Texas plays by its own rules
Everything about Texas real estate has a local twist, and mortgages are no exception. No state income tax - offset by some of the nation's highest property taxes. Homestead protections written into the state constitution. Surveys as a standard contingency. Title companies (not attorneys) running most closings. If you are relocating to Dallas-Fort Worth, the financing mechanics will feel familiar but the cost structure will not.
This guide covers what actually changes the math for DFW buyers: the tax picture, the homestead system, transaction norms, and which loan programs fit the market.
Property taxes: the defining Texas cost
Start with the headline: property taxes in the Dallas-Fort Worth metro typically run around 2 percent of market value per year, sometimes higher in newer suburbs with MUD levies stacked on top. On a $450,000 home, that is roughly $9,000 a year - $750 a month - added to your housing payment before principal, interest, or insurance.
This changes affordability math dramatically versus low-tax states. A buyer approved for a $2,800 total monthly payment in another state might afford hundreds less in house in DFW once taxes are loaded in. Run your pre-approval with the actual tax rate for the specific property's taxing jurisdictions - county, city, school district, and any MUD or PID - not a metro-wide estimate. Your loan officer should be pulling the real numbers; insist on it.
The homestead system softens the blow over time. After closing on your primary residence, file for the homestead exemption with your county appraisal district - Dallas, Tarrant, Collin, and Denton counties each have their own filing process. The exemption reduces the taxable value for school taxes, and the 10 percent annual appraisal cap limits how fast your taxable value can rise. Neither benefit applies until you file, and neither is retroactive - file promptly after closing.
One more Texas-specific note: property tax protests are a local sport. Appraisal districts set values annually, and professional protest firms - often working on contingency - challenge them routinely. Whether you protest yourself or hire it out, reviewing your notice of appraised value every spring is worth the hour it takes.
Transaction norms: option money, surveys, and title
Texas contracts use an option period - typically 7 to 14 days - during which the buyer pays a non-refundable option fee for the unrestricted right to terminate. This is your due-diligence window: inspections, survey review, insurance quotes, and financing confirmation all happen here. The option fee is credited toward the purchase at closing if you proceed.
Surveys are standard and, practically speaking, required by lenders. Review the survey for encroachments, easements, and setback issues during the option period - these are far cheaper to resolve before closing than after.
Texas is a title-company state for most residential transactions. The title company handles the closing, issues the title policy, and disburses funds. Texas title insurance rates are promulgated by the state, so the premium is fixed - shop on service and ancillary fees. Get both the lender's policy (required) and the owner's policy (strongly advisable).
Earnest money in Texas is typically 1 percent of the purchase price, held in escrow. Combined with the option fee, your at-risk money during due diligence is modest - one reason Texas contracts favor decisive buyers who do their homework fast.
Insurance and the Texas realities
Texas homeowner's insurance reflects the state's weather: hail, wind, and severe storms drive premiums, and North Texas hail seasons are genuinely destructive. Get quotes early in the option period - the premium feeds directly into your debt-to-income qualification, and sticker shock at the eleventh hour has killed more than one DFW closing.
Roof age and condition matter enormously to Texas insurers. A roof near the end of its life can mean higher premiums or difficulty getting coverage at all. If the inspection flags the roof, price the insurance impact alongside the replacement cost - they are two sides of the same negotiation with the seller.
Foundation issues deserve a mention because expansive clay soils in parts of DFW cause foundation movement. Lenders and insurers both care about structural integrity. If the inspection notes foundation concerns, get a structural engineer's opinion during the option period - not after you are committed.
Flood zones follow the creeks and tributaries through the metro. Check the FEMA maps for any property near water; lender-required flood insurance in high-risk zones adds a real monthly cost.
Loan options for the DFW market
Conventional loans are the default for most DFW purchases, with 3-percent-down options for qualified first-time buyers and standard programs up to the conforming limits. FHA loans serve buyers who need credit flexibility or lower down payments, and Texas has active down payment assistance programs - including statewide options through the Texas Department of Housing and Community Affairs - that pair with FHA and conventional first mortgages.
VA loans are a strong fit for the metro's large military and veteran population, with zero down and no monthly mortgage insurance. USDA loans cover eligible areas on the suburban fringe where development is still pushing outward.
At the higher end, jumbo loans serve the luxury segments in Highland Park, Southlake, and the newer trophy suburbs. Investors will find DSCR loans widely available for DFW rentals - the metro's landlord market is deep, and entity-friendly financing is standard practice here.
New construction in the DFW suburbs
A remarkable share of DFW purchases are new construction, and builder transactions play by builder rules. The builder's contract is written by the builder's attorneys - have your own agent or attorney review it, because the default terms favor the party that drafted them. Earnest money on new construction is often higher than resale norms and harder to recover; understand exactly which contingencies protect your deposit before you sign.
The design center is where budgets go to die. Builders advertise a base price, then the selections process - flooring, counters, fixtures, structural options - adds tens of thousands. Every upgrade financed into the mortgage increases your loan amount and monthly payment; every upgrade paid in cash reduces your reserves. Decide your total budget before the appointment, not during it, and remember that the model home's finishes represent the most expensive version of the floor plan, not the base.
Builders strongly prefer their affiliated lender and often attach incentives - closing cost credits, rate buydowns - to using them. Those incentives can be genuinely valuable, but the builder's lender still has to compete: get an outside quote on the same day and compare the total package. An incentive that comes with a rate an eighth higher than the market may cost more over five years than it saves at closing.
Get an independent inspection even on new construction. Municipal inspections verify code compliance, not quality - and they do not catch everything. A third-party inspector finds the missing insulation, the improperly flashed window, the grading issue, while the builder's warranty still covers it. The few hundred dollars is the cheapest leverage in the transaction: every deficiency found before closing is the builder's problem, and after closing it becomes a warranty claim at best.
The DFW buyer's edge is preparation: real tax numbers loaded into the pre-approval, insurance quoted during the option period, homestead filed after closing, and the appraisal protested every spring. A free quote review can put your actual target neighborhoods' tax rates, insurance realities, and loan options into one clear payment picture before you start touring homes.
Frequently asked questions
Why are Texas property taxes so high?
Texas has no state income tax, so local governments lean heavily on property taxes to fund schools and services. Effective rates in the Dallas-Fort Worth area are among the highest in the country - which means taxes are a major component of your monthly payment. Budget them honestly.
What is the Texas homestead exemption?
Texas offers a homestead exemption that removes a portion of your primary residence's value from school-district taxation, plus additional local exemptions many taxing units offer. You apply through your county appraisal district after closing - it is not automatic.
Does Texas cap how fast my appraised value can rise?
For homesteaded properties, Texas caps annual increases in appraised value at 10 percent for tax purposes. This does not cap market value or your purchase price - it limits how fast the taxable value can climb year over year while you own and occupy the home.
Do I need a survey when buying in Texas?
Surveys are customary in Texas transactions and most lenders require one. If the seller has a recent existing survey, you may be able to use it with an affidavit; otherwise a new survey is ordered during the option period. Do not skip it - boundary and encroachment issues are discovered at survey, not at closing.
Can I get a mortgage for a home in a MUD district?
Yes. Municipal Utility Districts are common in newer Dallas suburbs, and lenders finance homes in MUDs routinely. The MUD tax levy adds to your total tax rate, so make sure your loan officer uses the full combined rate - not just the county rate - when calculating your payment.
Related loan programs
Conventional Loans
A conventional loan is a mortgage not insured by the government that follows Fannie Mae or Freddie Mac guidelines.
First-Time Homebuyer Loans
First-time homebuyer loans are mortgage options with low down payments, typically 3% conventional, 3.5% FHA or $0 VA, often paired with state or local down payment assistance.
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