How much house can I afford in Texas? It comes down to two numbers: a full monthly payment that fits your budget and your lender's debt-to-income (DTI) limit, and the cash to close you can cover while keeping savings. In Texas, the full payment includes more than principal and interest. Local property taxes and homeowners insurance can be a big share of it, plus mortgage insurance and HOA dues. Down payment assistance can shrink the cash you need.
I'm Taylor Ring, a Mortgage Loan Officer with Fairway Independent Mortgage Corporation (The Wood Group) in Belton. This guide doesn't quote rates or home prices, because those depend on you. It shows how the pieces fit, using the CFPB's guidance and the published rules from Fannie Mae, FHA, and VA, read October 18, 2026.
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The Five Factors That Set Your Price Range
The CFPB says the home price you can afford depends on five key factors:
- How much you can pay monthly, after other debts like car loans, student loans, and credit cards
- How much you can pay up front as a down payment
- The kind of loan, such as a 30-year fixed or 15-year fixed
- Your interest rate and loan terms
- Property costs, including property taxes, homeowners and flood insurance, utilities, maintenance, and HOA fees
Change any one, and your price range moves. The fifth factor is where Texas buyers get surprised most.
What's in a Texas Mortgage Payment
The CFPB's list of the total monthly home payment includes principal, interest, property taxes, mortgage insurance, homeowners insurance, supplementary insurance such as flood, and HOA fees.
| Payment Piece | What It Is | Texas Note |
|---|---|---|
| Principal and interest | Repays the loan, plus the cost of borrowing | Depends on loan amount, rate, and term |
| Property taxes | Local taxes, often paid through escrow | Set by local taxing units; exemptions lower the taxable value |
| Homeowners insurance | Required by your lender | Premiums vary by home and location |
| Mortgage insurance | Protects the lender on low-down-payment loans | Conventional PMI under 20% down; FHA has upfront and monthly premiums |
| HOA dues | Required in many subdivisions | The TREC contract warns assessments can change |
Mortgage insurance. The CFPB explains that borrowers who put down less than 20% typically pay mortgage insurance. FHA requires it on every FHA loan, with an upfront cost and a monthly cost. Conventional PMI varies by down payment and credit score.
HOA dues. If membership is mandatory, the TREC resale contract warns you're obligated to pay assessments and the amount is subject to change. A resale certificate shows the regular assessments.
Why Property Taxes and Insurance Matter So Much in Texas
Taxes are local. The Texas Comptroller says Texas has no state property tax. Local taxing units set the rates and collect the taxes. Your bill depends on where the home sits: county, city, school district, and any special districts.
Some Texas neighborhoods sit in a water district or public improvement district. The TREC contract requires the seller to give you notices about those districts, including the district's tax rate where that applies. Read them with your budget in mind.
Exemptions help, but not right away. Once the home is your homestead, the Comptroller says school districts must exempt $140,000 of its value. You file after you buy. See my guide on how to file the homestead exemption in Texas. Until your exemptions apply, I'd budget on the full estimate. The seller's exemptions don't carry over to you.
Insurance varies a lot. The Texas Department of Insurance says companies weigh a home's age and condition, replacement cost, construction materials, location, fire protection, claims history, and often credit. Most home policies don't cover flooding, and lenders require flood insurance in a designated flood zone.
Escrow can change. The CFPB notes that when taxes or insurance change, your escrow payment and total payment change too. Leave room for that.
Debt-to-Income Basics
The CFPB defines DTI as all your monthly debt payments divided by your gross monthly income. Its own example: a $1,500 mortgage payment, a $100 auto loan, and $400 of other debts total $2,000. With $6,000 of gross monthly income, the DTI is 33%.
The CFPB also says different loan products and lenders have different DTI limits. Here's what the published guidelines say:
| Loan Type | Published DTI Guideline | Source |
|---|---|---|
| Conventional (Fannie Mae), manual underwriting | 36% maximum; up to 45% with required credit score and reserves | Selling Guide B3-6-02 |
| Conventional (Fannie Mae), Desktop Underwriter | Up to 50% | Selling Guide B3-6-02 |
| FHA, manual underwriting | 31% housing / 43% total, up to 40/50 with compensating factors | HUD Handbook 4000.1 |
| VA | 41% guideline, plus a residual income test | 38 CFR 36.4340 |
Automated approvals can differ, and lenders can be stricter. A maximum isn't a target; the CFPB suggests budgeting for maintenance, repairs, and utilities, too.
Hypothetical Example (No Rate Assumed)
These inputs are round, made-up numbers for illustration only:
- Hypothetical gross monthly income: $6,000
- Hypothetical other monthly debts: $500
- Hypothetical total DTI limit used for this example: 43%
43% of $6,000 is $2,580 for all debts. Subtract the $500 of other debts, and $2,080 is left for the entire housing payment, including taxes, insurance, mortgage insurance, and HOA dues. If those hypothetical extras were $700 a month, only $1,380 would remain for principal and interest. The price that supports depends on your rate and term, which is exactly what a pre-approval nails down.
Cash to Close: Down Payment, Closing Costs, and Prepaids
The CFPB's approach: add up your savings, set aside an emergency cushion (usually three to six months of expenses) and other goals, then subtract closing costs. What's left is your maximum down payment.
- Down payment. The CFPB says FHA loans can require as little as 3.5% down and conventional loans backed by Fannie Mae or Freddie Mac as little as 3%. Under 20% down, expect mortgage insurance.
- Closing costs. The CFPB says closing costs typically run 2% to 5% of the purchase price, not counting the down payment. My guide to closing costs in Texas breaks them down.
- Prepaids. The CFPB lists interest through the end of your closing month, the first year's homeowners insurance premium, and initial escrow deposits for future taxes and insurance.
- Earnest money and option fee. Both are due within 3 days after the contract's Effective Date and are credited at closing, but you need that cash early.
- Seller credits. The CFPB cautions that a seller may want a higher price to cover a credit, so you may still pay for it indirectly.
How Down Payment Assistance Changes the Cash Picture
Assistance doesn't lower the price of the home, but it can cut the cash you bring to closing. Two statewide programs Fairway participates in:
- TDHCA's My First Texas Home offers help of up to 5% of the loan amount for first-time buyers using FHA, VA, or USDA loans, as a second lien. See my My First Texas Home guide.
- TSAHC's Home Sweet Texas offers up to 5% of the loan amount as a grant or second lien, for first-time and repeat buyers who meet income limits. See my Home Sweet Texas guide.
TSAHC's guidelines say its assistance is funded at closing and can cover the down payment, closing costs, and prepaids. A second lien may need to be repaid when you sell or refinance, so weigh that too. My down payment assistance in Texas guide compares the options. Your full payment still has to fit your DTI.
A buyer in Temple had savings and wanted to keep as much of it as possible. We compared low-down-payment options, assistance programs, and seller credits side by side, looking at the payment, the rate, the cash to close, and any repayment terms, so they kept a healthy cushion for life after move-in day.
Illustrative scenario, not an actual client transaction. Seller credits are subject to negotiation and loan guidelines.
Your Texas Affordability Checklist
- List your monthly debts and gross income.
- Pick a monthly payment you're comfortable with, including taxes, insurance, and HOA dues.
- Get insurance quotes and check local tax rates for the areas you like.
- Total your savings, minus a cushion, for cash to close.
- Ask about assistance, then get pre-approved so the numbers are real.
This is general information, not financial or tax advice.
Frequently Asked Questions
How much house can I afford in Texas on my income?
It depends on your monthly payment budget, other debts, down payment, loan type, interest rate, and local property costs. Lenders compare your total monthly debts, including the full housing payment with taxes and insurance, to your gross monthly income, and each loan type has its own debt-to-income limits.
What debt-to-income ratio do I need to buy a house in Texas?
There is no single number. Fannie Mae allows up to 36 percent on manually underwritten loans, or 45 percent with required credit and reserves, and up to 50 percent through its automated system. FHA manual underwriting starts at 31 and 43 percent, and VA uses a 41 percent guideline plus residual income.
How much do I need for a down payment in Texas?
The CFPB says FHA loans can require as little as 3.5 percent down and conventional loans as little as 3 percent. Down payment assistance programs such as TDHCA's My First Texas Home and TSAHC's Home Sweet Texas can provide up to 5 percent of the loan amount for buyers who qualify.
How much are closing costs in Texas?
The CFPB says closing costs typically range from 2 to 5 percent of the purchase price, not including the down payment. You also need cash for prepaid items such as the first year of homeowners insurance and initial escrow deposits, plus your earnest money and option fee early in the contract.
Why is my Texas mortgage payment higher than I expected?
Many lenders require property taxes and homeowners insurance to be collected in your payment through escrow. Texas has no state property tax, so local taxing units set rates that vary by location, and insurance premiums vary by home. Mortgage insurance and HOA dues can add more.
Let's Find Your Real Number
I'll build your full Texas payment, with taxes, insurance, and any assistance, so you shop with a price range you're comfortable with.
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Related Guides
- Down Payment Assistance in Texas
- My First Texas Home Program
- Home Sweet Texas Home Loan Program
- Closing Costs in Texas
- How to File the Homestead Exemption in Texas
Sources
- CFPB: Figure out how much you want to spend and What is a debt-to-income ratio?
- CFPB: Mortgage insurance, Escrow accounts, and Mortgage costs
- Fannie Mae Selling Guide B3-6-02, HUD Handbook 4000.1, and 38 CFR 36.4340
- Texas Comptroller: Property Tax and Exemptions
- Texas Department of Insurance: Home insurance guide
- TREC One to Four Family Residential Contract (Resale) and TSAHC Program Guidelines
Taylor Ring, NMLS #2809683 | Fairway Independent Mortgage Corporation, NMLS #2289 | The Wood Group of Fairway, 127 Lake Rd Ste 300, Belton, TX 76513 | Equal Housing Opportunity. This is not a commitment to lend. All loans are subject to credit approval and program guidelines, and approval, rates, and program availability are not guaranteed. The example above is hypothetical and is not a quote or an offer. Assistance is subject to program requirements and funding availability. Not affiliated with or endorsed by the CFPB, HUD, VA, Fannie Mae, TDHCA, TSAHC, or any government agency.