Overview of Texas Mortgages
Texas mortgage rates tend to be close to or below the national average, which means your monthly mortgage payments should be relatively reasonable. No Texas counties have conforming loan limits beyond the standard $726,200 limit.
| Product | Today | Last Week | Change |
|---|---|---|---|
| 30 year fixed | 5.88% | 5.88% | 0.00 |
| 15 year fixed | 5.00% | 4.88% | +0.13 |
| 5/1 ARM | 6.25% | 6.25% | 0.00 |
| 30 yr fixed mtg refi | 6.75% | 6.56% | +0.19 |
| 15 yr fixed mtg refi | 5.75% | 5.63% | +0.13 |
| 7/1 ARM refi | 7.00% | 6.63% | +0.38 |
| 15 yr jumbo fixed mtg refi | 2.99% | 3.05% | -0.06 |
National Mortgage Rates
| Lender | APR | Payment |
| Searching for Mortgages...  |
Historical Mortgage Rates in Texas
Texas Mortgage Rates Quick Facts
- Median Home Value: $237,400 (U.S. Census Bureau)
- Loan Funding Rate: 51.32% (CFPB)
- Homeownership Rate: 64.1% (St. Louis Fed)
- Median Monthly Homeownership Costs: $1,747 (U.S. Census Bureau)
Texas, the largest state in the continental U.S., has a sizable mortgage market. Texas mortgage rates are generally a little lower than the average U.S. rate.
A financial advisor in Texas can help you plan for the homebuying process. Financial advisors can also help with investing and financial planning - including tax, retirement and estate planning - to make sure you are preparing for the future.
*The FHFA stopped reporting new data in 2018.
Texas Mortgages Overview
Getting a mortgage in Texas is a more consumer-friendly process than in some other states. The state government has put consumer protections in place that help prevent foreclosure. Also, the state did not allow home equity loans until 1997. Even now, the rules that govern Texas mortgages are designed to limit the risk that homeowners can take on.
The biggest example of this special feature of the Texas mortgage market is the fact that in Texas, the total of all mortgage debt on a home can’t legally exceed 80% of the home’s market value. That means that you can’t pile on, say, a second mortgage and a home equity loan and end up owing way more than your home is worth, as residents in some states did before the foreclosure crisis.
So, if you only have 20% equity in your home you won’t be allowed to get a home equity loan at all because the mortgage debt on your home is at that 80% cut-off. You can calculate the home equity loan you can legally have on your home by multiplying the home’s value by 0.8 and then subtracting the amount you still owe on the home. You can’t have more than one home equity loan on a single home and neither can you take out more than one home equity loan in a single year.
Texas law also imposes limits on lenders in the Texas mortgage market. Fees and costs are capped at 3% of the loan principal, for example, and rush loan jobs are forbidden. Even after closing on a mortgage you have three days to change your mind and cancel the transaction without having to pay a penalty for doing so.
Another stand-out feature of the Texas mortgage market is that Texas is a non-recourse state. That means that if you go through foreclosure and you owe your lender more than your home is worth the lender can’t go after you for the “deficiency,” the difference between what you owe the bank and what the bank can now get for your home on the market.
Foreclosures can be either judicial or non-judicial in Texas. If you have a traditional mortgage document your lender will probably have to go through judicial foreclosure to reclaim the home and this can be a lengthy process. You may instead have a deed of trust, which allows the lender to do a “power of sale” foreclosure.
With a “power of sale” clause in your mortgage or deed of trust you’re authorizing the lender to sell the home to recoup money if you default on your mortgage. This sale process, generally done by public auction, goes much more quickly than judicial foreclosure. However, Texas law requires that the bank give borrowers 20 days and plenty of notice to make delinquent payments before foreclosing. You can also bid on your own home during a foreclosure auction in Texas.
30-Year Fixed Mortgage Rates in Texas
Most homeowners in the U.S. opt for a fixed-rate, 30-year mortgage and Texas is no exception. Interest rates on fixed-rate 30-year loans are generally higher than for mortgages with a 15-year term, but 15-year loans often come with monthly payments that are too high for regular borrowers. Why? Because with a 15-year mortgage you have half as much time to pay off the same amount of debt.
The average Texas rate for a fixed 30-year mortgage is 5.96% (Zillow, Jan. 2023).
Texas Jumbo Loan Rates
In general, the conforming limit for mortgages in the U.S. is $726,200. Any loan above that is considered a “non-conforming” or “jumbo loan” and may come with higher interest rates to compensate for the extra risk that the bank is taking on by lending such a large sum of money. Plus, conforming loans can be sold on to Freddie Mac or Fannie Mae but jumbo loans cannot.
In certain high-cost counties in the country there are higher conforming loan limits. Texas, however, has no counties where the conforming loan limit exceeds $726,200 for a single-family home.
The average Texas 30-year fixed-rate jumbo loan rate is 5.84% (Zillow, Jan. 2023).
Texas ARM Loan Rates
An ARM is an adjustable-rate mortgage. Unlike a fixed-rate loan, where the interest rate on your mortgage debt stays the same throughout the life of the loan, adjustable-rate mortgages have interest rates that can adjust.
With an ARM you’ll generally get a low introductory interest rate, lower than the rates you may see for fixed-rate loans. However, after a period of one, three, five, seven or 10 years depending on the terms of your loan, that introductory rate will end and your interest rate will change. It will likely increase, though the size of the increase will be capped in the terms of your loan. Adjustable-rate mortgages are riskier for borrowers, but if you’re confident you can re-sell the home before the low introductory rate ends you may deem an ARM worth it.
The average rate for a 7/1 ARM in Texas is 5.43% (Zillow, Jan. 2023).
Texas Mortgage Resources
The Texas Department of Housing and Community Affairs (TDHCA) offers mortgage help for first-time homebuyers. There are two main programs that the TDHCA offers. The first is called My First Texas Home. Through My First Texas Home, eligible applicants can get 30-year fixed, low-interest-rate mortgages. Up to 5% of the home loan amount will be available to help with a down payment or closing costs.
The other benefit TDHCA offers is a Mortgage Credit Certificate. With a Texas Mortgage Credit Certificate, qualified borrowers get up to $2,000 per year in a federal income tax credit that’s based on the mortgage interest paid that year. It’s an extra benefit at tax season that complements the Mortgage Interest Tax Deduction. The low-interest mortgage loan from My First Texas Home and Texas Mortgage Credit Certificate can be combined or used separately.
To take advantage of TDHCA’s programs, you must be a first-time homebuyer who hasn’t owned a home as your primary residence in the last three years. You won’t be able to get TDHCA help with an investment property or summer house.
There are also income limits (up to 115% of the area median family income) and limits on the purchase price of qualifying homes (the limit varies by county). Wealthy Texans and those who want to buy mansions should look elsewhere. There are also minimum credit score and maximum debt-to-income ratio requirements to qualify for the home-buying help from TDHCA.
TDHCA doesn’t actually issue you a home mortgage. Instead, they work with participating lenders throughout the state and limit the fees those lenders can charge you. If you qualify and choose to participate you will be required to participate in homebuyer education and you will not be allowed to rent out the home you buy through the program.
If your income is a little higher, don’t assume you don’t qualify. In certain targeted areas that have historically been economically depressed, TDHCA allows a higher income and purchase price limits to entice development. You can check area limits on the table above. The TDHCA website offers links to foreclosure prevention resources through the federal government and groups like the Homeownership Preservation Foundation.
Texas Mortgage Taxes
Qualified applicants can get a Texas Mortgage Credit Certificate that will give them a tax credit when they file their federal income taxes. Remember that a tax credit is a dollar-for-dollar reduction in your tax liability (the amount you owe the government). If you have more money in tax credits than in tax liability your refund will increase by that amount. A tax deduction, by contrast, reduces your taxable income.
Even if you don’t qualify for a Texas Mortgage Credit Certificate, you can still deduct your mortgage interest on your federal income tax return. Texas has no state income tax, so no state-level deduction is necessary.
Though it doesn’t have a state income tax, Texas does have property taxes. In fact, Texas has some of the highest property tax rates in the U.S. The average effective property tax rate in Texas is 1.69%, the seventh-highest rate in the country. Texas does not have real estate transfer taxes, which are taxes imposed on the transfer of the title to real estate property within a given municipality, county or state. That means you won’t owe extra taxes when it comes time to sell your home.
Texas Mortgage Refinance
Ready to refinance your Texas mortgage? If you already receive a Mortgage Credit Certificate for your existing mortgage you can apply to continue receiving that credit after you refinance to a new mortgage. You’ll need to fill out the TDHCA Mortgage Credit Certificate Program’s “Refinance of MCC Loan Application” with details of your refinance such as the balance owed on your original loan and the new loan amount. If your application is approved you will continue to receive the MCC credit at the same rate as your original credit.
Whether or not you qualify for a Texas MCC, you may qualify for refinance help from Fannie Mae. You can apply to refinance through Fannie Mae's High Loan-to-Value Refinance Option. Note that the Home Affordable Refinance Program, or HARP, is no longer in existence.
