FHA Loans in Texas — Low Down Payment, Flexible Credit

Under HUD Handbook 4000.1, you need a Minimum Decision Credit Score of at least 580 for maximum financing with a 3.5% down payment, or 500 to 579 with a 10% down payment. Borrowers below 500 are not eligible, though buyers with no credit score can still qualify for 3.5% down through manual underwriting. If you pair your FHA loan with TDHCA or TSAHC down payment assistance, both state agencies require a minimum middle credit score of 620 (or 640 for manufactured homes under TSAHC).

For calendar year 2026, the FHA 1-unit loan limit is $541,287 in 229 of 254 Texas counties, including the entire Houston-Pasadena-The Woodlands metro (Harris, Fort Bend, Montgomery, Brazoria, and Galveston counties), El Paso, Hidalgo, and Lubbock. Higher 1-unit limits apply in the Austin-Round Rock-San Marcos metro ($571,550), the Dallas-Fort Worth-Arlington metro ($563,500), the San Antonio-New Braunfels metro ($557,750), and Glasscock County ($813,050 per HUD's lookup; confirm with your lender). Multi-unit properties (2 to 4 units) have higher limits, such as $1,099,150 for 4 units in the Austin metro.

FHA loans carry two mortgage insurance premiums: an Upfront MIP of 1.75% of the base loan amount (which may be financed into the loan) and an annual MIP paid monthly. On a standard 30-year FHA purchase with a base loan of $726,200 or less and 3.5% down (96.5% LTV), the annual MIP is 0.55% for the life of the loan. If you put at least 10% down (90% LTV or lower), the annual MIP is 0.50% and ends after 11 years; with less than 10% down, it lasts for the full mortgage term. The upfront MIP is not refundable except toward a new FHA refinance.

Yes, through a participating lender. With a 620+ credit score, you can pair an FHA loan with TDHCA's My First Texas Home or My Choice Texas Home (2% to 5% in a 0% 30-year deferred or 3-year forgivable second lien) or TSAHC's Home Sweet Texas or Homes for Texas Heroes (2% to 5% as a grant or 3-year forgivable second lien, or 4% to 5% in Bond DPA). First-time buyers and qualified veterans can also add a 15% Mortgage Credit Certificate (MCC) on eligible options.

Yes. The FHA 203(k) rehabilitation mortgage lets you finance both the home purchase and repair costs into one FHA mortgage, subject to your county's FHA loan limit. The Limited 203(k) covers minor remodeling and nonstructural repairs up to $75,000 in total rehab costs (and is eligible with TSAHC programs), while the Standard 203(k) covers structural work and major renovations with a $5,000 minimum repair budget and a required 203(k) Consultant selected by the lender from FHA's Consultant Roster. Note that TDHCA programs do not allow FHA 203(k) loans.

Yes. Under FHA rules, your 3.5% Minimum Required Investment can come from acceptable gift donors — including family members, your employer or labor union, a charitable organization, or a government homebuyer program — as long as it is documented with a gift letter signed by the donor and borrower, meets FHA's source rules, and does not come from the seller or the donor's cash on hand. In addition, the seller and other interested parties can contribute up to 6% of the sales price toward origination fees, other closing costs, prepaid items, discount points, interest-rate buydowns, or the upfront MIP.