The monthly principal and interest payment is the number most buyers focus on, but it is only part of what a home costs. In Texas, property taxes and insurance can make up a large share of the total housing payment, and owners also pay for upkeep that renters usually leave to a landlord. Planning for these costs before you buy helps you choose a home that stays affordable after the first year.
Property taxes
Texas does not have a state income tax, and local governments rely heavily on property taxes. Your bill is based on the appraised value set by the county appraisal district and the combined rates of every taxing unit where the home is located, such as the county, city, school district and special districts like MUDs. Rates and values change every year.
- Look up the property's tax history on the appraisal district and county tax office websites.
- Remember that a seller's bill may reflect exemptions you will not have at first, or a lower value from earlier years.
- After you buy, apply for the residence homestead exemption through your appraisal district if the home is your principal residence.
- Watch for the annual notice of appraised value; you have the right to protest a value you believe is too high.
Homeowners insurance
Lenders require hazard insurance, and in parts of Texas the cost is significant because of hail, wind and storm risk. Along the coast, windstorm coverage may be separate from the main policy. Standard homeowners policies do not cover flood damage, so check the FEMA flood map for the property and consider flood insurance even where a lender does not require it. Get quotes during your option period so there are no surprises at closing.
Escrow and payment changes
Most lenders collect taxes and insurance monthly through an escrow account and pay the bills for you. Because those bills change, your total payment can go up or down after the lender's annual escrow review, even on a fixed-rate loan. Build a little slack into your budget for these adjustments.
HOA and other community fees
Many Texas neighborhoods have a homeowners association with regular dues, and some have additional fees for amenities or special assessments for major projects. Read the HOA's budget, rules and resale certificate before you commit, and include the dues in your monthly plan.
Utilities
Larger homes and older homes generally cost more to cool and heat, and Texas summers make air conditioning a major expense. Ask the seller or the utility for past usage, and find out whether the home is in an area where you choose your electricity provider. Water, wastewater, trash and internet should all be in the budget.
Maintenance and repairs
Every home needs routine care: HVAC servicing, filter changes, pest control, gutter cleaning, landscaping and occasional plumbing or electrical work. Major components such as roofs, foundations, water heaters and air-conditioning systems eventually need replacing. Your home inspection report and the age of key systems are the best guides to what is coming. Many owners set aside a monthly amount in a separate savings account so repairs do not land on a credit card.
Setting up a homeownership budget
- Start with the full housing payment: principal, interest, taxes, insurance and any mortgage insurance.
- Add HOA dues and an estimate for utilities based on actual usage history.
- Add a monthly maintenance and repair reserve.
- Keep an emergency fund separate from the repair reserve.
- Compare the total with your take-home pay, not your gross income, and leave room for savings and other goals.
Key takeaways
- In Texas, property taxes and insurance can be a large part of the housing payment, so research them for each property.
- Escrowed payments can change every year as tax and insurance bills change.
- HOA dues, utilities and maintenance belong in the plan from day one.
- A dedicated repair reserve and a separate emergency fund protect you from surprise costs.
This article is general information, not legal, tax or lending advice. Loan requirements differ between lenders and change over time, so confirm the details with your lender, the relevant agency or a licensed professional.