One of the most common questions buyers bring to EXL Realty Group agents is a version of the same thing: "Do I really need 20% down?" The short answer is no — and for most Texas buyers in today's market, putting down 20% isn't even the right move financially. What matters more is choosing the right loan program for your specific situation.
There are four programs worth knowing cold before you talk to a lender: FHA, VA, USDA, and 3% conventional. Each has a different down payment floor, a different cost structure, and a different buyer profile it's built for. Here's how they actually compare.
FHA Loans: The Flexible Starting Point for Most First-Time Buyers
FHA loans are backed by the Federal Housing Administration and require just 3.5% down — on a $350,000 home in the Metroplex, that's $12,250 instead of $70,000. More importantly, FHA qualifies buyers at lower credit scores. You can get to 3.5% down with a 580 score. Between 500 and 579, FHA still works but requires 10% down.
The tradeoff is mortgage insurance. FHA charges an upfront MIP (mortgage insurance premium) of 1.75% of the loan amount, rolled into the loan, plus an annual MIP that currently runs 0.55% per year on most 30-year loans. The catch: that annual MIP doesn't automatically drop off when you reach 20% equity. For loans originated after 2013 with less than 10% down, MIP stays for the life of the loan.
That's not a dealbreaker — it just means most FHA buyers eventually refinance into a conventional loan once their credit improves or their home appreciates enough to remove the insurance. In a market like DFW, where values have climbed significantly over the past several years, that threshold often arrives faster than buyers expect.
VA Loans: Zero Down for Eligible Veterans and Service Members
VA loans are arguably the strongest mortgage product in existence for buyers who qualify. Eligible active-duty military, veterans, and surviving spouses can purchase with 0% down, no private mortgage insurance, and competitive interest rates — often lower than conventional rates at the same credit tier.
The VA does charge a funding fee at closing — typically 2.15% of the loan amount for first-time use with no down payment — but this can be financed into the loan. Buyers with a service-connected disability rating may be exempt from the fee entirely. There's no income limit and no loan amount cap (though jumbo VA loans above conforming limits have their own rules).
In DFW, where move-up buyers and relocating military families are a significant portion of the market, VA loans see heavy use. The key eligibility requirement is a Certificate of Eligibility (COE), which your lender can typically pull electronically within minutes.
USDA Loans: 0% Down in More of DFW Than You'd Expect
USDA loans are the least understood program on this list. Most buyers assume "rural" means farmland. In Texas, that's not accurate. The USDA's eligible area map extends well into the DFW suburban ring, and buyers are often surprised which communities qualify.
As of the current eligibility maps, areas like Forney, Lavon, Royse City, Caddo Mills, Nevada, and portions of Kaufman and Hunt counties fall within USDA-eligible boundaries. These aren't remote towns — Forney and Royse City are active, growing communities within reasonable commuting distance of downtown Dallas and the I-30 corridor.
USDA requires 0% down, and the mortgage insurance costs are lower than FHA: a 1% upfront guarantee fee (can be financed) and a 0.35% annual fee. The program does have income limits — generally 115% of the area median income — which in most DFW counties falls somewhere in the $100,000–$115,000 range for a household of 1–4.
If you're targeting a community in the eastern or southeastern DFW suburbs, it's worth running the USDA eligibility check before you assume you need a down payment.
Conventional 97: 3% Down Without the FHA Overhead
Fannie Mae's HomeReady and Freddie Mac's Home Possible programs offer 3% down on conventional loans — same floor as a strong FHA offer, but with a different cost structure. Conventional PMI is cancellable once you reach 20% equity, either through payments or appreciation, without refinancing. That's the key advantage over FHA.
The tradeoff: conventional loans are more credit-score sensitive. You'll generally need a 620 minimum, with pricing improving meaningfully at 680 and above. The 3% conventional programs also carry income limits — typically 80% of area median income — which may exclude some dual-income households in higher-earning DFW zip codes.
For buyers with solid credit and modest savings, the 3% conventional path often produces lower total long-term costs than FHA, particularly if you plan to stay in the home and build equity over five or more years.
TDHCA My First Texas Home: Stacking Down Payment Assistance on Top
Texas has its own layer: the Texas Department of Housing and Community Affairs runs the My First Texas Home program, which pairs a 30-year fixed mortgage with up to 5% down payment and closing cost assistance. The DPA comes as a no-interest, no-monthly-payment second lien that's forgiven after three years if you stay in the home.
The program is available on FHA, VA, and USDA loans and has income limits and purchase price caps that vary by county. In most DFW counties, the limits are generous enough that many first-time buyers qualify. Lenders must be TDHCA-approved to offer the program — it's worth asking specifically when you're shopping lenders.
Which Program Fits Which Buyer
The right program depends on your specific numbers — credit score, income, target location, and how long you plan to stay. As a general framework: VA is the clear first choice for any eligible veteran. USDA is worth checking if you're open to the eastern DFW suburbs. FHA is the most accessible path for buyers with lower credit or limited savings. Conventional 97 wins on long-term cost when credit is strong and income exceeds USDA limits.
What matters most is running your actual scenario through a lender before you rule anything out. Buyers who come to the table with a pre-approval in hand — and clarity on which program they're using — move faster and negotiate from a stronger position in any DFW market condition.