When I help buyers in North Texas—whether in Frisco, Prosper, McKinney, Plano, Celina, Little Elm, or anywhere across DFW—one of the first decisions we make together is which loan type fits their financial situation and homeownership goals.
Your loan type affects your:
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Monthly payment
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Required credit score
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Down payment
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Appraisal strategy
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Closing timeline
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Competitive strength
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Upfront costs and long-term costs
Here’s a simple, clear breakdown of the most common loan types in Texas and how I advise buyers on choosing the right one.
1. Conventional Loans
Conventional loans are the most common in Texas and the most competitive in multiple-offer situations.
Best For:
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Buyers with strong credit
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Buyers with steady income
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Buyers wanting lower long-term costs
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Buyers in competitive markets (Frisco, Prosper, etc.)
Typical Requirements:
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Credit Score: 620+ (680–740+ is ideal)
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Down Payment: 3%–20%+
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Debt-to-Income: Up to ~45% (sometimes higher with strong credit)
Pros:
✔️ Lower PMI (and it falls off automatically)
✔️ More flexible appraisals
✔️ Stronger in multiple-offer situations
✔️ Good for primary, secondary, or investment homes
Cons:
❌ Not as friendly for lower credit buyers
❌ Higher interest rates if credit is weak
Why Texas Buyers Use It:
Conventional loans are widely accepted, competitively priced, and work well with Texas’s high-cost suburban markets.
2. FHA Loans
FHA loans are great for buyers who need a more flexible approval process.
Best For:
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First-time buyers
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Buyers with lower credit
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Buyers with limited down payment
Typical Requirements:
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Credit Score: 580+ (sometimes 500–579 w/ 10% down)
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Down Payment: 3.5% minimum
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More flexible DTI: Up to ~50%
Pros:
✔️ Easier to qualify
✔️ Low down payment
✔️ Good for buyers rebuilding credit
Cons:
❌ FHA Mortgage Insurance Premium (MIP) stays for the life of the loan (unless you refinance)
❌ Harder to win in multiple-offer situations
❌ Stricter appraisal standards
Why It Matters in Texas:
In suburban North Texas, FHA can work very well in areas with more balanced competition or for new construction builders who accept FHA.
3. VA Loans (For Veterans & Active Service Members)
This is one of the best loan programs in the country for eligible buyers.
Best For:
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Veterans
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Active-duty service members
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Eligible surviving spouses
Typical Requirements:
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Credit Score: No official minimum (most lenders prefer 580–620+)
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Down Payment: $0
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Funding Fee: May apply unless exempt
Pros:
✔️ 0% down
✔️ No mortgage insurance
✔️ Low interest rates
✔️ Flexible credit guidelines
Cons:
❌ VA appraisal requirements can be stricter
❌ Harder to win in multiple-offer situations if sellers misunderstand VA loans
Why It Matters in Texas:
Texas has a large veteran population, and VA loans help many families buy in areas like Fort Worth, Denton, McKinney, Anna, Melissa, and Aubrey.
I help educate listing agents so VA buyers remain competitive.
4. USDA Loans
USDA loans are designed for rural and semi-rural areas—and North Texas has quite a few communities that qualify.
Best For:
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Buyers wanting 0% down
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Buyers buying in small towns or rural suburbs
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Lower to moderate-income households
Typical Requirements:
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Location: Must be in a USDA-eligible zone
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Income limits: Apply based on county
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Credit Score: Usually 620+
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Down Payment: 0%
Pros:
✔️ 0% down
✔️ Low mortgage insurance
✔️ Competitive rates
Cons:
❌ Location restrictions
❌ Income limits
❌ Slower underwriting
Where USDA Works in North Texas:
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Van Alstyne
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Anna (some parts)
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Melissa (older sections)
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Princeton
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Farmersville
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Pilot Point
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Aubrey (some parts)
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Gunter
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Smaller towns north of Highway 380
I check USDA maps for you to see if a home qualifies.
5. Jumbo Loans (For Higher-Priced North Texas Homes)
Jumbo loans are used when the loan amount exceeds the conforming loan limit.
2025 Conforming Loan Limit (Est.):
Approx. $750,000 (varies each year)
If your loan amount is above that, it’s considered a jumbo loan.
Best For:
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Luxury buyers
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Frisco/Prosper/McKinney/Plano higher-end homes
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Homes in top school districts
Typical Requirements:
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Credit Score: 700+
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Down Payment: 10–20%+
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Strong income verification
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Reserves required
Pros:
✔️ Ideal for luxury and high-end homes
✔️ Competitive rates if credit is strong
✔️ Good long-term options
Cons:
❌ Stricter underwriting
❌ Larger down payment and reserves
In areas like Frisco’s Fields development, Prosper’s Star Trail, or Plano West, jumbo loans are extremely common.
6. How I Help Buyers Choose the Right Loan Type
Every loan has strengths and weaknesses depending on:
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Your credit
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Your down payment
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Your comfort level with the monthly payment
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The area you're shopping in
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The competition level
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The age and condition of the home
I work with your lender to help you choose the option that:
✔️ Fits your financial goals
✔️ Maximizes affordability
✔️ Keeps you competitive
✔️ Gives you flexibility during the Option Period
✔️ Works well with Texas contracts and timelines
The right loan type can be the difference between winning a home or missing out.
Bottom Line: Texas Buyers Have Options—You Just Need the Right Guidance
When we work together, I make sure you understand every loan type and how it affects your buying power, your offer strength, and your long-term financial picture.
Ready to Buy in North Texas?
If you want a Realtor who understands financing strategy, local lender advantages, appraisal requirements, and the loan types that work best for North Texas neighborhoods, I’d love to help.
