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Glenn Heights TX new construction home framing with a builder contract on a truck tailgate at golden hour

Glenn Heights New Construction Arbitration Clauses: The Paragraph That Decides What Happens When the Slab Cracks (2026)

August 25, 2026

Glenn Heights New Construction Arbitration Clauses: The Paragraph That Decides What Happens When the Slab Cracks (2026)

By Steven J. Thomas

[Caption: A framed two-story home under construction on a Glenn Heights, TX lot at golden hour, with a builder contract folder open on a truck tailgate in the foreground.]

You will spend three weekends picking a floor plan in Glenn Heights and about eleven minutes signing the contract that governs it. Somewhere in that stack, usually well past page twenty, sits one paragraph that decides where you can take your builder if the foundation moves, the roof leaks, or the framing comes back wrong two years from now. Most buyers walking Maplewood Estates or Hampton Park never read it. It will matter more to you than the countertop selection ever will.

Direct answer

A binding arbitration clause in a Glenn Heights builder contract sends any dispute over defects, delays, or warranty work to a private arbitrator instead of a Dallas County courtroom. You give up your right to a jury, most of your discovery, and nearly all of your appeal rights. Arbitration is usually faster and cheaper than a lawsuit. It is also close to final. Read that section before you sign, and get the full walkthrough in the New Construction Buyer Guide. This article is education, not legal advice.

Where the clause sits and what it is called

Builder contracts in southern Dallas County are not written like the TREC resale forms you may have signed before. Each production builder uses its own purchase agreement, and the dispute language almost never appears near the price or the closing date. Look in the back third of the document, under a heading like Dispute Resolution, Binding Arbitration, Waiver of Jury Trial, Claims Procedure, or Alternative Dispute Resolution. Sometimes it lives inside the limited warranty booklet handed to you separately at closing rather than in the purchase agreement itself, and the purchase agreement simply incorporates that booklet by reference.

That last detail catches people. A buyer reads the twelve-page contract, sees nothing about arbitration, and signs. The arbitration terms were in the warranty document referenced in paragraph 19. Ask for every document the contract references, in writing, before you sign anything. This is standard industry structure across most national and regional builders, not a trick by any one company.

Binding versus non-binding, and why the word matters

Non-binding arbitration is a recommendation. If you do not like the result, you can still go to court. Binding arbitration is the end of the road. The arbitrator issues an award, and Texas courts will confirm and enforce it in almost every case.

The practical difference shows up when the ruling goes against you. In a courtroom, a bad ruling can be appealed on the law. An arbitration award ordinarily cannot be appealed at all, even when the arbitrator gets the facts or the law plainly wrong. Grounds to vacate an award are narrow and rarely successful. If your contract says binding, treat the first hearing as the only hearing you get.

Some contracts also require mediation first. Mediation is a settlement conversation with a neutral third party and no power to decide anything. It costs less and resolves plenty of punch list fights. It is a separate step from arbitration, not a substitute for it.

Neighborhood spotlights: where this shows up in Glenn Heights

Maplewood Estates and the Bloomfield communities

Bloomfield Homes is among the most active builders inside Glenn Heights right now, with plans running through Maplewood and its Hampton Park community off Ovilla Road and Hampton Road, roughly twenty minutes from downtown Dallas. These sections have been among the more affordable price points in southern Dallas County, based on current conditions. They are also spec-heavy communities where you may buy a home that is already framed, which means the construction decisions were made before you were in the picture. Your contract still governs everything that happens afterward. Compare active plans and pricing across the metro on the DFW new construction hub before you commit to a single builder.

Hampton Park and the newer sections off Ovilla Road

Newer sections carry newer contract paperwork, and builders revise their dispute language more often than buyers expect. A contract your neighbor signed in 2023 is not the contract in the sales office today. The 2025 Texas legislative session changed the ground rules for venue in construction contracts, and builder legal departments updated accordingly. Ask the on-site rep for the current version and the effective date printed on it.

Red Oak, DeSoto, and Waxahachie as the comparison set

Buyers shopping Glenn Heights almost always cross-shop Red Oak and Waxahachie south along I-35E, and DeSoto to the north. Different builders, different contract packets, different arbitration terms. Two communities four miles apart can hand you completely different remedies. If you are touring three cities in one Saturday, collect three contracts and compare the dispute sections side by side rather than the elevations.

Pro Tip: Pull the current builder inventory picture for all four cities on the DFW new construction homes page before you tour, so you are negotiating from the same information the sales office has.

Local market trends (Summer 2026)

  • Median list price, Glenn Heights: about $459,000 in August 2026, with active listings showing a median of 249 days on market, which measures how long current inventory has been sitting rather than how quickly homes sell (Source: Redfin Glenn Heights Housing Market, August 2026)
  • New construction inventory, Glenn Heights: builders are actively selling across several active communities, and Glenn Heights remains one of the more affordable new-build entry points in southwest DFW
  • 30-year fixed mortgage rate: 6.65% for the week ending August 20, 2026, down from 6.67% the prior week (Source: Freddie Mac Primary Mortgage Market Survey, August 2026)
  • Builder incentive packages across DFW: commonly $10,000 to $30,000 in flex cash, closing credits, and rate buydowns on standing inventory (Source: multiple DFW builder incentive trackers, mid-2026)

Slow absorption and heavy standing inventory put you in a stronger negotiating seat in Glenn Heights than buyers had two years ago, based on current conditions. That room to negotiate is real on price and incentives. It is much weaker on contract language, because the dispute sections are drafted at the corporate level and the on-site rep has no authority to change them. Understanding which of those two levers you can actually pull is most of the game.

"The builder's on-site rep works for the builder. That is not a criticism, it is the job description. Nobody in that model home represents you unless you bring your own agent, and in many communities the builder offers to pay that agent, though compensation is not automatic and belongs in writing in your buyer representation agreement." - Steven J. Thomas, Broker at Refind Realty DFW and Loan Officer at Envision Home Lenders

What you actually give up

Four things disappear when you sign a binding arbitration clause, and buyers rarely price any of them.

The jury. Construction defect cases in front of a Dallas County jury and the same facts in front of a single arbitrator can produce very different numbers. You are trading twelve neighbors for one professional decision-maker.

Discovery. Court litigation gives you subpoena power, depositions, and document production. Arbitration rules usually narrow all of it, sometimes to a handful of documents and one or two depositions. If the answer to your problem is buried in the framing subcontractor's internal emails, limited discovery is the difference between proving your case and guessing at it.

The appeal. An arbitrator's decision ordinarily stands. There is no second look at the merits.

Confidentiality. Most arbitration clauses require the proceeding and the award to stay private. This is the one buyers never see coming. It is why you cannot search for other owners in your own subdivision who fought the same slab issue and find out how it went. Court filings are public records. Arbitration awards generally are not. Every buyer in that community is negotiating in the dark, one at a time.

How arbitration interacts with your 1-2-10 warranty

Most Texas builders provide a limited express warranty in three tiers: one year on workmanship and materials such as paint, trim, doors, and drywall, two years on systems such as plumbing, electrical, and HVAC, and ten years on major structural components like the foundation and framing (Source: 2-10 Home Buyers Warranty, Texas builder warranty overview, 2026). Texas builders have no obligation to provide any warranty at all unless it is written into the purchase contract, so the warranty document is part of what you are negotiating.

Here is where the two documents meet. The warranty defines what counts as a defect and sets the claim deadlines. The arbitration clause defines what happens when the builder says your issue is not a defect. Those deadlines can be short, sometimes as little as thirty days from the date you notice a problem, and a missed deadline can void coverage entirely regardless of how strong your claim is. So the ten-year structural tier is only worth what your ability to enforce it is worth. If your foundation shows movement in year seven and the builder declines the claim, arbitration is your entire remedy, run under whatever rules that clause named back when you signed.

Read the warranty and the arbitration clause together, in one sitting, before you sign. They are one system.

The RCLA notice steps, in order

Texas does not let a homeowner go straight to a lawsuit or an arbitration filing over construction defects. The Residential Construction Liability Act, Texas Property Code Chapter 27, sets a mandatory pre-suit sequence, and it applies to arbitration as well as litigation (Source: Texas State Law Library, Construction Defects consumer guide, 2026).

  1. You send written notice to the builder by certified mail, return receipt requested, at least 60 days before filing suit or initiating arbitration. The notice must describe the defects in reasonable detail, and you must provide the evidence you already have of the defect and the repairs needed, including any expert reports and photographs.
  2. The builder has 35 days from receiving the notice to make a written request to inspect the property, and you must give reasonable access.
  3. The builder has until the 60th day after receiving the notice to make a written settlement offer. The offer can propose repairs at the builder's expense, at partial expense, or at a reduced cost to you.
  4. You accept or reject the offer in writing. If you reject an offer a court or arbitrator later finds reasonable, your recoverable damages can be limited.
  5. If no offer comes, or the offer is inadequate, you may then file suit or initiate arbitration, whichever your contract requires.

Deadlines in this statute are specific and unforgiving. Document the date you first noticed the problem, photograph it, and get a Texas construction attorney involved before you send the notice, not after.

One 2025 change that helps Glenn Heights buyers

For contracts entered into or renewed on or after September 1, 2025, Texas law voids provisions in construction contracts that require another state's law to apply, or that require litigation or arbitration to happen outside Texas. Those clauses are now void as against public policy rather than merely voidable, and disputes over Texas construction projects generally belong in the Texas county where the work was performed. Parties can agree to a different venue only after a dispute arises (Source: Snell and Wilmer, Texas Voids Out-of-State Forum and Choice of Law Clauses in Construction Contracts, February 2026, discussing amendments to Texas Civil Practice and Remedies Code Section 15.020 and Texas Business and Commerce Code Section 272.001 enacted by the 89th Legislature).

Practical translation for a 2026 Glenn Heights contract: your arbitration hearing over a house on Hampton Road should be in Texas, in the county where the house sits, under Texas law. That is a meaningful improvement over the older practice of routing homeowners to a builder's home-state forum. It does not remove the arbitration requirement itself. It fixes where the arbitration happens, not whether it happens.

Cost breakdown for a Glenn Heights new construction buyer

  • Arbitration administrative filing fee: scales with the size of your claim under the American Arbitration Association Construction Industry Rules. On the Standard Fee Schedule, a claim between $300,000 and $500,000 carries a $4,400 initial filing fee and a $3,850 final fee, and AAA can revise the schedule at any time (Source: AAA Construction Industry Arbitration Rules Administrative Fee Schedule, accessed August 2026)
  • Arbitrator compensation: billed separately at the arbitrator's daily or hourly rate and not included in the administrative schedule. The arbitrator can allocate these costs between the parties in the award
  • Consumer-rules alternative: where a clause routes the dispute to AAA Consumer Rules instead of Construction Rules, the homeowner's administrative filing fee is capped and the business pays the balance. Which rule set your clause names is worth more than any design center credit you will negotiate
  • Independent third-party inspections during construction: commonly $400 to $900 per phase inspection in DFW, with pre-pour, pre-drywall, and final walkthrough being the three that matter
  • Your own attorney and expert witnesses: engineers and construction experts bill separately from everything above, in arbitration exactly as in court

Compare those numbers to the incentive stack. A builder handing you $20,000 in flex cash is real money. So is a dispute clause that can put several thousand dollars of administrative and arbitrator cost between you and enforcing your ten-year structural coverage. Price both.

What is negotiable before you sign, and what is not

Be realistic. Most production builders will not strike the arbitration clause. It is corporate policy, it applies to every buyer in the community, and the on-site rep has no authority over it. Asking is still worth five minutes, because the answer tells you how the company operates.

What buyers do sometimes move:

  • Which rule set governs, Construction versus Consumer, and who pays the administrative fees
  • Whether mediation is required first, which is cheap and often ends the fight
  • Cost-shifting language, so a prevailing homeowner can recover fees
  • Confidentiality, or at minimum carving out your right to discuss the outcome with your own counsel and future buyers of the home
  • Warranty claim windows, moving a thirty-day notice requirement to something you can realistically meet
  • Adding an express walkthrough and inspection right at pre-pour and pre-drywall

What almost never moves: the existence of the clause itself, the jury waiver, and the appeal waiver.

And one more thing that does not move, because Texas law follows the house rather than the buyer. A later owner of your home can be bound by the arbitration provision in the original construction contract without ever signing it. The Texas Supreme Court reached that result in Lennar Homes of Texas Land and Construction v. Whiteley in 2023, applying direct-benefits estoppel to a subsequent purchaser bringing construction defect claims (Source: Supreme Court of Texas, decided May 2023). If you sell in year six, the next buyer of your Glenn Heights home may inherit the same remedy structure you did.

What to ask the builder in writing

Email these to your sales rep and keep the reply. A verbal answer in a model home is worth nothing later.

  • Please send every document the purchase agreement incorporates by reference, including the full limited warranty booklet.
  • Is the arbitration provision binding or non-binding, and where in the contract is it located?
  • Which arbitration rules apply, and which organization administers them?
  • Who pays the filing fee and the arbitrator's compensation, and can those costs be shifted to the losing party?
  • Is mediation required before arbitration?
  • Is the proceeding or the award confidential?
  • What are the notice deadlines for a workmanship, systems, or structural claim, and how do I submit one?
  • Do I have the right to bring my own independent inspector at pre-pour, pre-drywall, and final walkthrough?

Why an independent inspection matters more when arbitration is your only remedy

Municipal inspections in Glenn Heights confirm code compliance. Code is a floor, not a quality standard, and the inspector is not working for you. Your builder's internal quality checks are performed by the builder.

When arbitration is the only path to a remedy, and discovery in that arbitration will be limited, the evidence you create during construction becomes the case you will have to argue. A third-party inspector at pre-pour documents the forms, the grade beams, the rebar placement, and the plumbing rough before concrete makes all of it invisible forever. A pre-drywall inspection documents framing, bracing, and mechanical rough-in before sheetrock covers it. Photographs with dates and an independent professional's written report do work that a subpoena would otherwise have to do, and you may not get that subpoena.

Order the inspections. Pay for them yourself so the report belongs to you. File the reports somewhere you will still find them in year eight.

Builder and community insights

Builders active in Glenn Heights and the corridor around it include Bloomfield Homes, First Texas Homes, Kindred Homes, and D.R. Horton, with Bloomfield among the most active inside the city limits across Maplewood and Hampton Park. Push south to Red Oak and Waxahachie or north toward DeSoto and the builder mix shifts again. Across DFW in mid-2026, incentive packages commonly bundle rate buydowns, closing cost credits, and design center dollars in the $10,000 to $30,000 range on standing inventory, and builders reprice those packages roughly every 30 to 60 days.

Every one of those builders uses its own contract. Read each one. Buyers who use our team on a new construction purchase can also receive up to 1% back at closing, capped at $10,000, through the new construction rebate program, which is separate from anything the builder offers and does not reduce your negotiating position with the sales office. The rebate is subject to program terms, builder participation, and lender and closing approval, and it is not available in every transaction.

Financing and incentives

Builder incentives in this market are usually tied to the builder's preferred lender. That arrangement is common and is subject to federal RESPA rules, and the buydown money is often genuinely larger through that channel. Run the comparison anyway. Total cost over the years you plan to hold the home, not the teaser rate, is the number that decides it. With the 30-year fixed at 6.65% as of the week ending August 20, 2026 per Freddie Mac, a two-point permanent buydown and a $15,000 closing credit are worth very different amounts depending on how long you stay.

Because I am licensed on both sides, real estate and lending, I can price the builder's offer against an outside loan without a second set of phone calls. If you want the pre-approval and the side-by-side before you tour a single model home, see if you pre-qualify here. Loan products, rates, and terms are subject to change and credit approval, and nothing here is a lending commitment. Steven J. Thomas, Loan Officer, Envision Home Lenders, NMLS #689220.

Conclusion

The arbitration clause is not the reason to walk away from a Glenn Heights new build. Plenty of good homes get built under these contracts every month, and arbitration resolves plenty of disputes faster and cheaper than a lawsuit would. The point is to know what you signed before you sign it, so that a slab crack in year seven does not become the first time you read paragraph 22. Get the documents, read the dispute section and the warranty together, hire a Texas construction attorney for an hour of contract review, and put your own inspector on the job at pre-pour and pre-drywall. And remember who is standing where: the builder's on-site rep works for the builder. Nobody in that model home represents you unless you bring your own agent, and in many communities the builder offers to pay that agent, though compensation is not automatic and belongs in writing in your buyer representation agreement.

Read the full contract checklist in the New Construction Buyer Guide.

Explore buyer incentives and the new construction rebate program.

Download the Lone Star Living App to view Glenn Heights listings and track nearby builder activity.

Book an appointment today and we will read the contract together before you sign it.

You're Always Home with Steven J. Thomas.

Key takeaways

  • The arbitration clause usually sits in the back third of the builder contract or inside the limited warranty booklet the contract references, so demand every referenced document before signing.
  • Binding arbitration removes your jury, narrows discovery, and ends appeal rights, and most awards are confidential, which is why you cannot find other owners' outcomes in your own subdivision.
  • Texas RCLA requires certified-mail notice at least 60 days before filing, a 35-day builder inspection request window, and a 60-day builder settlement offer window, in that order.
  • For contracts signed on or after September 1, 2025, Texas voids out-of-state forum and choice-of-law clauses in construction contracts, so a Glenn Heights dispute belongs in the Texas county where the home was built.
  • Glenn Heights new construction remains one of the more affordable new-build entry points in southwest DFW, and DFW incentive stacks commonly run $10,000 to $30,000, so negotiate hard on price and incentives while accepting that the dispute language rarely moves.

FAQ: Glenn Heights builder contract arbitration

When during the process should I read the arbitration clause in a Glenn Heights builder contract?

Before you sign the purchase agreement and before you pay earnest money. Once the contract is executed, the dispute terms are set, and builders rarely amend them afterward.

Who pays for arbitration if I have a defect claim against my builder?

It depends on which rules your clause names. Under AAA Construction Rules, the party filing pays an administrative fee that scales with the claim, for example a $4,400 initial filing fee on a claim between $300,000 and $500,000, plus separate arbitrator compensation. Under AAA Consumer Rules, the homeowner's filing fee is capped and the business pays the balance.

Can I sue my builder in court if the contract says binding arbitration?

Generally no. Texas courts enforce binding arbitration agreements in residential construction contracts, and you must complete the RCLA pre-suit notice steps before filing either a lawsuit or an arbitration demand. Talk to a Texas construction attorney about your specific contract.

Do all builders in Glenn Heights use arbitration clauses?

Binding dispute resolution is common in production builder contracts across this corridor, but it is not universal, and no assumption should be made about any particular company. The rules, cost allocation, and mediation requirements vary by builder and by contract version. Compare the actual documents rather than assuming they match.

How long does builder arbitration take compared to a lawsuit?

Arbitration is typically faster than litigation, often resolving in months rather than years, though timelines vary by claim complexity and by the arbitrator's calendar. Add the 60-day RCLA notice period plus the builder's inspection and settlement windows before the clock even starts.

Where can I see current Glenn Heights new construction listings and builder activity?

Download the Lone Star Living App to browse active Glenn Heights, Red Oak, and DeSoto inventory, save searches, and get alerts when new builder inventory hits the market.

Disclosure: This article is general information about how residential construction contracts are commonly structured in Texas. It is not legal advice and does not create an attorney-client relationship. Have a licensed Texas construction attorney review your specific builder contract, warranty, and arbitration provision before you sign. Market data reflects current conditions and is subject to change. No outcome, price, or timeline is guaranteed.

Steven J. Thomas - Broker, Refind Realty DFW - TREC Broker License #0657467 - Loan Officer, Envision Home Lenders - NMLS #689220 - 972-846-9170 - 128 S. Cockrell Hill Rd, DeSoto, TX 75115. Equal Housing Opportunity.

glenn heights txnew constructionbuilder contractbinding arbitrationrclatexas property code chapter 27builder warrantybuyer tipsdallas county2026
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Steven J Thomas

Steven J. Thomas

Steven J. Thomas has been in the financial services industry for the past 19 years and started my career as a Financial Planner for American Express Financial Advisors. I entered into banking with JP Morgan Chase as personal banker in 2003 and was promoted several times up to Small Business Specialist. I earned multiple Million Dollar Club awards and was ranked in the top 5 Small Business Specialist before I branched out in 2005 to start my own Financial Management Company. I ran a successful company before family circumstances lead me to Wachovia Bank in 2008 where I worked as a Senior Financial Specialist. As a Sr. Financial Specialist; I was responsible for the P & L and revenue growth of my banking center. The elimination of my role thru a bank merger lead me to BBVA Compass. I have held various leadership roles at BBVA Compass including Personal Relationship Manager, Branch Retail Executive, Workplace Solutions VP, and his current role as a Retail Manager. As the Regional Workplace Solutions VP, I was responsible for the strategic, tactical, and execution of Partnership Banking relationships, promotion and activity with corporate and non-profit companies in my footprint. I was responsible for the acquisition production for three districts, which includes 51 banking centers and over 300 employees. In May of 2014, I joined the team at Refind Realty and became one of the managing partners in mid-2015.

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Ask Us Anything

Frequently Asked Questions

Why do you need a Realtor?

When buying or selling a home, there are so many options…which can also present a lot of obstacles. Laws change, forms change, and practices change all the time in the real estate industry. Because it’s our job to stay on top of those things, hiring a realtor reduces risk, and can also save you a lot of money in the long run.

When you work with me as your Realtor, you’re getting an expert who knows the area; knows how to skillfully guide your experience as a seller or buyer; can easily spot the difference between a good deal and a great deal. My job is to translate your dream into a real estate reality, and I work hard to earn and keep my business. This also means earning your trust: When you work with me, you’ll be working with a realtor who looks out for your best interests and is invested in your goals.

Which loan should you choose?

There are two different types of loans conventional loans and government-backed loans. The main difference is who insures these loans:

1 - Government-backed loans (FHA, VA and USDA):

(a) - Are, unsurprisingly, backed by the government.

(b) - Include FHA loans, VA loans, and USDA loans.

(c) - Make up less than 40 percent of the home loans generated in the U.S. each year.

2 - Conventional loans

(a) - Are not backed by the government.

(b) - Include conforming and non-conforming loans (such as jumbo loans).

(c) - Make up more than 60 percent of the loans generated in the U.S. each year.

What is the difference between FHA, VA and USDA loans?

1 - FHA LOANS:

FHA loans, which are insured by the Federal Housing Administration, are typically designed to meet the needs of first-time homebuyers with low or moderate incomes. FHA loans can be approved with a down payment of as little as 3.5 percent and a credit score as low as 580.

FHA loans are often called “helper loans,” because they give a leg up to potential borrowers who may not be able to secure one otherwise. For this reason, FHA loans have maximum lending limits, which are determined based on housing values for the county where the for-sale home is located.

Because the agency is taking on more risk by insuring FHA loans, the borrower is expected to pay mortgage insurance both at the time of closing and on a monthly basis, and the property must be owner-occupied.

2 - VA LOANS:

VA loans are backed by the Department of Veterans Affairs and they are guaranteed to qualified veterans and active-duty personnel and their spouses. VA loans can be approved with 100 percent financing, meaning VA borrowers are not required to make a down payment.

Unlike FHA loans, borrowers do not have to pay mortgage insurance on VA loans.

3 - USDA LOANS:

You may also hear about USDA loans, which are backed by the United States Department of Agriculture mortgage program. USDA loans are intended to support homeowners who purchase homes in rural and some suburban areas. USDA loans do not require a down payment and may offer lower interest rates; borrowers may have to pay a small mortgage insurance premium in order to offset the lender’s risk.

What’s a conventional loan? Understanding what it means to be conforming and non-conforming

Buyers who have a more established credit history and a larger down payment may prefer to apply for a conventional loan. These loans may offer a lower interest rate and only require the home buyer to purchase monthly mortgage insurance while the loan-to-value ratio is above a certain percentage, so a conventional loan borrower can typically save money in the long run.

Conventional loans are divided into two types: Conforming loans and non-conforming loans.

1 - CONFORMING LOANS:

Conforming loans are those that meet (or conform to) predetermined standards set by Fannie Mae and Freddie Mac — two government-sponsored institutions that buy and sell mortgages on the secondary market. By selling the loans to "Fannie and Freddie," lenders can free up their capital and return to issue more mortgages than if they had to personally back every loan that they approve.

The main standard for conforming loans is that the amount borrowed must be under a certain amount; in Alaska, a single-family home loan must be under $647,200 in order to be considered conforming.

Properties with more than one unit have higher limits.

2 - NON-CONFORMING (JUMBO) LOANS:

But what happens if a borrower wants to borrow more than the Freddie- and Fannie-approved loan amount? In this case, they would have to apply for a “jumbo loan,” which is the most common type of non-conforming loan.

Because the lender cannot resell the jumbo loan (or any non-conforming loan) to Freddie Mac or Fannie Mae, jumbo loans are considered to be riskier than a conforming loan. To protect against this risk, the bank will typically require a higher down payment; the interest rate on a jumbo loan may also be higher than if the same borrower applied for a conforming loan.

What kind of rate should you choose?

Rate types: Fixed-rate vs. adjustable-rate mortgages.

In addition to the loan type you choose, you’ll also have to determine if you want a fixed-rate mortgage or an adjustable-rate mortgage (ARM). A fixed-rate mortgage has an interest rate that does not change for the life of the loan, so it provides predictable monthly payments of principal and interest.

An adjustable-rate mortgage typically offers an initial introductory period with a low-interest rate. Once this period is over, the interest rate adjusts periodically, based on the market index. The initial interest rate on an ARM can sometimes be locked in for different periods, such as one, three, five, seven, or 10 years. Once the introductory period is over, the interest rate typically readjusts annually.

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