The core FHA loan requirements in Texas come straight from HUD, and they're the same statewide. You need a 580 credit score for 3.5% down, or 500 to 579 with at least 10% down. You'll document two years of employment and income, show a debt-to-income ratio your approval supports, pay FHA mortgage insurance, and buy a home that passes FHA's property standards. At least one borrower has to move in within 60 days and plan to live there a year or more, and the loan has to fit your county's FHA limit.
I'm Taylor Ring, a Mortgage Loan Officer with Fairway Independent Mortgage Corporation (The Wood Group) in Belton. My FHA loans page explains what FHA is, and my FHA loan limits guide covers county limits in depth. This post is the checklist I'd hand you before we start, built from HUD Handbook 4000.1 as revised August 12, 2026.
Ready to check your file? Get Pre-Approved or Book a Free Consultation.
The FHA Checklist at a Glance
- Credit: 580+ for maximum financing; 500 to 579 limited to 90% loan-to-value
- Down payment: at least 3.5% of the adjusted value; gifts and approved assistance can help
- Income: two years of employment and income verified
- Debt-to-income: automated approval findings, or HUD's manual ratio limits
- Mortgage insurance: 1.75% upfront plus annual MIP
- Occupancy: principal residence, moved into within 60 days, for at least one year
- Property: meets HUD's Minimum Property Requirements
- Loan amount: within the 2026 FHA limit for your county
Source for all items: HUD Handbook 4000.1, Update 18.
1. Credit Score
HUD uses a Minimum Decision Credit Score to set how much you can borrow:
| Credit Score | What FHA Allows |
|---|---|
| 580 or higher | Maximum financing (3.5% down) |
| 500 to 579 | Maximum 90% loan-to-value (at least 10% down) |
| Below 500 | Not eligible for FHA-insured financing |
If you have non-traditional or insufficient credit, you can still get maximum financing, but the loan must be manually underwritten.
Keep in mind that HUD's numbers are the floor. Programs layered on top often set a higher one. Texas's TDHCA and TSAHC programs, for example, require at least a 620 score.
2. Down Payment and Where It Can Come From
FHA's Minimum Required Investment is at least 3.5% of the adjusted value, set by Section 203(b)(9) of the National Housing Act. The maximum loan-to-value on a purchase is 96.5%.
The money doesn't all have to be yours. HUD lets gifts come from:
- a family member
- your employer or labor union
- a close friend with a clearly defined, documented interest in you
- a charitable organization
- a government agency or public entity with a homeownership program for low- or moderate-income families or first-time buyers
Two rules to know: the donor's cash on hand isn't an acceptable source, and your lender needs a signed and dated gift letter stating that no repayment is required.
3. Income, Employment, and Debt-to-Income
Two Years of History
Your lender has to verify your most recent two years of employment and income and document your current job. With the alternative method, that means your most recent pay stub showing year-to-date earnings, your W-2s from the previous two years, and a phone verification with your employer. Employment is reverified within 10 days before the Note date.
A gap of six months or more doesn't automatically rule you out. HUD lets lenders use your current income if you've been in your current line of work for at least six months and had a two-year work history before the gap.
How DTI Works
Most FHA files run through FHA's TOTAL Mortgage Scorecard. When a file is manually underwritten instead, HUD caps two ratios: your total mortgage payment to income, and your total fixed payments to income.
| Credit Score | Maximum Ratios | What's Required |
|---|---|---|
| 500-579 or no score | 31% / 43% | No stretch allowed (33/45 for energy-efficient homes) |
| 580+ | 31% / 43% | No compensating factors (33/45 for energy-efficient homes) |
| 580+ | 37% / 47% | One compensating factor: reserves, minimal payment increase, or residual income |
| 580+ | 40% / 40% | No discretionary debt |
| 580+ | 40% / 50% | Two compensating factors |
Source: HUD Handbook 4000.1, Section II.A.5, Approvable Ratio Requirements (Manual).
If you have no credit score, HUD counts income only from borrowers who live in the home and sign the mortgage, not non-occupant co-borrowers.
4. FHA Mortgage Insurance
Every FHA purchase loan carries two premiums:
- Upfront MIP: 1.75% of the base loan amount. You can finance it or pay it in cash, but it has to be all one or the other.
- Annual MIP: paid monthly. It ranges from 0.15% to 0.75% depending on term, loan size, and loan-to-value. On most 30-year loans with 3.5% down, it's 0.55% for the life of the loan.
My FHA loan limits guide has the full annual MIP chart.
5. Occupancy
FHA is for the home you live in. HUD requires that:
- At least one borrower occupies the home within 60 days of signing the security instrument
- That borrower intends to stay at least one year
- The home is a principal residence, meaning the place you live most of the calendar year. You can only have one at a time
FHA generally won't insure more than one principal residence for the same borrower, with limited exceptions.
6. The Property and the FHA Appraisal
The FHA appraiser does more than estimate value. They're the lender's on-site check that the home meets HUD's Minimum Property Requirements, which HUD sums up as safe, sound, and secure. New construction also has to meet HUD's Minimum Property Standards.
If the appraiser finds problems, they list the repairs needed and an estimated cost to cure. When the appraiser can't tell whether the home meets the standards, the lender can order an inspection from a qualified professional. If you're looking at an older home, tell me about any obvious issues before the appraisal is ordered so we can plan for them.
7. The 2026 FHA Loan Limit for Your County
For a one-unit home, HUD's 2026 FHA limits in Central Texas are:
- Bell, Coryell, and McLennan counties: $541,287
- Williamson and Travis counties: $571,550
Source: HUD FHA Mortgage Limits, CY2026. For two- to four-unit limits and how the limit plays out on a purchase, see my FHA loan limits in Texas guide.
Documents to Gather Before You Apply
- Pay stubs and W-2s for the past two years (self-employed buyers: tax returns, since HUD averages self-employment income over the previous two years)
- Asset statements for your down payment and closing funds
- A gift letter, signed and dated by the donor, if someone is helping
- Photo ID and details on any debts, such as auto loans or student loans
I'll tell you exactly which extras your file needs once we talk, so you're not chasing paperwork you don't need.
FHA Plus Texas Down Payment Assistance
FHA pairs with both statewide programs:
- TDHCA My First Texas Home: FHA, VA, or USDA with up to 5% assistance for first-time buyers and a 620 minimum score. See my My First Texas Home guide.
- TSAHC Home Sweet Texas and Homes for Texas Heroes: FHA, VA, USDA, or conventional with up to 5% assistance. On FHA, TSAHC requires a 620 score, or 640 for manual underwriting with a 45% maximum DTI. See my Home Sweet Texas guide.
Fairway is a participating lender for both TDHCA and TSAHC programs. Assistance can also help with costs beyond the down payment, which I break down in closing costs in Texas.
A first-time buyer in Killeen had limited savings and assumed they'd need 20% down. We looked at TDHCA and TSAHC assistance along with seller credits, and the takeaway was simple: there were real options well short of 20%.
Illustrative scenario, not an actual client transaction. Assistance and loan eligibility are subject to program and lender requirements.
Frequently Asked Questions
What credit score do I need for an FHA loan in Texas?
HUD allows maximum financing with a 580 or higher score, which means 3.5% down. Scores from 500 to 579 are limited to 90% loan-to-value, so at least 10% down, and scores below 500 aren't eligible. Lenders and assistance programs can require higher scores.
What is the maximum debt-to-income ratio for an FHA loan?
Most FHA loans are approved through FHA's automated TOTAL Mortgage Scorecard. For manually underwritten loans, HUD allows 31% housing and 43% total debt with no compensating factors, and up to 40% and 50% with two compensating factors when the score is 580 or higher.
Can my FHA down payment be a gift?
Yes. HUD allows gifts from family members, employers or labor unions, close friends with a documented interest, charitable organizations, and government homeownership programs. The donor must sign a gift letter stating no repayment is required, and cash on hand isn't an acceptable donor source.
Do I have to live in the home with an FHA loan?
Yes. At least one borrower must occupy the home as a principal residence within 60 days of signing the security instrument and intend to keep living there for at least one year.
Does the home have to pass an FHA inspection?
The FHA appraiser checks that the home meets HUD's Minimum Property Requirements, meaning it is safe, sound, and secure. If the appraiser notes needed repairs, they are listed with an estimated cost to cure, and the lender confirms they are corrected.
Let's Run Through Your Checklist Together
I'll check your credit, income, and savings against each FHA requirement and show you where assistance could cut your cash to close.
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Related Guides
- FHA Loans in Texas
- FHA Loan Limits in Texas
- My First Texas Home Down Payment Assistance
- Home Sweet Texas Home Loan Program
- Closing Costs in Texas
- Conventional Loans
Taylor Ring, NMLS #2809683 | Fairway Independent Mortgage Corporation, NMLS #2289 | The Wood Group of Fairway, 127 Lake Rd Ste 300, Belton, TX 76513 | Equal Housing Opportunity. This is not a commitment to lend. All loans are subject to credit approval and program guidelines, and approval, rates, and program availability are not guaranteed. FHA requirements summarized from HUD Handbook 4000.1; lender and program overlays may apply. Not affiliated with or endorsed by HUD, FHA, TDHCA, TSAHC, or any government agency.