O'Brien met with the Texans after Christmas -- the second candidate the team has spoken with since the firing of Gary Kubiak. Lovie Smith was the first to interview with the team.
The source added that the Texans still have a short list of candidates to talk to in case talks break down with O'Brien.
O'Brien, 44, spent six years with the New England Patriots as a coordinator. He was head coach at Penn State for two seasons. He was Big Ten Coach of the year in 2012, followed by a 7-5 season this year while playing with a freshman quarterback (Christian Hackenberg) and amid heavy sanctions placed on the Nittany Lions after the Jerry Sandusky scandal.