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Mortgage Options for First-Time Home Buyers in Texas

Buying a house is an important milestone for many Americans. At Dream Home, we understand that the process of buying your own Dream home can be just as exciting as it is overwhelming. But navigating the world of real estate on your own can be quite tricky. But you don’t need to worry. There are many mortgage lenders and programs that cater to all kinds of first-time home buyers especially in Texas. 

This can be quite hard to manage on your own, but we’re here to guide you through the process. Here we will explore the different types of mortgages, such as first-time home buyer programs, VA loans, conventional loans, FHA loans, jumbo loans, and bad credit loans.

 We’ll also discuss the pros and cons of each mortgage option, and you can choose which one suits you the best: 

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Different Types of Mortgage Options:


1. First Time Home Buyers Program

First time home buyers program is designed keeping those buyers in mind who are looking to buy their first property. First time home buyers have a certain edge over others as these programs often offer favourable conditions. These include lower interest rates, tax benefits, low down payments and special assistance in closing costs. In Texas, there are many local and state programs that assist first time buyers.


  • The Down payments are as low as 3.5% 
  • Reduced interest rates. 
  • Cash Back Reward of 1% on Pre-owned Homes and 2% on New Homes. 
  • Potential assistance with closing costs. 


  • May have income or purchase price limits. 
  • Eligibility requirements.  

2. VA Loans

The Veteran Affairs (VA) loans are a special category of loans. These cater to active-duty service members, veterans, members of the National Guard and Reserves. VA loans are distributed and financed by the Department of Veterans Affairs. These loans offer numerous benefits, including no down payment and competitive interest rates. 


  • No down payment is required. 
  • No private mortgage insurance (PMI). 
  • A 100% finance plan is available.  
  • Contribute towards VA funding fees with a one-time payment of 0% – 3.3%. 
  • Competitive interest rates. 


  • Limited to eligible veterans and service members.

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3. Conventional Loans

If you are looking for loans that offer flexibility in terms and conditions than conventional loans are a good option. You will require a higher credit score and a larger down payment.  


  • Long-term loan (15, 20, 30 years). 
  • Constant interest rates.  
  • No private mortgage insurance (PMI) with a down payment of 20% or more. 
  • It can be used for a variety of property types. 


  • Higher credit score requirements. 
  • A larger down payment is needed (usually at least 3-5%). 
  • Non-government insured

4. Bad Credit Loans

There’s no need to feel ashamed about having a bad credit score. Therefore, you should not let it stand in your way of becoming a homeowner. Bad Credit loans are a special category of loans for such borrowers who may have difficulty when applying for other types of mortgages. These loans often come with higher interest rates. And you may have to pay a larger down payment upfront.  


  • Low interest rates.  
  • Longer repayment period.  
  • It can help improve credit scores with timely payments


  • Higher interest rates. 
  • A larger down payment is required


You can add a co-signer or co-borrower if you are having difficulty securing a loan. Especially if the co-signer is someone with a good credit score, as it will tip the scales in your favor. Make sure you properly explain the terms and conditions to them to ensure that there is no misunderstanding down the line.  

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5. FHA Loans

The FHA loans are backed by the Federal Housing Administration. They are tailored to help lower-income borrowers, and those with less-than-perfect credit achieve homeownership. Lenders ask for lower down payments and relaxed credit requirements. 


  • Lower down payment as low as 3.5%. 
  • More lenient credit score requirements. 
  • High debt-to-income ratios up to 57%. 
  • Requires mortgage insurance premiums (MIP). 


  • Loan limits for FHA loans are lower than those for conventional loans

6. Jumbo Loans

If you have a big family or simply want a bigger house than Jumbo loans are perfect fit for you. These loans are used to finance properties that surpass the conforming loan limits which is $726,000. The loan limit is set by the Federal Housing Finance Agency (FHFA). The loan amounts are larger and typically come with higher interest rates and stricter requirements. 


  • Can finance high-value properties. 
  • Competitive interest rates for qualified buyers. 
  • Fixed-rate for 3-10 years 


  • Higher interest rates. 
  • Stricter credit conditions.  
  • Down payment from 10-30% of the property’s value.  
  • You will have to pay PMI if the down payment is less than 20% 

Choose The Best Option for You:

Now that you are aware of all the different mortgages, you can opt for the one that best suits your needs. As of May 2023, 4.3 million Americans have bought their own homes, so it is ample time you add your name to the list. Before you start your home ownership journey, you should save enough down payment, try to improve your credit score and pay off any standing debts. These factors will improve your chances of procuring a first time home buyers program.  


Consult The Experts:

Once you have your matters in order, you should consult Dream Home consultants expert consultant Mr. Hussein Panjwani. With over 25+ years of expertise, we can make your home ownership journey as easy as possible. Our licensed mortgage lenders are available in over 50 states and are ready to deal with any queries you may have. Whether you are a first-time home buyer with a bad credit score, a Texan native, or aspiring for a better future with an H1B Visa, we’ve got you covered. With our first time home buyers program you can achieve your dream of owning your home.  

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