Mortgages and Home Financing in Houston: FAQ

Texas has no state minimum; the loan program sets it. Conventional lenders commonly look for 620 or better, FHA allows 580 with 3.5 percent down (500 to 579 with 10 percent down), and VA and USDA set no official floor, though most lenders look for the high 500s to low 600s. A higher score lowers both your rate and your mortgage insurance, so pulling your score a few months before you shop gives you time to fix errors or pay down balances.

Less than most buyers think. Conventional first-time buyer programs start at 3 percent down, FHA at 3.5 percent, and VA and USDA loans can be zero down for eligible buyers. Twenty percent avoids private mortgage insurance but is not required. Budget another 2 to 5 percent of the price for closing costs and prepaid taxes and insurance. In 2026 a conventional loan is "conforming" up to $832,750 and the FHA limit in Harris County is $541,287 (both limits are reset each January); above the conforming limit you are in jumbo territory with stricter rules. There are also 0 percent down programs in certain parts of town or with certain lenders if you qualify; ask us for details.

Yes, several. The Texas Department of Housing and Community Affairs runs My First Texas Home and My Choice Texas Home, which pair a 30-year loan with up to 5 percent of the loan amount in assistance. The Texas State Affordable Housing Corporation offers Home Sweet Texas and Homes for Texas Heroes grants and second liens, also up to 5 percent. The City of Houston's Homebuyer Assistance Program lists up to $125,000 for income-qualified buyers of homes inside the city, and Harris County runs its own program for unincorporated areas. Income limits, purchase price caps and funding change often, so confirm current terms with the program and a participating lender.

Inside the City of Houston the combined rate is about 2.1 percent of appraised value before exemptions; many suburbs run 2 to 2.5 percent, and newer subdivisions with a MUD can exceed 3 percent. Most lenders collect one twelfth of the annual bill each month in escrow and pay the county by January 31. A homestead exemption and a yearly protest both lower the bill, and your escrow payment adjusts after the county updates the value.

A municipal utility district is a special district that borrowed money to build a subdivision's water, sewer and drainage systems and repays it with its own property tax. They are common in Katy, Cypress, Spring, Pearland, Fulshear, League City and most newer master-planned communities. Rates run from about $0.25 to $1.50 per $100 of value for the MUD itself, with new districts at the high end and mature districts that have paid down their bonds at the low end; with a levee or drainage district added, the total can reach about $2.00 (2%). Our calculator's MUD toggle adds 1 percentage point as a placeholder. Texas law requires the seller to give you a notice of the district's tax rate and bonded debt before you sign a contract, and the county appraisal district lists every taxing unit for the address.

Three ways. It removes $140,000 of value from school district taxes (Houston ISD also takes 20 percent off), Harris County's taxing units and the City of Houston take 20 percent off their portion, and once it is in place your appraised value can rise no more than 10 percent a year. Owners 65 or older or with a qualifying disability get an extra $60,000 off school taxes and a school tax ceiling. You can apply with the county appraisal district as soon as you move into the home as your primary residence; it is free and there is no reason to pay a service to file it. Your lender lowers the escrow once the county applies it. Example: on a $450,000 home inside the City of Houston and Houston ISD, the 2026 tax bill is about $9,600 a year with no exemption. With a homestead, Houston ISD taxes $220,000 of value and the city and county entities tax $360,000, so the bill drops to roughly $6,500 to $6,600, a savings of about $3,000 a year, or about $250 a month in your escrow payment. The Texas Comptroller explains how these exemptions work statewide: Texas property tax exemptions.

For budgeting, we use about 0.5 percent of the purchase price per year, about $1,625 on a $325,000 home, and our mortgage calculator fills that in for you. Quotes run higher for older roofs, larger homes and coastal addresses. Houston policies usually carry a separate wind and hail deductible of 1 to 2 percent of the dwelling coverage, so compare that deductible along with the premium. Get quotes during your option period, since the roof's age and condition drive much of the price and can affect which carriers will write the policy.

If the home sits in a FEMA special flood hazard area, such as zone A or AE, your lender will require it. Outside those zones it is optional, but a large share of Harvey's flooded homes were outside the mapped high-risk areas, so many Houston owners carry it anyway. To see how far Harvey's flooding reached, compare NASA's satellite images of the Houston area before and during the flood with the Harris County Flood Control District's estimated maximum inundation map, which shows where bayous and creeks left their banks rather than which homes took on water. Policies come from the National Flood Insurance Program or private insurers and cost from a few hundred dollars a year in lower-risk zones to several thousand in high-risk zones. Texas sellers must disclose known flooding and flood insurance claims on the seller's disclosure notice, and we share tools and information for reviewing the flood zone and flood maps for any home you consider.

From our guide: Houston flood zones and flood insurance

Plan on 2 to 5 percent of the purchase price. That covers lender fees, the appraisal, the lender's title policy, a survey if a recent one is not available, recording fees, prepaid interest and the first deposits into your tax and insurance escrow. Texas has no transfer tax, title insurance rates are set by the state, and in Houston the seller customarily pays for the owner's title policy, although everything is negotiable. We can work on negotiating seller credits to help you offset closing expenses. Lenders want YOU to come up with the down payment, but the rest we can work on negotiating if needed. We'll help you evaluate the options.

At late-2026 rates, with 10 percent down and modest other debts, a $100,000 household income supports roughly a $265,000 to $340,000 purchase, which is a payment of about $2,300 to $3,000 a month including Houston taxes and insurance. A car payment or student loans pull that down; a larger down payment, a lower rate or a seller-paid buydown pushes it up. Lenders count the minimum required payment on each debt, not what you actually pay each month or the total you owe. A lender's pre-approval, which checks your actual credit, income and debts, is the figure to shop with.

Run your own numbers: Houston mortgage calculator

Here's an example at 7% on a 30-year loan with 20% down:

• Down payment: $200,000, leaving an $800,000 loan, which is under the 2026 conforming limit of $832,750, so it isn't a jumbo loan.
• Principal and interest: about $5,322 a month.
• Property taxes at Houston's typical combined rate of about 2.2%: about $1,833 a month.
• Homeowners insurance at about 0.5% of the price: about $417 a month.
• Total: about $7,572 a month, with no mortgage insurance at 20% down.

A household income of about $252,000 a year keeps that payment near 36 percent of gross income, and about $325,000 keeps it near 28 percent, the traditional comfort zone. With little other debt, many lenders approve total debt payments up to about 45 percent of income, or roughly $202,000 a year here. Lenders look at the minimum required payment on each debt, such as car loans, student loans and credit cards, not what you actually pay each month or the total you owe. Once your homestead exemption is in place, the tax portion drops to roughly $1,400 a month, and a lender's pre-approval gives you the exact numbers.

It depends on how long you will keep the loan. A permanent buydown costs about 1 percent of the loan per point and usually lowers the rate by roughly a quarter point, so it pays off if you stay past the break-even year. A 2-1 buydown lowers the rate by 2 points in year one and 1 point in year two, and sellers or builders often fund it. A straight seller credit toward closing costs keeps more cash in your pocket on day one. In a high-rate market we see all three in Houston negotiations, and the right pick depends on your plans and the lender's quote, so run the numbers with your lender before you choose. Example: on a $292,500 loan, which is a $325,000 home with 10 percent down, at 7.25 percent the principal and interest payment is about $1,995 a month. Paying one point costs about $2,925 and might lower the rate to 7 percent, saving roughly $49 a month, so the break-even is about five years. A 2-1 buydown on the same loan costs the seller about $6,900 and cuts the payment to roughly $1,615 in year one and $1,800 in year two before it returns to $1,995. Many buyers take a seller credit or a temporary buydown today and plan to refinance if rates come down, but nobody can promise that they will, so make sure the payment works at today's rate.

From our guide: Mortgage rates, seller credits and buydowns

Yes. Houston sellers expect a pre-approval letter with every offer, and a pre-approval, unlike a quick pre-qualification, means the lender has verified your credit, income and assets. It usually takes a day or two, stays valid for 60 to 90 days, and lets you compare rate quotes from several lenders within a short window with a single credit inquiry. Texas also now requires a written agreement with your agent before showings, effective January 1, 2026, so talk to an agent and a lender at the same time.

Within three business days after you apply, the lender must send a Loan Estimate, a standard three-page federal form. An application here means six things: your name, income, Social Security number, the property address, an estimated value and the loan amount. Every lender uses the same form, so compare:

• the rate and APR on page 1;
• the lender's own charges and any points in section A on page 2;
• total loan costs;
• the "In 5 Years" figures on page 3.

Request your estimates on the same day, for the same loan type, amount and lock period, because rates change daily. Pre-approval letters can't be compared this way; Loan Estimates can.

You must receive the Closing Disclosure at least three business days before closing. It shows your final loan terms and the cash you need to close. Compare it line by line with your Loan Estimate: some fees can't go up at all, some can rise up to 10% in total, and others can change. Three changes restart the three-day wait: a large enough rise in the APR, a change in the loan product, or an added prepayment penalty. Before you wire closing funds, call the title company at a number you already have to confirm the wiring instructions. Never use instructions from an email alone.

For 2026, the conforming loan limit for a one-unit home in the Houston area is $832,750. A loan above that is a jumbo loan. Jumbo loans usually need a larger down payment, higher credit scores and more cash in reserve, and each lender sets its own rules. Many purchases in River Oaks, West University Place, Bellaire and Memorial cross that line. The limit is reset each January, so check the current figure with your lender.

Your payment usually includes escrow for property taxes and homeowners insurance, and those aren't fixed. Once a year the lender reviews the escrow account. If taxes or insurance went up, your monthly payment rises, and you may also owe a shortage, paid at once or spread over 12 months. Common Houston causes:

• The first-year bill on a new build was based on the lot or a partly built home.
• The homestead exemption wasn't filed.
• The insurance premium went up.
• The purchase price became the new appraised value.

I know a higher payment is never welcome news. The good news is that some of it is in your control: file your homestead exemption, protest your appraised value by the deadline (usually May 15) and compare insurance quotes every year or two.

On a conventional loan, you can ask the lender to cancel private mortgage insurance once your balance reaches 80% of the home's original value, if your payments are current and on time. The lender may ask for an appraisal to show the value hasn't dropped. It ends automatically at 78% of the original value. Some lenders also let you remove it based on a new appraisal after the home's value rises, usually after two to five years. FHA mortgage insurance works differently: with less than 10% down, it generally lasts as long as the loan unless you refinance.

Usually not. Eligible veterans, service members and surviving spouses with full entitlement can buy with no down payment and no monthly mortgage insurance, as long as the price doesn't exceed the VA appraisal (see What is a VA notice of value?). Most borrowers pay a one-time VA funding fee, which can be added to the loan. Veterans who receive VA disability compensation are exempt from it. The home also has to meet the VA's minimum property requirements.

Texas limits a home equity loan, HELOC or cash-out refinance on your homestead to 80% of the home's fair market value, counting every loan against it. Other Texas rules:

• generally no more than one such loan every 12 months;
• a 12-day wait after you receive the required notice before you can close;
• closing at the lender's office, a title company or an attorney's office;
• a 3-day right to cancel after closing.

Your lender can explain how the rules apply to you.