The Ultimate FHA Loan Guide for First-Time Homebuyers in Texas

Last updated: August 2025

Why Choose an FHA Loan in Texas for Your First Home

Buying your first home can feel exciting—and overwhelming. FHA loans are designed to make that leap easier, especially if your credit or savings aren’t perfect.

Backed by the Federal Housing Administration, they let you buy with as little as 3.5% down and often have more flexible credit standards than conventional loans.

At Salute Mortgage, we see FHA loans as a bridge to homeownership—helping Texas buyers move forward sooner without waiting years to save for a big down payment.

Why FHA is a smart choice in Texas

Low down payment – Just 3.5% with a 580+ credit score
Flexible credit requirements – Scores as low as 500 may qualify
Competitive rates – Government backing often means better pricing
Works across Texas – From Houston suburbs to Austin’s urban core, FHA loan limits fit a wide range of budgets

FHA Loan Texas Eligibility Requirements

You may qualify if you can show financial stability and meet FHA guidelines.

Credit score:

580+ = 3.5% down
500–579 = 10% down

Income & employment:

Max debt-to-income ratio: 43% (back-end)
2+ years of steady work history
Verifiable income through pay stubs, W-2s, or tax returns
Self-employed borrowers provide additional documentation

First-time buyer definition: You’re considered “first-time” if you haven’t owned a home in the last 3 years. Exceptions may apply for single parents, displaced homemakers, or those who only owned with a spouse.

📌 Tip: Always confirm the most current guidelines with HUD’s FHA Resource Center.

Texas FHA Loan Limits for 2025

Loan limits vary by county and property size:

Standard areas (most counties):

1-unit: $524,225
2-unit: $671,200
3-unit: $811,275
4-unit: $1,008,300

High-cost counties:

Travis County (Austin): $571,550
Collin County (Dallas suburb): $563,500
Fort Bend County (Houston suburb): $524,225

The calculation formula:

Maximum loan amount = (Median home price × 115%)

FHA caps are up to 115% of the local median home price, within federal conforming limits.

FHA Loan Texas Down Payment and Costs

FHA loans require significantly less upfront cash than conventional mortgages.

Down payment:

3.5% with 580+ credit
10% with 500–579 credit
Example: $300,000 home = $10,500 down (3.5%)

Mortgage Insurance Premium (MIP):

FHA mortgage insurance is a required fee that protects the lender if you stop making payments on your FHA loan.

Upfront MIP: 1.75% of the loan amount (can be financed)
Annual MIP: 0.45%–1.05%, depending on loan terms and down payment

Other costs:

Closing costs: 2%–5% of purchase price
Home inspection: $300–$600
Appraisal: $400–$800

Gift funds from family are allowed. Sellers can contribute up to 6% toward closing costs.

Many Texas buyers pair FHA loans with TSAHC down payment assistance programs for even less upfront cash.

Texas FHA Loan Property Requirements

Allowed:

Single-family homes
FHA-approved condos
Townhomes (with HOA review)
2–4 unit properties (must live in one unit)

Property condition: Must meet HUD’s “safe, sound, and secure” standard, which includes:

Functional heating, plumbing, and electrical systems
Structurally sound foundation and roof
Safe drinking water and adequate sewage disposal
No health or safety hazards

Not allowed:

Manufactured homes without a permanent foundation
Pure investment properties (no owner occupancy)
Homes needing major repairs before move-in

How to Apply for an FHA Loan in Texas

Here’s how Salute Mortgage makes the process simple and fast:

Here’s how Salute Mortgage makes the process simple and fast:

Get pre-approved – Know your budget in 1–3 days
Find your home – an FHA-approved property that fits your price range
Submit your application – Provide W-2s, pay stubs, bank statements, and ID
Appraisal & inspection – Ensure the property meets FHA standards
Underwriting review – Lender verifies your information
Close & move in – Sign final paperwork, get the keys

Required documents:

Two years of tax returns
30 days of recent pay stubs
2–3 months of bank statements
Employment verification
Photo ID + Social Security card

Average timeline: 30–45 days from application to closing.

FHA Loan Texas Pros and Cons

Advantages:

Lower down payment (3.5%)
More flexible credit scores
Assumable loans (can transfer to another buyer)
Gift funds allowed

Disadvantages:

Mortgage insurance lasts for life of the loan (unless refinanced)
Property condition rules may limit choices
Loan amount caps in high-cost areas

FHA vs. Conventional Comparison

FHA loans excel for buyers with limited down payment funds or credit challenges. Compare FHA benefits with conventional mortgage options to determine the best fit for your financial situation.

Start Your FHA Loan Texas Application Today

An FHA loan can help you stop renting and start building equity—sooner than you think. With the right guidance, you can navigate Texas’s housing market with confidence.

At Salute Mortgage, we: