🏦 Texas Mortgage Affordability Calculator

Texas Metro Price Landscape

Houston: The Affordability Leader

Houston remains the most affordable major Texas metro with a median sale price of $324,200 and positive 3.2% year-over-year growth in early 2026. Diversified employment across energy, healthcare (Texas Medical Center), aerospace (NASA Johnson), and petrochemicals keeps demand steady without Austin's volatility. Inner-loop neighborhoods like Heights, Montrose, and Bellaire run $500,000 to $900,000, while outlying master-planned communities in Katy, Cypress, and Pearland offer new construction from $280,000 to $400,000.

Dallas-Fort Worth: The Correction

DFW saw the sharpest price correction among Texas metros, with home prices declining 4.1% year-over-year as inventory normalized after pandemic excess. The metro median settled around $400,000 in mid-2025. Fort Worth offers the best value within the metroplex, with median prices 15-20% below Dallas proper. Plano, Frisco, and McKinney retain premium pricing driven by corporate relocations (Toyota North America HQ, JPMorgan campus). Allen, Prosper, and Celina are the fastest-growing affordable exurbs.

Austin: From Boom to Buyer's Market

Austin has experienced the most dramatic reset, with prices dropping 22% from the pandemic peak to a $440,000 median. The Austin-Round Rock-San Marcos metro shows 53.4% of active listings taking price cuts as of late 2025. Tech layoffs and the pandemic-era influx retrenching have shifted Austin firmly into buyer-favorable territory. Round Rock, Pflugerville, Leander, and Kyle offer new construction below the Austin median, while central Austin neighborhoods like Tarrytown and Hyde Park still command $800,000+ for 1,500 square feet.

San Antonio: Value in the Alamo City

San Antonio saw a modest 1.8% year-over-year decline, keeping its median below $300,000 and making it the most affordable major Texas metro after Houston. Military base employment at JBSA Lackland, Randolph, and Fort Sam Houston provides stable demand. Stone Oak, Alamo Heights, and the Dominion command premium pricing, but most of Bexar County remains accessible to median-income households. The metro offers strong value for buyers seeking space without DFW or Austin premiums.

The Property Tax Equation: Higher Than You Think

Statewide Rates

Texas has no state income tax, but it recoups revenue through property taxes averaging 1.8% of market value. This is among the highest effective rates in the nation. The rate breaks into components: school district M&O (1.0-1.3%), county (0.3-0.5%), municipal (0.3-0.6%), and often a municipal utility district (MUD) or public improvement district (PID) levy of 0.2-0.5%. Total combined rates in newer suburban developments can reach 2.5-2.8%, adding $7,500-$9,000 annually on a $350,000 home.

The MUD Tax Trap

New construction in master-planned communities often carries MUD taxes that fund water, sewer, and infrastructure. While MUD taxes typically decline over 20-30 years as initial bonds are repaid, they can add 0.5-1.0% to the effective rate in early years. Buyers comparing a $350,000 home in an established neighborhood to a $350,000 home in a new MUD community may face a $3,500 annual tax difference. Always request the prior-year tax bill before making offers, and factor the full rate into monthly affordability.

The $140,000 Homestead Exemption

Texas voters approved a constitutional amendment in November 2025 raising the school district homestead exemption from $100,000 to $140,000 ($150,000 for seniors). The average Texas homeowner will save $363 annually, or $497 when combined with school tax rate compression included in the state budget. Notably, 49% of Texas school districts have average home values under $140,000, meaning school M&O property taxes are effectively eliminated for typical homeowners in nearly half the state.

Additional Exemptions

Beyond the state homestead exemption, local jurisdictions offer additional relief. Most counties provide a 20% optional homestead exemption on county taxes. Over-65 homeowners qualify for a tax ceiling on school district taxes (frozen at purchase-year levels) plus an additional $10,000 state exemption. Disabled veterans receive exemptions ranging from $5,000 to 100% of value depending on disability rating. Surviving spouses of first responders killed in the line of duty receive 100% exemption.

The No-Income-Tax Advantage Quantified

Texas's absence of state income tax is the most frequently cited affordability advantage, but the math is more nuanced than it appears. A $100,000 earner in California pays roughly $6,000 in state income tax; in Texas, zero. However, that same earner in Texas likely pays $2,000-$3,500 more in property taxes and $2,000-$3,000 more in homeowners insurance than a comparable California homeowner. The net benefit remains positive for high earners but narrows significantly for middle-income buyers. For households earning under $75,000, the no-income-tax savings ($1,500-$2,500) often fail to offset higher property tax and insurance costs. Use our Texas Paycheck Calculator to model your exact take-home pay and compare to your target mortgage payment.

Insurance: The Second-Highest Burden in the Nation

Statewide Premium Reality

Texas homeowners insurance averages $4,142 annually (2025), ranking Texas second-highest in the nation behind Florida. Projections put the average at $4,529 by the end of 2026. The pace of growth slowed from 18.7% in 2024 to 4.3% in 2025, but the absolute dollar amount remains a major affordability headwind. On a $350,000 home with a $3,500 annual mortgage insurance premium, the monthly impact is nearly $300 — roughly equivalent to a $50,000 increase in the home's price at current rates.

Regional Variation

Premiums vary dramatically by region. Houston homeowners face average premiums near $6,370 due to hurricane exposure. DFW and Central Texas (Austin) hail and tornado risk keep rates in the $3,500-$4,500 range. El Paso and the Panhandle face lower premiums ($2,500-$3,500) due to fewer catastrophic events. Coastal counties from Beaumont through Brownsville require separate windstorm coverage through the Texas Windstorm Insurance Association (TWIA), with premiums adding $1,500-$3,000 annually on top of standard coverage. Flood insurance through the NFIP averages $779 per year and is mandatory in FEMA Special Flood Hazard Areas.

Shopping Aggressively

Unlike tightly regulated states, Texas insurance premiums vary 40-60% between carriers for identical coverage. Shopping three to five insurers at purchase and annually thereafter can save $1,000-$2,500 per year. Bundling home and auto typically reduces combined premiums 15-25%. Avoid frequency-based surcharges by maintaining higher deductibles (typically $2,500-$5,000 rather than $1,000) and filing fewer small claims.

Down Payment Assistance: TSAHC and TDHCA

My First Texas Home (TDHCA)

The Texas Department of Housing and Community Affairs runs My First Texas Home, providing 30-year fixed-rate loans with up to 5% of the loan amount in down payment and closing cost assistance. Eligibility requires a 620 credit score, income below roughly $100,000 (varies by county and family size), and completion of an approved homebuyer education course. First-time buyer status means not owning a primary residence in the past three years.

TSAHC Programs

The Texas State Affordable Housing Corporation runs two parallel programs. Home Sweet Texas targets general first-time buyers with below-market 30-year fixed rates and up to 5% DPA. Homes for Texas Heroes serves teachers, police officers, firefighters, EMS, corrections officers, veterans, and active-duty military with enhanced terms. Both programs pair with FHA, VA, USDA, or conventional loans. The DPA can be structured as a grant (no repayment) or a forgivable second lien, depending on the specific option chosen at application.

Mortgage Credit Certificate (MCC)

Eligible first-time buyers can layer an MCC with either TSAHC or TDHCA programs. The MCC provides a federal tax credit of up to 20% of mortgage interest paid annually, up to $2,000. Over a 30-year loan at current rates, this credit is worth roughly $30,000-$50,000 in effective interest savings. The MCC does not reduce monthly payments directly but increases after-tax income, freeing cash for other expenses.

Jobs and Wage Growth: The 2026 Outlook

Statewide Employment

The Dallas Fed forecasts Texas will add 278,400 jobs in 2026, a 1.9% increase bringing total employment to 14.6 million by year-end. Austin and San Antonio lead metro growth at 5.9%, followed by Dallas (4.8%) and Houston (4.1%). AI-driven data center construction is expected to be a major 2026-2027 growth driver, with Texas capturing a significant share due to grid capacity and low electricity costs. For mortgage qualification, stable employment in these sectors provides lender confidence, though RSU-heavy tech compensation requires careful documentation.

Salary Benchmarks

The average Texas salary reached approximately $64,800 in 2026. Austin's average rose to $82,400, reflecting the tech sector concentration. Dallas ranks fourth nationally as a destination for college graduates, driven by 24 Fortune 500 headquarters. Houston's diversified economy supports six-figure salaries across engineering, medicine, and finance, though the metro's median household income runs closer to the state average. These wages, combined with Texas's relatively low home prices, produce price-to-income ratios below 4.0 in most metros — substantially healthier than the 6.0+ ratios in California and the Northeast.

Metro-by-Metro Affordability Scenarios

Houston: $85,000 Household Income

At $85,000, 6.19% rate, 20% down, 2.2% effective property tax (Houston metro average including MUD), and $6,370 annual insurance, a buyer can afford approximately $265,000-$290,000. This reaches most Greater Houston suburbs including Katy, Spring, and Pearland. Inner-loop neighborhoods remain out of reach at this income without stacking DPA.

Dallas-Fort Worth: $95,000 Household Income

DFW's higher median income and 2.3% effective tax rate allow $95,000 earners to afford approximately $330,000-$360,000. This clears much of Fort Worth, Grand Prairie, and Mesquite, plus McKinney and Mansfield exurbs. Frisco, Plano, and Southlake generally require $120,000+.

Austin: $100,000 Household Income

Austin's price reset post-peak has opened more of the market to $100,000 earners. With 2.2% effective tax and $4,000 insurance, this income supports approximately $350,000-$385,000. Round Rock, Pflugerville, and Kyle offer the best stock at this price point. Central Austin remains out of reach without dual incomes.

San Antonio: $75,000 Household Income

San Antonio's lower price point and moderate property tax (1.9% average) allow $75,000 earners to afford roughly $290,000-$320,000. This covers most of Bexar County outside the Stone Oak and Alamo Heights enclaves. Military housing allowances (BAH) for servicemembers at JBSA bases often cover these mortgage payments entirely.

Use our Texas Mortgage Affordability Calculator to model these scenarios with your specific debt loads, down payment, and target neighborhoods.

Deregulated Electricity: A Texas-Specific Variable

How Deregulation Affects Homeowners

Most of Texas operates under electricity deregulation through ERCOT, meaning homeowners choose their retail electric provider rather than buying from a monopoly utility. This creates opportunity and risk. Fixed-rate plans at 13-15 cents per kilowatt-hour offer predictability. Variable-rate and indexed plans can spike to 30-50 cents during demand peaks. The February 2021 winter storm exposed the system's vulnerability when wholesale prices briefly hit $9 per kilowatt-hour. Smart homeowners lock in 24-36 month fixed contracts and avoid indexed products. Austin Energy and CPS Energy (San Antonio) remain regulated municipal utilities.

Annual Cooling Costs

Texas summers drive the largest utility expense. A typical 2,200-square-foot home in Houston or Dallas uses 2,500-3,500 kilowatt-hours monthly from June through September. At 14 cents per kilowatt-hour, summer bills routinely reach $350-$500. Energy-efficient construction and solar panel installations can reduce these costs, but Texas's net metering terms are less favorable than California's, meaning solar payback periods run 10-14 years versus 6-8 in regulated-rate states. Factor summer utility costs into the DTI calculation: a buyer with $400 summer electric bills qualifies for substantially less mortgage than one with $150.

Climate Resilience and Maintenance Costs

Foundation Issues in Expansive Soils

Much of East and Central Texas sits on expansive clay soils that expand and contract with moisture changes. This causes foundation heaving and settling that affects an estimated 60-70% of homes in these regions over a 30-year ownership period. Typical repairs run $5,000-$15,000 for minor leveling and $20,000-$50,000+ for piering. A pre-purchase structural engineering inspection ($400-$800) is nearly essential in Houston, Dallas, and San Antonio. Homes on slab-on-grade foundations are more vulnerable than those on pier-and-beam. Established neighborhoods with older homes may show historic foundation repair records — not always a red flag, but warranty transferability matters.

Hail, Wind, and Roof Longevity

North Texas sees the highest frequency of damaging hail events in the nation. Standard asphalt shingle roofs that last 20-25 years in temperate climates often require replacement every 10-12 years in DFW. Impact-resistant Class 4 shingles cost 20-30% more upfront but earn 10-35% insurance discounts and can extend roof life to 15-18 years. Factor a roof replacement reserve of $400-$800 per year into long-term budgeting. Insurance carriers increasingly require certified roof inspections before renewing policies on older homes.

Investor-Friendly Environment and Owner-Occupant Competition

Texas ranks among the top destinations for residential real estate investors. Institutional buyers (iBuyers like Opendoor, corporate single-family rental operators like Invitation Homes) and out-of-state individual investors compete directly with owner-occupants in the $200,000-$400,000 range. In Houston, Dallas, and San Antonio, investor purchases account for 15-20% of transactions in typical months. For owner-occupant buyers, this means more cash offers, faster timelines, and waived contingencies. Strategies for competing include getting fully underwritten pre-approval (not just pre-qualification), offering shortened option periods, and escalation clauses on desirable listings. Use our Texas Mortgage Calculator to determine the maximum payment you can commit to when writing competitive offers.

Regional Variations in Building Standards

Texas has no statewide building code, delegating standards to municipalities. Major metros (Houston, Dallas, Austin, San Antonio) enforce the International Residential Code, but unincorporated county areas may have minimal requirements. Post-Harvey (2017) flood mitigation rules apply in Houston-area flood zones, requiring first-floor elevation above projected 500-year flood levels. Austin's water quality protection zones limit construction in recharge areas. Newer construction in Houston suburbs built after 2018 incorporates substantial flood resilience improvements — worth 5-15% more than pre-Harvey builds in similar neighborhoods. Verify flood zone status via FEMA's Flood Map Service Center before committing to any Texas purchase near water. Even a 50-year-old home three blocks from Buffalo Bayou in Houston may carry different flood requirements than a new build in a retrofitted subdivision. Request the property's elevation certificate from the seller or order one independently for $500 to $800. Lenders increasingly require these documents before closing on properties anywhere near mapped flood risk areas.

Hidden Costs of Texas Homeownership

Beyond property taxes and insurance, Texas homeowners face ongoing costs that vary by region. Electricity runs 13-17 cents per kilowatt-hour in deregulated markets (most of Texas outside Austin and San Antonio), with summer bills reaching $350-$500 per month for typical homes. HOA fees in master-planned communities range from $40 to $200+ per month, often with separate assessments for amenity upgrades. Foundation repair in expansive-soil regions (most of East and Central Texas) is a recurring concern — budget for potential $5,000-$20,000 repairs over a 10-year ownership horizon. Tree trimming, given Texas's severe weather, averages $500-$1,500 annually for mature yards. Total ongoing costs beyond the mortgage typically add $600-$1,000 per month for a median-priced home.