Financing Options for Buyers

Explaining financing paths so you arrive at pre-approval prepared — from Natalie's Home Buyer Masterclass

Understanding Your Loan Options

Conventional, FHA, USDA, or VA — which mortgage loan type actually fits your credit score and budget?

Conventional Loan: A non-government-insured loan backed by Fannie Mae and Freddie Mac, subject to financing limits set by the Federal Housing Finance Agency (FHFA). Minimum credit score: 620.

FHA Loan: A federal loan program created by the U.S. Department of Housing and Urban Development (HUD) for lower-income borrowers. Easier to qualify for than a conventional loan, insured by the Federal Housing Administration and issued by an FHA-approved lender.

USDA Loan: Created by the U.S. Department of Agriculture for borrowers purchasing in eligible rural and suburban areas. Features no down payment, credit scores as low as 580, and a guarantee fee (mortgage insurance) around 2%.

VA Loan: Created by HUD for veteran, active-duty, and reservist military personnel, and surviving spouses of veterans. Easier to qualify for than a conventional loan, with credit scores as low as 580 and higher allowable debt-to-income (DTI) ratios.

Texas Down Payment Assistance Programs

Several Texas down payment assistance programs can cover some — or all — of your down payment.

Available Programs: Texas buyers may qualify for Home Sweet Texas, Hometown Heroes, County DPA, My First Texas Home, My Choice Texas Home, NHF, the Mortgage Credit Certificate (MCC), and Homes for Texas Heroes — plus county-specific programs such as Harris County DPA and Montgomery County DPA.

Home Sweet Texas Program: Available to both first-time and repeat buyers with low-to-moderate household income. Requires qualifying for an FHA, VA, or USDA loan.

Example: On a $300,000 purchase with a 3% down payment ($9,000) and FHA upfront mortgage insurance (1.75%, $5,250), the total loan amount comes to $314,250. A 5% down payment assistance grant ($15,000) can cover the entire down payment, potentially leaving $0 owed toward it at closing.

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