Texas Mortgage Calculator — Rates, Property Tax & Homestead Exemption

How Texas Mortgage Calculator Works

M = P * [r(1+r)^n] / [(1+r)^n - 1]

Standard monthly mortgage payment formula. Texas-specific factors include property taxes (among the highest in the nation at ~1.8% average), no state income tax, and the Texas Homestead Exemption which can reduce school district property taxes. All calculations use decimal.js for precise financial math.

M

Monthly Payment — Your monthly principal and interest payment. Texas property taxes add significantly to the true monthly cost — often more than PMI.

PMI

Private Mortgage Insurance — Required when down payment is under 20%. In Texas, FHA loans and USDA loans are popular alternatives to avoid PMI. Texas also has a unique "Texas Vet" loan program with no PMI for qualifying veterans.

Homestead

Texas Homestead Exemption — Texas law exempts a portion of your home value from school district property taxes. As of 2026, the exemption is $100,000 for general homestead. Seniors 65+ and disabled homeowners receive the $100K exemption plus a school tax freeze, meaning their school tax amount never increases even if property values rise.

No Income Tax

Texas No State Income Tax — Texas is one of 9 states with no state income tax. This saves homeowners 2-10% of their income compared to states like California, New York, or Oregon. The trade-off: property taxes are roughly 60% higher than the national average to fund local services.

How to Use

1. Enter the Texas home price — use $350,000 as a starting point for the statewide median.
2. Enter your down payment. First-time buyers in Texas can use programs like TSAHC or Texas My First Home.
3. Select your loan term. 30-year fixed is most common in Texas.
4. Enter the property tax rate. Default 1.8% is the Texas average — your county may vary from 1.2% to 3.0%.
5. Select your Homestead Exemption type to see estimated property tax savings.
6. Review the results: your true monthly cost includes property taxes (often the second-largest component after P&I) but not state income tax.

Quick Reference

Common Uses

• •Estimate monthly mortgage payments on a Texas home factoring in the state's above-average property tax rates and homestead exemption.
• •Compare the no-state-income-tax advantage against higher property taxes to understand your true housing cost in Texas.
• •Plan your home purchase by exploring TSAHC and Texas Veterans Land Board down payment assistance programs.

Understanding the Result

Texas is unique in the US housing market because it has no state income tax but relies heavily on property taxes to fund local services. The average effective property tax rate in Texas is approximately 1.8% of home value annually — among the highest in the nation. This means a $350,000 home in Texas costs about $6,300 per year in property taxes alone ($525/month), which is significantly more than the national average of ~1.1%. However, Texas offers a Homestead Exemption that reduces the taxable value of your home for school district taxes. As of 2026, the general homestead exemption is $100,000. Seniors and disabled homeowners receive additional benefits including a school tax freeze. First-time homebuyers should also explore programs like the Texas State Affordable Housing Corporation (TSAHC) and the Texas Veterans Land Board for down payment assistance. Despite the high property taxes, Texas remains attractive due to no state income tax, strong job growth, and relatively affordable home prices compared to coastal states.

Worked Examples

Frequently Asked Questions

Why are Texas property taxes so high?

Texas has no state income tax, so local governments rely on property taxes to fund schools, roads, and emergency services. The average effective tax rate is about 1.8%, compared to the national average of 1.1%. Texans pay more in property taxes but no state income tax, which can benefit higher-income buyers. The breakeven point depends on your income — for many middle-class families, the savings from no income tax roughly offset the higher property taxes.

What is the Texas Homestead Exemption?

The Texas Homestead Exemption removes a portion of your home value from school district property taxes. For 2026, the exemption is $100,000 for general homesteads. Seniors 65+ and disabled homeowners also get the $100K exemption plus a school tax freeze (your school tax dollars never increase). You must file an application with your county appraisal district. The exemption only applies to your primary residence.

What down payment assistance is available in Texas?

Texas offers several programs: TSAHC (Texas State Affordable Housing Corporation) provides up to 5% of the home price as down payment assistance. Texas My First Home offers 30-year fixed rates with down payment help. The Texas Veterans Land Board offers land, home, and improvement loans for veterans with below-market rates. Additionally, SETH (Southeast Texas Housing Finance Corporation) and TDHCA offer programs for specific regions.

How do I protest my property tax appraisal in Texas?

File a written protest with your county Appraisal Review Board (ARB) by May 15 (or 30 days after your appraisal notice, whichever is later). Gather evidence: recent comparable sales, an independent appraisal, photos of property defects, and repair estimates. The ARB hearing is informal — you present your case, the appraisal district presents theirs, and the panel decides. Most homeowners who protest get a reduction. You can also hire a property tax consultant who works on contingency.

Is Texas really cheaper than California for homeowners?

For the same home price, Texas is generally cheaper due to no state income tax, though property taxes are higher. However, the actual comparison depends on: (a) home prices — $350K in Texas buys much more house than $350K in most of California, (b) your income — the higher your income, the more valuable the no-income-tax advantage becomes, and (c) lifestyle factors — Texas has higher utility costs (AC), higher property insurance (hail, hurricanes in coastal areas), and potentially higher transportation costs due to sprawl. Many Texas transplants save money overall, but the gap has narrowed as Texas home prices and property taxes have risen.

Pro Tips

• →File your Homestead Exemption application with your county appraisal district immediately after closing — you have until April 30 of the tax year. The exemption does not apply retroactively, so every month you delay costs you money.
• →Protest your property tax appraisal every year. Texas allows annual protests, and data shows homeowners who protest save an average of 5-10% on their tax bill. Many protest services work on contingency (they only get paid if they reduce your taxes).
• →If you are over 65, file for the senior exemption AND the tax freeze — the freeze locks your school tax dollars (not just the rate) so they never increase, regardless of how much your home appreciates.
• →In high-growth markets like Austin, Dallas, and Houston, factor in annual property tax increases of 5-10% into your budget. Texas has no cap on how much your assessed value can increase for non-homestead properties.
• →Consider USDA Rural Development loans if you are buying outside major metro areas — much of Texas qualifies as rural under USDA guidelines, including many suburbs of major cities. 0% down, no PMI, and competitive rates.

Limitations to Know

• •This calculator uses average Texas tax rates; your actual rate depends on your specific county, city, school district, and any MUD (Municipal Utility District) or PID (Public Improvement District) assessments.
• •Homestead savings are estimated at ~55% school tax share — actual savings depend on your school district's tax rate.
• •The no-income-tax comparison is illustrative and does not account for differences in sales tax (TX: 6.25% state + up to 2% local = 8.25% max) versus states with income tax but lower sales tax.
• •Property tax rates can change annually based on local government budgets and voter-approved bond measures. Texas does not have a state property tax cap on assessment increases, though a 10% annual cap applies to homestead properties.

Sources

• Texas Comptroller — Property Tax
• TSAHC — Homebuyer Programs
• Texas State Law Library — Homestead Exemption