Everything You Need to Know About Buying a Home in 2026
Mortgage rates have dropped to their lowest level in over three years. As of 2026, the 30-year fixed rate sits at approximately 6.06% to 6.24%. The conforming loan limit has also gone up to $832,750, giving more buyers access to loans backed by government agencies.
But here's the thing: choosing the right mortgage type still matters more than timing the market perfectly. The difference between a 15-year and 30-year fixed rate, or between conventional and government-backed options, can translate to tens of thousands of dollars over the life of your loan. This guide breaks down every major mortgage type, compares their true costs side by side, and walks you through what Texas buyers specifically need to know.
What Are Mortgage Rates in 2026 and Why Are They Changing??
Before diving into specific loan products, it helps to understand how mortgage rates are actually determined. This explains why certain loans cost more than others and when market conditions favor different strategies.
How Are Mortgage Rates Determined in 2026?
Mortgage rates don't move in step with the Federal Reserve's Federal Funds Rate. Instead, the 30-year fixed rate closely follows the 10-Year U.S. Treasury yield. Why? Because the average mortgage lasts about 7 to 10 years (because people refinance, move, or pay it off), which makes the 10-Year Treasury a good comparison point.
• The "spread" between Treasury yields and mortgage rates is usually about 170 basis points (1.7%)
• In 2026, this gap is still higher than normal because of ups and downs in the bond market and the Fed cutting back on mortgage-backed securities
• Even when Treasury yields hold steady, mortgage rates may not drop because lenders add extra charges to cover their risk
What Are the Current Mortgage Rates for Every Loan Type in 2026?
The following table shows 2026 national average rates across all major loan products. Pay close attention to the APR column, which shows your true borrowing cost including fees and mortgage insurance.
| Loan Product | Interest Rate | APR | Market Trend |
|---|---|---|---|
| 30-Year Fixed (Conventional) | 6.06% - 6.29% | 6.24% - 6.33% | Stable / Slight Rise |
| 20-Year Fixed | 5.89% | 5.95% | Stable |
| 15-Year Fixed | 5.38% - 5.49% | 5.69% - 5.79% | Stable |
| 30-Year FHA | 5.75% - 6.18% | 6.23%+ | Lower Rate / Higher APR (MIP) |
| 30-Year VA | 5.375% - 5.77% | 5.50% - 6.52% | Lowest Available Rates |
| 30-Year Jumbo | 5.625% - 6.39% | 6.44% | At Parity or Below Conforming |
| 5/6 SOFR ARM | 5.625% - 6.00% | 6.30% | Inverted (No Discount) |
Two unusual things are happening in the 2026 market. First, adjustable-rate mortgages currently cost as much or more than fixed rates, which takes away their usual advantage. Second, jumbo loan rates are now lower than regular conforming rates in many cases, which is the opposite of what normally happens and is good news for people borrowing larger amounts.
Do Credit Unions Offer Lower Mortgage Rates Than Banks?
The rates above reflect national averages across all lender types. But not all lenders price the same way. Federal credit unions like PrimeWay consistently offer rates 0.10% to 0.37% below traditional bank averages because they are owned by their members and don't need to make profits for outside investors. That difference adds up fast over the life of a mortgage.
When comparing typical bank mortgage rates to PrimeWay's, the potential savings are clear. On a $400,000 loan, choosing PrimeWay could save you tens of thousands over the life of your loan:
-
30-Year Fixed: Save up to $30,348
-
15-Year Fixed: Save up to $9,180
-
30-Year FHA: Save up to $24,120
-
30-Year VA: Save up to $21,600
-
Jumbo (30-Year): Save up to $34,560
These estimates are based on average market comparisons and assume full loan terms. Actual savings will vary depending on your credit, down payment, and the rate you lock in at the time of approval.
PrimeWay Advantage
One thing worth noting: not every lender charges the same rate for the same loan. Federal credit unions like PrimeWay typically price 0.10% to 0.37% below traditional bank averages because they're member-owned and don't need to generate profits for outside shareholders. On a $350,000 mortgage, that translates to roughly $22,000 to $46,000 in savings over 30 years. Same loan, same house, different lender.
What Are the 2026 Conforming Loan Limits?
The Federal Housing Finance Agency (FHFA) updates conforming loan limits every year based on how home prices have changed. For 2026, the baseline limit increased 3.26% to $832,750. Knowing these limits helps you figure out whether you can get a lower-cost government-backed loan or whether you'll need a jumbo or portfolio loan.
How Much Can You Borrow by Property Type in 2026?
These limits apply to most U.S. counties. Multi-unit properties have higher limits because they can bring in rental income.
| Property Units | 2026 Limit | 2025 Limit | YoY Change |
|---|---|---|---|
| 1-Unit | $832,750 | $806,500 | +3.26% |
| 2-Unit | $1,066,250 | $1,032,650 | +3.25% |
| 3-Unit | $1,288,800 | $1,248,150 | +3.26% |
| 4-Unit | $1,601,750 | $1,551,250 | +3.26% |
What Are the Loan Limits in High-Cost Areas?
In counties where homes cost a lot more than average (where 115% of the local middle home price is above the baseline), the law allows a higher limit, up to 150% of the baseline:
• 1-Unit Ceiling: $1,249,125
• Applies to San Francisco, New York City, Los Angeles, Washington D.C., and areas set by law like Alaska, Hawaii, Guam, and the U.S. Virgin Islands
• Super Conforming loans usually come with rates 0.125% to 0.25% higher than Standard Conforming
What Are the Different Types of Mortgage Loans?
What Is a Conventional Mortgage Loan?
Conventional loans are the most common type of mortgage in the U.S. These are "conforming" loans that follow Fannie Mae and Freddie Mac rules, making them easy to buy and sell on the market and generally offering the best rates for borrowers who qualify.
What Do You Need to Qualify for a Conventional Loan?
• Minimum Credit Score: 620 (740+ for best pricing)
• Down Payment: 3% for first-time buyers, 5% for repeat buyers, 20% to avoid PMI
• Debt-to-Income (DTI): Usually tops out at 43%, but can go up to 49.9% if you have other strong points (like extra savings or a big down payment)
• Employment: 2-year history in same field preferred
• Reserves: None required for primary residence (2 to 6 months for investment properties)
How Does Your Credit Score Affect Your Mortgage Rate? (LLPAs Explained)
Your actual rate depends a lot on your credit score because of LLPA fees. Someone with a 640 credit score often pays much more than the advertised rates:
| Credit Score Range | Approximate LLPA | Impact on $400K Loan |
|---|---|---|
| 780+ | 0.00% - 0.25% | $0 - $1,000 in fees |
| 740-779 | 0.25% - 0.50% | $1,000 - $2,000 in fees |
| 700-739 | 0.75% - 1.00% | $3,000 - $4,000 in fees |
| 660-699 | 1.25% - 1.75% | $5,000 - $7,000 in fees |
| 620-659 | 1.75% - 2.50% | $7,000 - $10,000 in fees |
For people with scores below 680, FHA loans often end up costing less overall, even with the required mortgage insurance.
What Is PMI and How Do You Get Rid of It?
PMI is required on conventional loans when you put less than 20% down. Unlike FHA insurance, PMI is based on your risk level and can be removed:
• High Credit (760+): PMI costs 0.20% to 0.40% annually
• Lower Credit (640-660): PMI costs 1.0% to 1.5% annually
• Drops Off Automatically: When your loan balance reaches 78% of the original home value (required by federal law)
• Early Removal: You can ask to remove it at 80% loan-to-value if you can show your home's value has stayed the same or gone up
What Is an FHA Loan and Who Should Get One?
The Federal Housing Administration backs loans made by private lenders, making it easier for people with lower credit scores or smaller down payments to get a mortgage. FHA is still the go-to choice for first-time buyers who can't qualify for a conventional loan.
What Are the FHA Loan Limits in 2026?
| Property Units | Floor (Low-Cost) | Ceiling (High-Cost) | Calculation |
|---|---|---|---|
| 1-Unit | $541,287 | $1,249,125 | 65% - 150% of CLL |
| 2-Unit | $693,062 | $1,599,375 | 65% - 150% of CLL |
| 3-Unit | $837,720 | $1,933,200 | 65% - 150% of CLL |
| 4-Unit | $1,041,137 | $2,402,625 | 65% - 150% of CLL |
How Much Does FHA Mortgage Insurance Cost?
FHA charges two types of insurance to keep its insurance fund running:
• Upfront MIP (UFMIP): 1.75% of the loan amount, usually rolled into your loan balance
• Annual MIP: 0.55% for most borrowers (LTV over 95%, term over 15 years)
• Duration with less than 10% down: Life of loan (never cancels)
• Duration with 10%+ down: Removed after 11 years
| Loan-to-Value | Annual MIP Rate | Duration |
|---|---|---|
| 90% or below | 0.50% | 11 Years |
| 90.01% - 95.00% | 0.50% | Life of Loan |
| Over 95.00% | 0.55% | Life of Loan |
What Are the Benefits of an FHA Loan?
• Flexible on Credit: A 580 score gets you in with 3.5% down; scores from 500 to 579 qualify with 10% down
• Higher Debt Allowed: The automated system can approve debt-to-income ratios up to 56.9%
• Transferable: FHA loans can be passed on to future buyers, which adds value to your home when rates are going up
• Long-Term Plan: Refinance to a Conventional loan once your credit improves and you've built up 20% equity
What Is a VA Loan and How Does It Work?
The VA Home Loan program is the best deal available in the U.S. mortgage market. It offers zero down payment, no monthly mortgage insurance, and usually the lowest rates you can find.
Who Qualifies for a VA Home Loan?
• Wartime Active Duty: 90 consecutive days
• Peacetime Active Duty: 181 consecutive days
• Gulf War Era (1990 to present): 24 continuous months or full period called to active duty
• National Guard/Reserves: 6 creditable years or 90 days active duty
• Surviving Spouses: Of veterans who died in service or from service-connected disabilities
How Much Is the VA Loan Funding Fee?
The VA charges a one-time funding fee (which you can roll into your loan) to help cover the program's costs:
| Down Payment | First Use | Subsequent Use |
|---|---|---|
| Less than 5% (Zero Down) | 2.15% | 3.30% |
| 5% - 9.9% | 1.50% | 1.50% |
| 10% or more | 1.25% | 1.25% |
Funding Fee Exemptions (pay 0%): Veterans with 10%+ service-connected disability, surviving spouses, and Purple Heart recipients.
Is There a Limit on How Much You Can Borrow With a VA Loan?
A law change removed loan limits for veterans with Full Entitlement:
• Full Entitlement: If you don't have any active VA loans, you can borrow any amount with zero down (as long as the lender approves it)
• Partial Entitlement: If you already have a VA loan, the 2026 limit of $832,750 is the most you can borrow with zero down
• Above the Limit: You'll need to put 25% down on any amount over the entitlement cap
What Is a USDA Loan and Do You Qualify?
The USDA Section 502 Guaranteed Loan Program offers 100% financing (no down payment) in qualifying rural and suburban areas for middle-income families.
• Location Rule: Towns with fewer than 35,000 people (many suburban areas qualify)
• Income Limits (2026): $119,850 for 1 to 4 members; $158,250 for 5 to 8 members
• Upfront Guarantee Fee: 1.00% (financeable)
• Annual Fee: 0.35% (significantly lower than FHA's 0.55%)
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Conventional vs. FHA vs. VA vs. USDA: Which Loan Is Best for You?
The following side-by-side comparison lets you see how all the major loan types stack up on the most important qualification and cost factors.
What Are the Requirements for Each Mortgage Loan Type?
| Factor | Conventional | FHA | VA | USDA | Jumbo |
|---|---|---|---|---|---|
| Min. Credit | 620 | 500-580 | ~620* | ~640* | 700-720 |
| Min. Down | 3-5% | 3.5-10% | 0% | 0% | 10-20% |
| Max DTI | 43-50% | 43-57% | 41%+ | 41% | 43% |
| Mortgage Ins. | PMI if <20% | MIP (life) | None | 0.35%/yr | None |
| 2026 Limit | $832,750 | $541K-$1.25M | Unlimited* | None | >$832,750 |
| Upfront Fee | None | 1.75% | 2.15% | 1.00% | None |
| Reserves | 0-6 mo. | None | None | None | 6-12 mo. |
| Property Use | Any | Primary | Primary | Primary/Rural | Any |
*VA and USDA have no official minimum but lenders typically require 620 to 640. VA "unlimited" applies with full entitlement.
How Much Does Each Loan Type Really Cost in the First Year? ($300,000 Example)
To see the real cost, you need to look at both upfront fees and ongoing insurance costs:
| Loan Type | Upfront Fees | Annual Insurance | Total Year 1 |
|---|---|---|---|
| Conventional (5% down) | $0 | $2,100-$4,200 PMI | $2,100-$4,200 |
| FHA (3.5% down) | $5,250 | $1,650 MIP | $6,900 |
| VA (0% down, first use) | $6,450 | $0 | $6,450 |
| USDA (0% down) | $3,000 | $1,050 | $4,050 |
Should You Get a 15-Year or 30-Year Mortgage?
Choosing between a 15-year, 20-year, or 30-year loan makes a big difference in your monthly payment, how much total interest you pay, and how fast you build equity.
How Much More Do You Pay With a 30-Year vs. 15-Year Mortgage? ($400,000 Example)
| Metric | 30-Year (6.25%) | 20-Year (5.89%) | 15-Year (5.49%) | Difference |
|---|---|---|---|---|
| Monthly P&I | $2,462 | $2,852 | $3,265 | +$803/mo |
| Total Interest | $486,320 | $284,480 | $187,700 | -$298,620 |
| Balance at Year 5 | $376,526 | $330,000 | $290,000 | -$86,526 |
| Equity at Year 5 | $23,474 | $70,000 | $110,000 | +$86,526 |
Many financial planners suggest going with the 30-year term for the lower required payment, then making extra payments to pay it off faster like a 15-year loan. This keeps more cash in your pocket while still building equity quickly.
How Much Can a Lower Mortgage Rate Save You Each Month?
The term you choose matters, but so does where you get your loan. Federal credit unions like PrimeWay typically offer rates 0.10% to 0.37% lower than traditional banks. Here's what that looks like on a $400,000 loan:
| Loan Term | Bank Payment | PrimeWay Payment | Monthly Savings | Annual Savings |
|---|---|---|---|---|
| 30-Year Fixed | $2,462/mo | $2,367/mo | $95/mo | $1,140/yr |
| 20-Year Fixed | $2,852/mo | $2,778/mo | $74/mo | $888/yr |
| 15-Year Fixed | $3,265/mo | $3,209/mo | $56/mo | $672/yr |
That $95 per month savings on a 30-year loan adds up to $34,200 over the life of the mortgage. It's the same house, same neighborhood, same closing process. The only difference is who you borrow from.
Are Adjustable-Rate Mortgages (ARMs) Worth It in 2026?
With fixed rates above 6%, ARMs would normally appeal to borrowers looking for lower starting payments. But right now, short-term rates are actually higher than long-term rates, which wipes out that advantage.
How Do Adjustable-Rate Mortgages Work?
• 5/6 ARM: Fixed for 5 years, then adjusts every 6 months
• 7/6 ARM: Fixed for 7 years, then adjusts every 6 months
• Index: SOFR (Secured Overnight Financing Rate) replaced LIBOR
• Rate Formula: SOFR + Margin (typically 2.25% to 3.00%)
How Much Can an ARM Rate Go Up? (Rate Cap Explained)
| Cap Type | Purpose | Common Values |
|---|---|---|
| Initial | Maximum first adjustment after fixed period | 2% or 5% |
| Periodic | Maximum each subsequent adjustment | 1% or 2% |
| Lifetime | Maximum total increase over loan life | 5% or 6% |
The 5/6 ARM averages 5.625% compared to 6.25% for a 30-Year Fixed. That 0.625% gap gives you only small savings while putting you at real risk of higher rates down the road. ARMs just don't make sense right now in 2026.
What Mortgage Options Are There for Self-Employed, Investors, and Doctors?
How Do Self-Employed Borrowers Get a Mortgage? (Bank Statement Loans)
For business owners whose tax returns show low income because of write-offs, bank statement loans offer another way to qualify:
• Documentation: 12 to 24 months of business or personal bank statements
• How Income Is Figured: Average deposits minus estimated expenses (10% to 50% depending on business type)
• Rates: Typically 1.0% to 3.0% higher than conventional (approximately 8.0% to 10.0% in 2026)
• Down Payment: 10% to 20% minimum
What Is a DSCR Loan for Real Estate Investors?
Debt Service Coverage Ratio loans don't look at your personal income at all. Instead, they qualify you based on the property's rental income:
• Formula: DSCR = Gross Rental Income / PITI Payment
• The Goal: A DSCR over 1.0 means the rent covers the mortgage payment
• Some Wiggle Room: Some lenders will finance properties with a DSCR as low as 0.75 if you put 30% to 40% down
• Your Personal Income: Not needed or checked
What Are Doctor and Physician Mortgage Loans?
These are special loans for doctors, dentists, and sometimes lawyers who earn a lot but carry heavy student debt:
• Student Loan Treatment: Student loans are often left out of your debt-to-income ratio if they're in deferment or on an income-driven repayment plan
• Financing: Up to 100% to $1 Million; 95% to $1.5 Million
• PMI: None required
• Best For: Young professionals with a lot of student debt and strong earning potential
PrimeWay’s 104% Mortgage program helps medical professionals become homeowners with ease, offering 100% financing plus 4% toward closing costs.
Compare 2026 mortgage rates for conventional, FHA, VA & USDA loans. Learn which loan type fits your credit score, plus Texas-specific programs and property tax tips.