FHA Loan Requirements Texas: Eligibility, Credit Score & Down Payment

Buying a home in Texas is still very much within reach but getting there requires understanding your financing options clearly. For a lot of buyers, especially first-timers, FHA loans are the most accessible path to homeownership. Lower down payment, more flexible credit requirements, and government backing that makes lenders more willing to work with borrowers who don’t have a perfect financial profile.

But “more flexible” doesn’t mean “anything goes.” FHA loans have specific requirements, and knowing exactly what they are before you start the application saves you a lot of frustration down the road.

This guide covers FHA loan requirements Texas buyers actually need to meet in 2026. Credit scores, down payments, income, debt ratios, property standards, and a few things most guides gloss over. By the end, you’ll know whether you’re ready to apply or what needs to happen first.

What Makes FHA Loans Different

The Federal Housing Administration doesn’t actually lend you money. What it does is insure the loan meaning if you default, the FHA covers the lender’s loss. That guarantee is why lenders can offer FHA loans to borrowers with lower credit scores and smaller down payments than conventional loans typically allow.

The trade-off is mortgage insurance. Every FHA loan comes with an upfront mortgage insurance premium and ongoing monthly premiums. That’s the cost of the lower barrier to entry and it’s worth factoring into your monthly payment calculations from the start.

For Texas buyers who have solid income but limited savings or credit history that’s still being rebuilt, FHA loans often make more financial sense than waiting years to qualify for a conventional mortgage.

Credit Score Requirements: What You Actually Need

Here’s where things get a little nuanced, because there are technically two credit score thresholds that matter.

580 and above: At this score, you qualify for the minimum 3.5% down payment. This is the threshold most people think of when they hear “FHA credit score requirement.”

500 to 579: You can still qualify for an FHA loan, but you’ll need to put down 10% instead of 3.5%. That’s a meaningful difference on a $300,000 home $10,500 versus $30,000.

Below 500: FHA guidelines don’t permit loans for borrowers below this threshold.

Now here’s the part most articles skip: the FHA sets the floor, but individual lenders set their own minimums on top of those guidelines. Many lenders require 620 or even 640 before they’ll approve an FHA application. This is called a “lender overlay,” and it’s completely legal.

What this means practically: if one lender turns you down at 580, another might approve you. Shopping across multiple lenders matters more with FHA loans than people realize.

At HomeTown Lending, we work with borrowers across a range of credit profiles. The conversation about where you stand is worth having before you assume you don’t qualify.

Down Payment: How Much Do You Actually Need?

The 3.5% minimum down payment is one of FHA’s biggest draws. On a $275,000 home close to the Texas median for entry-level properties in many markets that’s $9,625 compared to $55,000 for a 20% conventional down payment.

But there’s an important nuance: the 3.5% is calculated on the purchase price or appraised value, whichever is lower. If you’re buying a home that appraises below the contract price, your down payment calculation changes.

Can the down payment be a gift?

Yes and this is one of FHA’s genuinely borrower-friendly features. Down payment funds can come from:

• Family members
• Close friends with a documented relationship
• Employer assistance programs
• Charitable organizations approved by the FHA
• Government down payment assistance programs

The gift must be properly documented with a gift letter stating the funds don’t need to be repaid. Texas also has several state and local down payment assistance programs worth exploring some specifically designed to stack with FHA financing.

Debt-to-Income Ratio: The Number Most Buyers Overlook

Credit score and down payment get most of the attention. Debt-to-income ratio (DTI) is equally important and often catches buyers off guard.

DTI compares your monthly debt payments to your gross monthly income. FHA guidelines set two thresholds:

Front-end ratio: Your proposed housing payment (principal, interest, property taxes, insurance, and mortgage insurance) should be no more than 31% of your gross monthly income.

Back-end ratio: Your total monthly debt obligations housing payment plus car loans, student loans, credit card minimums, and any other recurring debts should be no more than 43% of gross income.

With compensating factors strong cash reserves, significant income history, or a credit score well above minimum some lenders will approve DTIs up to 50% on the back end. But the standard guideline is 43%.

Here’s where Texas-specific costs matter: property taxes in Texas are among the highest in the country. That tax component of your monthly payment can be substantial sometimes $300 to $600 per month on a moderately priced home depending on the county. This affects your front-end DTI calculation meaningfully, so running accurate numbers before you start shopping is important.

Income Requirements: What FHA Actually Looks For

FHA loans don’t have a minimum income requirement in dollar terms. What they care about is stability and verifiability.

Employment history: Most lenders want to see two years of consistent employment in the same field. That doesn’t necessarily mean two years with the same employer changing jobs within the same industry is typically acceptable. Gaps in employment require explanation.

Income types that qualify:

• W-2 employment income
• Self-employment income (with two years of tax returns)
• Part-time income (if consistent for two years)
• Social Security and disability income
• Pension and retirement income
• Child support and alimony (if documented and consistent)
• Rental income (with proper documentation)

Self-employed borrowers face more scrutiny two years of personal and business tax returns are standard, and lenders typically use a two-year average of net income after business expenses. If your write-offs are aggressive, your qualifying income may be lower than your actual earnings.

FHA Loan Limits in Texas for 2026

FHA sets maximum loan amounts by county, adjusted annually based on median home prices. Texas has significant variation given the state’s size and the range of home values across different markets.

For 2026, FHA loan limits in Texas generally break down like this:

Standard counties (most of rural Texas): Loan limits around $524,225 for a single-family home.

Higher-cost counties (Austin metro, Dallas, Houston, San Antonio areas): Limits range higher some counties in the Austin area have limits exceeding $600,000 reflecting higher local home prices.

If you’re shopping in a market where home prices regularly exceed FHA limits, you’d need to either make up the difference with a larger down payment or look at alternative loan programs. A conventional loan or jumbo loan might be a better fit in those higher-priced markets.

Property Requirements: Not Every Home Qualifies

This surprises a lot of buyers. FHA loans come with property standards the home must meet minimum safety, security, and soundness requirements determined through the appraisal process.

Common property issues that can complicate FHA financing:

• Roof in poor condition with less than two years of remaining life
• Foundation issues or structural concerns
• Peeling paint on homes built before 1978 (lead paint concern)
• Non-functional heating systems
• Evidence of termite infestation
• Missing handrails on stairs
• Inoperable windows or broken glass
• Electrical or plumbing issues

The FHA appraiser evaluates both value and condition. If issues are flagged, they typically need to be repaired before closing either by the seller or through an escrow holdback arrangement.

This is particularly relevant in Texas markets where older housing stock is common. A home that works fine for a cash buyer or conventional financing might require repairs before an FHA loan can close.

If the home needs significant repairs, discuss the situation with your lender early. In some cases, sellers agree to make required repairs before closing, or an escrow holdback can be structured to cover repairs after closing. Your loan officer can walk you through what options are available based on the property’s condition.

Mortgage Insurance: Understanding the Real Cost

Every FHA loan comes with two types of mortgage insurance:

Upfront Mortgage Insurance Premium (UFMIP): 1.75% of the loan amount, due at closing. On a $280,000 loan, that’s $4,900. This can be rolled into the loan rather than paid out of pocket.

Annual Mortgage Insurance Premium (MIP): Paid monthly as part of your payment. For most FHA loans with less than 10% down, the annual MIP is 0.55% of the loan balance roughly $128 per month on a $280,000 loan.

How long does MIP last? For loans with less than 10% down, MIP stays for the life of the loan. For loans with 10% or more down, MIP cancels after 11 years.

This is a meaningful long-term cost consideration. Once you’ve built 20% equity, refinancing into a conventional loan refinance to eliminate mortgage insurance is a strategy worth planning for from the start. The monthly savings can be substantial.

Texas-Specific Considerations

A few things that specifically affect Texas FHA borrowers:

Property taxes are high. Texas has no state income tax, which partly explains property tax rates that average among the highest nationally. Budget carefully taxes are escrowed into your monthly payment and can be $300 to $700 per month or more depending on location and home value.

Texas offers a homestead exemption that can reduce your taxable property value once the home becomes your primary residence. It’s worth asking your county appraisal district about eligibility and timing it can meaningfully affect your annual tax bill.

HOA fees in newer communities. Many Texas developments particularly in suburban growth areas around Dallas, Houston, Austin, and San Antonio have HOA fees. These count toward your DTI calculation and affect how much home you can qualify for.

Flood zone considerations. Parts of Texas are in designated flood zones. If a property requires flood insurance, that premium gets added to your monthly escrow a meaningful additional cost that affects your qualifying ratios.

If you’re unsure how these factors affect your specific situation, using a mortgage calculator to run realistic monthly payment scenarios including taxes, insurance, and MIP is a useful first step before you start seriously shopping.