Published , 4 minute read
Learn how lenders decide how much house you can afford in Texas, why property taxes and insurance matter so much here, and how to find your real number before you shop.
Quick answer: How much house you can afford in Texas depends mainly on your gross monthly income, your existing monthly debts, your down payment, and the property taxes and insurance on the home you want. Most loan programs look at your debt-to-income ratio the share of your monthly income that goes to all debts, including the new house payment. In Texas, property taxes and homeowners insurance take a bigger bite of the monthly payment than in many states, so the same income buys a little less house here than the sticker price suggests.
How lenders calculate what you can afford
Lenders don't start with the home price. They start with your monthly budget.
The key number is your debt-to-income ratio (DTI): your total monthly debt payments divided by your gross (before-tax) monthly income. "Debts" include car payments, student loans, credit card minimums, and the new house payment. They do not include utilities, groceries, or phone bills.
Your new house payment includes more than principal and interest:
- Principal and interest on the loan
- Property taxes (often the second-largest piece in Texas)
- Homeowners insurance
- Mortgage insurance, if your down payment is under 20% on a conventional loan, or on most FHA loans
- HOA dues, common in newer DFW suburbs like Prosper, Celina, and McKinney
Each loan program has its own DTI limits. As a general guide, conventional loans approved through automated underwriting can go as high as 50% DTI for strong files, FHA loans can sometimes go higher with compensating factors, and VA loans use a 41% guideline alongside a separate "residual income" test. These are ceilings, not targets. Being approved at a number and being comfortable at that number are two different things.
A simple example
Say your household earns $10,000 a month before taxes and you have a $500 car payment.
- At a 45% DTI, your total monthly debts could be up to $4,500.
- Subtract the $500 car payment, and your maximum all-in house payment is about $4,000 per month.
- That $4,000 has to cover principal, interest, taxes, insurance, mortgage insurance, and any HOA.
This example is for illustration only. Your actual number depends on the loan program, your credit, the interest rate on the day you lock, and the specific home.
Why Texas is different
No state income tax helps. Texans keep more of each paycheck, which helps your real-world budget.
Property taxes work the other way. Texas funds schools and local government heavily through property taxes. Two homes at the same price in Frisco and Wylie can carry very different tax bills because each city, school district, county, and special district (like a MUD) sets its own rate. A home in a newer community with a MUD or PID can carry a noticeably higher tax rate.
Insurance costs are significant. Hail and severe weather drive North Texas homeowners insurance premiums. Get a real insurance quote on any home you're serious about.
The practical takeaway: when you compare homes, compare the full monthly payment, not just the price.
Afford vs. qualify: the "house poor" question
A lender tells you the maximum you can qualify for. Only you can decide what you're comfortable paying. Before you settle on a price range, think about:
- Your emergency savings after closing
- Childcare, tuition, or other costs that don't show up on a credit report
- Upcoming changes like a new baby, a job change, or a car replacement
- How much you want left over each month for savings and life
Many buyers choose a target payment below their maximum approval. That's a smart, responsible decision.
How to find your real number
Online calculators give you a rough range. A pre-approval gives you a real one. With a pre-approval, a loan officer reviews your actual income, credit, debts, and assets, and runs them through the same underwriting systems used for your final loan. You walk away knowing your price range and your estimated monthly payment at that range.
FAQ
How much house can I afford on a $100,000 salary in Texas? It depends on your other debts, down payment, credit, and the tax rate in the area you're buying. With few other debts, many buyers at that income look in the $300,000s to low $400,000s, but your actual range could be higher or lower. A pre-approval gives you a specific answer.
What is the 28/36 rule? It's a traditional rule of thumb: spend no more than 28% of gross income on housing and 36% on total debt. Today's loan programs often allow higher ratios, but the rule is still a useful comfort check.
Does my spouse's income count? Yes, if your spouse is on the loan. Two incomes on the application can increase what you qualify for, but both partners' debts and credit are also considered.
Do lenders use my take-home pay? No. Lenders use gross monthly income, before taxes and deductions.
Want to know your real number? Call or text Mike Tanas at 214-604-5245
This article is general education, not financial, tax or legal advice. Guidelines change and vary by lender. Talk with Mike about your own situation.