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Find out how much you’ll pay per month with this Texas mortgage calculator with taxes and insurance.
Using a mortgage calculator to buy a house in Texas is a great way to see what you can afford. Texas is a massive state with a wide variety of real estate markets. By plugging the right numbers into our mortgage calculator for Texas, you can estimate your monthly payment, whether you’re in Dallas or Del Rio.
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Current Texas Mortgage Rates
Build a table with current Texas mortgage rates for purchase and refi of multiple popular loan types.
Other Texas Mortgage Costs
Along with paying your principal and interest, several other costs impact your monthly mortgage payment. Here are some other variables that can affect your mortgage.
Property Taxes
Property taxes in Texas are well above the national average. According to data from SmartAsset, Texas taxes hover around 1.6% annually. The national average is closer to 1%. Part of the reason is that the Texas state government often assesses property taxes on the school district, city, and county levels. Though property taxes are high in the Lone Star State, Texas does not have a state income tax, so there’s a trade-off.
You can search for data from the Texas government for your specific area’s info, then use that in our mortgage calculator for Texas. Let’s work through an example for Austin. The Austin Chamber of Commerce puts their total tax at around 2% annually. If you own a home assessed at $300,000 in Austin, that means you’re paying almost $6,000 a year in property taxes.
Property Tax Calculator for Texas
If you’re unsure of how the property tax works, or if you are having trouble finding info, you can find property taxes for any Texas address in the Texas Property Tax Directory. All you have to do is select the county, then enter the home’s address for a solid figure.
Insurance
Property tax and homeowners insurance are likely to be included together in an escrow payment on your mortgage statement. Homeowners insurance costs vary depending on several factors:
Location
Value of property
Amount of coverage
Crime
Climate
In 2022, Texas homeowners insurance cost $3,080 annually on average on a $300,000 house according to PolicyGenius. That breaks down to $257 a month. Texas’ average is much higher than the national average of $1,800 annually. Still, some areas and carriers are more affordable than others. To get a better estimate of your homeowners insurance costs, get some quick online quotes from insurance companies to use with our mortgage calculator for Texas.
Private Mortgage Insurance (PMI)
PMI and homowners insurance aren’t the same thing. PMI is a fee paid on a conventional mortgage to the lender if you don’t make at least a 20% down payment. It usually varies between 0.1% and 2% of your loan amount annually. Depending on your lender, down payment, credit score, and the size of your loan, you could pay more or less.
HOA Fees
Homeowners Association fees (HOA) are another factor to consider. These fees are lobbied through a neighborhood association or a condo association. They have a wide range, going from as little as $120 - $7,200 annually. How much you’re charged depends on the amenities. Condo owners typically pay higher fees, but they also may enjoy add-ons like security, groundskeeping, and a community gym.
How to Lower Your Mortgage Payment in Texas
If you want to lower your Texas mortgage payment, there are several options. However, buying a house may be one of the biggest financial decisions of your life. So — before signing onto a mortgage, make sure it’s right for you.
Find a Lower Interest Rate in Texas
It’s a common misconception that mortgage rates are the same everywhere. Not only can they vary from lender to lender, but they change by area. They also change daily depending on fluctuations in the market. Shop around between lenders. Look at local credit unions and banks, as well as large online lenders. And keep your eye on the market news to see if rates are fluctuating. Experiment with different ways to find lower rates to use with our mortgage calculator for Texas.
Pay More Up Front
A higher down payment takes more off your principal. That lowers your monthly payment, but it also means you’ll pay less in interest over time. On top of that, a higher down payment could lower your interest rate and eliminate the need to pay PMI.
Also, look into the upfront fees you’ll pay at the closing table. You may have the option to buy mortgage points, which are fees you can choose to pay at closing in exchange for a lower rate. You’ll pay more up front, but less in the long run. This is a great option if you’re planning on staying in the house long-term.
Choose a Different Mortgage
While the industry standard is the conventional 30-year fixed-rate mortgage, there are other strategies to lower your interest rate in Texas. For instance, if you or your spouse is a veteran, you may qualify for a VA Loan. Though they come with the VA Funding Fee (an upfront fee paid at closing), they usually have lower interest rates than conventional loans.
Another route you can take is an Adjustable Rate Mortgage (ARM). ARMs come with a low rate for an introductory period of three to 10 years. After that, they adjust regularly, usually upward. ARMs are a useful choice if you plan to move or refinance before the low-rate period is over.
Buy a Less Expensive House
It’s a bit obvious, but it’s true: a less expensive house can reduce your monthly payment. If you’re searching for homes at $300,000, you could end up paying over $2,100 a month. That includes the current average interest rate (6.75%), taxes, and homeowners insurance. That’s also assuming a $20,000 down payment. If you dropped the home cost to $275,000, you could save around $200 a month. And you’d save significantly more in interest over the loan term.
Average Closing Costs in Texas
Another cost you need to consider when buying a home in Texas is your closing cost. Average closing cost estimates in the state in 2022 amounted to 2% to 5% of the sale price. On a $300,000 house, that’s $6,000 to $15,000.
These costs cover various fees from lenders, governments, and municipalities, and third parties. Because of that, they can vary by specific location and who you get your mortgage from.
Here are some closing costs you could see:
Transfer taxes with the local municipality
Lender’s and owner’s title insurance
Title search and land survey fee
Upfront mortgage insurance
Escrow fees
Loan origination fee
Appraisal fee
Mortgage application fee
Underwriting fee
Texas Housing Market
Taking data from Redfin, you can see that the Texas housing market seems to be cooling slightly. This is good news for buyers because median home sale prices were down by 2.6% in March 2023 on a year-over-year basis. On top of that, the amount of homes on the market is up 40.8% and the median days on the market has more than doubled. So, there are more homes to choose from and less competition for them than there was in 2021 and 2022.
Mortgage Calculator Texas: Instructions
The Texas mortgage calculator above uses a formula to estimate your monthly mortgage payments. Here’s the exact formula. Following the math, we’ll define the variables:
M = P[r(1 + r)^n / ((1 + r)^n) - 1)]
M = Monthly mortgage payment in Texas. This is the total combination of your principal and interest payment for the month. Note that this does not include taxes, insurance, and other fees. Those are calculated separately.
P = The principal loan amount. Your principal is how much you borrowed for the mortgage. On a $400,000 home with an $80,000 down payment, your principal is $320,000, for instance.
r = Your monthly interest rate. Mortgage lenders use annual rates, so to get a monthly rate, we divide that annual rate by 12. For example, take an annual rate of 6.75% / 12 and you get a monthly rate of 0.56%.
n = Total number of loan payments. This is the total number of monthly payments you’ll make on your mortgage. For a 30-year term, that’s 360. It’s 180 for a 15-year mortgage.
Summary
Now is a great time to buy a house in Texas. Prices are going down, the market has more housing stock, and there’s less competition than in recent years. Before moving, research the areas you’re interested in. Some may come with higher taxes and insurance premiums than others. Then, with your research, use our mortgage calculator for Texas for a solid estimate of your monthly mortgage payment.
