The Texas mortgage market
Overview
Texas combines moderate home prices with high property taxes — a tradeoff buyers should understand before estimating their monthly payment. The state has no income tax, but property tax rates of 1.6%–2.5% (sometimes higher in MUD or PID districts) can match California's home price effect on monthly PITI.
Texas mortgages have one unusual structural feature: home equity loans and HELOCs are governed by the state constitution, with caps on total loan-to-value (80% combined LTV maximum on owner-occupied homes), one-time-per-year refinance restrictions, and specific disclosure requirements. This makes cash-out refinancing slower and more procedural in Texas than in most other states.
Texas State Affordable Housing Corporation (TSAHC) and TDHCA programs are among the most generous first-time-buyer assistance programs in the country, with down-payment grants that don't require repayment for qualifying borrowers. Texas's large veteran population also makes VA loans especially popular, with the Texas Veterans Land Board offering additional state-level discounts on top of federal VA benefits.
Texas loan programs & assistance
State-specific programs that layer with FHA, VA, USDA, and conventional financing.
Frequently asked questions
Why are property taxes so high in Texas?+
Texas has no state income tax, so property taxes are the primary funding source for schools, local government, and many infrastructure projects. Effective rates of 1.6%–2.5% are common, with newer MUD (Municipal Utility District) and PID (Public Improvement District) levies adding to the total. Always check the full tax estimate before estimating monthly PITI.
What are the cash-out refinance rules in Texas?+
Texas governs home equity loans and cash-out refinances through state constitutional Section 50(a)(6) rules: maximum 80% combined LTV, only one cash-out refinance per year, mandatory 12-day cooling-off period after application, and specific disclosure forms. Plan for a 45–60 day timeline rather than the 30 days typical in other states.
Do TSAHC programs require repayment?+
The Homes for Texas Heroes and Homes Sweet Texas Home programs provide down-payment assistance as a 3-year forgivable grant — no repayment required if you stay in the home for three years. The Mortgage Credit Certificate provides ongoing tax savings without repayment. Other programs may be structured as deferred-payment second mortgages.
Can I use a VA loan with a Texas Veterans Land Board loan?+
Yes. The Texas Veterans Land Board (VLB) offers below-market interest rates on top of federal VA loans for eligible Texas veterans purchasing land, homes, or home improvements. The two programs stack and can produce significantly lower monthly payments than a federal VA loan alone.