Mortgage Types Explained: Conventional, FHA, VA, and USDA Loans Compared
January 20, 2026 | 9 min read
Choosing the right mortgage is one of the most important financial decisions you will make. Here is a side-by-side comparison of the four major loan programs available to Texas homebuyers.
Quick Comparison Table
| Feature | Conventional | FHA | VA | USDA |
|---|---|---|---|---|
| Min. Down Payment | 3-5% | 3.5% | 0% | 0% |
| Min. Credit Score | 620 | 580 | No min (620 typical) | 640 |
| Mortgage Insurance | PMI if <20% | MIP (life of loan) | Funding fee (one-time) | Guarantee fee |
| Loan Limits (2026) | $766,550 | $498,257 | No limit | No limit |
| Property Requirements | Standard | Strict | VA appraisal | Rural areas only |
| Best For | Good credit, 20% down | Lower credit, low down | Veterans/military | Rural buyers |
Conventional Loans in Detail
Conventional loans are the most common mortgage type and are not backed by any government agency. They are offered through private lenders like banks, credit unions, and mortgage companies. To get the best rates, you will want a credit score of 740 or higher and a down payment of at least 20% to avoid paying private mortgage insurance (PMI).
In Texas, conventional loans are ideal for buyers in urban areas with good credit and some savings. They offer the most flexibility in terms of property types and loan amounts.
FHA Loans in Detail
FHA loans are insured by the Federal Housing Administration and are designed for borrowers who may not qualify for conventional financing. The lower credit score requirement (580) and smaller down payment (3.5%) make them popular with first-time buyers. The downside is mandatory mortgage insurance premiums (MIP) that last for the life of the loan in most cases.
VA Loans in Detail
VA loans are one of the best mortgage products available and are exclusively for eligible veterans, active-duty service members, and surviving spouses. With Texas being home to numerous military bases including Joint Base San Antonio, Fort Cavazos, and Fort Bliss, VA loans are extremely common in the state. Benefits include no down payment, no PMI, competitive rates, and no prepayment penalties.
USDA Loans in Detail
USDA loans offer 100% financing for homes in eligible rural and suburban areas. Many areas outside of Texas's major cities qualify, making this a great option for buyers looking at smaller communities. Income limits apply based on household size and location.
Which Loan Is Right for You?
Use our mortgage calculator to compare payments under different scenarios, and visit our resources page for more information about Texas-specific programs.