FHA vs. Conventional vs. VA vs. USDA Loans: Which Mortgage Is Right for You in North Texas?

By Landon Williams | North Texas Realtor | Sherman, Texas

Buying a home is exciting, but figuring out how to pay for it can feel overwhelming.

If you’ve started researching homes in Sherman, Denison, McKinney, or anywhere in North Texas, you’ve probably heard terms like FHA, conventional, VA, and USDA loans.

But what do they actually mean? And more importantly, which one could help you become a homeowner?

Here’s something I want every buyer to understand: You don’t necessarily need 20% down to purchase a home.

In fact, some mortgage programs offer down payments as low as 3%, and others may allow qualified buyers to purchase with no down payment at all.

Let’s break down four common mortgage options in plain English.

1. Conventional Loans: More Flexible Than You Might Think

Conventional loans are mortgages that aren’t insured or guaranteed by a federal government agency.

A common misconception is that you need excellent credit and a 20% down payment to qualify.

That’s not always true.

Some conventional loan programs allow qualified buyers to purchase with as little as 3% down.

A few things to know:

• Down payments can start as low as 3% for eligible borrowers.
• Credit, income, debts, and other financial qualifications determine eligibility.
• Private mortgage insurance (PMI) is generally required with less than 20% down.
• PMI can often be removed once certain equity and other requirements are met.
• Conventional financing can be used for many different property types, subject to program requirements.

Who might benefit?

Buyers with established credit who want flexibility, competitive financing options, and the potential to eventually eliminate mortgage insurance.

2. FHA Loans: A Popular Option for Buyers With Limited Savings

FHA loans are insured by the Federal Housing Administration.

These loans can be especially helpful for buyers who have smaller down payments or credit histories that make conventional financing more challenging.

FHA loans allow qualified borrowers to put down as little as 3.5%.

For example, on a $250,000 home, a 3.5% down payment would be $8,750.

That doesn’t include closing costs or other expenses, but it may be much more manageable than buyers initially expect.

A few things to know:

• Down payments can start at 3.5% for eligible borrowers.
• Credit qualification guidelines can be more flexible than many conventional options.
• Mortgage insurance is required.
• The property must meet applicable FHA appraisal and condition requirements.
• FHA loans aren’t exclusively for first-time homebuyers.

Who might benefit?

Buyers working on improving their credit or those who have dependable income but haven’t saved a large down payment.

3. VA Loans: An Incredible Benefit for Eligible Veterans

If you’ve served our country, one of the most valuable homebuying benefits available to you may be a VA loan.

These loans are backed by the U.S. Department of Veterans Affairs and are available to eligible veterans, active-duty service members, and certain surviving spouses.

One of the biggest advantages is that qualified buyers can often purchase with no down payment.

A few things to know:

• No down payment is often required.
• No monthly private mortgage insurance is required.
• Interest rates and terms can be competitive.
• A VA funding fee may apply unless the borrower qualifies for an exemption.
• The VA loan benefit can potentially be used more than once.

Who might benefit?

Eligible military buyers who want to take advantage of their earned home loan benefits.

If you qualify, it’s worth having a conversation with a lender who understands VA financing before assuming another loan program is better.

4. USDA Loans: Don’t Overlook This North Texas Opportunity

Here’s a loan program that doesn’t always get enough attention.

USDA loans are designed to help eligible buyers purchase homes in qualifying rural areas.

And yes, certain areas throughout North Texas may qualify.

Under the USDA Single Family Housing Guaranteed Loan Program, eligible borrowers can purchase with no down payment.

A few things to know:

• No down payment is required for qualified borrowers.
• The property must be in a USDA-eligible area.
• Household income limits apply.
• The home generally must be your primary residence.
• Upfront and annual guarantee fees generally apply.

Who might benefit?

Buyers considering homes outside major urban centers who meet the household income and property eligibility guidelines.

If you’re considering purchasing around Grayson County or in some of the smaller North Texas communities, it’s worth checking whether USDA financing is an option.

Remember, eligibility is determined by the property’s specific location, not simply the city or county name.

How Much Money Would You Need Down on a $300,000 Home?

Here’s a simple illustration of the minimum down payments available to eligible borrowers.

 

Loan Type	Down Payment	On a $300,000 home
Conventional	3%	$9,000
FHA	3.5%	$10,500
VA	0%	$0
USDA	0%	$0

 

These examples are for educational purposes. They don’t include closing costs, prepaid expenses, mortgage insurance, guarantee fees, or other potential charges. Not every borrower qualifies for the minimum down payment.

What About Closing Costs and Seller Concessions?

Here’s something buyers sometimes overlook.

Your down payment isn’t necessarily the only money involved in purchasing a home.

There can also be expenses for the appraisal, title services, lender fees, property taxes, homeowners insurance, and other closing costs.

Depending on the mortgage program, contract terms, and seller’s willingness to negotiate, you may be able to ask the seller to contribute toward certain closing expenses.

That’s one reason having a knowledgeable real estate agent matters.

Understanding how to structure an offer involves more than simply negotiating the purchase price. It’s also about understanding which terms may help you reach the closing table comfortably.

Does Your Loan Type Affect the Home You Can Buy?

Absolutely.

Different loan programs have different property and appraisal requirements.

For instance, some property conditions may require repairs before financing can be approved.

That doesn’t automatically mean a home is a bad purchase, but it’s important to understand potential financing issues before submitting an offer.

As a Realtor who also has experience in remodeling, I pay attention to both the home’s condition and how that condition might affect a buyer’s plans.

A home that looks like a great deal isn’t necessarily the right purchase if it creates unexpected financing or repair challenges.

Frequently Asked Questions About Mortgage Loans in Texas

Do I need 20% down to buy a home in Texas?

No. Some conventional loans allow as little as 3% down, FHA loans can start at 3.5%, and eligible VA and USDA buyers may qualify for no-down-payment financing.

Is FHA better than conventional financing?

Neither is automatically better. Your credit, income, savings, mortgage insurance costs, and long-term goals all matter. Comparing lender estimates for both programs can help you make an informed choice.

Can I buy a home in Sherman, Texas, with a USDA loan?

Possibly, depending on the property’s exact address and your household eligibility. The USDA has a property eligibility tool that can help determine whether a location qualifies.

Can I use a VA loan more than once?

Yes. VA home loan benefits may be reused, subject to entitlement and other eligibility requirements.

Can the seller pay my closing costs?

In many transactions, yes. Seller contributions are subject to negotiation and the limits and requirements of the applicable mortgage program.

Should I get preapproved before looking at houses?

I strongly recommend it.

A mortgage preapproval can help establish a realistic shopping budget and make the offer process more efficient. Preapproval isn’t a final loan commitment, but it’s an important starting point.

Once you’ve found the right financing and your offer is accepted, the next stage of your homebuying journey begins. I’ve also created a helpful guide explaining what happens after your offer is accepted when buying a home in Texas.

My Advice to North Texas Homebuyers

Don’t rule yourself out of homeownership before exploring your financing options.

I’ve worked with buyers in different situations, and one thing I’ve learned is that everyone’s path to homeownership looks a little different.

Some buyers have money saved but need help understanding the process. Others are trying to determine which mortgage program makes the most sense. Some are relocating, buying their first home, or starting over in a new community.

My job isn’t to push you toward a particular house or loan.

It’s to help you understand the process, ask the right questions, connect with qualified professionals, and make informed decisions.

Whether you’re considering buying in Sherman, Denison, Whitesboro, Howe, Van Alstyne, McKinney, or the surrounding North Texas communities, I’d be happy to help you get started.

Ready to Explore Your Homebuying Options in North Texas?

You don’t have to figure everything out on your own. Whether you’re buying your first home, relocating to North Texas, or exploring financing options, I’d love to help you take the next step.

I can connect you with trusted local mortgage professionals, help you understand the homebuying process, and guide you toward finding a home that fits your needs and budget.

Have questions? Let’s talk about your homeownership goals!

 

Landon Williams
North Texas Realtor
homesbylandon.com

Disclaimer: This article provides general educational information and is not a mortgage offer or financial advice. Financing programs, eligibility guidelines, lender requirements, and fees may change. Consult a licensed mortgage professional for your specific financing options.