What is a FHA Loan in Texas?

FHA loan Texas

A FHA loan in Texas refers to a mortgage loan that is insured by the Federal Housing Administration (FHA). According to the Congressional Research Service, FHA loans accounted for approximately 18% of all mortgage loans in the state of Texas in 2020. As of 2022 the  FHA can insure mortgages up to $420,680. Nearly 85% of FHA-insured mortgages made to purchase a home were obtained by first-time homebuyers,  



The history of the FHA loans in Texas

Since its inception in 1934, the FHA has insured more than 34 million properties in the entire United States. The FHA loan requirements are applicable to both purchase and refinance transactions, which makes it a great mortgage option. The Texas FHA loan program, insures mortgages on single-family homes, including manufactured homes, against losses due to the homeowner’s inability to pay the mortgage back.

Eligibility for FHA loan in Texas

A Texas FHA-insured loans are available to borrowers who intend to be owner-occupants and who can demonstrate the ability to repay the loan according to the terms of the contract. Loans that are covered by the FHA must be underwritten in compliance with FHA guidelines and acknowledged practices of responsible lending institutions. Lenders must consider the applicant’s credit, financial situation, monthly housing costs, money needed for closing costs, effective monthly income, and debts and commitments, among other things. People who have had their mortgages foreclosed on in the past are typically ineligible for FHA-insured loans for at least three years after the foreclosure.

The applicant’s potential mortgage payment should typically not be more than 31% of their gross effective monthly income. The applicant’s overall debt commitments, which include the suggested housing costs, shouldn’t be more than 43% of gross effective monthly income. If these ratios are not fulfilled, the borrower may still be eligible to obtain an FHA-insured loan if they can demonstrate the presence of other offsetting variables, such as financial reserves.

What are the types of FHA loans in Texas?

Here are the types of FHA loans in Texas:

203b FHA loan

The most commonly used to purchase a home. Almost anybody buying a house with an FHA loan uses the FHA 203(b) as long as they meet the FHA loan requirements for both the borrower and the property.

203h FHA loan

Section 203(h) of the National Housing Act authorizes FHA to insure mortgages to victims of a Presidentially Declared Major Disaster or PDMDA. This type of loan is used by those who have lost their homes and are in the process of rebuilding or buying another home; victims of a major disaster

203k Rehab FHA loan

A loan where a home buyer can finance up to $35,000 into their mortgage to repair, improve or upgrade their home; it is used for either a purchase or refinance transactions. The purchase price and the cost of rehabilitation are added together in one loan when buying a house.


A Home Equity Conversion Mortgage is also known as a “Reverse Mortgage,” where Seniors who are 62 years or older and have equity in their home can withdraw funds in their home and use it to supplement their income. Additional information can be found on our Reverse Mortgage page.

EEM FHA loan

Energy Efficient Mortgage loan program allows buyers to save money on utility bills by adding energy-efficient features on new or existing homes. This loan can also be used with the 203k rehabilitation program.

Different loan programs in Texas have their own loan guidelines and requirements, respectively. The 203b, being the most commonly known and used loan program to buy a home, is the one generally thought of by prospective home buyers when they are in the process of buying a home.

What are the FHA loan credit score requirements in Texas?

In Texas the FHA loan credit score requirements are dictated by the the lenders. According to the the FHA you will need a  10% down payment from borrowers with credit scores between 500 and 579. If the borrowers have a credit score of 580 or above their down payment is at least 3.5%. FHA no longer insures loans made to borrowers with credit scores below 500. 

Do FHA loans in Texas require mortgage insurance?

Yes, FHA loan in Texas require mortgage insurance.  A mortgage insurance premium is paid if the borrower is able to make a down payment of less than 20 percent of the home loan. FHA requires borrowers to pay an upfront mortgage insurance premium, which is 1.75 percent of the loan amount, and the annual mortgage insurance premium, which is 0.45 to 1.05 percent based on the loan term and payable by monthly payments for one year.

What are the FHA Loan income requirements in Texas?

The Texas FHA loan income requirement for self-employed borrowers, 1099 home buyers, and other commissioned employees is the average of their last two (2) years’ tax returns to calculate their monthly income. Home buyers who are salaried and get an actual W2 are simple and easy. Since their income can be calculated based on one of the following: (a) hourly rate, (b) monthly wage, or (c) box #1 on W2. Any bonus, in order to be counted, must have been received in the last two (2) years and will continue for the next 3. Overtime is looked upon in the same manner. A borrower must have been consistently working overtime for the past two years and the probability of continuity for the next three years should apply.

Texas FHA Loan Assets And Reserves In Texas

For Texas FHA loan assets and reserves in Texas, prospective home buyers must have enough reserve in their bank account after a down payment is taken out. Depending on the borrower’s scenario and credit situation, the typical rule on reserves is about 3 – 6 months of the proposed housing monthly payment.

What documents Are Required for An FHA Loan In Texas?

Here are the documents required for an FHA loan in Texas:

  • Driver’s License or a valid picture id
  • Social Security Card or passport
  • Last 30 days’ paycheck stubs
  • Last two years W2s or 1099 from Employer
  • Last two years signed Tax Returns
  • All pages of the previous two months’ bank statements
  • Most recent retirement account statement (401k, IRA, etc.)
  • Copy of the benefits letter (Social Security or retirement)
  • Copy of Final Divorce Decree (if applicable)
  • Copy of Final Bankruptcy discharge papers (if applicable)
  • Name, address, and phone number of the current landlord (if renting)
  • Letter of Explanation for any known credit problems
  • Source of any non-payroll deposits over $500
  • Gift Letter (if applicable)

The items above are a general list of what every lender needs from the borrower. Additional documentation might be required depending on the borrower’s circumstances and must not be construed as a final loan checklist. It is very important that borrowers must have the above documentation beforehand. Not only does it set the platform for the loan, but it also gives the lender the ability to structure the loan appropriately.


Texas FHA Loan Calculator

The Texas FHA loan calculator considers many variables like credit, debt, and other liabilities. Texas is known as a “Community State.” Thus, both parties have to sign the deed, although the loan is only applied for by one or either party. A non-purchasing spouse’s (NPS) credit, though not used in qualifying for the loan, will be required. The NPS debts have to be included in the borrower’s total debts as part of calculating eligibility. NPS Credit is also required to make sure that the non-purchasing spouse has no outstanding debt that will affect the title of the property.

For additional information about FHA loan Texas requirements and eligibility guidelines, contact our FHA Loan Specialist at (877) 280-4833.

What is the FHA loan limit in Texas 2023?

The 2023 FHA loan Limits in Texas change depending on which county you are in. There are over 250 counties in Texas, and all have an assigned home value each year. These values differ between the number of dwellings per home, 1 thru 4 families. For the most update to date information, click FHA loan limits in Texas 2023 to get the most up-to-date info direct from HUD.gov.

What are the FHA loan rates in Texas?

The FHA loan rates in Texas change based on your credit history and the value of the mortgage. Your credit, income, and home value will be assessed on a case-by-case basis. Your income ratio will play a big part in determining your interest Rate on the Texas FHA loan.
Contact us today to look at Loan Options, Mortgage rates, and what monthly mortgage payments will suit your needs on this type of mortgage loan.  We serve great cities in Texas, including Houston, Austin, Dallas, Fort Worth, San Antonio, Plano, Fort Worth, and more.