How do I apply for an FHA loan in Texas?

When you’re looking to buy a house, it is very likely that you will need to get a home loan to complete the purchase. You will have several options, such as FHA, conventional loans, VA and USDA loans. The latter two have some special requirements, so today we’re going to talk about FHA and how they compare to conventional loans.

FHA Loans in Texas

FHA loans in Texas are a type of loans backed by the federal government It is the most flexible type of mortgage, which allow people to qualify for this loan having a lower credit score or giving a smaller down payment. It is very recommendable to always start applying for a FHA loan in Texas, whatever happens afterwards, you will always have the option to switch to a conventional one. This type of loan is ideal if you’ve had any kind of financial struggle in the past, whether it is a low income, a low credit score or even bankruptcy. So, how does an FHA loan compares to a conventional one? On one hand, you need a lower credit score to qualify, you have to make a smaller down payment and it is much easier to get approved. However, the main difference and the advantage conventional loans have over FHA loans is the mortgage insurance.

On FHA loans in Texas, you have to pay an MPI, which stands for “Mortgage Premium Insurance”, which is a way of protect the bank in case you aren’t able to make the monthly payment of your loan. If you have anything less than 10% down payment on the mortgage, the MPI will last for the life of the loan. Only if you have a 10% down payment will the insurance go away after 11 years have passed. On the other hand, with the conventional loan, once the loan-to-value ratio reaches 80%, or in some cases 78%, the bank will remove the mortgage insurance (PMI, Private Mortgage Insurance). This could save you a lot of money.

For more information about FHA Loans in Texas don’t hesitate to contact us at (281) 850-1066 or email us at team@houstonhomeslegacy.com