Texas Mortgage FAQ

Understanding mortgages in Texas - loan types, rates, requirements, and refinancing explained.

Loan Types & Options

What types of mortgages are available in Texas?
Common Texas mortgage options include: Conventional loans (3-20% down, 620+ credit), FHA loans (3.5% down, 580+ credit), VA loans (0% down for veterans), USDA loans (0% down in rural areas), and Jumbo loans (for amounts over $766,550). Each has unique benefits and requirements.
What is the difference between FHA and conventional loans?
FHA loans require lower credit scores (580 vs 620) and down payments (3.5% vs 3-5%), but require mortgage insurance for the life of the loan. Conventional loans drop PMI at 20% equity and have lower overall costs for borrowers with good credit (740+). FHA is better for lower credit; conventional for higher credit.
Can veterans get special mortgage benefits in Texas?
Yes, VA loans offer: 0% down payment, no PMI, competitive rates, and flexible credit requirements. Texas also has the Veterans Land Board (VLB) program offering below-market rates and land loans. Active duty, veterans, and eligible surviving spouses qualify. Read our VA Loan Guide.
What is a jumbo loan and when do I need one?
Jumbo loans exceed the conforming loan limit ($766,550 in most Texas counties for 2026). They're needed for high-value properties and typically require 10-20% down, 700+ credit score, and strong reserves. Rates may be slightly higher than conforming loans.

Rates & Costs

What are current mortgage rates in Texas?
Mortgage rates fluctuate daily based on economic conditions. As of early 2026, 30-year fixed rates range from 6.0-7.0%. Rates vary by credit score, loan type, and down payment. Compare offers from at least 3 lenders - even a 0.25% difference can save thousands over the life of the loan.
Should I buy mortgage points to lower my rate?
Buying points (1 point = 1% of loan amount) lowers your rate by 0.25-0.5%. It makes sense if you plan to stay 5+ years. On a $400,000 loan, 1 point costs $4,000 and saves ~$60/month. Break-even is about 5.5 years. Don't buy points if you might refinance or move sooner.
What fees should I expect when getting a mortgage?
Common mortgage fees include: origination fee (0.5-1%), appraisal ($400-$600), credit report ($30-$50), title search and insurance ($1,500-$3,000), and recording fees ($50-$250). Total closing costs typically run 2-5% of the loan amount. Get a Loan Estimate from each lender to compare.
What is an escrow account and do I need one?
An escrow account holds funds for property taxes and insurance, paid with your monthly mortgage payment. Most lenders require escrow for loans with less than 20% down. It ensures taxes and insurance stay current. Your monthly payment includes principal, interest, taxes, and insurance (PITI).

Pre-Approval & Qualification

What is the difference between pre-qualification and pre-approval?
Pre-qualification is an informal estimate based on self-reported information. Pre-approval is a formal process where the lender verifies income, assets, credit, and employment. Pre-approval carries much more weight with sellers and is essentially required to make competitive offers in Texas.
What documents do I need for mortgage pre-approval?
Prepare: last 2 years of tax returns and W-2s, recent pay stubs (30 days), bank statements (2-3 months), investment account statements, photo ID, and Social Security number. Self-employed buyers need business tax returns and profit/loss statements. Having documents ready speeds up the process.
How much house can I afford in Texas?
Lenders use the 28/36 rule: housing costs should be under 28% of gross income, total debt under 36%. On $100,000 household income, you could afford roughly $350,000-$425,000 depending on debts, rate, and down payment. Remember to include property taxes (1.6-2.5% in Texas). Use our Mortgage Calculator.
Will checking my credit score hurt my mortgage application?
Multiple mortgage inquiries within a 14-45 day window count as a single inquiry on your credit report. This encourages rate shopping. Your own credit checks (soft inquiries) never affect your score. Check your credit 3-6 months before applying to address any issues.

Refinancing

When should I refinance my Texas mortgage?
Consider refinancing when rates drop 0.75-1% below your current rate, to remove PMI when you reach 20% equity, to switch from an ARM to a fixed rate, or for a cash-out refinance. Calculate break-even by dividing closing costs by monthly savings. Texas has a unique refinance law requiring a 12-day waiting period.
What is a cash-out refinance in Texas?
Texas has strict rules for cash-out refinances (Texas Section 50(a)(6) loans): you can borrow up to 80% of your home's value, fees are capped at 2% of the loan, and there's a mandatory 12-day cooling-off period. You can only do one cash-out refinance per year, and the home must be your primary residence.
Can I refinance with bad credit in Texas?
FHA Streamline refinances may be available if you have an existing FHA loan, with relaxed credit requirements. VA Interest Rate Reduction Refinance Loans (IRRRLs) offer similar benefits for VA borrowers. Conventional refinances typically need 620+ credit. Improving your credit score first usually gets better results.

Mortgage & Lending Resources

Information on this page is sourced from official Texas and federal agencies. Always verify current rates, requirements, and regulations with the appropriate authority.

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Last updated: January 27, 2026 | Content reviewed and verified by licensed Texas REALTORS®

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