Types of Mortgage Loans in Texas: 2026 Home Buyer's Guide

There is no best mortgage. There is the loan that fits your credit, your down payment, how you earn your money and how long you plan to keep the house — and for most Texas buyers, two or three of the programs below will work, at different costs. This guide is about telling them apart.

Conventional loans

A conventional loan is any mortgage not insured by a government agency. It follows the rules Fannie Mae and Freddie Mac set, and when it fits inside their size limits it is also called a conforming loan.

Two things about conventional loans get repeated wrongly often enough to be worth stating plainly.

It does not require 20% down. Conventional financing starts at 3% down for a first-time buyer and 5% for everyone else on a primary residence. Twenty percent is simply the point at which private mortgage insurance is no longer required — it has never been the price of admission.

It is not only a 30-year fixed. Conventional loans are written as fixed-rate mortgages in terms from 10 to 30 years, and as adjustable-rate mortgages where the rate is fixed for an initial period and then adjusts. A 15-year fixed carries a lower rate and a much higher payment; an adjustable can make sense if you know you are selling inside the fixed period.

The real advantage of conventional is that its mortgage insurance ends. You can request cancellation at 80% loan-to-value and your servicer must terminate it automatically at 78% under federal law. Over the life of a loan that is usually worth more than a small difference in interest rate.

Best for: credit scores of roughly 620 and up, especially above 700, and anyone who plans to hold the house long enough to shed the mortgage insurance. More on conventional loans in Texas.

FHA loans

Insured by the Federal Housing Administration, and available to any qualified buyer — not only first-time buyers, and not only borrowers with damaged credit. FHA's purpose is to make homeownership reachable on a smaller down payment and a wider credit box, and plenty of repeat buyers use it on purpose.

The minimum down payment is 3.5% with a score of 580 or better. FHA also tolerates higher debt-to-income ratios than conventional, which is frequently the actual reason a file goes FHA rather than the credit score.

The cost is the insurance. FHA charges 1.75% upfront, financed into the loan, plus an annual premium that on most files stays for the life of the loan unless you put 10% down. FHA appraisals also apply stricter property condition standards, which matters on older housing stock and can make an FHA offer less attractive to a seller.

Best for: lower credit scores, higher debt ratios, thinner credit files, and buyers who need the most forgiving underwriting available. More on FHA loans in Texas.

VA loans

For eligible veterans, active-duty service members, National Guard and Reserve members, and surviving spouses. Texas has one of the largest veteran populations in the country and this is the single best loan program available to any of them.

No down payment. No monthly mortgage insurance at all — not PMI, not an annual premium. Competitive rates and a limit on what closing costs the borrower can be charged. In exchange there is a one-time funding fee, which is financed into the loan and waived entirely for veterans receiving compensation for a service-connected disability.

Most veterans with full entitlement have no loan limit, and the benefit is reusable rather than once in a lifetime.

Best for: anyone eligible. If you qualify for VA, it is almost always the right answer. More on VA loans in Texas.

USDA loans

Guaranteed by the U.S. Department of Agriculture, and the other genuine zero-down program. Two tests decide it: the property has to sit in a USDA-eligible area, and household income has to be at or below 115% of the area median for the county and household size.

The word rural is misleading. Eligible areas can have populations as high as 35,000, and several communities within commuting distance of Houston qualify today. It is worth checking a specific address rather than assuming.

USDA loans do not carry private mortgage insurance. They carry a 1% upfront guarantee fee, which can be financed, and a 0.35% annual fee collected monthly — usually cheaper than FHA mortgage insurance on the same purchase.

Best for: buyers under the income limit purchasing outside the built-up metro core, with little or no down payment. More on USDA loans in Texas.

Jumbo loans

Any loan above the conforming limit, which for 2026 is $832,750 on a one-unit home in most Texas counties, Harris County included. Jumbo loans are held by the lender or sold to private investors rather than to Fannie and Freddie, so the requirements are set by whoever is buying them.

Expect a larger down payment, a higher credit score, more documented reserves and closer scrutiny of income. Rates are often surprisingly competitive.

Best for: purchase prices above the conforming limit. More on jumbo loans in Texas.

Bank statement loans

For self-employed borrowers whose tax returns understate what they actually earn. Instead of returns, the lender qualifies you on deposits into your business or personal accounts over 12 or 24 months.

Every legitimate deduction you take lowers your taxable income and lowers the income a conventional lender can count. This program exists because that is a documentation problem, not an ability-to-pay problem.

Best for: business owners, contractors and commission earners who write off aggressively. More on bank statement loans.

DSCR loans

For investment property, qualified on the rent the property produces rather than on your personal income. The debt service coverage ratio compares the property's rent to its payment; if the ratio works, the file works.

Best for: investors, particularly anyone whose personal returns already carry several mortgages. More on DSCR loans.

Construction loans

A one-time close construction loan funds the build and converts to your permanent mortgage without a second closing and a second set of costs. Texas has a large build market and comparatively few lenders who explain this product clearly.

Best for: building rather than buying. More on construction loans.

Refinance loans

Not a purchase program, but part of the same map. A rate-and-term refinance replaces your loan with a better one. A cash-out refinance converts equity to cash and, on a Texas homestead, is governed by its own constitutional rules including an 80% cap. An FHA streamline or a VA IRRRL lets you improve an existing government loan with very little documentation.

Which one is yours

That table is a starting point, not an answer. Most buyers qualify for more than one of these, and the useful comparison is the monthly payment and the total cost over the years you actually keep the house — not the headline rate.

Ask us to price two programs against each other on your file. It costs nothing and it is the only way to see the real difference.

Program requirements are set by the agencies and investors named above and change periodically. This page is not a commitment to lend. Texas United Mortgage, LLC, NMLS #2442778. Equal Housing Lender.