Buying a house is one of the biggest financial decisions most people make in their lifetime. If you're considering buying property in Texas, understanding your mortgage payments is essential to ensure you can comfortably afford the home you're looking at. A mortgage calculator in Texas is a great tool to estimate your monthly mortgage costs based on key variables like loan amount, interest rate, loan term, and other factors like property taxes and insurance.

In this guide, we'll walk you through how mortgage calculators work, the key factors that affect your monthly payments in Texas, and how to use them to make an informed decision when buying a home.

Mortgage Calculator Texas

What is a Mortgage Calculator?

A mortgage calculator in Texas is an agency used to estimate your monthly mortgage cost based on various inputs, such as loan amount, interest rate, loan term, property taxes, homeowners insurance, and sometimes private mortgage insurance (PMI). While it doesn't provide an exact number, it can give you a close estimate to help you gauge whether a mortgage is affordable for your financial situation.

Texas has some unique features—like lower property taxes and insurance rates than others—that can affect mortgage payments. A mortgage calculator can help you know how these factors affect your loan costs.

Key Factors in a Mortgage Calculator in Texas

Mortgage calculators typically ask for the following information to estimate your monthly payments:

1. Loan Amount (Principal):

The loan amount is the total amount you borrow from your lender. It is usually the price of the home minus your down payment. For example, if you buy a house for $350,000 and put 20% ($70,000) down, your loan amount would be $280,000.

2. Interest Rate:

The interest rate is the percentage the lender charges you for borrowing the money. A lower interest rate usually results in lower monthly payments. The interest rate depends on your credit score, loan type, and market conditions.

3. Loan Term:

The loan term refers to the length of time you will repay the loan. The most normal loan terms are 15 and 30 years, but you can also find options like 20-year terms. A longer loan term will lower monthly payments, but you will pay more interest over time.

4. Property Taxes:

Property taxes are a significant part of your mortgage payment in Texas. The Property taxes are assessed based on the value of your home and the local tax rate. Texas has relatively high property taxes, averaging 1.83% of home value as of 2023—the highest in the U.S. The tax amount varies by county and city.

5. Homeowners Insurance:

Homeowners insurance protects you from damage to your home from fire, theft, or natural disasters. In Texas, the cost of homeowners insurance can depend on your home's location and size. Still, it is higher than the national average, especially in areas prone to severe weather like hurricanes and tornadoes.

6. Private Mortgage Insurance (PMI):

If you put less than 20% of the home's value down, your lender will require you to pay PMI. PMI protects the lender if you default on the loan.

Types of Mortgages in Texas

Texas offers a variety of mortgage calculator in Texas options, each with different terms and requirements. Here are some of the most common types:

1. Conventional Loans:

Conventional loans are the most common type of mortgage and are not insured by the federal government. They typically require a minimum 5% down payment, but putting down 20% can help you avoid PMI. Conventional loans offer fixed- and adjustable-rate options.

2. FHA Loans:

The Federal Housing Administration insures FHA loans, which are popular with first-time homebuyers. They need a down payment as low as 3.5%, making homeownership more accessible to people with low credit scores or limited savings.

3. VA Loans:

VA loans are available to veterans, active-duty military members, and eligible spouses. They require no down payment and typically offer low interest rates.

4. USDA Loans:

The U.S. Department of Agriculture backs USDA loans available to homebuyers in rural areas. These loans require no down payment and often have lower interest rates than regular loans.

5. Jumbo Loans:

Jumbo loans exceed the Federal Housing Finance Agency (FHFA) set loan limits. This limit varies by county in Texas but is generally higher in major metropolitan areas. Because of their size, jumbo loans have higher interest rates and stricter eligibility requirements.

6. Adjustable-Rate Mortgages (ARMs):

ARMs start with a lower interest rate than fixed-rate mortgages but adjust over time based on market conditions. Although they offer lower starting rates, ARMs can result in higher payments over time if interest rates rise.

How to Use a Mortgage Calculator in Texas

Using a mortgage calculator is easy. Here's how to use one effectively:

• Enter your loan amount: Input the loan amount (the total amount you want to borrow from your lender). It is usually the purchase price of the home minus your down payment.

• Add an interest rate: Enter the interest rate your lender quoted you or an estimate based on your credit profile and the current market.

• Select your loan term: Choose the best loan term for years or 30 years based on your financial situation and goals.

• Input property taxes and insurance: Enter property taxes and homeowners insurance estimates. In Texas, property taxes can vary by location, so check with your local county tax assessor's office for exact rates. Houseowners insurance premiums are based on the value and location of your home.

• Review the results: After entering all the information, the mortgage calculator will generate an estimated monthly payment for principal and interest, property taxes, homeowners insurance, and PM, if applicable.

• Adjust variables for comparison: Explore different scenarios and adjust the interest rate, loan amount, or loan term. It will show how these factors affect your monthly and total loan costs.

Conclusion

Whether buying your first home in Texas or refinancing, a mortgage calculator in Texas is a powerful tool to help you make informed decisions. By inputting your loan amount, interest rate, and other factors like property taxes and insurance, you can estimate your monthly payments and better understand the true cost of homeownership.

Texas has specific considerations—high property taxes and flood insurance requirements in some areas—that can significantly impact your mortgage payments. The mortgage calculator, designed specifically for Texas, can give you a clear financial picture and help you stay within your budget as you search for your dream home.

FAQs

How much are closing costs in Texas?

While the exact amount varies, closing costs generally add 2% to 5% of the home's purchase price.

How do first-time home buyers work in Texas?

My Choice Texas Home is a program available to new and repeat homebuyers. Through the program, you can qualify for a 30-year, low-interest mortgage with up to 5% of the down payment and closing cost assistance.

What are mortgage rates in Texas right now?

Today's mortgage rates in Texas are 6.937% for a 30-year fixed, 6.200% for a 15-year fixed, and 7.548% for a 5-year adjustable-rate mortgage (ARM).

What is the average mortgage cost in Texas?

Home prices in Texas have achieved an all-time high, and so have mortgage payments. The moderate monthly mortgage payment is now $2,547.