What Are My Home Loan Options in Texas?
Conventional, FHA, VA and USDA loans, plus Texas down payment assistance
By Natalie Pilkinton, REALTOR® & Real Estate Investor · Updated
Short answer
Most Texas buyers use one of four loan types: conventional, FHA, VA or USDA. The right one depends on your credit, your down payment, your military service and where you're buying.
Texas down payment assistance programs, from the state and from counties like Harris and Montgomery, can cover some or all of your down payment. Getting pre-approved first tells you which programs you qualify for.
The four main loan types
Swipe the table to see every column →
| Conventional | FHA | VA | USDA | |
|---|---|---|---|---|
| Backed by | Fannie Mae / Freddie Mac | Federal Housing Administration (HUD) | Department of Veterans Affairs | U.S. Department of Agriculture |
| Minimum down | 3%–5% | 3.5% | 0% | 0% |
| Credit score | Most lenders ~620 | 580 (500 with 10% down) | Set by lender | Set by lender |
| Mortgage insurance | PMI if under 20% down; removable | 1.75% upfront plus annual MIP | None; one-time funding fee | 1% upfront plus 0.35% a year |
| Best for | Good credit, flexible | Lower scores or smaller savings | Eligible veterans and service members | Eligible areas and incomes |
As of October 2026. The VA funding fee is 2.15% for first use with under 5% down, and is waived for many veterans with a service-connected disability.
How each loan works
- Conventional: not government-insured. Private mortgage insurance applies with less than 20% down and can be removed once you reach 20% equity; it drops off automatically at 22%.
- FHA: insured by the Federal Housing Administration and easier to qualify for. There's no income limit. With less than 10% down, the annual mortgage insurance lasts for the life of the loan.
- VA: for eligible veterans, active-duty service members, reservists and surviving spouses. No down payment and no monthly mortgage insurance.
- USDA: for homes in USDA-eligible areas, which include many communities on the edges of the Houston area. Household income must be under the area limit.
Texas down payment assistance
Texas assistance usually comes as either a grant you never repay or a 0% second loan you repay when you sell or refinance. Programs commonly provide 3% to 5% of the loan amount, have income and purchase-price limits, require a minimum credit score (often 620, sometimes 580 on FHA) and require a homebuyer education course.
| Program | Who it's for |
|---|---|
| TSAHC Home Sweet Texas | First-time and repeat buyers with low-to-moderate income |
| TSAHC Homes for Texas Heroes | Teachers, firefighters, police and corrections officers, EMS, nurses and veterans. See our Texas Heroes guide |
| TDHCA My First Texas Home | Buyers who haven't owned a primary residence in the past 3 years |
| TDHCA My Choice Texas Home | Repeat buyers who meet the program's limits |
| Mortgage Credit Certificate (MCC) | A federal tax credit on part of your mortgage interest each year |
| County programs | Harris County and Montgomery County run their own assistance with local rules |
Limits and amounts change; your lender confirms eligibility.
How assistance can cover an FHA down payment
An illustration: on a $300,000 home, 3.5% down is $10,500. The base loan is $289,500, and FHA's 1.75% upfront mortgage insurance brings it to about $294,566. A 5% assistance grant on that loan is about $14,700 — enough to cover the full down payment, with roughly $4,200 left toward closing costs.
What you need for pre-approval
- Your credit, pulled from Experian, Equifax and TransUnion.
- Pay stubs from the last 30 days.
- W-2s and tax returns from the last 2 years.
- Bank statements from the last 2 months — every page.
- During the process, keep living where you are, keep paying your rent or mortgage, and don't open or close credit.
Bank or mortgage broker?
Big banks often charge an origination fee or discount point, keep 9-to-5 hours and may not offer down payment assistance. A mortgage broker or specialized lender can compare programs across many lenders. Either way, get Loan Estimates from more than one and compare them line by line.
Who Natalie works with on financing
Natalie's buyers often start with Brian Lupton at HomeRock Mortgage, who co-presents her Home Buyer Masterclass. Compare his terms with any lender you're considering.
Mortgage broker
HomeRock Mortgage
Brian Lupton, Mortgage Loan Originator
Conventional, FHA, VA and USDA financing, plus help finding the Texas down payment assistance programs you qualify for. Brian co-presents Natalie's Home Buyer Masterclass.
NMLS #2035744 · Company NMLS #1691956
HomeRock Mortgage is part of the HomeRock Group, the same group of companies as HomeRock Realty, Natalie's brokerage. You're free to choose any lender, and you should compare terms. Loan programs, rates and approval are set by the lender.
Frequently asked questions
Which loan is best for a first-time buyer in Texas?
It depends on your credit and savings. FHA is common for buyers with lower scores or small down payments; conventional loans with 3% down can be cheaper for buyers with good credit; VA and USDA offer 0% down to those who qualify. Pairing any of them with down payment assistance can lower your cash to close.
Do I have to be a first-time buyer to get down payment assistance in Texas?
Not always. Home Sweet Texas, Homes for Texas Heroes and My Choice Texas Home are open to repeat buyers who meet the income and price limits.
Do I have to pay down payment assistance back?
It depends on the program and option you choose. Some assistance is a grant you never repay; other assistance is a 0% second loan you repay when you sell or refinance.
Is FHA only for low-income buyers?
No. FHA loans have no income limit. They have flexible credit requirements, which is why many first-time buyers use them.
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