FHA Loan Requirements Texas 2026

By Adam Styer | NMLS #513013 | April 10, 2026

FHA loans require a minimum 580 credit score with 3.5% down, or a 500–579 score with 10% down. In 2026, loan limits in most Texas counties sit at $524,225 for a single-family home. Mortgage insurance is required on every FHA loan regardless of down payment size.

In Texas, an FHA loan in 2026 requires a minimum 580 credit score for 3.5% down, a stable 2-year employment history, a debt-to-income ratio under 43–50% depending on compensating factors, and a property that passes an FHA appraisal. FHA is one of the most flexible loan types available to Austin-area buyers — but the mortgage insurance is a real cost you need to understand before you choose it.

I'm Adam Styer, mortgage broker in Austin TX, NMLS #513013. I've done a lot of FHA loans. This is the straight version — no marketing language, just what the requirements actually are and how they play out in real deals.

What Credit Score Do You Need for an FHA Loan in Texas?

The FHA sets two thresholds:

• 580 or higher — eligible for 3.5% down payment
• 500–579 — eligible with 10% down payment
• Below 500 — not eligible for FHA financing

Here's the part most websites skip: most lenders have their own overlays. Even though FHA allows 580, many lenders require 620 or 640 before they'll touch the file. We work with lenders that go to 580, but your options get thinner below 620.

If you're in the 580–620 range, the better play is often a short-term credit score improvement strategy — moving from 619 to 621 can open up options. I walk borrowers through that all the time. See our credit score guide if you're in that range.

How Much Down Payment Does an FHA Loan Require?

The minimum is 3.5% of the purchase price for borrowers with 580+ credit. On a $400,000 home in Austin, that's $14,000 down — significantly less than the $20,000–$40,000 you'd need for 5–10% conventional.

What makes FHA flexible on down payment:

• The 3.5% can come from a gift — family members can give you the full down payment, no repayment required (you'll need a signed gift letter)
• Down payment assistance programs stack on top of FHA — TSAHC and TDHCA both offer grants and second liens that work with FHA loans in Texas
• Seller concessions are allowed up to 6% of the purchase price — you can negotiate for the seller to cover closing costs

If you want to combine FHA with down payment assistance, see our First-Time Home Buyer Programs guide — it breaks down exactly which Texas DPA programs are currently active and how to stack them.

What Are the FHA Loan Limits for Texas in 2026?

FHA loan limits are set by county and updated annually. For 2026, most Texas counties — including Travis County (Austin) and Williamson County — are at:

• 1-unit (single family): $524,225
• 2-unit (duplex): $671,200
• 3-unit (triplex): $811,275
• 4-unit (fourplex): $1,008,300

The $524,225 limit covers most Austin starter homes, condos, and townhomes. If you're shopping in the $550K+ range, you're looking at conventional financing instead.

One thing worth noting: FHA does allow multi-unit purchases if you live in one unit. Buying a duplex in East Austin with FHA, living in one side, and renting the other is a real strategy. The rental income can help you qualify, and the loan limit is higher than single-family.

What Does an FHA Appraisal Actually Look For?

FHA appraisals check two things: market value (same as any loan) and minimum property standards. That second part is where FHA differs from conventional.

Common FHA flags in Texas that can derail a deal:

• Peeling or chipping paint on homes built before 1978 — lead paint concern, must be remediated before closing
• Roof condition — appraiser must estimate remaining life; under 2 years = condition
• HVAC — must be functional for the season; broken AC in Texas July is a hard stop
• Exposed wiring — any open electrical boxes, missing outlets, visible wire runs
• Missing or broken handrails on stairs with 3+ steps
• Water intrusion or drainage issues — standing water in the foundation, active leaks

If the appraiser conditions any of these, the seller has to fix them before closing — or the buyer walks. For older homes in Austin's central neighborhoods, this is worth thinking through before you make an offer. An FHA loan on a 1960s house in Hyde Park or Travis Heights is possible, but it takes a seller willing to address deferred maintenance.

How Does FHA Mortgage Insurance Work in 2026?

This is the most important thing to understand about FHA — and the most common reason buyers switch to conventional once they see the numbers.

FHA has two layers of mortgage insurance:

• Upfront MIP (UFMIP): 1.75% of the base loan amount, paid at closing or rolled into the loan. On a $400,000 loan, that's $7,000 — most borrowers roll it in, making the actual loan balance $407,000.
• Annual MIP: For a 30-year loan with less than 10% down, the annual rate is 0.55% of the outstanding loan balance, divided into 12 monthly payments. On a $400,000 loan, that's roughly $183/month added to your payment.

The catch most people miss: FHA MIP does not cancel automatically if you put less than 10% down. It stays for the life of the loan. To get rid of it, you have to refinance into a conventional loan once you have 20% equity and a credit profile that qualifies.

Compare that to conventional PMI, which drops off automatically at 78% LTV. For buyers who plan to stay in the home 3+ years and expect their credit to improve, the conventional route — even at a slightly higher rate — often costs less over time. See our FHA vs. Conventional guide for the side-by-side math.

Who Actually Makes Sense for FHA?

FHA is a legitimate tool. It's not the "bad loan" some people make it out to be. It's the right choice for specific situations:

• Credit score 580–659 — conventional pricing at this range is painful; FHA rate often wins even with MIP
• Less than 5% saved — FHA at 3.5% down vs. conventional at 5% is a real difference on a $400K home ($6,000)
• Recent credit events — FHA has more flexibility around prior bankruptcies, foreclosures, and collections than conventional guidelines
• Combining with DPA — if you're using Texas down payment assistance, FHA compatibility is often required by the program

FHA is probably NOT the move if your credit is 720+ and you can put 10–20% down. At that profile, conventional wins on cost.

Frequently Asked Questions