How much house you can afford in Texas, with the taxes counted
A national affordability calculator asks your income and your down payment. In Texas the answer moves by tens of thousands depending on which house you point it at, because the tax line is part of the payment and it is not the same on two streets.
Why does a Texas affordability answer move so much?
Because the payment is not mostly the mortgage. In a state with no income tax and some of the highest property tax rates in the country, the tax and insurance lines are a large share of what you send every month, and they are set by where the house is rather than by what you borrow. A calculator that asks your income and your down payment and returns one number has quietly assumed a tax rate. In Texas that assumption is doing more work than any other input.
The same budget, two houses, a $51,000 gap
Brad ran this on a live file in one week. One buyer, one fixed monthly budget, FHA with its 3.5% minimum down payment. Against a resale home with high taxes the budget reached about $290,000. Against a builder home with a lower rate and lower taxes, the same budget reached about $341,000. Nothing about the buyer changed between those two numbers. 🔴 That is what he measured on one file, not a figure anyone should expect to reproduce, and only a lender can tell you what your own budget reaches.
Can a more expensive house have a lower payment?
In Texas, yes, and it happens often enough that Brad argues it directly against the standard price-first advice. His position: "because taxes and insurance and other costs, mortgage insurance, because depending on the program and depending on the address, the payment on the more expensive home can be lower than the less expensive home. You can have a four hundred thousand dollars house that has a lower monthly payment than the three hundred and seventy five thousand dollars house." The variables that do it are the tax rate on the street, the insurance on that structure, and which mortgage insurance the programme attaches. None of those appear in a price comparison.
What should you compare instead of price?
The payment, with every line in it, on the specific address. That is more work than looking at a list price and it is the only comparison that means anything here. A useful habit is to refuse to rank two houses until you have the tax rate for each, because in the Dallas-Fort Worth area the school district line alone ranges from roughly 0.67 to 1.29 per $100 of value and it is the largest single component of the bill.
- Get the tax rate for the exact address, not the city. Two houses a mile apart can sit in different districts.
- Ask whether the property sits in a MUD or a PID, because both add a line that a list price never shows.
- Price the insurance on that structure rather than using an average. Texas premiums vary widely by county.
- Ask what mortgage insurance the programme you are using attaches, and for how long it stays on the loan.
- Then, and only then, compare the two houses. If the payments are close, the cheaper list price may be the more expensive house.
Does assistance change what you can afford?
It changes what you need at closing more than it changes what you can carry each month, and sometimes it moves the monthly number the wrong way. Assistance is generally paid for through the rate on the first mortgage, so the help that gets you into the house can raise the payment that keeps you there. That is not an argument against it, and for a buyer who cannot otherwise reach a down payment the question is usually settled. It is an argument for asking your lender to quote you both ways and comparing the payments rather than the headline.
Want this checked against your own situation?
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