Texas Mortgage Guide

Texas Different

No state income tax — but property taxes hit hard. Texas is famous for having no state income tax, which attracts transplants from California and New York. But the trade-off is real: Texas has one of the highest property tax rates in the country, averaging 1.8% of assessed value. On a $400,000 home, that's $7,200/year — nearly double what you'd pay in many other states. Budget accordingly.

Property taxes fund everything locally. Since there's no income tax, schools, cities, and counties rely heavily on property taxes. This means your rate varies significantly by location. A home in Austin might have a different effective rate than the same-priced home in a Houston suburb due to school district and municipal tax differences.

Homestead exemptions matter. Texas offers a mandatory $100,000 homestead exemption for school district taxes on your primary residence. This directly reduces your taxable value. File your homestead exemption with your county appraisal district immediately after closing — it can save you $1,500+/year in taxes.

No state transfer tax. Texas doesn't charge a transfer tax when you buy property, saving you 0.5-2% compared to states that do. Your closing costs will be lower than in many coastal states.

HOAs are everywhere in newer developments. Texas has more HOAs than any other state. Many master-planned communities in the suburbs have HOA fees of $50-300/month plus rules about everything from lawn maintenance to exterior paint colors. Factor this into your affordability calculation.

• Benefit: Below-market 30-year fixed-rate mortgage + up to 5% down payment assistance
• How it works: The DPA comes as a 0% interest deferred second lien — no payments until you sell, refinance, or pay off the first mortgage
• Who qualifies: First-time buyers (haven't owned in 3 years), veterans, or buying in a targeted area. Income limits apply.
• Website: welcomehome.tdhca.texas.gov

• Benefit: Down payment assistance (grant or second lien) + below-market interest rates
• Who qualifies: Teachers, police, firefighters, EMS, corrections officers, veterans, and other "heroes"
• Key perk: The grant option doesn't require repayment — it's free money
• Website: tsahc.org/homebuyers-renters

• Benefit: Down payment assistance for buyers who don't qualify for Homes for Texas Heroes
• How it works: Available to all eligible buyers, not just specific professions
• Assistance amount: Varies; can be structured as grant or forgivable second lien
• Website: tsahc.org

• Houston HAP: Harris County and City of Houston offer separate homebuyer assistance programs with $15,000-30,000 in DPA for qualifying buyers
• Austin DPA: City of Austin has programs specifically for the Austin metro area
• San Antonio: Bexar County offers multiple DPA options through local nonprofits
• Check with your local housing authority — Texas has dozens of local programs

(January 2026)

Median home prices by metro:

• Austin: $475,000 (down from peak, still expensive for Texas)
• Dallas-Fort Worth: $380,000
• Houston: $335,000
• San Antonio: $310,000
• El Paso: $255,000

  Market trends:

• Austin saw a significant correction from 2022 peaks — prices are more reasonable but still above pre-pandemic levels
• Dallas-Fort Worth continues steady growth with corporate relocations driving demand
• Houston remains affordable for a major metro, with strong job growth in energy and healthcare
• San Antonio offers military-friendly buying with multiple bases nearby

  Best value areas for 2026:

• San Antonio metro (affordable, growing, military presence)
• Houston suburbs (Katy, Sugar Land, Pearland — good schools, reasonable prices)
• Dallas exurbs (McKinney, Frisco have gotten expensive; look at Denton, Sherman, Waxahachie)
• El Paso (most affordable major Texas city, but remote)