How to Get the Best Mortgage Rate in Texas

Learn what a mortgage is and how it works in Texas. Discover Texas-specific property tax benefits, homestead exemptions, and foreclosure protections that make buying a home in the Lone Star State unique.

If you’re considering buying a home in Texas, understanding how mortgages work is your first step toward home ownership. Whether you’re a first-time buyer or returning to the market after years away, Texaslending is here to guide you through every step of the process.

A mortgage is more than just a loan—it’s a legal agreement that makes home ownership possible for millions of Texans. But Texas mortgages come with unique benefits and protections you won’t find in other states. From substantial property tax exemptions to strong homestead protections, the Lone Star State offers homebuyers distinct advantages worth understanding before you sign on the dotted line.

Understanding the Basics: What Is a Mortgage?

At its core, a mortgage is a secured loan used to purchase real estate. When you take out a mortgage, you borrow money from a lender to buy a home, and the property itself serves as collateral for the loan. This arrangement benefits both parties: you get to buy a home without paying the full price upfront, and the lender has security knowing they can recover their investment if payments aren’t made.

Unlike personal loans or credit cards, mortgages are specifically designed for real estate purchases and typically feature lower interest rates due to the secured nature of the loan. In January 2026, Texaslending rates for a home purchase on average have been see between 5.75% APR and 7.0% APR depending on many factors

The Four Components of Your Monthly Mortgage Payment

Your monthly mortgage payment consists of four main components, commonly known as PITI:

Principal is the portion of your payment that reduces the actual loan balance. When you first start making payments, a smaller percentage goes toward principal, but this amount increases over time through a process called amortization. Use a Mortgage Calculator Texas tool to see how your payments break down over the life of your loan.

Interest is the cost of borrowing money—essentially the lender’s profit for taking the risk of lending to you. Your interest rate depends on factors including your credit score, down payment, loan type, and current market conditions.

Taxes in Texas are particularly important to understand. Unlike most states, Texas has no state income tax—but property taxes are among the highest in the nation, averaging around 1.6% to 2.7% of assessed value. Your lender typically collects property tax payments monthly through an escrow account and pays them on your behalf.

Insurance includes homeowners insurance (required to close on any mortgage) plus flood insurance if your property is in a FEMA-designated flood zone. If your down payment is less than 20%, you’ll also pay Private Mortgage Insurance (PMI) on conventional loans.

Texas Property Taxes: What Home buyers Need to Know

Understanding Texas property taxes is essential for any home buyer. Because the state has no income tax, local governments rely heavily on property taxes to fund schools, roads, emergency services, and infrastructure.

The good news? Texas voters overwhelmingly approved major property tax relief in November 2025 that took effect January 1, 2026. Here’s what this means for your mortgage:

• The $140,000 Homestead Exemption – If the home is your primary residence, the first $140,000 of your home’s assessed value is exempt from school district property taxes. This increased from $100,000 in 2025, representing a significant savings for Texas homeowners.

• Additional Senior and Disabled Exemptions – Homeowners aged 65 or older, or those with qualifying disabilities, receive an additional $60,000 exemption from school taxes. Combined with the general homestead exemption, seniors can exempt up to $200,000 from school property taxes.

• The 10% Appraisal Cap – Once you receive a homestead exemption, your property’s taxable value cannot increase by more than 10% per year, regardless of market appreciation. This protection begins the January 1st following your exemption approval.

When calculating affordability with your Mortgage Calculator Texas, remember to factor in property taxes. A typical Texas homeowner with a $300,000 home can expect to save approximately $490 annually from the new exemptions.

How Mortgages Work: The Step-by-Step Process

Working with home lenders Texas professionals like the team at Texaslending simplifies what might otherwise feel like an overwhelming process:

• Pre-Approval is where it all begins. A loan officer reviews your income, assets, credit score, and debt-to-income ratio to determine how much you can borrow. Pre-approval gives you a realistic budget and shows sellers you’re a serious buyer.

• House Hunting and Offer comes next. Once pre-approved, you’ll work with a realtor to find your home. When you make an offer, your pre-approval letter strengthens your negotiating position.

• Loan Application happens after your offer is accepted. You’ll provide detailed documentation including pay stubs, tax returns, bank statements, and employment verification.

• Underwriting is where the lender verifies all information and ensures the property meets their requirements. An appraisal confirms the home’s value supports the loan amount.

• Closing is the final step. You’ll sign documents, pay closing costs (typically 2% to 5% of the purchase price), and receive the keys to your new home. At Texaslending, our goal is to close your loan in just 21 days.

Types of Mortgages Available to Texas Homebuyers

Conventional Loans are not backed by any government agency and typically require a minimum 620 credit score. With 20% down, you avoid PMI. The 2026 conforming loan limit in Texas is $832,750 for most counties.

FHA Loans are backed by the Federal Housing Administration and popular with first-time buyers. FHA loans Dallas TX and throughout Texas require as little as 3.5% down with a 580+ credit score. Current FHA loan limits range from $541,287 in standard counties to $563,500 in high-cost areas.

VA Loans offer qualified veterans and active military zero down payment and no PMI—an exceptional benefit for those who’ve served.

USDA Loans provide zero down payment options for properties in qualifying rural areas, which includes many Texas communities outside major metros. USDA loans are also limited by qualified income.

Texas Homestead Protections: Unique Benefits for Homeowners

Texas offers some of the strongest homestead protections in the nation, enshrined in the state constitution. These protections make home equity in Texas work differently than in other states:

• Creditor Protection means your primary residence cannot be seized to satisfy most debts. Unlike other states that cap this protection at a dollar amount, Texas protects unlimited home value from general creditors. Only mortgage lenders, property tax authorities, and home equity lenders can force the sale of your homestead.

• Surviving Spouse Rights ensure that a surviving spouse can continue living in the homestead even if it must be sold to pay the deceased spouse’s debts.

• No Forced Sale for Unsecured Debts means credit card companies, medical creditors, and other unsecured lenders cannot force you to sell your home to pay their debts—no matter how much you owe.

Understanding Foreclosure in Texas

While no one plans to face foreclosure, understanding the process helps you protect your investment. Texas uses a non-judicial foreclosure process for most mortgages, which is faster than many other states.

• The Timeline in Texas can move quickly. Federal law requires loans to be 120 days delinquent before foreclosure can begin. After that, Texas law requires a 20-day notice allowing you to cure the default, followed by at least 21 days’ notice before the sale.

• Foreclosure Sales occur on the first Tuesday of each month at the county courthouse. Unlike some states, Texas does NOT provide a right of redemption after the sale—once your home is sold at foreclosure, you cannot buy it back.

• Home Equity Loans Require Judicial Foreclosure – This is a critical distinction. Under Texas law, Home Equity Loans in Texas and HELOCs require a court order before foreclosure can proceed, providing additional protection for borrowers who’ve tapped their equity.

• Loss Mitigation Options are available. If you’re struggling with payments, contact your servicer immediately. Federal rules require servicers to evaluate you for loan modifications, forbearance, and other alternatives before proceeding with foreclosure.

Building Equity in Your Texas Home

Home equity in Texas represents the portion of your home you actually own—the difference between your home’s market value and what you owe on your mortgage. Equity builds in two ways: as you pay down your principal balance and as your home appreciates in value.

Texas homeowners have several options for accessing their equity, including Home Equity loan Dallas Texas products and cash-out refinances. However, Texas home equity lending is regulated by Article XVI, Section 50(a)(6) of the Texas Constitution, which provides important consumer protections including an 80% loan-to-value maximum and mandatory waiting periods.

Current Mortgage Rates in Texas (January 2026)

As of mid-January 2026, here’s what Texas home buyers can expect:

In January 2026 most conventional and government mortgage rates average between 5.75% APR and 7% APR creating an attractive window for home buyers. Use our Mortgage Calculator Texas tools at texaslending.com to see how these rates translate into monthly payments for your target purchase price.

Why Choose Texaslending?

Since 2001, Texaslending has been helping Texas families achieve their home ownership dreams. As experienced home lenders Texas families trust, we offer competitive Texaslending rates, personalized service, and deep knowledge of Texas-specific mortgage requirements.

Whether you’re interested in a Texas Home Refinance, exploring Home Equity Loans in Texas, or purchasing your first home, our licensed loan officers are ready to guide you through every step. We understand that Home Refinance rates in Texas and lending regulations are different from other states, and we’re experts at navigating these requirements for our clients.

Ready to get started? Contact Texaslending today at 800-346-8047 or visit texaslending.com for a free pre-approval. Your dream of Texas home ownership is closer than you think.