Buying a Home in Houston: How the Mortgage Market Works
When clients ask me about buying a home in Houston, my first question is always: which Houston? The metro covers more than 670 square miles and encompasses dozens of distinct submarkets, each with its own inventory levels, price trends, and commute dynamics. Getting the mortgage part right starts with understanding how those submarkets affect what you can afford and what your financing options look like.
Houston’s Market in 2026
Houston has more housing inventory than most major Texas metros. As of spring 2026, the Houston area is sitting at roughly four to five months of supply for existing homes, which puts it closer to a balanced market than the seller’s markets seen in 2021 and 2022. That’s meaningful for buyers. You have more negotiating room on price, more time to complete due diligence, and sellers are more open to concessions on closing costs or repairs.
Median home prices in Houston hover around $330,000 to $340,000 for the greater metro, but the range is wide. A townhome in Midtown or the Heights will run $450,000 to $600,000. A four-bedroom in Katy or Pearland might be $280,000 to $350,000. Sugar Land and The Woodlands tend to run $400,000 to $600,000 or higher depending on the subdivision. Your loan amount and product type will vary significantly based on where you’re targeting.
Flood Risk and Insurance: The Factor Houston Buyers Can’t Skip
Houston has experienced repeated major flood events, and any serious home search in the metro has to account for flood insurance costs and property elevation. Before making an offer on any Houston property, I strongly recommend checking the FEMA flood map at msc.fema.gov.
Properties in AE or VE zones are in the 100-year floodplain and require flood insurance, which adds several hundred to several thousand dollars per year to ownership costs depending on the home’s base flood elevation and coverage amounts. That cost factors into your debt-to-income ratio calculation, because your lender will include it in the housing payment estimate.
Some Houston buyers specifically target elevated lots, newer construction on higher pads, or neighborhoods with a documented history of no flooding during Harvey and Imelda. That knowledge matters and your real estate agent should be able to pull flood history for any property you’re serious about.
Loan Programs That Work Well in Houston
Houston buyers have access to the full range of Texas mortgage programs. A few that come up frequently in my conversations:
Conventional Loans
For buyers with 620+ credit and 3-20% down, conventional financing is often the cleanest path. Houston’s median price point means many buyers stay well under the conforming loan limit ($806,500 for 2025), which keeps them in standard Fannie/Freddie underwriting territory. Private mortgage insurance (PMI) drops off at 20% equity, which arrives faster in a balanced market where home values appreciate steadily.
FHA Loans
For buyers with credit scores in the 580-640 range or limited down payment savings, FHA loans remain the most accessible path to homeownership in Houston. The FHA loan limit for Harris County is well above Houston’s median price, so most buyers aren’t constrained by the limit. The upfront MIP (1.75% of the loan amount) and annual MIP (0.55-0.85% depending on loan size and term) add cost, but the lower credit bar and 3.5% down requirement matter for many first-time buyers.
VA Loans
Houston has a large active-duty and veteran population, particularly near Ellington Field and Fort Bend County. VA loans remain the strongest product available for those who qualify: zero down, no PMI, and competitive rates. If you or your spouse served, run the VA numbers before defaulting to conventional.
What to Expect in the Offer Process
With more inventory and longer days-on-market than a few years ago, cash offers are less dominant in Houston than in Austin or Dallas. Financed offers with pre-approval letters carry real weight. A seller receiving two comparable offers will typically accept the one with the cleaner financing, which means a full pre-approval (not just pre-qualification) before you make your first offer.
Seller-paid closing costs are more negotiable in Houston’s current environment. Asking for 2-3% back toward closing costs while keeping the offer price at or near list is a common structure. I can model out how different concession amounts affect your cash needed at closing if you want to see the numbers.
Property Tax Reality Check
Texas has no state income tax, but property taxes are among the highest in the country. Harris County effective rates typically run 1.8 to 2.5% of appraised value. On a $350,000 home, that’s $6,300 to $8,750 per year ($525 to $729 per month) in taxes alone, before insurance. Your lender will escrow for this, so it hits your payment directly. Factor this into your budget before you decide on a purchase price.
The Texas homestead exemption reduces the appraised value used for tax calculation on a primary residence. You’ll file for it in the first year you own the home, and it reduces the taxable value by $100,000 for school district taxes (as of 2023 legislation). It doesn’t eliminate the tax burden, but it’s a meaningful reduction.
If you’re planning to buy in Houston and want to talk through which loan program fits your situation, reach out directly and we can run the numbers together.
Anthony Ferrando | Mortgage Loan Originator | NMLS# 1919613 | Ferrando Financial LLC NMLS# 2403080 | Licensed in Texas. This is not a commitment to lend. Loan approval is subject to credit, income, and property qualifications. Market data reflects conditions as of May 2026 and is subject to change. Flood zone status should be independently verified via FEMA flood maps prior to purchase. Property tax estimates are illustrative and based on typical Harris County effective rates. Equal Housing Lender.
