Mortgage Guide for Texas
Texas is the second most populous state and one of the most active real estate markets in the country. With no state income tax, relatively affordable home prices outside major metros, and a diverse housing stock, the state attracts both first-time buyers and investors. Property tax rates are among the highest nationally, which directly affects monthly mortgage payments and qualification calculations.
Mortgage Numbers for Texas
| Median Home Price | $330,000 |
|---|---|
| Baseline Conforming Limit | $806,500 |
| Conforming Limit Ceiling | $806,500 (standard) |
| FHA Loan Limit (Baseline) | $524,225 |
| Avg. Property Tax Rate | 1.80% |
| Avg. Homeowners Insurance | ~0.47% of home value (avg. annual premium) |
| Transfer Tax | None (None. Texas does not impose a state or county real estate transfer tax.) |
| High-Cost Counties | No |
Data sources: FHFA (conforming limits), HUD (FHA limits), U.S. Census (home values), State Department of Revenue (property tax). Updated annually unless noted. Data as of 2026-02-20.
What This Means for Your Mortgage
Mortgage rates are set by lenders and vary daily. This guide focuses on structural factors that affect your loan in Texas.
Property Taxes Shape Your Payment
Texas has one of the highest effective property tax rates in the country at approximately 1.80%. On a $330,000 home, that translates to roughly $5,940 per year, or $495 per month added to your mortgage payment through escrow. This is substantially higher than the national median of approximately 1.1% . When lenders calculate your debt-to-income ratio, this property tax burden counts against your qualifying income, which means Texas borrowers often qualify for less house than borrowers in lower-tax states at the same income level.
No State Income Tax, Higher Property Tax
Texas funds state and local services primarily through property taxes and sales taxes rather than income taxes. While the absence of a state income tax boosts take-home pay, the higher property tax rate offsets some of that advantage in your mortgage payment. Lenders factor your gross income before taxes, so the income tax benefit does not directly improve your DTI ratio. However, higher take-home pay can help with cash reserves, down payment savings, and overall monthly budget flexibility.
Insurance Costs Run Above Average
Homeowners insurance in Texas averages approximately 0.47% of home value annually. On a $330,000 home, that is roughly $1,551 per year. Texas premiums reflect exposure to windstorm, hail, and flooding risks. Buyers in coastal counties and floodplains should budget for additional flood insurance through the National Flood Insurance Program (NFIP) or private carriers, which can add $500 to $3,000 or more annually depending on flood zone designation.
Conforming Loan Limits Are Uniform Statewide
All 254 Texas counties use the baseline conforming loan limit set by FHFA. There are no high-cost county designations in Texas, which means borrowers seeking loans above the baseline limit must use jumbo financing with its typically higher rates, stricter credit requirements, and larger down payment minimums. For most Texas home purchases, conventional conforming loans remain the standard option.
No Transfer Tax at Closing
Texas is one of approximately 12 states that does not impose a real estate transfer tax. This eliminates one cost line from your closing statement and reduces the total cash needed at closing. Combined with no state income tax, this makes Texas comparatively favorable for transaction costs, though the high property tax rate is a recurring annual cost that typically exceeds the one-time transfer tax savings over a few years of ownership.
State Programs Can Reduce Upfront Costs
Texas has two separate state housing agencies that offer down payment assistance and below-market mortgage programs. The Texas Department of Housing and Community Affairs (TDHCA) and the Texas State Affordable Housing Corporation (TSAHC) each offer grant and forgivable loan options of up to 5% of the mortgage amount. Several of these programs are available to repeat buyers, not just first-time purchasers. Eligibility generally requires a minimum 620 credit score, income below county-specific limits, and completion of a homebuyer education course.
What This Means for Your Monthly Payment
On a $330,000 Texas home with 10% down ($297,000 loan) at a 6.5% interest rate, estimated monthly costs break down as follows: principal and interest of approximately $1,877, property tax escrow of approximately $495, homeowners insurance of approximately $129, and PMI of approximately $124 (assuming 0.5% PMI rate). The total estimated monthly payment is approximately $2,625. The property tax and insurance components account for nearly 24% of the total payment, which is higher than most states. PMI rates vary by credit score, loan-to-value ratio, and insurer, so your actual cost may differ from this estimate. Using the affordability calculator with Texas defaults will give you a personalized estimate based on your income and debts.