Conventional vs. FHA vs. VA loan in Texas: which one should I use?

Conventional loans follow the 2026 conforming limit of $832,750 for one unit. FHA uses a nationwide floor of $541,287 and a ceiling of $1,249,125, set by county. VA loans have no loan limit for a veteran with full entitlement, and the funding fee is waived for service-connected disability compensation. Ask a lender to price all three.

Start with the part that is fixed, not the part that is marketed

Most comparisons of these three programs lead with down payment percentages, credit minimums and mortgage insurance rates. Those are the parts that move — by lender overlay, by borrower, by month. Lead instead with the structural facts that are published, dated and the same for everyone. They are what actually determine which programs are on the table for a given purchase price.

How much each program will lend

Conventional. For 2026, the Federal Housing Finance Agency set the conforming loan limit for a one-unit property at $832,750, up $26,250 from 2025's $806,500. The high-cost area ceiling is $1,249,125. FHFA announced the increase after third-quarter 2025 house price index data showed prices up 3.26% year over year (FHFA). A loan above the applicable conforming limit is a jumbo — Fannie Mae and Freddie Mac will not buy it, so it is priced and underwritten by the individual lender or its investor, on their terms.

FHA. For 2026, per Mortgagee Letter 2025-23, the nationwide one-unit floor is $541,287 and the ceiling is $1,249,125, effective for case numbers assigned January 1 through December 31, 2026 (HUD Mortgagee Letter 2025-23, HUD announcement). FHA limits are set county by county between those two numbers. Each county's actual limit is published on HUD's lookup tool, and that lookup — not a third-party article — is the number a lender will use (HUD FHA mortgage limits lookup).

VA. Veterans with full entitlement have no VA loan limit, and the VA guaranty does not exceed 25% (U.S. Department of Veterans Affairs). That is a real structural advantage, and it is the one most often misunderstood: no VA limit is not the same as no limit. The VA is not capping the loan. The lender still underwrites the file, and the appraisal still governs value.

Entitlement can be partial — a veteran with an existing VA loan, or a prior VA foreclosure, may not have full entitlement. The Certificate of Eligibility answers it, and the lender pulls it.

The VA funding fee, and the exemption most eligible borrowers do not ask about

VA loans carry a one-time funding fee paid to the VA, calculated as a percentage of the loan amount. Certain borrowers do not pay it at all. The exemptions include veterans receiving VA compensation for a service-connected disability, veterans who would be eligible to receive that compensation but are taking retirement or active-duty pay instead, certain recipients of Dependency and Indemnity Compensation, and Purple Heart recipients still serving on active duty (U.S. Department of Veterans Affairs).

Documentation is VA Form 26-8937 (Verification of VA Benefits), a current award letter dated within the last 12 months, or a letter from a Veteran Service Center Manager. The second category on that list is the one that gets missed: a veteran who is entitled to compensation but elected retirement pay instead can still be exempt. That is a file question for the lender, raised at application, not at closing.

What none of these three programs does in Texas

All three are federal loan products. Texas layers its own constitutional rules on top of the homestead — the home you actually live in — and those rules survive whichever program you choose.

A cash-out refinance or home equity loan on a Texas homestead is governed by the Texas Constitution, Section 50(a)(6): total borrowing against the homestead cannot exceed 80% of fair market value at closing, so at least 20% equity must remain; closing cannot occur until at least 12 days after the later of the application or your receipt of the required notice; fees other than the appraisal, land survey, title insurance premium and title search/exam cannot exceed 2% of loan principal; the loan is generally non-recourse; and only one such loan may exist on the homestead at a time, with 12 months required between home equity closings. A Texas HELOC on a homestead is also a 50(a)(6) loan and carries the same limits (Texas cash-out rules summarized).

This is why the purchase decision and the refinance plan should be made together. If the strategy is minimum down now and a cash-out in two years, 80% is the hard ceiling in Texas no matter which of the three programs you used to buy. Investment property in Texas is not governed by 50(a)(6).

Where these programs actually differ for a real buyer

The differences that decide it are file-specific, and a lender can price them on your numbers in an afternoon. The dimensions worth asking about by name:

Mortgage insurance structure. Conventional and FHA handle it differently, and one is cancellable under conditions while the other is not. VA has no monthly mortgage insurance. Ask what the monthly amount is, how long it lasts, and what makes it go away.
Appraisal standards. FHA and VA appraisals include minimum property condition requirements that a conventional appraisal does not. On an older home, a rural property, or anything with deferred maintenance, that can turn into required repairs before closing — a real risk on Hill Country properties with wells, septic systems, outbuildings or peeling paint on pre-1978 construction.
Seller concessions. Each program caps what a seller can contribute toward the buyer's costs, and the caps differ. This shapes what you can negotiate.
Property eligibility. Condominiums in particular have program-specific approval requirements that can eliminate a building outright.
Assumability. FHA and VA loans have assumption mechanics conventional loans do not. Relevant when rates move.
Speed and certainty. How long the lender's own underwriting queue runs matters more to a seller than the program name.

The comparison to ask for, in writing

"Price this file as conventional, FHA and VA. Give me the rate, the monthly payment including taxes, insurance and any mortgage insurance, the cash to close, and what my mortgage insurance does over time in each case."

That single request gets you a decision you can defend. It also surfaces the case buyers miss most often, where the program with the lower entry cost carries the higher lifetime cost, or the reverse.

What the seller's side is reading

A Texas buyer whose purchase depends on a mortgage uses the Third Party Financing Addendum, TREC form 40-11, effective 01/03/2025 (TREC contract forms). TREC promulgates these forms and license holders are required to use them; a license holder cannot draft contract language.

The listing side reads that addendum together with the preapproval letter. Some sellers have opinions about loan programs — usually about appraisal condition requirements and timelines rather than about the buyer. A loan officer who will take a listing agent's call and speak to the file is worth more at that moment than a fractionally better rate.

Who to ask

Program eligibility, pricing, mortgage insurance, overlays and which loan is cheapest over your actual holding period are lender questions. Entitlement and funding fee exemption status run through the VA and your lender. County-level FHA limits come from HUD's lookup tool. How the Texas homestead rules apply to your ownership or title situation is a question for a Texas real estate attorney.

Questions about a specific property?

Heath Shepard is a 100% disabled veteran and a licensed Texas REALTOR. If VA benefits or the disabled-veteran exemption are part of your purchase, say so up front and he’ll factor them into the numbers.

Call or text 830-446-3847 · Email heath.shepard@kw.com

This page compares loan programs on published federal limits and Texas constitutional rules. It is not lending or legal advice. A licensed lender prices and qualifies your specific file; a Texas real estate attorney handles homestead and title questions.