Choosing a home is only half of the home-buying decision.

How you finance that home can be just as important as which property you buy.

Two buyers can purchase identical $400,000 homes and end up with very different down payments, monthly payments, mortgage insurance costs, interest expenses, and cash requirements simply because they chose different mortgage programs.

That’s why one of the biggest mistakes buyers make is asking:

“What’s the best mortgage?”

There isn’t one mortgage that’s best for everyone.

A conventional loan may be an excellent fit for one buyer. FHA financing may give another buyer a better path to homeownership. An eligible veteran may find that a VA loan provides benefits that are difficult to match. Someone purchasing outside a major Texas metro may discover that USDA financing deserves serious consideration.

And then there are decisions involving fixed rates, adjustable rates, jumbo loans, down payment assistance, temporary rate buydowns, and new-construction financing.

The goal isn’t simply to get approved.

The goal is to understand your options well enough to choose a financing strategy that fits your payment, available cash, property, and long-term plans.

If you’re already trying to figure out which direction makes sense, you don’t have to sort through every option alone. You can schedule a 15-minute consultation with Kory White to talk through your budget, timeline, preferred areas, and where you are in the buying process.

This guide breaks down the major types of mortgage loans Texas homebuyers should understand in 2026.

First: What Is a Mortgage Loan?

A mortgage is financing used to purchase or refinance real estate.

When you purchase a home with a mortgage, you typically contribute some amount of your own money toward the transaction, while a lender provides financing for the remaining amount.

Your monthly housing expense may include several components:

Principal
Interest
Property taxes
Homeowners insurance
Mortgage insurance, when applicable
HOA dues
Flood insurance, when applicable
MUD or PID-related costs depending on the property

This is why comparing mortgages based solely on the interest rate can be misleading.

The better question is:

What will this home and this financing strategy actually cost me upfront, monthly, and over the period I expect to own it?

The Major Types of Mortgage Loans

Most Texas homebuyers will encounter some combination of these financing options:

Mortgage Type	Potential Down Payment	Mortgage Insurance	Best Known For
Conventional	As low as 3% on certain programs	Usually applies with lower down payments	Flexibility
FHA	As low as 3.5% for qualifying borrowers	FHA mortgage insurance	Qualification flexibility
VA	Potentially 0%	No monthly PMI	Eligible military borrowers
USDA	Potentially 0%	USDA-related fees apply	Eligible properties and borrowers
Jumbo	Varies	Depends on program	Higher loan amounts
ARM	Varies	Depends on underlying loan	Initial fixed period followed by adjustments

These are general characteristics. Actual eligibility, pricing, down-payment requirements, and underwriting depend on the borrower, lender, property, occupancy, and current program guidelines.

Let’s look at each one more closely.

1. Conventional Mortgage Loans

A conventional mortgage is a home loan that isn’t insured or guaranteed by a federal government agency such as FHA, VA, or USDA.

Conventional financing is extremely common and can work well for both first-time and repeat buyers.

One of the biggest misconceptions about conventional financing is:

“I need 20% down.”

Not necessarily.

Certain conventional programs allow qualified borrowers to purchase with substantially less.

For example, Fannie Mae HomeReady and Freddie Mac Home Possible are conventional programs designed to expand homeownership opportunities for qualifying borrowers.

Potential Advantages of Conventional Loans

Low-down-payment options for qualified borrowers
Broad property eligibility
Competitive rates for qualified borrowers
Potentially lower mortgage insurance costs in some situations
Mortgage insurance may eventually be removable when requirements are satisfied
Financing options for different property and occupancy types

Potential Disadvantages

Conventional financing can sometimes be less forgiving of certain credit or debt profiles than government-backed programs.

Pricing can also be affected by:

Credit score
Loan-to-value ratio
Property type
Occupancy
Debt-to-income ratio
Loan amount

Who Should Consider Conventional Financing?

Conventional financing deserves consideration if you have reasonably strong credit, stable qualifying income, and want flexibility.

But don’t automatically choose conventional simply because your credit is good.

Compare it against the other programs available to you.

If you haven’t gotten far enough into the process to know which programs you should be comparing, schedule a quick 15-minute buyer consultation and we can establish where you are before you start shopping for homes.

2. FHA Mortgage Loans

An FHA loan is a mortgage insured by the Federal Housing Administration.

FHA financing is especially popular among buyers who may have:

Smaller down payments
Less-established credit
Higher debt-to-income ratios
Limited cash reserves

Qualified borrowers may potentially purchase with a down payment as low as 3.5%, subject to FHA and lender requirements.

You can learn more about FHA financing through the Federal Housing Administration.

Why FHA Can Be Attractive

FHA financing may offer:

Relatively low down-payment requirements
More flexible credit qualification
Greater flexibility for certain financial profiles
Compatibility with some down payment assistance programs
Financing for first-time and repeat buyers

That’s worth emphasizing:

FHA is not exclusively a first-time homebuyer program.

You don’t have to be purchasing your first home to potentially use FHA financing.

The Big FHA Consideration: Mortgage Insurance

FHA financing generally requires mortgage insurance.

Depending on the loan structure, this can include an upfront mortgage insurance premium and annual mortgage insurance premiums incorporated into monthly payments.

The duration of mortgage insurance can depend on your loan structure.

This means an FHA loan with a seemingly attractive rate isn’t automatically less expensive than a conventional loan.

You need to compare the complete payment and cost structure.

FHA vs. Conventional: Which Is Better?

This is one of the most common questions buyers ask.

The answer depends on your finances.

Feature	FHA	Conventional
Minimum down payment	Potentially 3.5%	Potentially 3% on certain programs
Credit flexibility	Often greater	Pricing may reward stronger credit
Mortgage insurance	Generally required	Typically required with certain lower down payments
First-time buyer only?	No	No
Investment-property options	Generally owner-occupied	Certain conventional programs allow investment properties
Property requirements	FHA requirements apply	Conventional requirements apply

Don’t decide based on the table alone.

Ask your lender to run both scenarios using the same property and purchase price.

Compare:

Cash to close
Interest rate
Principal and interest
Mortgage insurance
Total monthly payment
Closing costs
Long-term cost

That’s how you make a meaningful comparison.

3. VA Home Loans

For eligible veterans, active-duty service members, and certain surviving spouses, VA financing can be one of the strongest mortgage programs available.

The VA Home Loan Program can provide significant benefits to eligible borrowers.

Potential VA Loan Advantages

These may include:

Potentially 0% down
No monthly private mortgage insurance
Competitive financing terms
Limits on certain closing costs
No prepayment penalty
Reusable VA loan benefits when eligibility requirements are met

What Is a Certificate of Eligibility?

Your Certificate of Eligibility, commonly called a COE, establishes eligibility for the VA home loan benefit.

However, a COE doesn’t automatically mean you’re approved for a mortgage.

You still have to satisfy applicable lender requirements involving income, debts, credit, and underwriting.

What About the VA Funding Fee?

Many VA borrowers pay a one-time funding fee.

The amount can depend on:

Type of VA loan
Down payment
Previous use of the VA benefit
Applicable exemptions

Some eligible borrowers may be exempt from the funding fee.

If you’re eligible for VA financing, make sure your lender compares it against your other options instead of assuming one loan structure is automatically best.

4. USDA Home Loans

USDA financing is one of the most overlooked mortgage options, especially among Texas buyers willing to consider communities outside the urban core.

The USDA Single Family Housing Guaranteed Loan Program can provide qualifying borrowers with financing for eligible properties.

One of its biggest attractions is the potential for 100% financing for eligible borrowers.

USDA Isn’t Just for Farms

The word “rural” causes many buyers to immediately dismiss USDA financing.

That’s a mistake.

Some suburban and developing communities outside major Texas metropolitan areas may potentially qualify.

That can make USDA worth investigating for buyers looking around the outer portions of:

Dallas-Fort Worth
Greater Houston
Austin
San Antonio
Other growing Texas regions

You can use the USDA Property Eligibility tool as a starting point when researching an area.

USDA Eligibility Can Include

Geographic requirements
Household income limits
Occupancy requirements
Credit and underwriting requirements
Property requirements

The property generally must be your primary residence.

This is a great example of why I don’t recommend eliminating an area or financing program before looking at the entire picture. If you’re flexible on location and trying to maximize what your budget can buy, schedule 15 minutes with me and we can discuss both the financing and communities that may fit your goals.

5. Jumbo Mortgage Loans

A jumbo mortgage is generally used when the loan amount exceeds applicable conforming loan limits.

This becomes particularly relevant in higher-priced Texas markets and luxury real estate.

Jumbo loans can finance properties such as:

Luxury homes
Higher-priced new construction
Larger custom homes
Properties requiring loan amounts above conforming limits

Jumbo Loan Requirements

Depending on the lender and program, buyers may encounter:

Higher credit-score expectations
Larger reserve requirements
Greater documentation requirements
Different debt-to-income requirements
Larger down-payment requirements

But jumbo financing isn’t one standardized product.

Different lenders can have dramatically different jumbo programs.

If you’re purchasing a higher-priced property, comparing lenders and structures can be particularly important.

6. Fixed-Rate Mortgages

A fixed-rate mortgage keeps the note’s interest rate fixed for the term of the loan.

Common examples include:

30-year fixed
20-year fixed
15-year fixed

A fixed interest rate gives buyers predictability.

Your principal-and-interest payment generally remains stable for the life of the loan.

However, your total monthly housing payment can still change.

Why?

Because property taxes, homeowners insurance, flood insurance, mortgage insurance, and certain other costs can increase or decrease.

This is particularly important for Texas homeowners.

A fixed-rate mortgage does not necessarily mean your total monthly payment will remain exactly the same forever.

7. 15-Year vs. 30-Year Mortgages

A 15-year mortgage generally requires a larger monthly principal-and-interest payment because you’re repaying the loan much faster.

In exchange, borrowers may receive:

A potentially lower interest rate
Faster equity accumulation
Significantly less total interest over the life of the loan

A 30-year mortgage generally provides:

Lower required monthly payments
Greater monthly cash-flow flexibility
More room in the household budget

Neither is universally better.

A mortgage should fit into your overall financial life, not consume it.

8. Adjustable-Rate Mortgages (ARMs)

An adjustable-rate mortgage, or ARM, has an interest rate that can change after an initial period.

An ARM may provide an initial fixed-rate period followed by periodic adjustments.

Before choosing one, understand:

Initial fixed period
Index
Margin
Initial adjustment cap
Periodic adjustment cap
Lifetime cap
Maximum possible payment
How long you expect to own the property

We’ve created an entire resource specifically for this financing strategy.

Read our guide to adjustable-rate mortgages in Texas to understand the advantages, disadvantages, and situations where an ARM might make sense.

If you’re considering an ARM because you’re trying to reach a specific monthly payment, that’s also a good time to schedule a 15-minute consultation. We can look at whether the home price, location, taxes, builder incentives, or financing structure could give you other ways to reach that payment goal.

9. First-Time Home Buyer Mortgage Programs

Being a first-time buyer doesn’t automatically mean you need a special “first-time buyer loan.”

First-time buyers may potentially use:

Conventional financing
FHA
VA
USDA
State assistance programs
Local assistance programs

We’ve created a separate resource specifically for buyers trying to understand these options.

Read our Texas First-Time Home Buyer Programs: Complete 2026 Guide for a deeper look at assistance programs and financing options available to Texas buyers.

10. Down Payment Assistance Programs

Down payment assistance, commonly called DPA, can potentially help eligible buyers cover some of the upfront costs of purchasing a home.

Assistance may come in several forms:

Grants
Forgivable second mortgages
Deferred-payment second liens
Repayable second mortgages

This distinction matters enormously.

“Down payment assistance” does not automatically mean free money.

Before accepting assistance, ask:

Does it have to be repaid?
Is there a second lien?
Is it forgivable?
How long must I occupy the home?
What happens if I sell?
What happens if I refinance?
Does using assistance change my interest rate?
Are there additional fees?

Sometimes bringing more of your own money produces a better long-term financing structure.

Other times, preserving your cash and using assistance may make more sense.

Run the numbers both ways.

11. New Construction Mortgage Financing

New construction deserves its own conversation because builders frequently offer financing incentives through preferred or affiliated lenders.

You may encounter offers involving:

Interest-rate buydowns
Closing-cost contributions
Permanent rate reductions
Temporary rate reductions
Appliance packages
Design-center credits
Price reductions
Combination incentives

This can make builder financing extremely attractive.

But don’t look only at the incentive.

Compare:

Builder lender + incentive

against:

Outside lender + potentially different rate and fees

A $20,000 incentive sounds enormous, but you need to understand exactly where that $20,000 is going and what the final financing costs.

This is also where having representation on the real estate side can matter. Builder incentives, purchase price, closing costs, inventory, and financing can interact with one another. If you’re thinking about new construction, schedule a 15-minute consultation with Kory White before walking into sales offices so we can discuss your strategy first.

12. Temporary Mortgage Rate Buydowns

A temporary buydown reduces the effective interest rate used to calculate the borrower’s payment during the initial years of the mortgage through funds allocated to the buydown.

You may hear terms such as:

2-1 buydown

3-2-1 buydown

These can appear in builder promotions and seller negotiations.

A temporary buydown can provide payment relief during the first years of homeownership.

But there’s one rule buyers should remember:

Make sure you can comfortably afford the full payment after the temporary buydown ends.

Don’t build your household budget around a temporary payment.

Mortgage Pre-Approval Comes Before Choosing the House

The time to compare mortgage programs is before you find the home you want.

A strong pre-approval process should help you understand:

What you qualify for
Your comfortable purchase range
Available mortgage programs
Estimated interest rate
Down payment
Closing costs
Cash to close
Estimated monthly payment

Our guide explaining why mortgage pre-approval is one of the most important steps in buying a home walks through this process in detail.

And remember:

The maximum mortgage you qualify for isn’t necessarily the mortgage you should take.

If you’re not pre-approved yet, that’s okay. Schedule a 15-minute consultation with me first and we can discuss your goals, payment comfort level, timeline, and what should happen next.

Compare Monthly Payment, Not Just Interest Rate

This is one of the most important lessons in this entire guide.

Suppose you’re comparing 2 homes.

Both cost $350,000.

Home A has:

Lower property taxes
No HOA
Lower homeowners insurance
No flood-insurance requirement

Home B has:

Higher property taxes
$150 monthly HOA dues
Higher insurance
Additional district-related costs

Those houses don’t actually cost the same amount to own.

That’s why your mortgage decision must be connected to the specific property.

The goal isn’t necessarily finding the cheapest house.

It’s finding the best combination of:

home + location + payment + financing + long-term fit.

Texas Property Taxes Can Change the Equation

Property taxes are especially important when comparing homes in Texas.

Tax rates and taxing jurisdictions can vary substantially from one community to another.

New construction deserves additional attention because buyers may encounter early tax information that doesn’t reflect what taxes could look like once the completed home is fully assessed.

Understanding the likely tax burden before buying can prevent a major payment surprise later.

Houston-area homeowners who believe their appraisal is too high can use our Harris County property tax protest guide.

Dallas-area homeowners can review our Dallas County property tax protest guide.

Don’t Forget the Costs Beyond Your Mortgage

Your mortgage payment isn’t your complete cost of homeownership.

You may also have:

Electricity
Water
Natural gas
Internet
Security
HOA dues
Lawn maintenance
Pest control
Repairs
Routine maintenance

If you’re buying in a deregulated Texas electricity market, you can explore Competitive Rates & Friendly Service when preparing to establish electricity for your new home.

The objective is to understand what owning the property costs after you receive the keys, not simply what it takes to qualify for the mortgage.

How Do You Choose the Right Mortgage?

Rather than asking a lender only:

“What’s your best rate?”

Ask:

Which mortgage programs do I qualify for?
What would my payment be under each?
How much cash would I need to close?
Does the loan require mortgage insurance?
How long does that mortgage insurance remain?
Are assistance programs available?
What lender fees apply?
Are discount points included in the quoted rate?
What would it cost to buy the rate down?
Is there a prepayment penalty?
What happens if I sell or refinance in 3–5 years?
Which option gives me the best combination of payment, cash preservation, and long-term cost?

That conversation is much more valuable than simply asking which lender advertises the lowest rate.

And you don’t need to know all of these answers before contacting me. If anything, these are exactly the conversations we should be having before you start seriously shopping. You can reserve 15 minutes to talk through your home-buying strategy and we’ll identify the questions that matter most for your situation.

Mortgage Loan Comparison at a Glance

Loan	Potentially Best For	Major Advantage	Important Consideration
Conventional	Broad range of qualified buyers	Flexibility	PMI may apply with lower down payments
FHA	Buyers needing qualification flexibility	Lower down payment and flexible underwriting	Mortgage insurance
VA	Eligible military borrowers	Potentially 0% down and no monthly PMI	Eligibility and funding-fee considerations
USDA	Eligible buyers and properties	Potentially 100% financing	Income and geographic requirements
Jumbo	Higher-priced homes	Larger loan amounts	More stringent underwriting may apply
Fixed Rate	Buyers prioritizing stability	Predictable interest rate	Total payment can still change
ARM	Buyers with appropriate timelines	Potential initial-rate advantage	Rate can adjust
DPA	Buyers needing upfront assistance	Reduces immediate cash requirement	Assistance may have repayment conditions

Frequently Asked Questions About Mortgage Loans

What is the best mortgage for a first-time buyer?

There isn’t one universally best mortgage.

A first-time buyer might benefit from conventional, FHA, VA, USDA, or assistance-program financing depending on credit, income, available cash, military eligibility, property location, and long-term goals.

Start with our Texas First-Time Home Buyer Programs guide.

Do I need 20% down to buy a house?

No.

Certain conventional programs may allow qualifying borrowers to purchase with substantially less than 20% down, while eligible VA and USDA borrowers may have access to financing without a traditional down payment.

Is FHA always better if my credit isn’t perfect?

No.

FHA may be worth considering, but you should compare actual conventional and FHA scenarios.

Interest rate, mortgage insurance, down payment, lender pricing, and your expected ownership period can change which option is financially preferable.

Is VA always the best choice for a veteran?

VA financing offers substantial benefits, but eligible borrowers should still compare actual loan terms, costs, and their specific financial circumstances.

Can I buy a house with no money down?

Potentially.

Eligible VA and USDA borrowers may have access to 100% financing.

But 0% down doesn’t necessarily mean $0 out of pocket.

You may still encounter closing costs, prepaid expenses, inspections, earnest money, appraisal-related expenses, and other transaction costs.

Can I use down payment assistance?

Potentially.

Eligibility depends on the assistance program, income, location, mortgage, lender, and other requirements.

Our Texas First-Time Home Buyer Programs guide is a good next resource if cash-to-close is one of your biggest concerns.

Is a 15-year mortgage better than a 30-year mortgage?

Not automatically.

A 15-year mortgage can dramatically reduce total interest but requires a larger monthly payment.

The right decision depends on your cash flow and broader financial priorities.

Should I buy discount points?

It depends on the cost of the points, resulting rate reduction, and how long you expect to keep the mortgage.

Calculate the break-even point rather than automatically paying points for a lower rate.

Can my mortgage payment increase with a fixed-rate loan?

Your principal-and-interest payment generally remains fixed on a standard fixed-rate mortgage.

Your total payment can still change because property taxes, homeowners insurance, mortgage insurance, and other escrowed expenses may change.

The Most Important Mortgage Decision Isn’t Just the Rate

Buyers understandably focus on interest rates.

Rates matter.

But the lowest advertised rate doesn’t automatically produce the best mortgage.

You also need to consider:

Loan type
Down payment
Closing costs
Discount points
Mortgage insurance
Property taxes
Homeowners insurance
Cash reserves after closing
Expected ownership period
Future refinancing possibilities
Your actual monthly comfort level

The right mortgage should help you buy the home without making the rest of your financial life uncomfortable.

The Bottom Line

There are many ways to finance a home in Texas.

You may have conventional, FHA, VA, USDA, jumbo, fixed-rate, adjustable-rate, first-time buyer, down payment assistance, and builder-financing options available.

The best strategy is rarely choosing a mortgage based on one number.

Instead, compare the complete financial picture.

At Kory White Real Estate Group, that’s how we approach home buying. We want clients to understand the home, financing, property taxes, insurance, inspections, builder incentives, utilities, and long-term costs before making a decision.

You don’t have to know which mortgage you need before reaching out. That’s part of the process.

If you’re preparing to buy in Dallas-Fort Worth, Houston, Austin, San Antonio, or elsewhere in Texas, schedule a 15-minute consultation with Kory White. We’ll start with what you want your home and monthly payment to look like, then work backward toward the financing and properties that make the most sense.

About Kory White Real Estate Group

Kory White Real Estate Group helps first-time buyers, repeat buyers, sellers, investors, and relocating families navigate real estate throughout Texas.

Our approach is built around education, strategy, and advocacy.

Buying a home isn’t simply about finding something you like. It’s about determining whether the property, payment, financing, location, condition, and long-term value make sense together.

That’s why we help clients evaluate the complete transaction instead of looking at any one piece in isolation.

If buying a home is on your radar, even if you’re still several months away, schedule a 15-minute consultation with Kory White and let’s establish the right starting point.

Types of Mortgage Loans: A Complete Guide for Texas Homebuyers in 2026