Mortgage and Refinance Rates in Texas

Use our comparison table to compare refinance and mortgage rates in Texas

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Today's Rates In Texas

Frequently Asked Questions

A lot of factors are put into consideration when choosing mortgage loans. Your credit history, debt to income ratio, and several other factors will affect your mortgage loan. Hence, check out the different options available and choose which one suits you best.

Mortgage rates are always fluctuating, hence to get the best, check our site regularly so as not to miss out on the best rates.

The TDHCA has programs available for first-time homebuyers that require zero down payment. You can get Adjustable Rate Mortgages for a low down payment.

Texas is the second-largest state by area and by population in the United States of America, with the largest state by area being Alaska; and by population, California. Texas is known for its large expanse of land which encourages agriculture. There are also industries, which indicates the availability of jobs. These have encouraged movement to the state thus increasing the population in the past few years.

Also, getting a home in the Lone Star State can be said to be affordable compared to the most populous state in the United States of America, California. Different mortgages suit different kinds of home buyers moving to Texas. Mortgage rates in Texas change continually which is why you should always check for up-to-date rates.

Types of Mortgages in Texas

  • Conventional mortgage loans
  • Government-issued mortgages
  • Jumbo loans
  • Adjustable rate mortgages

Conventional Mortgage Loans

Conventional mortgage loans available in Texas are loans that are not issued by the government. These loans are gotten from private money lenders and are backed by Fannie Mae or Freddie Mac. Some important documents need to be provided before this loan is approved. Required documents include the following:

  • Proof of income
  • Assets
  • Employment verification
  • Other documents such as a copy of your driver's license, social security number

Unlike government-issued loans, conventional mortgage loans have a fixed interest rate; and the interests are generally higher than government-issued loans. These rates are dependent on your credit score, borrowers with good to excellent credit scores get good rates. To qualify for a conventional mortgage loan, you need to have a credit score of at least 620 and a debt to income ratio of 45%.

You can get a loan with a down payment of as low as 3%, but for better rates, it is best to make a down payment of at least 20%. Down payments of less than 20% incur additional monthly payments for private mortgage insurance. The monthly payments are canceled once you reach the 20% down payment.

Government Issued Loans

If for any reason, you do not qualify for a conventional loan in Texas, you can get loans from some government-backed agencies. Some of the government-issued loans include

  • Texas FHA loans
  • VA loans

Texas FHA loans

Loans from the Federal Housing Association (FHA) are easier to qualify for than conventional loans and are thus great for the following categories of people:

  • First-time homebuyers
  • Homebuyers with poor credit history
  • Homebuyers who are short on finances

You can qualify for a Texas FHA loan with a credit history of as low as 500, which qualifies you for a down payment as low as 3.5%. A credit history of 500 allows you to secure an FHA loan with a down payment of 10%. You will need a debt to income ratio of 31% to 41% to qualify for an FHA loan.

However, a 1.75% mortgage insurance premium must be paid upfront. Down payments of less than 20% means that borrowers will have to pay the annual mortgage insurance premium. This insurance premium is billed monthly and is dependent on some factors, viz,

  • Percentage of down payment
  • Period of the loan, and
  • The loan amount

The annual mortgage insurance premium is carried for the full extent of the loan unlike conventional loans when it is stopped once the down payment is reached. However, for buyers refinancing, these monthly payments can be canceled when the 20% down payment is reached.

Texas VA loans

VA loans are for active or veteran military personnel who have met certain minimum standards. Widows or widowers of those who died during service can also get this loan.

Unlike other forms of loans, down payments are not required for the Texas VA loan. You can borrow up to $453,100 which is the highest amount you can get when getting an FHA loan or conventional loans without a down payment. If you will be taking a jumbo loan, you can make a down payment of 25%. You have to pay a funding fee before taking this loan and it is usually between 2.15% and 3.3% of the purchase price.

Jumbo Loans

Jumbo loans are loans that are larger than the standard loans such as Fannie Mae, Freddie Mac, and FHA loans. The highest amount Texans are eligible for using the standard loans is $726,200 which only covers a single-family home as of 2023. For mortgages larger than this, a jumbo loan is the best option.

The down payment for a jumbo loan is also higher than that of other loans with 20% being the standard. Some jumbo loan lenders accept a 10% down payment. Also, the credit score is a lot higher than the others at 680. If you have very strong finances but a low credit score, you can still get jumbo loans from some lenders. The average Texas jumbo loan rate is 4.23%.

Adjustable Rate Mortgages (ARMs)

Adjustable-rate mortgage loans have a fixed interest rate for the first few years of the loan after which the loan repayment becomes variable. The fixed interest period can be between one to five years. After this, the rate is adjusted from time to time. ARMs are for homebuyers who need to pay as little as possible at the point of getting a mortgage but will eventually be able to pay more as the years go by.

Mortgage Refinancing in Texas

Mortgage refinance rates in Texas are under the jurisdiction of the Texas cash-out refinance loan, also known as Section 50(a)(6) loan. This allows you to refinance your current mortgage simultaneously using your current home equity. Refinance rates in Texas change from time, updated rates are available here using our comparison table.

New laws affecting Texas cash-out refinance loans were passed by state voters in 2017. These new laws are more favorable to Texas borrowers. Some important things to note from these new laws include:

  • You now qualify for a Texas cash-out loan if your land is used for agricultural purposes.
  • When applying for a refinance, you can't borrow beyond 80% of your home's current market value.
  • The fees on the Texas cash-out loan have been lowered to 2% from 3%.
  • A year after getting a refinance loan, you can refinance into a conventional loan without a cash-out.

Benefits of Texas Cash-out Refinance Loan

Some benefits of taking the Texas cash-out refinance loan include the following:

  • Reducing your mortgage rate
  • Get extra cash for other needs like home appliances, tuition, or a new car
  • Shorten your loan repayment

Home Equity Loans

There are two types of home equity loans, the standard home equity loan and the home equity line of credit (HELOC). Standard home equity loans are generally used for immediate expenses, and borrowers can start repaying the loan immediately.

HELOCs on the other hand are used for continuous expenses. Borrowers get a line of credit where they get money as needed and do not have to start repaying the loan immediately.

Texas home equity loan rates are generally higher than mortgage loan rates and refinancing rates. However, they are lower than unsecured loans such as credit card loans and student loans. Standard home equity loan rates are usually fixed and HELOCs are adjustable.

First-time Homebuyers Programs in Texas

First-time Homebuyers are people who have never purchased a home or have not purchased a home in the past three years. The Texas Department of Housing and Community Affairs (TDHCA) offers help for this category of people. The programs available are:

  • My first Texas home
  • TDHCA Mortgage credit certificate

My first Texas home

This program offers mortgages with low monthly payments and also covers down payment and closing costs. To qualify for this program, you have to meet the income and purchase price limit of the area where you intend to get a home.

TDHCA Mortgage Credit Certificate

This allows first-time homebuyers to get up to $2,000 annually in a federal income tax based on the mortgage interest paid that year.