If you’re buying a home anywhere in the San Antonio → New Braunfels → Hill Country corridor, the mortgage you choose matters just as much as the house. In a market where rates can still feel “high,” and sellers may offer concessions on certain listings, the right loan strategy can be the difference between:

• getting in the door now vs. waiting another year,
• having cash left after closing vs. feeling house-poor,
• and winning a multiple-offer situation vs. losing to a cleaner deal.

Three paths come up the most for buyers right now:

• FHA (more flexible credit / lower down payment)
• Conventional (often cheaper long-term if your credit/down payment are strong)
• DPA (Down Payment Assistance—help with down payment and/or closing costs)

Let’s break down when each is a fit—and then we’ll give you a simple “pick your lane” chart.

The 30-second overview

FHA loan (the “flexibility” lane)

Backed by the Federal Housing Administration, FHA is popular with first-time buyers because it can work well with:

• smaller down payments
• less-than-perfect credit
• higher debt-to-income (depending on lender)

FHA guidelines commonly allow 3.5% down with a 580+ FICO, and 10% down with 500–579 (lender overlays may be stricter).

Conventional loan (the “strong profile” lane)

Conventional loans aren’t government-insured like FHA. Many are designed to be eligible for purchase by Fannie Mae / Freddie Mac (that’s what “conforming” means).

If your credit and cash position are solid, conventional can often deliver:

• lower monthly mortgage insurance vs FHA (not always—but often)
• the ability to remove PMI later (huge long-term win)
• stronger offer terms in competitive situations

For 2026, the national baseline conforming loan limit for a 1-unit property is $832,750 (higher in high-cost areas).

DPA (Down Payment Assistance) (the “cash help” lane)

DPA is not a single loan type—it’s assistance that can sometimes be paired with FHA or conventional (depending on the program and lender).

In Texas, common program sources include:

• Texas State Affordable Housing Corporation (TSAHC) programs offering down payment assistance as a grant or second lien options. (Texas Housing Corporation)
• Texas Department of Housing and Community Affairs “My First Texas Home” program, which offers down payment assistance and 30-year fixed-rate loans. (The Texas Homebuyers Program)
• SETH programs (including second-lien options) that can provide assistance up to a percentage of the loan amount, with some forgivable structures. (sethfc.com)

The real difference (what buyers feel month-to-month)

Mortgage insurance: FHA MIP vs Conventional PMI

This is where the decision gets real.

FHA requires mortgage insurance:

• Upfront MIP (UFMIP) is typically 1.75% of the base loan amount.
• Annual MIP varies by loan size and LTV (commonly around the 0.55% range for many 30-year FHA scenarios).
• In many cases, FHA MIP lasts for the full loan term when putting less than 10% down (rules can vary by case—your lender can confirm for your scenario).

Conventional PMI:

• Usually required when you put less than 20% down
• The big advantage: PMI can generally be removed once you reach the right equity threshold. The CFPB notes automatic termination typically occurs when the scheduled balance reaches 78% of the home’s original value (and you’re current), and you can often request cancellation at 80%.

Translation:
If you expect to stay in the home a long time, and your credit supports it, conventional often wins on long-term insurance cost and flexibility.

Decision chart: pick your best starting point

Use this like a quick “choose your lane” guide (then fine-tune with a lender pre-approval).

“If this, then that” quick rules (practical version)

• If your biggest challenge is credit or approval odds: start with FHA.
• If your biggest goal is minimizing mortgage insurance over time: aim for Conventional.
• If your biggest barrier is cash to close: explore DPA first, then decide whether FHA or conventional pairs best with that program.

The DPA reality check (what most people don’t hear upfront)

Down payment assistance can be a game-changer—but always ask these before committing:

1. Is it a grant or a second lien? (Some are forgivable after a set time; some are repayable on sale/refi.) (Texas Housing Corporation)
2. Does it come with a higher interest rate? (Sometimes the help is “paid for” via rate pricing.)
3. Any income limits, purchase price limits, or first-time buyer requirements? (Common in many programs.) (The Texas Homebuyers Program)
4. Can it be combined with seller concessions? (Often yes, but program rules vary—your lender will confirm.)

A simple next step (that saves time)

Before you fall in love with a home, get a lender to quote two side-by-side options using your real numbers:

• FHA (with full MIP breakdown)
• Conventional (with PMI estimate and removal strategy)
• If you qualify, add a third: DPA paired with the best loan type

That comparison turns this from “guessing” into a clear decision.

How Correa Realty Group can help

At Correa Realty Group, we help buyers line up the right financing strategy with the right homes—so you’re not just shopping, you’re shopping with an advantage. We’ll connect you with trusted local lenders who can run FHA vs conventional vs DPA side-by-sides, help you spot listings where seller concessions could reduce your cash-to-close, and structure an offer that fits your scenario and your comfort level.

FAQs

Can I use down payment assistance with an FHA loan?

Often, yes—many Texas programs are designed to pair with FHA (and sometimes conventional). Program rules vary by provider and lender. (sethfc.com)

What credit score do I need for FHA?

FHA guidelines commonly allow 3.5% down at 580+, and 10% down at 500–579, but lenders may require higher scores.

Does FHA mortgage insurance ever go away?

FHA mortgage insurance includes an upfront premium and annual MIP; duration depends on down payment and structure (many common low-down FHA scenarios carry MIP for the full term).

When can I remove PMI on a conventional loan?

In general, PMI can often be requested off around 80% LTV and is typically set to terminate automatically around 78% LTV if you’re current (rules can vary by loan type and investor).

Are conforming loan limits the same as FHA loan limits?

No. Conforming limits are set for loans acquired by the GSEs; FHA has its own loan limits by county. (If you’re near the edge, we recommend confirming limits for your specific county before choosing a lane.)