How property taxes affect your mortgage payment in Texas
August 27, 2026
Texas doesn't have a state income tax. That's the trade-off most people know about. What catches a lot of first-time buyers off guard is just how much property taxes add to their monthly mortgage payment, and how those taxes can shift from year to year without warning.
When you finance a home in Texas, your lender usually sets up an escrow account to handle property taxes and homeowners insurance on your behalf. Each month, you pay a portion of your annual tax bill into that account, and the lender pays the county when the bill comes due. That's why your total monthly payment is almost always higher than just principal and interest. The tax portion alone can run several hundred dollars a month on a typical Texas home, and in higher-cost metros it can easily push past a thousand. The exact number depends on your county, your school district, and the assessed value of your property.
Texas counties use local appraisal districts to set property values each year, and those values don't always track with what the market is doing. A home that sold for one price last year might be appraised higher the following January if comparable sales in the neighborhood climbed. On top of that, Texas has a patchwork of homestead exemptions that can lower your taxable value, but the savings depend on whether you file the right paperwork and whether you qualify. The state also caps how fast local governments can grow their property tax revenue, but that cap doesn't protect individual homeowners from rising appraisals.
Here's where it gets practical for buyers. Lenders calculate your debt-to-income ratio using the full monthly payment, including the tax and insurance escrow. A buyer who qualifies at one price point in a low-tax county might not qualify for the same loan amount in a high-tax county just across the border. New homeowners also tend to underestimate how much their tax bill can jump in year two, especially after a purchase triggers a fresh appraisal. A good rule of thumb is to budget for a tax increase in the second year, because the first year often reflects the previous owner's exemptions or a more conservative assessment.
Property taxes are a real cost of owning a home in Texas, and they belong in your monthly budget from day one. If you're shopping for a home or comparing loan options, the tax line on your payment deserves just as much attention as the interest rate.