TurkMortgages.com (a team of NEXA Mortgage, LLC) · Ethan Morgan NMLS #2738407 · NEXA Mortgage, LLC Corp NMLS #1660690
The most accessible home loan in Texas — 3.5% down at 580 credit, flexible DTI up to 56.9%, and stacking with Texas DPA programs. Everything you need to know for 2026.
An FHA loan is a mortgage insured by the Federal Housing Administration (FHA), a division of the U.S. Department of Housing and Urban Development (HUD). Because the federal government guarantees the lender against default losses, lenders can offer lower credit score minimums, smaller down payments, and more flexible underwriting than conventional loans.
FHA loans are designed for primary residences only — they cannot be used for investment properties or second homes. This is one key limitation vs. conventional loans. However, multi-unit properties (2–4 units) are allowed if the borrower occupies one unit.
In Texas for 2026, FHA loan limits range from $541,287 in most counties (the HUD floor) up to $813,050 in higher-cost Texas metros like Travis and Williamson counties (Austin area). This compares to the conventional conforming limit of $832,750 statewide.
Many Texas buyers use FHA to purchase when they can't yet qualify for conventional — then refinance to conventional once they hit 20% equity. This removes the lifetime MIP permanently. It's a planned two-step: FHA to get in, conventional to save long-term. Ethan can model both steps for you at application.
| Credit Score | Down Payment | Eligibility | Notes |
|---|---|---|---|
| 760+ | 3.5% | ✓ Eligible | Consider conventional — likely better total cost |
| 720–759 | 3.5% | ✓ Eligible | Run FHA vs. conventional comparison |
| 680–719 | 3.5% | ✓ Common range | FHA often competitive with conventional at this range |
| 620–679 | 3.5% | ✓ FHA sweet spot | FHA typically wins vs. conventional here |
| 580–619 | 3.5% | ✓ FHA primary option | Conventional minimum is 620 — FHA is the path |
| 500–579 | 10% required | ⚠ 10% down required | Many lenders set floor at 580 — shop carefully |
| Below 500 | N/A | ✗ Not eligible | Work on credit improvement |
While HUD guidelines allow FHA loans down to 500 (with 10% down), most lenders set their own minimum at 580 or 620. This is called a "lender overlay." If you're between 500–579, you'll need to find a lender specifically approved for that range. Ethan's NEXA wholesale network includes Carrington Mortgage which accepts 500+ scores.
FHA is the most flexible loan type for DTI — it allows higher ratios than any other standard mortgage program.
| DTI Range | FHA Status | Approval Path | Notes |
|---|---|---|---|
| Under 43% | ✓ Ideal | Automatic AUS approval | Cleanest approval, best terms |
| 43–50% | ✓ Standard FHA | AUS approval (TOTAL Scorecard) | Most FHA borrowers in this range |
| 50–56.9% | ✓ Acceptable | AUS with compensating factors | 720+ credit, 3+ months reserves, low payment shock |
| Above 56.9% | ✗ Exceeds FHA max | Not eligible | Reduce debt or lower loan amount |
*FHA uses the TOTAL Mortgage Scorecard (AUS). DTI limits shown are for AUS-approved files. Manual underwrite has stricter DTI caps (31%/43%).
| Texas Market | County | 1-Unit Limit | 2-Unit | 3-Unit | 4-Unit |
|---|---|---|---|---|---|
| Most TX counties | Standard floor | $541,287 | $693,000 | $837,600 | $1,040,850 |
| Austin Metro | Travis / Williamson | $813,050 | $1,040,850 | $1,258,400 | $1,563,800 |
| Dallas / Collin County | Collin / Denton | $541,287+ | $693,000+ | $837,600+ | $1,040,850+ |
| Houston Metro | Harris County | $541,287 | $693,000 | $837,600 | $1,040,850 |
| San Antonio | Bexar County | $541,287 | $693,000 | $837,600 | $1,040,850 |
*Verify exact county limits at HUD's official website. Limits shown are for illustration. 2026 limits updated by HUD annually.
| Credit Event | FHA Waiting Period | Conventional Waiting Period | Notes |
|---|---|---|---|
| Chapter 7 Bankruptcy | 2 years from discharge | 4 years | Re-established credit required |
| Chapter 13 Bankruptcy | 1 year (with trustee approval) | 2 years from discharge | 12 months satisfactory plan payments |
| Foreclosure | 3 years from completion | 7 years | Extenuating circumstances may shorten |
| Short Sale / Deed-in-Lieu | 3 years | 4 years | No delinquency at time of event |
| Collections / Charge-offs | Case-by-case | Stricter review | May not need to pay off for FHA |
FHA MIP has two components: Upfront MIP (UFMIP) paid at closing, and Annual MIP paid monthly. Unlike conventional PMI, FHA MIP applies regardless of down payment amount, and for most borrowers (less than 10% down), it lasts for the entire life of the loan.
On a $300,000 FHA loan: Upfront MIP = $5,250. This can be financed into the loan (most borrowers do this), meaning you don't pay it out of pocket — but you will pay interest on it for the life of the loan. On a $300K loan financed at 6.875%, that adds roughly $12,000 in interest over 30 years.
| Down Payment | LTV | Loan ≤ $541,287 | Loan > $541,287 | Duration |
|---|---|---|---|---|
| 3.5% | 96.5% | 0.55%/yr | 0.75%/yr | Life of loan |
| 5% | 95% | 0.55%/yr | 0.75%/yr | Life of loan |
| 10% | 90% | 0.50%/yr | 0.70%/yr | 11 years only |
| 22%+ | ≤78% | 0.15%/yr | 0.15%/yr | 11 years only |
Monthly MIP = (Loan Amount × Annual Rate) ÷ 12 · Example: $300,000 × 0.55% ÷ 12 = $137.50/month
Houston area · 30-year FHA · 0.55% annual MIP
Dallas area · 30-year FHA · 0.50% annual MIP
| Factor | FHA MIP | Conventional PMI |
|---|---|---|
| Upfront cost | 1.75% of loan (always) | None |
| Monthly cost (3.5% / 5% down, 680 credit) | ~$126–$150/mo | ~$85–$180/mo (credit-dependent) |
| Cancelable? | No (if <10% down) — Life of loan | Yes — at 20% equity |
| With 10%+ down | Cancels after 11 years | Cancels at 20% equity (faster) |
| Credit score impact | None — same rate regardless of score | Higher score = lower PMI rate |
| Best for (credit 580–680) | FHA wins — lower total payment | PMI too expensive at low score |
| Best for (credit 700+, 20% down) | FHA adds unnecessary cost | Conventional wins — no PMI at all |
FHA wins when: your credit is 580–680, your DTI is above 45%, you need 100% gift funds, or you've had a recent bankruptcy/foreclosure that disqualifies you from conventional. Always run both scenarios — Ethan can model the exact break-even point for your specific numbers.
All scenarios assume 30-year fixed rate of 6.75% (illustration only — contact Ethan for current rate). TX property tax ~2.1% average. FHA UFMIP financed into loan.
W-2 · 620 credit · 3.5% down · $280,000 home
W-2 · 640 credit · TSAHC 5% grant · $300,000 home
W-2 + part-time · 660 credit · 3.5% dn · $320,000
Buy FHA now · refi conventional at 20% equity
Owner-occupies unit 1 · rents unit 2 · 580 credit
Ch. 7 discharged 2 yrs ago · 600 credit · rebuilt
As a NEXA Mortgage broker, Ethan shops 200+ wholesale lenders simultaneously to find you the best FHA rate and terms. Below are the key NEXA wholesale partners used for FHA loans — you never deal with them directly; Ethan handles everything.
FHA rates at wholesale (via NEXA) are typically 0.25–0.50% lower than going directly to a retail bank. On a $280,000 FHA loan over 30 years, that rate difference equals $15,000–$30,000 in savings. Plus Ethan's access to specialty FHA lenders (like Carrington for low scores) means more borrowers get approved.
| Factor | NEXA Broker (Ethan Morgan) | Retail FHA Lender / Bank |
|---|---|---|
| Rate access | Wholesale FHA rates — no markup | Retail rate — markup built in |
| Low score options | Carrington (500+) available | Most retail set floor at 620+ |
| FHA 203(k) | Multiple lenders available | Not all retail lenders offer |
| Texas DPA stacking | TSAHC + TDHCA expert | May not specialize in TX DPA |
| Turkish language support | Yes — Ethan speaks both | No |
| One application, multiple options | Yes — 200+ lenders compared | No — one lender only |
| Phase | Standard | Expedited | Notes |
|---|---|---|---|
| Pre-Approval | 1–2 days | Same day | Have all docs ready |
| Under Contract to Submit | 3–5 days | 24–48 hours | FHA case number ordered |
| FHA Appraisal (ordered to received) | 7–14 days | 5–7 days (rush) | FHA-approved appraiser required |
| Underwriting | 3–7 business days | 24–48 hrs (priority) | MPR issues can delay |
| Conditions to CTC | 2–5 days | 1–2 days | Respond fast to conditions |
| Total Typical Close | 21–30 days | 14–17 days | FHA slightly slower than conventional |
| Factor | FHA Loan | Conventional Loan |
|---|---|---|
| Min Credit Score | 580 (3.5% dn) / 500 (10% dn) | 620 minimum |
| Min Down Payment | 3.5% (580+) | 3% (income limit programs) |
| Upfront MI | 1.75% always — adds to loan | None |
| Monthly MI | MIP — life of loan (if <10% dn) | PMI — cancelable at 20% |
| Max DTI | 56.9% (AUS) | 45–50% (with factors) |
| TX Loan Limit | $541,287 (most counties) | $832,750 (statewide) |
| Investment Property | No — primary only | Yes |
| Second Home | No — primary only | Yes |
| Gift Funds (down payment) | 100% from gifts allowed | Allowed with conditions |
| Property Condition | Stricter FHA MPR standards | Standard appraisal only |
| Post-Bankruptcy Wait | 2 years (Ch. 7) | 4 years |
| Post-Foreclosure Wait | 3 years | 7 years |
| Seller Concessions | 6% max | 3–9% (varies by down %) |
| Your Situation | Best Choice | Reason |
|---|---|---|
| Credit score below 620 | FHA | Conventional not available at 619 or below |
| Credit score 580–680, 3.5% down | FHA | FHA MIP often cheaper than conventional PMI at low scores |
| Credit score 700+, 5–20% down | Compare both | Conventional PMI may be lower; run side-by-side |
| Credit score 740+, 20%+ down | Conventional | No PMI, no upfront MIP — conventional wins clearly |
| DTI above 50% | FHA | FHA allows up to 56.9% — conventional max is 50% |
| Using 100% gift funds for down payment | FHA | Simplest gift fund documentation; no borrower funds required |
| Chapter 7 bankruptcy 2–3 years ago | FHA | FHA 2-year wait vs. conventional 4-year wait |
| Need loan over $541,287 in TX | Conventional | FHA limit in most TX counties; conventional goes to $832,750 |
| Buying investment property | Conventional | FHA primary residence only |
| Stacking TX DPA (TSAHC/TDHCA) | FHA | DPA programs designed to pair with FHA |
Ethan Morgan is a Texas FHA specialist — serving clients in Turkish & English. Get your personalized rate, payment, and Texas DPA eligibility check in one call.