texas homebuyers.
FHA Loan Basics
FHA loans are government-insured mortgages that allow for low down payments and more flexible credit requirements. Some key facts:
- Insured by the Federal Housing Administration (FHA)
- Require just 3.5% down payment
- Available from FHA-approved lenders
- Ideal for first-time home buyers and those with lower credit scores
On a $200,000 home purchase, your down payment would only need to be $7,000 with an FHA loan versus $20,000 on a conventional loan.
The trade-off is you have to pay mortgage insurance with an FHA loan. But even with the added mortgage insurance costs, FHA loans are very competitive and offer one of the lowest down payments around.
FHA Loan Limits in Texas
FHA sets limits on the maximum loan amount they will insure based on median home prices in each county. In Texas, the 2023 FHA loan limits range from $331760 to $552250 depending on the county.
You can lookup the exact FHA loan limit for any county in Texas here.
The standard limit for a single-family home is $362,900 in most Texas counties. Higher cost counties like Harris and Dallas have limits up to $552,250.
The FHA loan limits are generally high enough for moderate priced homes but may fall short if buying a luxury property.
Minimum FHA Down Payment in Texas
The minimum down payment on an FHA loan in Texas is:
- 3.5% of the purchase price for credit scores of 580 and above
- 10% down for credit scores between 500 to 579
So if you’re buying a $250,000 home with an FHA loan in Texas, here are the minimum down payments:
- Credit Score 580+ – $8,750 (3.5%)
- Credit Score 500-579 – $25,000 (10%)
The 3.5% down programs offers a huge advantage over conventional mortgages that typically require 10% to 20% down.
Buyers can gift their down payment from relatives but the seller cannot contribute funds.
Additional Texas FHA Loan Requirements
Beyond the minimum FHA down payment, you must also meet all the standard FHA loan eligibility guidelines:
- Credit score of at least 500
- Debt-to-income ratio below 43%
- Purchase a primary residence (no investment properties)
- Use a FHA-approved lender and pay all mortgage insurance
- Complete a homebuyer education course
- Meet income limits for your county
Talk to an FHA lender to go over the full eligibility criteria and documentation required.
FHA Down Payment Assistance Programs in Texas
The 3.5% down payment on an FHA loan is attractive but still a hurdle for some buyers. Fortunately, Texas offers statewide and local down payment assistance (DPA) programs.
Texas State Affordable Housing Corporation
TSAHC provides down payment assistance grants and loans throughout Texas. Options include:
- Down payment grants up to 5% of the purchase price
- Down payment loans at 0% interest deferred for 3 years
Buyers must complete a homebuyer course and meet income limits. The assistance can be used with an FHA, USDA, or conventional mortgage. Learn more about TSAHC down payment help.
Local DPA Programs
Many Texas counties and cities offer their own down payment programs through the HOME program, CDBG funds, or local housing bonds:
- City of Dallas Down Payment Assistance
- Harris County Down Payment Assistance
- Travis County Down Payment Assistance
- Tarrant County Down Payment Assistance
Check with your mortgage lender on options available for your specific area. The local assistance is often layered with an FHA first mortgage.
Alternatives to Large Down Payments
If you don’t have funds saved up for even a 3.5% FHA down payment, here are some options to still get into a home:
80/10/10 Piggyback Loan
This “piggyback loan” combines an FHA first mortgage covering 80% of the purchase price with a 10% second mortgage and just 10% down from your own funds.
Sellers Pay Down Payment
Ask the sellers to pay 3% to 6% of the purchase price to help cover your down payment and closing costs. This seller contribution must be identified in the purchase contract.
Lease-to-Own
Rent the home first with option to buy later. A portion of each rent payment goes towards the future down payment.
Shared Equity Programs
Offered by nonprofits and local housing agencies, these programs help cover the down payment in exchange for sharing in a portion of the home’s equity when you sell.
Look at Lower Priced Homes
Consider buying a lower priced home that requires a smaller down payment to fit your current budget.
The Bottom Line on FHA Loans in Texas
The low 3.5% down payment requirement on FHA loans makes buying a home feasible for many more Texas families. Just be sure to shop around for the best rates and explore any down payment assistance programs available in your area.
With minimal funds required upfront, an FHA mortgage really opens the door to finally achieving the dream of homeownership. Now is a great time to connect with an FHA lender and real estate agent to map out your options and start the pre-approval process.
What is a Texas FHA Loan?
If you want to own a home in Texas but are worried that you are limited by your credit score, an FHA loan may be right for you. FHA loans were created in 1934 by the Federal Housing Administration. They are a valuable resource designed to help borrowers with less-than-perfect credit purchase a home. Since 1934, FHA loans have helped over 40 million people become homeowners.
The FHA is governed by the U.S. Department of Housing and Urban Development (HUD). This means FHA loans are guaranteed by the United States government. This makes FHA loans attractive to mortgage lenders because there is less risk of the lender losing its money. The FHA insures the loan and does not lend money directly to the borrower.
FHA loans are one of the best options available for first-time homebuyers. They are more accessible than Conventional loans. This makes them popular with a wide range of borrowers.
With lower down payments, lower credit requirements, and the option for financial assistance, homebuyers from all financial backgrounds may be able to qualify.
Get answers to your questions about Conventional loans vs FHA loans here.
Texas FHA Loan FAQs
To qualify for an FHA loan in Texas borrowers need to have a minimum mortgage specific credit score of 580. A credit score of 580 can qualify you for a 3.5% down payment.
However, many lenders in Texas require a mortgage specific score of 620 or higher to qualify.
Some lenders may accept a credit score of 500-579 with a 10% down payment.
100% LOAN / 0% DOWN PAYMENT USING AN FHA LOAN 2024
FAQ
How much do I need to make to buy a $300K house with an FHA loan?
What happens if I put $20 down on an FHA loan?
Does FHA require 5% down?
What is the minimum down payment for a first time buyer in Texas?
What are the down payment requirements for an FHA loan?
The down payment requirements for an FHA loan vary depending on your qualifying credit score. If your median credit score is in the range of 500 – 579, you need a 10% down payment. But most lenders, including Rocket Mortgage®, require a median FICO® Score of at least 580. At 580 or better, the minimum down payment is 3.5% of the purchase price.
How much is a down payment on a home loan?
The amount of your down payment depends on a few things, including your income, your loan type, the amount of TSAHC assistance that you choose, the cost of the home, and how much you want to borrow. The larger your down payment, the smaller your monthly mortgage payment will be.
Does FHA offer down payment assistance?
Home buyers with mortgages backed by the FHA can qualify for and use down payment assistance toward their purchase. However, the FHA doesn’t offer this type of program directly to borrowers. FHA loans offer one path to affordable housing. Down payment assistance can further that objective. How Does FHA Loan Down Payment Assistance Work?
What are FHA loans in Texas?
These loans are backed by the U.S. Department of Housing and Urban Development and they insure the mortgage. This backing gives lenders more freedom to offer mortgage loans to people with below-average credit scores with a low down payment. FHA loans in Texas are a favorite for numerous residents.