Mortgage Refinance Calculator for Texas Homeowners

Texas Mortgage Market Snapshot (2025)

Key metrics for Texas homeowners evaluating a refinance. Sources: FHFA, NAR, Texas Comptroller, MBA.

Texas entered a two-speed market in 2023–2025: Austin and San Antonio corrected 8–15% from 2022 peaks while DFW and Houston held positive momentum. The statewide +1.4% YoY obscures these metro-level divergences — check local comps for your specific market. Texas's 1.60% effective property tax rate is the dominant ongoing cost and must be factored into refinance analysis. On a $400,000 home, property taxes run $6,400 per year ($533/month escrow). No income tax improves take-home pay, but the escrow burden means true PITI payments should drive your savings comparison, not P&I alone.

Refinancing in Texas: The Basics

Texas is the second-largest mortgage market in the United States, with strong home value appreciation across major metros including Austin, Dallas, Houston, and San Antonio. The Texas real estate market has seen significant price growth over the past decade, giving many homeowners substantial equity to work with when refinancing.

Texas has no state income tax. For mortgage purposes, this means your gross income is the same as what a lender uses to calculate your debt-to-income ratio — and your net take-home pay is higher than borrowers in high-tax states, which can improve your overall financial position going into a refinance.

Like California, Texas has no mortgage recording tax. This keeps closing costs meaningfully lower than states such as New York or Florida, where recording taxes can add several thousand dollars to the cost of a refinance. Texas closing costs are primarily driven by the standard fees: origination, appraisal, title, and underwriting.

However, Texas has one unique feature that every homeowner must understand before refinancing: a constitutional restriction on cash-out refinances on primary homesteads. If you plan to pull equity at closing, this rule will directly affect how much you can borrow.

The Texas 80% Cash-Out Rule

This is the most important Texas-specific rule for any homeowner considering a cash-out refinance. Under the Texas Constitution's homestead protections (Section 50(a)(6)), cash-out refinances on a primary residence are capped at 80% loan-to-value (LTV). This applies regardless of your lender, your credit score, or the loan program you use — it is a constitutional limit, not a lender policy.

Additional requirements under Texas Section 50(a)(6) cash-out rules:

• 12-month waiting period: You must wait at least 12 months after your home purchase or your last refinance before doing a cash-out refi on the same property.
• Lender fee cap: Fees charged by the lender are capped at 2% of the loan amount (not counting third-party fees like appraisal and title).
• One loan at a time: You can only have one home equity loan or cash-out refi outstanding at a time on a Texas homestead.
• Cooling-off period: You have 12 days after signing the loan application to cancel, and closing cannot occur until that period passes.

Texas Tax Profile for Homeowners

Texas is one of seven states with no state income tax — a defining feature of Texas's fiscal structure. Texas funds state services primarily through sales tax (6.25% state, up to 8.25% combined with local) and property taxes, the latter of which are notably high. For homeowners, the absence of income tax improves gross-to-net income, strengthening qualifying ratios for mortgage applications, but the high property taxes offset some of that advantage.

Texas has one of the highest effective property tax rates in the country at approximately 1.60% — significantly above the national average. On the Dallas metro median of roughly $390,000, annual property taxes run approximately $6,240. In Austin, where values are higher and mill rates significant, annual taxes on a $550,000 home can easily exceed $11,000. Texas provides a Homestead Exemption of at least $100,000 (effective January 1, 2023) from the school district assessed value for owner-occupied primary residences, which reduces school taxes meaningfully. The Over-65 Homestead Exemption adds an additional $10,000 state exemption and freezes the school tax ceiling. The Disabled Veterans Exemption provides further reductions for qualifying veterans, up to 100% tax exemption for 100% disabled veterans.

Texas has no state mortgage recording tax on refinances. County recording fees are modest. Despite high property taxes, Texas refinances do not incur state-level recording taxes on the mortgage instrument, keeping closing costs predictable and within normal ranges.

Attorney Requirements at Closing in Texas

Texas is a title company state. Licensed title insurance companies handle the overwhelming majority of real estate closings in Texas, from Houston, Dallas/Fort Worth, and San Antonio to Austin, El Paso, and smaller markets. Title company settlement fees for a standard Texas refinance typically run $400–$700. Texas has a mandatory title insurance rate structure: the Texas Department of Insurance regulates title insurance premiums, meaning all title companies must charge the same promulgated rate for the same coverage — competition is on service, not price, for title insurance premiums.

While attorney presence is not required in Texas, the lender's attorney often prepares or reviews the closing documents for complex transactions. Texas Section 50(a)(6) cash-out refinance transactions carry specific constitutional requirements (see Refinance Laws section) and lenders universally involve legal review for those transactions.

Texas title companies are generally highly efficient; 30–45-day closing timelines are standard. Texas's title insurance is lender-side mandatory and includes owner's title insurance for refinances at a reduced rate when purchased simultaneously.

Refinance Laws and Mortgage Framework in Texas

Texas uses the deed of trust as its standard security instrument. Texas permits non-judicial foreclosure via trustee's sale, one of the fastest processes in the country. Under Texas law, a lender must post notice at the county courthouse and publish notice in a newspaper for 21 days before the sale, which occurs on the first Tuesday of each month. The total foreclosure timeline from initial notice to sale in Texas is typically 45–60 days — among the fastest in the nation.

Texas Article XVI, Section 50 of the Texas Constitution imposes unique, strict rules on cash-out refinancing (called "50(a)(6)" loans). Key Section 50(a)(6) requirements for Texas homesteads: (1) you may only take cash out once every 12 calendar months; (2) cash-out loans may not exceed 80% LTV (regardless of current loan programs); (3) you must receive at least $4,000 in cash out or the loan does not qualify as a cash-out; (4) fees cannot exceed 2% of the loan amount; (5) no prepayment penalties are allowed; (6) a 12-day waiting period from application is required before the loan can close. Once a home has been the subject of a 50(a)(6) loan, it retains that designation even after refinancing to a non-cash-out loan, until certain conditions are met. Texas's 80% LTV cap on cash-out refinances is significantly more restrictive than the 85%–90% LTV allowed in most states for cash-out.

Texas is a community property state. Even if only one spouse is on the loan, both spouses must sign the deed of trust for a Texas homestead property. This spousal consent requirement applies to all homestead property refinances.

Texas Home Values and Loan Sizing

Texas has four of the largest housing markets in the country: Houston, Dallas/Fort Worth, San Antonio, and Austin. Texas has absorbed enormous in-migration from California, New York, and Illinois, driven by its no-income-tax status, corporate relocations (Tesla, Oracle, HP Enterprise, CBRE to Austin; Goldman Sachs operations to Dallas), and relatively affordable housing compared to the coasts. Austin saw extraordinary appreciation through 2022 (50%+ gains over two years) followed by meaningful correction; it remains above pre-2020 levels. All Texas metro markets have individual county conforming loan limits; most properties are within the standard limit.

Texas homeowners considering cash-out refinancing must account for the 80% LTV cap and the 12-day waiting period. On a $390,000 Dallas home with a $260,000 outstanding balance, the maximum cash-out loan is $312,000 (80% LTV), yielding $52,000 in available equity minus closing costs. Factor in Texas's elevated property tax escrow when modeling the full PITI payment post-refinance.

Texas Property Taxes and Escrow

Texas has among the highest effective property tax rates in the United States: 1.5%–2.5% of assessed value per year, depending on the county, school district, and special district levies. There is no state income tax in Texas, and property taxes are one of the primary ways local governments fund schools and services — which explains the elevated rates.

On a $350,000 home at a 2% effective rate, that is $7,000 per year — adding $583 per month to your escrow payment. At 2.5%, that is $8,750 per year, or $729 per month just for property taxes. This is a critical number to factor into your monthly payment estimate when refinancing.

When you refinance, your lender recalculates your escrow account based on your current property tax bill. If taxes have risen since you took out your original loan — which is common in high-appreciation Texas markets — your new monthly payment may be higher than expected even if you secured a lower interest rate. Always pull your most recent tax bill before estimating your new total monthly payment.

Closing Costs in Texas

Texas closing costs are competitive compared to many states, largely because there is no mortgage recording tax. Typical costs run 1.5%–2.5% of the loan amount, driven primarily by the origination fee, title insurance, and appraisal.

Texas title insurance rates are set by the Texas Department of Insurance, which means rates do not vary between title companies the way they do in other states. You shop on service quality and speed, not price, for title work in Texas.

Community Property State: Spousal Considerations

Texas is a community property state. Like California, this means most assets and debts acquired during marriage are jointly owned under state law. For mortgage purposes, this has a direct practical effect at closing.

Both spouses generally must sign the mortgage documents and deed of trust at refinance closing, even if only one spouse is listed as the borrower. Lenders and title companies require this to establish a valid lien on community property. Failing to get both signatures can create title complications.

As with California, the non-borrowing spouse's income and credit are not used for loan qualification — only the borrowing spouse's financials drive the underwriting decision. But the signing requirement still applies. Confirm this with your lender and title company at the beginning of the process to avoid last-minute delays.

Common Texas Refinance Situations

Texas homeowners refinance for the same core reasons as borrowers in any state, but the constitutional rules and high property taxes create some Texas-specific patterns:

• Rate-and-term refi to reduce monthly payment: The most straightforward refinance — lower rate, lower payment, no cash out, no 80% LTV constraint. Works well when rates drop significantly from your original lock.
• Eliminating PMI/MIP after reaching 80% LTV: With home appreciation in markets like Austin and Dallas, many borrowers reach 20% equity faster than expected. Refinancing removes mortgage insurance without requiring the home to be sold.
• Switching from FHA to conventional: FHA loans require mortgage insurance premiums for the life of the loan in many cases. Once equity reaches 20%, refinancing into a conventional loan eliminates this cost permanently.
• Cash-out refi to access equity (within the 80% LTV cap): Texas homeowners with significant equity can still do cash-out refinances — but the 80% constitutional cap means the maximum loan-to-value is fixed regardless of creditworthiness.
• ARM to fixed-rate before a reset: Adjustable-rate mortgages can be attractive at origination, especially for shorter-horizon buyers, but refinancing into a fixed rate before an ARM adjusts upward provides payment certainty.

For a broader look at when refinancing does and does not make sense, see the mortgage refinance situations guide and the 1% refinance rule guide.

Frequently Asked Questions: Refinancing in Texas

What is the Texas 80% cash-out refinance rule?

Under the Texas Constitution, cash-out refinances on a primary homestead are limited to 80% of the home's appraised value. You must also wait 12 months after the last refinance or purchase, and lender fees are capped at 2% of the loan amount. Rate-and-term refinances with no cash out are not subject to the 80% cap.

Does Texas charge a mortgage recording tax on refinances?

No. Texas does not charge a mortgage recording tax, which makes closing costs lower than states like New York or Florida. You will pay standard fees — origination, appraisal, title insurance, and county recording — but no separate state mortgage tax.

How do high property taxes affect my Texas refinance?

Property taxes directly affect your monthly escrow payment. Texas effective rates of 1.5%–2.5% mean that on a $350,000 home, your escrow contribution for taxes alone can be $438–$729 per month. Your lender recalculates this at closing, so check your current tax bill before estimating your new total monthly payment. If taxes have risen since your original loan, your new payment may be higher than expected even with a lower interest rate.

Can I do a cash-out refinance on an investment property in Texas?

Yes. The 80% LTV cash-out cap applies only to your primary homestead. Investment properties and second homes in Texas are not subject to the constitutional restriction and follow standard federal lending guidelines. Confirm the property's classification with your lender before applying.

How to Use the Calculator for a Texas Loan

The RefinanceUSA calculator returns monthly P&I savings and break-even from your loan balance, current rate, new rate, and total closing costs. For Texas, two factors affect how you enter your numbers:

No mortgage recording tax: Texas charges no state-level mortgage recording tax on refinances. Your closing cost estimate should reflect origination, appraisal, title insurance (rates are set by the Texas Department of Insurance and do not vary by company), and county recording fees — no recording tax line is needed.

Cash-out refinances and the 80% LTV cap: If you are doing a cash-out refinance under Texas Section 50(a)(6), your maximum loan amount is 80% of the appraised value — regardless of your credit score or rate. Enter your actual new loan amount (capped at 80% LTV) as the loan balance. The 2% fee cap on lender charges may also affect your closing cost total — confirm your lender fees do not exceed 2% of the new loan amount.

Property tax escrow: Texas property taxes (effective rate 1.5%–2.5%) are a large component of your total monthly payment. The calculator shows P&I only — add your monthly tax escrow (annual bill ÷ 12) to get the true payment. On a $400,000 home at 2% effective rate, that is $667/month in escrow alone. If your property has been reassessed since your original loan, your new escrow may differ from what you currently pay.

Texas Housing Market Trends (2025)

Texas's housing market is experiencing geographic divergence that makes statewide averages misleading. The Austin metro — which saw the most extreme price run-up of any major US city during 2020–2022 (median prices rose 60%+ peak-to-peak) — has corrected 15–20% from peak and continues to face headwinds from elevated new construction supply. The DFW metro has shown more resilience: inventory has risen but demand from corporate relocations (Toyota, Goldman Sachs, Charles Schwab, CBRE, McKesson) continues to absorb supply.

Metro-Level Trends

• Dallas–Fort Worth: Most resilient Texas market. Corporate headquarters relocations from California and the Northeast, financial services growth, and population in-migration keep demand positive. Plano and Irving tech and financial corridors remain active.
• Houston: Energy sector (oil above $70/barrel long-term) supports upper-end demand. Suburban markets (The Woodlands, Sugar Land, Katy, Pearland) are active. Texas Medical Center employment is the largest medical complex in the world and a powerful demand anchor.
• Austin: New construction inventory is the primary headwind. Dell, Applied Materials, and Samsung maintain Austin presence but tech hiring has slowed from pandemic peaks. Market is moving toward balance for the first time since 2019 — good news for buyers, moderate pressure on existing owner equity.
• San Antonio: Military presence (JBSA-Lackland, Fort Sam Houston) provides stability. Toyota's San Antonio assembly plant and growing cybersecurity/government contractor sector support employment diversification.

For refinancers: Austin homeowners who purchased at 2021–2022 peak prices should obtain a current appraisal before assuming cash-out availability — some properties may have limited or negative equity depending on the specific zip code. DFW and Houston homeowners who purchased pre-2020 have accumulated substantial equity and are strong refinance candidates. Texas's 80% LTV cash-out cap applies statewide regardless of equity levels above that threshold.

Refinance Rates in Texas

Texas's standard conforming loan limit is $766,550 for most counties in 2026. The Texas Department of Housing and Community Affairs (TDHCA) and the Texas State Affordable Housing Corporation (TSAHC) offer homebuyer programs; existing homeowners refinance through conventional, FHA, and VA channels. Texas's large military presence — Fort Cavazos (Killeen), Fort Bliss (El Paso), JBSA-Lackland (San Antonio), Dyess AFB (Abilene), NAS Corpus Christi — creates one of the largest VA-eligible populations of any state. For cash-out refinances, Texas's 80% LTV constitutional cap (Article XVI, Section 50(a)(6)) applies — borrowers cannot extract equity beyond 80% of the appraised value. Rate-and-term refinances are not subject to this cap.

Rate Context by Loan Type

For real-time rate comparisons, use the CFPB rate explorer filtered to Texas and your county. Always get at least three quotes — Texas attracts national lenders with strong competition in the DFW, Houston, and Austin metros.

Texas Section 50(a)(6): Cash-Out Refinance Rules You Cannot Waive

Texas is the only state in the country where cash-out refinance rules are written directly into the state constitution — Article XVI, Section 50(a)(6). These rules were passed by Texas voters in 1997 specifically to protect homestead equity, and they apply to every Texas homeowner regardless of credit score, loan size, or lender. No lender can waive them, and no borrower can contract around them.

The Six Hard Rules

One Cash-Out Per Year: The Practical Impact

The 12-month seasoning rule catches many Texas borrowers off guard. If you did a rate-and-term refinance in March 2025, you cannot do a cash-out refinance until March 2026 — even if your home value has risen dramatically. This makes timing critical: many Texas homeowners do a rate-and-term refi first (to secure a lower rate), then wait the 12 months before doing a cash-out refi if needed. But if you need cash within 12 months of any prior refinance, a HELOC may be the only path — and Texas HELOC rules under Section 50(t) impose their own set of constraints.

Credit Union Mortgage Lenders in Texas

Texas credit unions offer mortgage refinancing at member-owner rates. RBFCU (Randolph-Brooks FCU) is one of the largest credit unions in the United States and serves a wide area around San Antonio and beyond. Several Texas CUs have broad community charters open to all state residents.

Credit unions do not publish rate sheets publicly — request a pre-qualification to get a rate. Use the break-even calculator first to establish your minimum rate reduction threshold, then collect quotes from at least one credit union and two other lenders.

Related Guides

• How to Calculate Your Refinance Break-Even Point
• Mortgage Refinance Closing Costs: Every Fee Explained
• How Much Can You Save by Refinancing?
• Cash-Out Refinance Calculator Guide
• How to Compare Refinance Offers Side by Side
• The 10-Step Mortgage Refinance Process
• Refinance Situations: When It Makes Sense
• Mortgage Refinance Glossary
• Refinance Rules by State
• Refinance Closing Costs by State — Texas 3% Fee Cap Explained
• Mortgage Refinance Fees Explained — Every Line Item
• Texas Mortgage Refinance Calculator — Step-by-Step Input Guide
• California Refinance Guide — another community property state with different anti-deficiency rules
• Florida Refinance Guide — documentary stamp tax details and no income tax comparison
• The Best Time to Refinance in 2026
• How to Estimate Your New Mortgage Payment
• Mortgage Refinancing: The Complete Guide
• Refinance Break-Even Calculator
• PMI Removal Calculator

Sources & References

• Consumer Financial Protection Bureau (CFPB) — Explore Mortgage Rates
• Freddie Mac Primary Mortgage Market Survey (PMMS)
• Federal Housing Finance Agency (FHFA) — Conforming Loan Limits
• IRS Publication 936 — Home Mortgage Interest Deduction
• U.S. Department of Housing and Urban Development (HUD) — FHA Loan Programs
• Texas Constitution, Article XVI, Section 50(a)(6) — Home Equity Lending Rules
• Texas Department of Insurance — Title Insurance Rates & Regulations
• Texas Comptroller — Property Tax Overview