Did you know that Texas added more new residents than any other state in the country last year? For us, It’s not hard to see why. Texas has no state income tax, a booming and diverse job market, and some of the most affordable major metros left in the country.
Property taxes carry more weight here than in almost any other state, and 2026 brought the largest property tax relief package in Texas history. The Texan market has fortunately shifted in buyers’ favor after years of rapid price growth, and there’s a lot to understand before you make an offer. Today we’ll cover everything you will want to know before you start looking.
Before diving in, just a bit about us –
We’re DMV Residential Financing, a licensed, award-winning mortgage brokerage with a veteran-led team that works with buyers across the DMV (DC, Maryland, and Virginia), Florida, Texas, and beyond. With over 2 decades of experience, we specialize in complex-income files that other lenders often turn down, backed by fast 24-hour pre-approvals and closings that typically move in under 15 days.
What Makes Buying A Home In Texas Different From Other States?
No State Income Tax, But Real Property Tax
Texas has no individual state income tax, one of the biggest reasons people move here from higher-tax states. The trade-off is a property tax rate well above the national average, so owning a home here leans more on that yearly bill than in most states.
Texas Is Genuinely More Affordable
In mid-2026, the median list price for a home in Texas was around $359,000, which is about 17% lower than the national median of $430,000, according to Realtor.com. Homes are also generally more affordable compared with local incomes than they are in many high-cost states, although it can vary quite a bit from one metro area to another. So, if you’re moving to Texas from a more expensive state, the lower cost of housing can make a noticeable difference to your budget.
Wide Open Space And Room To Grow
Texas is the second-largest state in the country, and that means more room for your money. Large lots, new construction on the edges of major metros, and entire planned communities are common here, more than in smaller, denser states.
A Major Draw For Business And Job Growth
Texas has a genuinely diverse economy: technology in Austin, energy in Houston, healthcare in San Antonio and Dallas, and company headquarters relocating here in recent years. That mix is a big reason Texas added more people than any other state last year.
Homestead Protection Goes Beyond Taxes
In Texas, having a homestead can give you some extra protection for your main home if a creditor comes after you. This is separate from the property-tax break we’ll cover later in the guide. That said, the protection doesn’t cover everything. For example, mortgages, property taxes, and certain other legal claims can still apply.
A Market That’s Shifted In Buyers’ Favour
After years of rapid price growth, some major Texas metros are seeing prices soften and availability rise in 2026, especially in Austin. That gives buyers more room to negotiate than they’ve had in years, though the picture varies a lot by city.
How Do Texas Property Taxes Affect Your Home Buying Budget?
We hear the same question from almost every buyer moving to Texas: why is the property tax bill so much higher than back home?
Texas has no individual state income tax, so property taxes play a bigger role. Many homeowners can reduce their taxable home value with a homestead exemption. For 2026, the exemption is $140,000, up from $100,000, with an additional $60,000 for homeowners age 65 or older or those with disabilities. The amount you save depends on your local school district’s tax rate.
You’ll need to apply for the homestead exemption. It isn’t automatic. In most cases, you need to own the home and live there as your primary residence.
If you buy a home after January 1, you may still qualify for that tax year in some cases, so it’s best to check with your county appraisal district. The usual deadline to apply is April 30, though late applications may be accepted by Texas law to apply for this.
Once you qualify, your home’s appraised value generally can’t increase by more than 10% per year, starting the following tax year.
Also, check whether a home is located in a special district, such as a MUD or PID. Common in parts of Houston, Austin, and Dallas-Fort Worth, these districts can add property taxes or assessments to your costs. Before buying a new-construction home, ask whether one applies and how much it could add to your monthly expenses.
What Should Buyers Know About Insurance And Weather Risk In Texas?
Hail and wind are major factors in Texas home insurance costs, and spring storms bring frequent hail damage across the state. Your roof’s age and material matter more to your premium than most people expect.
Fourteen coastal counties are part of Texas’s designated windstorm catastrophe area. That includes Galveston and Nueces County, where Corpus Christi is located, along with a few communities east of Houston such as La Porte, Morgan’s Point, Pasadena, Seabrook, and Shore Acres.
If you’re buying a home in one of these areas, get a windstorm insurance quote before making an offer. You don’t want to find out about the cost after you’ve already committed to the property.
Some Texas homeowners insurance policies have a separate deductible for wind and hail damage. Instead of a fixed dollar amount, the deductible is often a percentage of your home’s insured value. That means you could end up paying more out of pocket than you expected.
For example, if your dwelling coverage is $350,000 and you have a 2% deductible, you’d pay $7,000 out of pocket before the insurance coverage kicks in.
Keep in mind, the dwelling coverage amount may be different from what you paid for the home. It’s worth checking both numbers on your policy so you know exactly what your deductible could be.
Standard homeowners insurance usually doesn’t cover flood damage. If you’re buying near the coast, a river, drainage area, or somewhere with a history of flooding, it’s a good idea to check the property’s flood zone and get a separate flood insurance quote.
Just like with property taxes, your lender needs your real insurance quote, not a placeholder number, to give you a debt-to-income ratio you can actually rely on.
Which Texas Markets Should Buyers Consider?
Texas isn’t one market, and the right city depends heavily on what you’re actually trying to do. Here’s a breakdown by buyer intent, since “best market” means something different depending on your goal.
A Strong Option For A Deal Right Now
Austin home prices are down around 5-7% from a year ago, depending on the source. That gives buyers a little more room to negotiate, although the market could start picking up again later this year. If Austin felt out of reach before, it may be worth taking another look now.
A Strong Option For Affordability
San Antonio is meaningfully more affordable than Austin, and it’s drawing buyers priced out of the capital who commute in or work remotely.
A Strong Option For Stability
Houston is relatively affordable, and rental demand there has held up reasonably well. Dallas-Fort Worth has stayed more stable than Austin through 2026, backed by a large, diverse job base.
A Strong Option For Jobs And Career Growth
Austin is a major tech hub, Houston is known for energy, and Dallas-Fort Worth and San Antonio have strong healthcare and financial industries. If you work in one of these fields, your career may end up playing a bigger role in choosing where to live than affordability alone.
A Strong Option For Retirees
Texas doesn’t have a state income tax, which can help your retirement income go a little further. Homeowners who are 65 or older may also qualify for an additional $60,000 exemption on their home’s taxable value.
For many retirees, smaller cities and suburbs can be a good fit because they offer a lower cost of living while still giving you the benefit of Texas’ tax advantages.
Up-And-Coming Areas To Watch
Cities in South and West Texas, including El Paso, McAllen, and Brownsville, are worth watching if you’re priced out of the bigger metros. They offer lower price points and local economies that have held up reasonably well while Austin works through its adjustment.
A Strong Option For Investment Properties
In our experience, Houston’s affordable entry pricing and stable rental demand make it worth considering for DSCR financing, where the loan is qualified on how rental income compares to debt obligations, not your personal earnings.
How Much Are Closing Costs When Buying A Home In Texas?
As a planning estimate, not a quote, closing costs typically run 2% to 5% of the purchase price, per CFPB guidance, covering title insurance, recording fees, loan origination charges, and prepaids like property taxes and homeowners insurance. Title insurance premiums in Texas are set by the state rather than shopped between companies, so that particular cost won’t vary much.
Who pays what is still negotiable and varies by contract, so ask your lender for a loan estimate early to know your real number before you’re under contract.
Which Mortgage Programs Are Available For Texas Buyers?
Texas buyers have more loan options than most people realize, and the right one depends on your income situation and the property itself.
Conventional loans suit buyers with steady W-2 income and strong credit. FHA loans help those with lower down payments or credit scores. VA loans can offer eligible veterans zero-down financing, common given Texas’s military population from Fort Cavazos to Lackland to Fort Bliss. Texas veterans may also qualify for financing and other benefits through the state-run Texas Veterans Land Board program. Jumbo loans cover the higher price points in parts of Austin and Dallas.
If you’re self-employed or your income doesn’t fit the usual W-2 setup, you may still have financing options. Bank statement loans can be a good fit for self-employed buyers because they look at your bank deposits instead of relying only on tax returns.
For investment properties, DSCR loans focus on the income the property is expected to generate, which can be helpful for investors in Houston’s rental market. Foreign national loan programs are also available for some international buyers who don’t have a U.S. credit history.
Just keep in mind that requirements can vary from one lender to another, so it’s worth checking what you may qualify for.
| Program | Best For | Learn More |
| Conventional Loans | Buyers with steady income and strong credit | Details |
| FHA Loans | Lower down payment or credit score flexibility | Details |
| VA Loans | Eligible veterans and service members | Details |
| Jumbo Loans | Purchase prices above conventional loan limits | Details |
| Bank Statement Loans | Self-employed and business owner buyers | Details |
| DSCR Loans | Investment properties, qualified on rental income | Details |
| Foreign National Loans | International buyers without US credit history | Details |
Texas Home Buying Process Step-By-Step
Here’s the order we walk buyers through, and it’s not always the order people assume.
- Get pre-approved first for a clear budget and a more competitive offer.
- Get a real property tax estimate for the specific county and school district.
- Pull an insurance quote before you write the offer, including windstorm coverage near the coast.
- Work with a local agent who knows the specific metro, since price trends vary right now.
- Write the offer with protections built in, including an inspection contingency, appraisal contingency and financing contingency.
- Order inspections, with extra attention to the roof given how common hail damage is.
- Once eligible, file your homestead exemption with the county appraisal district before the deadline.
Frequently Asked Questions
How much is the Texas homestead exemption in 2026?
The mandatory school district homestead exemption is $140,000 in 2026, up from $100,000. Homeowners 65 or older or disabled qualify for an additional $60,000, for a total of $200,000 off the school-district taxable value for qualifying seniors.
When do I need to file my Texas homestead exemption?
To qualify, you generally need to own the home and live there as your primary residence. If you buy after January 1, you may still be able to get the homestead exemption for that tax year in some cases, so check with your county appraisal district to confirm.
The usual deadline is April 30, but Texas law allows every application to apply for this.
Is home owner insurance expensive in Texas?
It really depends on where you’re buying and how old the roof is. Wind and hail are some of the biggest factors behind homeowners insurance claims in Texas.
If you’re buying in one of the 14 coastal counties or certain parts of eastern Harris County, you may also need separate windstorm coverage.
What credit score do I need to buy a home in Texas?
It depends on the loan program. For a conventional loan, a credit score of around 620 or higher is common, but some lenders may have different requirements.
For FHA loans, you may qualify with a score of 580 or higher with 3.5% down. Scores between 500 and 579 may still qualify with 10% down or higher, based on individual scenarios.
For non-QM options, such as bank statements or DSCR loans, the credit score requirements can vary based on guidelines.
Do self-employed buyers qualify for a mortgage in Texas?
Yes. Bank statement loan programs let self-employed buyers qualify using deposit history instead of tax returns, often a better fit for business owners whose returns don’t reflect actual cash flow and
P&L programs with account statement.
Ready To Get Started?
We’ve closed more than 5,000 loans and carry a 5.0 rating across 272 client reviews on Google. Jalene Beresa called homeownership “a place where our children can grow, feel safe” after a journey she described as full of challenges before her family finally reached that dream. Beatrice Quansah said our team beat the closing timeline they’d given her from the start. Those reviews reflect our track record across the DMV, Florida, and Texas rather than Texas transactions specifically, but the pattern holds wherever we close a loan: buyers want someone who gives them the real number, not the convenient one.
Buying in Texas rewards people who do their homework before they fall for a property, not after. Know your real property tax number after the exemption. Know your real insurance number. Know which program actually fits your income. The buyers who walk in with those answers are the ones who end up ahead.
If you want to talk through your specific situation, start with a fast pre-approval through our LendingPad application, or reach out and we’ll walk through it together.
Disclaimer
This blog is for informational purposes only. Eligibility for mortgage programs depends on income, credit, property type, and other qualifying factors. Contact DMV Residential Financing for personalized advice.
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