FHA Home Loans in Texas

As a first-time homebuyer, it can be overwhelming to navigate through the process of purchasing a house. There are many different types of mortgages available to buyers, such as conventional, USDA, VA, and FHA loans, just to name a few. Knowing which mortgage is the right fit for you is easier when working with a trusted mortgage lending professional. The next best thing is to do your research about the options available to you.

FHA home loans in Texas offer an accessible path to homeownership for anyone looking to buy their first home.

Key Takeaways:

FHA home loans are backed by the Federal Housing Administration and have more flexible eligibility requirements and lower down payment options when compared to conventional loans.
Most FHA loan programs allow you to use down payment assistance programs to help cover your loans closing costs.

FHA home loans are mortgages that make homeownership dreams become an easy reality. These loans are backed by the Federal Housing Administration and have more flexible eligibility requirements and lower down payment options when compared to conventional loans. If you want to buy a home in Texas, exploring FHA home loans could be a great option to help you become a homeowner.

What is an FHA Loan

Federal Housing Administration loans (FHA) are government-backed mortgages designed to make homeownership more accessible. These loans are ideal for first-time homebuyers and those with lower credit scores. A common misconception about FHA homes is you have to be a first-time homeowner to qualify. However, anyone can secure an FHA home loan if a borrower meets the FHA minimum requirements. A key feature of FHA loans is the low down payment requirement, which can be as low as 3.5% of the purchase price.

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FHA Loan Requirements

To qualify for an FHA home loan in Texas, you’ll need to meet specific requirements:

Income and Debt

Lenders use a debt-to-income ratio (DTI) to determine whether you can afford home loan payments. Most conventional loans require a DTI of no more than 45%. However, FHA loans can push a borrower’s DTI up to 50% for well-qualified borrowers.

Property Eligibility

The property you want to purchase must meet specific standards to ensure it’s safe and habitable for primary residences. These standards are:

Safe: The house must be in a safe and liveable condition.
Secure: The property should offer protection from weather or hazards.
Soundness: The home cannot have any structural defects such as roof or foundation issues.

Other property requirements to keep in mind:

Residence: The home must be a single-family residence with a four-unit cap. The property can be a condo, but it must be a FHA-approved condo. If the condo is not FHA-approved, you will have to explore other financing options, such as a nonwarrantable condo mortgage.
Intended Use: The house cannot be an investment property, and you must start living in the home within 60 days of closing on your property. It has to serve as your primary residence.

FHA requires an appraisal and inspection of the house to ensure it meets their criteria. During the appraisal and inspection process, if a house does not meet the minimum property standards for safety, security, and soundness, the house will be disqualified for an FHA home loan. Even if this happens, speak to your realtor and loan officer as soon as possible to find solutions.

Loan Process for an FHA Loan

Getting an FHA home loan in Texas involves several steps:

Loan Application

Submit a formal loan application with a mortgage lender. Documentation that is needed for an FHA varies from borrower to borrower, but here is a typical list of necessary documents:

Tax returns
Pay stubs and W-2 forms
Bank statements
Info on any other properties you own
Last two years of employment information or if you were in a trade school or university, proof of college admission or graduation

Appraisal and Inspection

The house you’re buying will be appraised to ensure its value aligns with the loan amount. You may also opt for a home inspection to identify potential issues.

Loan Term

FHA loans offer various loan terms, allowing you to choose the one that fits your financial situation and long-term goals.

Mortgage Insurance Premium (MIP)

You’ll need to pay mortgage insurance premiums, which can be included in your monthly mortgage payments. This differs from private mortgage insurance (PMI) associated with conventional loans. If you put down 20% on conventional loans, you avoid having to say PMI. However, with FHA loans, regardless of how much you put down, you still have to pay a mortgage insurance premium. The MIP is typically 1.75% of the total loan amount.

Closing

If approved, you’ll sign the final paperwork, pay any closing costs, and receive the keys to your new home.

Down Payment Assistance Programs in Texas

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Down Payment Assistance and FHA Loans

Most FHA loan programs allow you to use down payment assistance programs to help cover your loan’s closing costs. A few of the programs offered are:

Texas State Affordable Housing Corporation TSAHC
- Homes for Texas Heroes: for teachers, firefighters, EMS, police, and corrections officers.
- Home Sweet Texas: for Texas homebuyers with low and moderate income.
U.S. Department of Housing and Urban Development HUD
Texas Department of Housing and Community Affairs TDHCA
- My First Texas Home: option available to first-time homebuyers
- My Choice Texas Home: option available for repeat homebuyers.
- Texas Mortgage Credit Certificate Program: this certificate entitles you to a dollar-for-dollar reduction on your federal tax liability.

For more information, schedule a call with a mortgage lender today.

Conclusion

FHA home loans in Texas offer an accessible path to homeownership for anyone looking to buy their first home. By comparing FHA loans to other loan programs, understanding FHA loan requirements, and following the loan process, you can be well-prepared to become a homeowner.

With careful planning and responsible financial management, the dream of owning a home in Texas can become a reality.

For more information, visit our Mortgage – Home Loans & Refinance from Texas Regional Bank website.

Texas Regional Bank Mortgage, NMLS Number 804865. All loans subject to approval, including credit approval. Some Restrictions may apply. Texas Regional Bank Mortgage may change the products, services, and other information described on this site at any time. Texas Regional Bank Mortgage does business as TRB Mortgage in the State of Texas.