Texas Mortgage Quote: Programs & Buyer Guide
Texas is the second-largest mortgage market in the United States and the most unusual from a legal standpoint — the Texas Constitution's Section 50(a)(6) imposes home equity loan rules that exist nowhere else in the country, and the Texas Department of Savings and Mortgage Lending operates under regulatory frameworks specific to the state. This guide walks through every Texas mortgage program, the Section 50(a)(6) framework you need to understand before any Texas cash-out, the Texas-specific assistance programs through TSAHC, TDHCA, and the Texas Veterans Land Board, and county-by-county notes for the major metros.
Texas Mortgage Market: Scale and Structure
Texas is the second-largest mortgage market in the U.S. after California by origination volume. The state's mortgage activity reflects three structural realities: a fast-growing population (driven by inbound migration from California, the Northeast, and the Midwest), a deep stock of new construction across all major metros, and a uniquely Texas legal framework for home equity that affects every cash-out refinance and home equity loan originated in the state.
Texas mortgage origination is dominated by purchase activity in the four major metros (Houston, Dallas-Fort Worth, San Antonio, Austin) plus the rapidly growing secondary markets (Austin's exurbs, North DFW, Corpus Christi, El Paso, the Rio Grande Valley). Government loan share (FHA, VA, USDA) is high in Texas — driven by large military and veteran populations near Fort Cavazos (formerly Fort Hood), Joint Base San Antonio, Fort Bliss, and others, plus extensive USDA-eligible territory outside metro cores.
Texas Section 50(a)(6): The Home Equity Framework
Texas is the only state in the country whose constitution explicitly governs home equity lending. Section 50(a)(6) of Article XVI of the Texas Constitution sets out a specific framework for any loan secured by a Texas homestead where any portion of the proceeds are taken as cash to the borrower (cash-out refinance, home equity loan, or HELOC on a homestead property). The rules are strict and well-litigated:
- 80% LTV combined cap. The total of all liens on a Texas homestead (including the new cash-out loan) cannot exceed 80% of the fair market value of the property at the time of closing. A purchase mortgage at 95% LTV is fine; a cash-out refinance is capped at 80%.
- 3% fee cap. Lender fees and certain third-party fees are capped at 3% of the loan amount for Section 50(a)(6) loans (with some exclusions for items like appraisal and survey).
- 12-day cooling-off period. A Section 50(a)(6) loan cannot close until at least 12 days after the borrower receives the required disclosures. This is in addition to any TILA right-of-rescission period.
- Closing-location requirement. Closing must occur at a permitted location — typically the office of the lender, an attorney, or a title company. The borrower's home is not a permitted closing location for Section 50(a)(6).
- No prepayment penalty. Texas Section 50(a)(6) loans cannot have prepayment penalties.
- One Section 50(a)(6) per 12 months. A Texas homestead can only be subject to one Section 50(a)(6) loan in any 12-month period.
- Loan classification stays. Once a Texas mortgage is classified as a Section 50(a)(6) loan, that classification follows the loan through subsequent refinances — even a rate-and-term refinance of a prior 50(a)(6) loan is still a 50(a)(6) loan unless specifically restructured.
These rules apply to homestead property — a Texas resident's primary-residence Texas property. Second homes, investment properties, and Texas residents' out-of-state property are not subject to Section 50(a)(6). For Texas homeowners considering a cash-out refinance or home equity loan, working with a Texas-experienced lender is important because Section 50(a)(6) violations can be costly to the lender and the borrower.
Texas Assistance Programs
Texas has two principal homebuyer-assistance program administrators: the Texas State Affordable Housing Corporation (TSAHC) and the Texas Department of Housing and Community Affairs (TDHCA). Both provide down-payment and closing-cost assistance that can pair with FHA, VA, USDA, or conventional first mortgages.
- TSAHC Home Sweet Texas. Down-payment assistance for low-to-moderate-income Texas buyers. Provided as a grant or a deferred second mortgage that does not require repayment if the buyer stays in the home for the required period.
- TSAHC Homes for Texas Heroes. A profession-targeted version of Home Sweet Texas for teachers, professional educators, firefighters, EMS personnel, peace officers, corrections officers, veterans, and Texas county jailers.
- TDHCA My First Texas Home. A first-mortgage program for qualifying first-time and qualified-veteran buyers, with down-payment and closing-cost assistance available as a second-lien deferred-payment loan.
- TDHCA My Choice Texas Home. Similar to My First Texas Home but available to non-first-time buyers — broader eligibility, similar assistance structure.
- TDHCA Texas Mortgage Credit Certificate (MCC). A federal tax credit (not a deduction) of up to 35% of mortgage interest paid annually for qualifying first-time buyers, recapturable on early sale.
Both administrators require working with a TSAHC- or TDHCA-approved participating lender and completing a homebuyer education course. Income and purchase-price limits apply and vary by county.
Texas Veterans Land Board (TVLB)
The Texas Veterans Land Board offers a Texas-specific program for veterans and active-duty servicemembers who are Texas residents: the VLB Veterans Housing Assistance Program. This program is separate from the federal VA loan program but can be combined with it. The VLB Housing Assistance Loan can be used for purchase, refinance, or improvement of a primary residence in Texas, with loan amounts that vary year-to-year and an interest rate that is often slightly below market.
The principal benefit of pairing TVLB with VA financing is that the rate discount applies to the VLB portion. Eligibility requires Texas residency, qualifying veteran or military status, and the property must be a primary residence in Texas. The Texas Veterans Land Board also offers a separate Land Loan and Home Improvement Loan with similar Texas-veteran eligibility requirements.
Texas Property Taxes
Texas has no state income tax but funds state-and-local government through some of the highest property tax rates in the U.S. The combined effective property tax rate in many Texas counties is 2-3% of property value annually — roughly twice the national average. For a Texas mortgage, this matters in two ways. First, qualifying ratios are affected: a borrower's debt-to-income ratio is calculated based on the full PITIA (principal, interest, taxes, insurance, and HOA) payment, so Texas's higher tax rate translates into a higher monthly PITIA than the same priced home in a low-tax state. Second, escrow accounts are larger in Texas — your monthly escrow contribution will be meaningfully higher than in most states.
Texas does offer a homestead exemption — a fixed-dollar reduction in assessed value for owner-occupied primary residences (the exact amount varies by district and was increased by recent statewide reform). Senior, disabled, and disabled-veteran homestead exemptions provide additional reductions. Filing for homestead in the year after purchase is important and the deadline is generally April 30 of the assessment year.
Texas Major Metros
Texas's four major metros have distinct mortgage markets:
- Houston (Harris and surrounding counties). The largest Texas metro and one of the largest U.S. metros. Significant FHA, VA, and jumbo activity. Flood-zone considerations matter — Harris County has substantial floodplain footprint and many properties require flood insurance even outside FEMA Special Flood Hazard Areas due to local flood history.
- Dallas-Fort Worth (Dallas, Tarrant, Collin, Denton). The fastest-growing major metro by population in the U.S. for much of the past decade. Mix of urban (Dallas, Fort Worth), inner suburb (Plano, Frisco, Arlington), and exurban markets. Strong jumbo activity in central Dallas, Frisco, and parts of Plano; substantial first-time-buyer activity in Tarrant and outer Collin/Denton.
- San Antonio (Bexar). Joint Base San Antonio drives heavy VA activity. Generally more affordable than the other major Texas metros, with strong first-time-buyer and FHA share.
- Austin (Travis, Williamson, Hays). The most expensive Texas market by some measures. Median home prices in central Austin routinely require jumbo financing, and the surrounding counties (Williamson, Hays, Bastrop) have absorbed substantial spillover growth. Austin's rapid appreciation in the early 2020s has moderated but the market remains expensive relative to other Texas metros.
- El Paso, Corpus Christi, and the Rio Grande Valley. Heavy USDA, VA (Fort Bliss in El Paso), and FHA activity. More affordable home prices, with first-time-buyer programs particularly active.
Texas Insurance Considerations
Texas insurance pricing varies by region. Coastal Texas (Galveston, Corpus Christi) has windstorm and hurricane exposure similar to coastal Louisiana and Mississippi, with Texas Windstorm Insurance Association (TWIA) coverage often required for areas the private market will not insure. Inland Texas — Houston (despite the flood history), DFW, San Antonio, Austin — has more normal property insurance pricing closer to the national average.
Flood insurance is required in FEMA Special Flood Hazard Areas A and V, and many lenders require additional flood coverage in Houston given local flood history (Harvey, Imelda). Wind/hail coverage is sometimes a separate consideration in DFW given hailstorm frequency.
State-Specific Notes
Texas is the second-largest mortgage market in the U.S. and combines no state income tax with relatively high property taxes — a different cost structure than most other states. Major regional notes:
Florida
If you are relocating from Florida, the principal adjustments are: Texas has higher property taxes (roughly 2-3% vs Florida's 1-1.5%), Texas has Section 50(a)(6) constitutional rules on cash-out, but Texas's coastal insurance footprint is much smaller than Florida's. No state income tax in either state.
Texas
See the major-metros section above for the Texas-internal differences. Houston, DFW, San Antonio, and Austin operate as distinct mortgage markets.
Tennessee
If you are relocating from Tennessee, expect higher property taxes in Texas but similar income-tax-free structure. Texas's Section 50(a)(6) is a meaningful difference if you plan to do any future cash-out refinance.
South Carolina
If you are relocating from South Carolina, the adjustments are higher property taxes in Texas and the Section 50(a)(6) framework on home equity. Both states have meaningful military presence.
Colorado
If you are relocating from Colorado, expect substantially lower home prices in most Texas markets (Austin excluded) but higher property tax rates. Texas has no state income tax; Colorado does. Texas's Section 50(a)(6) rules on cash-out are unique.
Frequently Asked Questions
What is the 80% LTV rule on Texas cash-out refinances?
Under Section 50(a)(6) of the Texas Constitution, the total of all liens on a Texas homestead — including a new cash-out loan — cannot exceed 80% of the fair market value of the property at closing. This means Texas homestead owners cannot do cash-out refinances above 80% combined LTV, even if their lender's program would otherwise allow a higher LTV. The 80% cap applies to homestead property; second homes, investment properties, and Texas residents' out-of-state property are not subject to this rule.
Why are Texas property taxes so high?
Texas has no state income tax. State-and-local government in Texas is funded principally by property taxes, sales taxes, and oil and gas severance taxes. To make up for the absence of income tax, property tax rates in Texas are among the highest in the country — combined effective rates of 2-3% of property value annually are typical, roughly twice the national average. This affects mortgage qualification because debt-to-income ratios are calculated on the full PITIA payment including taxes. Filing for the Texas homestead exemption after purchase reduces the assessed value for owner-occupied primary residences.
What is the difference between TSAHC and TDHCA?
Both are Texas state-level homebuyer-assistance administrators, but they operate independently. TSAHC (Texas State Affordable Housing Corporation) administers Home Sweet Texas, Homes for Texas Heroes, and the TSAHC MCC program. TDHCA (Texas Department of Housing and Community Affairs) administers My First Texas Home, My Choice Texas Home, and the TDHCA MCC program. Both provide down-payment and closing-cost assistance that pairs with FHA, VA, USDA, or conventional financing, but they have different participating-lender networks, slightly different income and purchase-price limits, and different application processes. A Texas-experienced loan officer who is approved with both can run scenarios across each to identify which produces the best outcome.
Can I use both VA and Texas Veterans Land Board programs?
Yes — Texas veterans can combine federal VA financing with the Texas Veterans Land Board Housing Assistance Loan in certain scenarios. The VLB component typically provides a small rate benefit on a portion of the loan. Eligibility requires Texas residency, qualifying veteran or military status, and the property must be a Texas primary residence. The combination is most often used by Texas veterans buying their first home with VA after settling in the state. Your lender will run the VLB program eligibility and stack the assistance with the VA loan.
How does the Texas homestead exemption work?
Texas allows owner-occupants of a primary residence to file for homestead exemption, which reduces the assessed value used to calculate property taxes. The base homestead exemption is a fixed-dollar reduction (recently increased by statewide reform); senior, disabled, and disabled-veteran homestead exemptions provide additional reductions. The exemption must be filed with the county appraisal district, generally by April 30 of the assessment year. The homestead exemption is one of the principal ways Texas owner-occupants offset the state's high property tax rates.
Do you have to put 20% down to buy a house in Texas?
No — Texas down payment requirements depend on the loan program, not the state. FHA requires 3.5% down, VA and USDA can be zero down for eligible borrowers, and conventional first-time-buyer programs can be as low as 3%. The 80% LTV rule from Section 50(a)(6) applies only to cash-out refinances and home equity loans on Texas homestead property — it does not apply to purchase mortgages.
What is a Texas Section 50(a)(6) loan?
A Section 50(a)(6) loan is any loan secured by a Texas homestead where any portion of the proceeds are paid to the borrower in cash — typically a cash-out refinance or a home equity loan. These loans are governed by Section 50(a)(6) of the Texas Constitution, which imposes the 80% LTV cap, 3% fee cap, 12-day cooling-off period, closing-location requirement, no-prepayment-penalty rule, and one-per-12-months rule. Section 50(a)(6) classification follows the loan through subsequent refinances unless specifically restructured. A standard rate-and-term refinance of a non-50(a)(6) loan that does not take cash out is not a Section 50(a)(6) loan.
How much can I borrow with a Texas VA loan?
There is no maximum VA loan amount, but the county conforming limit affects how much can be borrowed with zero down using full entitlement. Texas conforming loan limits in 2026 follow the FHFA national limit for most counties. Texas veterans buying above the conforming limit can use VA jumbo financing, which typically requires 25% down on the portion exceeding the limit. The combination of VA and Texas Veterans Land Board can sometimes provide additional benefit for Texas veterans.
Is Austin a jumbo market?
Yes — much of central Austin (Travis County) requires jumbo financing for median-priced homes. The 2026 FHFA conforming loan limit applies in Travis County, and homes above that limit are jumbo loans. Surrounding counties (Williamson, Hays, Bastrop) have lower price points and more conforming activity. Austin is the most expensive of the four major Texas metros.
Do I need flood insurance in Houston?
It depends on the property. Properties in FEMA Special Flood Hazard Area zones A and V require flood insurance under federal law. Properties outside SFHA may not be federally required to carry flood insurance but many Houston-area lenders require flood coverage anyway given the metro's flood history (Hurricane Harvey, Tropical Storm Imelda). Even where not required, flood insurance in Houston is often a prudent purchase given the broader flood risk that goes beyond mapped SFHA zones.
How long does it take to close a Texas mortgage?
Most Texas purchase loans close in 30-45 days from accepted offer. Section 50(a)(6) cash-out refinances must observe the 12-day cooling-off period plus the standard TILA right of rescission, so they typically take 35-50 days from application. Rate-and-term refinances without 50(a)(6) classification can close in 25-35 days. Title work and property surveys are generally efficient in Texas.
Can I get a Texas mortgage if I just moved here?
Yes — recent relocation to Texas is normal and does not by itself prevent a mortgage. Lenders look at continuity of employment, source of down payment, and overall qualification. Some Texas-specific programs (TSAHC, TDHCA, TVLB) require Texas residency or completion of a Texas homebuyer education course; the underlying federal programs (FHA, VA, USDA, conventional) do not require any post-relocation waiting period. Establishing Texas homestead and filing for the homestead exemption happens in the year after closing.
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