Last updated: August 2025
Buying a home in Texas is exciting — but figuring out the right loan can feel overwhelming.
Two of the most common choices are FHA loans and conventional loans. Each has unique advantages, and the best fit depends on your credit, savings, and long-term goals.
At Salute Mortgage, we make this decision simpler. We break down the details in plain English, so you can choose the option that gives you the most buying power while keeping monthly costs manageable.
FHA vs. Conventional Loans at a Glance
| Feature | FHA Loan | Conventional Loan |
|---|---|---|
| Backing | Insured by the federal government | Backed by private lenders & investors |
| Minimum Credit Score | 580 (or 500 with 10% down) | 620+ |
| Minimum Down Payment | 3.5% | 3–5% (3% for qualifying first-time buyers) |
| Mortgage Insurance | Required for life of loan (MIP) | PMI can be removed at 20% equity |
| Property Types | Primary residence only | Primary, second homes, investment properties |
| Loan Limits | $524,225 standard in most Texas counties | Higher limits available |
*For illustrative purposes only. Loan requirements and limits vary by location and lender.
FHA Loans: Accessible for First-Time and Credit-Challenged Buyers
If your credit isn’t perfect or your savings are limited, an FHA loan can help you get into a home sooner. With a down payment as low as 3.5% and flexible credit guidelines, it’s often the go-to choice for first-time buyers in Texas.
FHA loan highlights:
- Credit scores down to 580 (500 with 10% down)
- Higher debt-to-income allowances in some cases
- Ability to use gift funds for the entire down payment
- Flexible income documentation for self-employed borrowers
- Recovery programs after bankruptcy or foreclosure
Texas Tip: FHA loan limits vary by county — in areas like Austin or Dallas-Fort Worth, higher limits may apply to match home prices.
Thinking FHA might be right for you? Get an FHA loan quote today and see how much home you can buy in Texas with minimal upfront cash.
Conventional Loans: Flexible and Cost-Effective for Stronger Credit
If you’ve built solid credit and have more savings for a down payment, a conventional loan may offer better long-term value. You can avoid mortgage insurance entirely with 20% down — or have PMI removed as you build equity.
Conventional loan highlights:
- Competitive rates for strong credit (740+)
- Available for second homes and investment properties
- Faster closings without government-required steps
- PMI can be removed at 80% loan-to-value
- More property flexibility, including condos and unique homes
Texas Tip: In high-cost neighborhoods like Westlake or River Oaks, conventional loans may allow you to borrow more than FHA limits permit.
Wondering if you qualify for conventional? Start your pre-approval and get a clear picture of your buying power.
Down Payment Differences
For a $400,000 Texas home:
- FHA (3.5%): $14,000 down + upfront mortgage insurance
- Conventional (3–5%): $12,000–$20,000 down + PMI (if under 20%)
If you’re short on cash now but expect to refinance later, FHA might be your bridge to ownership. If you can save a larger down payment, a conventional loan could save you thousands over time.
Want to compare the monthly payments side-by-side? Request your personalized loan comparison.
Mortgage Insurance: Short-Term Help vs. Long-Term Cost
- FHA MIP: 1.75% upfront (can be financed) + annual premium for the life of the loan
- Conventional PMI: No upfront cost, annual premium based on credit score and down payment; can be removed
Why it matters: If you plan to stay in your Texas home long-term, conventional PMI removal can save you significant money. FHA insurance may make more sense for short-term ownership or if your credit needs improvement before refinancing.
Which Loan Fits Your Texas Homebuying Goals?
Choose FHA if you:
- Have a credit score between 580–680
- Need minimal upfront cash
- Recently recovered from a credit setback
- Are buying a standard primary residence
Choose Conventional if you:
- Have a credit score above 720
- Can put 10–20% down
- Want to buy a second home or investment property
- Plan to stay in the home for 7+ years
Next Step: Let’s Find Your Best-Fit Loan
At Salute Mortgage, we guide you through both FHA and conventional options — step-by-step, without jargon.
Whether you’re buying in Houston, Austin, or a small Texas town, we’ll help you find the loan that keeps your monthly payment comfortable and your path to ownership clear.
Compare your options with a quick pre-approval — and take the stress out of choosing your Texas home loan.
