How Much House Can You Afford in Texas in 2026?

Texas has four of the country’s 15 largest cities. Depending on which one you’re buying in, the median home price in 2026 ranges from around $280,000 in San Antonio to roughly $380,000 in Dallas and $510,000 in Austin. The mortgage payment those prices produce at today’s rates looks very different than it did two or three years ago, when rates were half what they are now. Understanding what you can actually afford, before you start touring homes, saves significant time and prevents the disappointment of falling in love with a property that doesn’t pencil out.

This is a practical framework for Texas buyers in 2026 to calculate their real number, based on income, debt, down payment, and current market conditions.

Start with Your Gross Monthly Income

Every mortgage affordability calculation starts with gross monthly income, meaning before taxes and deductions. If you earn $90,000 per year, that’s $7,500 per month gross. Lenders use this number, not your take-home pay, because tax liability varies by deductions and filing status.

For borrowers with variable income, including salespeople who earn commissions, business owners, or hourly workers with overtime, lenders typically use a two-year average from tax returns rather than the most recent pay stub. If your income has grown significantly in the last year, the two-year average will understate your current earning power, which affects how large a loan you can qualify for.

Two-income households add both incomes together but both borrowers’ debts appear on the application too. A couple each earning $65,000 has $10,833 in combined monthly gross income, but that number gets offset by any student loans, car payments, or other recurring debt either person carries.

The Two DTI Limits You’re Working Against

Lenders use two debt-to-income (DTI) ratios to evaluate affordability. The front-end ratio looks only at housing costs: principal, interest, property taxes, homeowner’s insurance, and, if applicable, HOA fees and PMI. The back-end ratio includes all of that plus all other monthly debt payments.

Front-end DTI limits by loan type:

• Conventional loans: no hard front-end cap in most cases, but lenders watch it
• FHA loans: front-end DTI of up to 31% is the traditional guideline (some flexibility with compensating factors)

Back-end DTI limits by loan type:

• Conventional (Fannie Mae / Freddie Mac): up to 50% with strong compensating factors, 45% is a more comfortable ceiling
• FHA: up to 57% in some automated approval scenarios, though 43 to 50% is more typical
• Jumbo loans: typically 43 to 45% max

The key number most Texas buyers should plan around is 43% back-end DTI as a working maximum. That means if you earn $8,000 per month and have $500 in existing debt payments (car loan, student loans), your maximum total monthly housing cost is $2,940 (43% of $8,000 minus the $500 in other debt = $2,940).

What That Looks Like at Texas Home Prices

Here’s how back-end DTI translates to purchase prices across major Texas markets at a 6.5% mortgage rate, with 10% down and estimated property taxes and insurance included.

On $80,000 annual income ($6,667/month gross), with no other debts and a 10 percent down payment:

• Maximum total housing payment at 43% DTI: $2,867/month
• Estimated property taxes (1.7% of home value annually in Texas): varies by county
• At a $350,000 purchase price with 10% down: P&I of roughly $2,120 + taxes + insurance = approximately $2,550 to $2,700/month total. Fits.
• At a $430,000 purchase price with 10% down: P&I of roughly $2,600 + taxes + insurance = approximately $3,100 to $3,250/month total. Over the limit.

This math shifts significantly in Austin versus Dallas versus Houston because property tax rates vary by county. Travis County (Austin) runs around 1.9 to 2.3% effective. Harris County (Houston) is higher, often 2.5 to 3%. Tarrant County (Fort Worth) and Dallas County run approximately 2 to 2.5%. Those differences add $200 to $400 per month to the same home’s carrying cost depending on where you buy in Texas.

For more on how rates in mid-2026 affect the monthly math, see Texas mortgage rates in June 2026.

Down Payment and Its Effect on What You Can Afford

A larger down payment does three things: it reduces your loan amount (and therefore your monthly payment), it may eliminate private mortgage insurance (PMI), and it improves your debt-to-income ratio. A smaller down payment has the inverse effect.

On a $350,000 home in Texas:

• 3% down ($10,500): loan of $339,500, P&I of ~$2,147 at 6.5% + PMI of ~$120/month = roughly $2,267 before taxes and insurance
• 10% down ($35,000): loan of $315,000, P&I of ~$1,991 at 6.5%, PMI likely eliminated at 80% LTV over time = roughly $1,991 before taxes and insurance
• 20% down ($70,000): loan of $280,000, P&I of ~$1,771 at 6.5%, no PMI = roughly $1,771 before taxes and insurance

PMI (private mortgage insurance) typically costs 0.4 to 1.5% of the loan amount annually, split into monthly payments. On a $320,000 loan, that’s $106 to $400 per month. PMI generally drops off once you reach 20% equity, either through payments or appreciation. The decision about how much to put down depends on your cash reserves after closing. Stretching to 20% down but arriving at closing with minimal reserves can create more risk than putting 10% down and keeping a larger cash cushion. For a detailed look at how PMI factors into the calculation, see how to remove PMI and when it makes sense.

What Your Credit Score Does to Your Affordability

Your credit score affects the interest rate you qualify for, which in turn affects your monthly payment and total affordability. The difference between a 680 and a 740 credit score on a conventional loan in Texas can be 0.5 to 0.75 percent in rate, which translates to roughly $90 to $130 per month on a $300,000 loan. Over 30 years, that’s $32,000 to $47,000 in additional interest.

A borrower at 720 who improves to 740 before applying moves into Fannie Mae’s best pricing tier and often qualifies for a meaningfully lower rate. If you’re close to a scoring threshold, it may be worth spending 3 to 6 months improving your score before applying. See credit score requirements for a Texas mortgage in 2026 for specific thresholds by loan type.

The “Comfortable” Number vs. the “Approved” Number

A lender approval tells you the maximum loan amount you qualify for based on income and debt. What it doesn’t tell you is what payment will feel comfortable month to month after you account for groceries, utilities, childcare, car maintenance, retirement contributions, and the unexpected expenses that come with homeownership.

Many Texas homebuyers find that a front-end housing cost of 25 to 30% of gross income feels sustainable over the long term, even if they qualify for 43%. Using a more conservative number leaves room for financial flexibility. On $8,000/month gross, 25 to 30% of that is $2,000 to $2,400 for all housing costs combined. That’s a workable payment in San Antonio or Houston but tight in Austin’s higher-price neighborhoods.

Running both numbers, the lender maximum and your comfortable ceiling, before you shop gives you a clear range to work within. If they’re close, great. If they diverge significantly, that’s useful information before you fall in love with a home that requires the maximum qualification.

If you’d like to run your specific numbers across loan types and Texas price points, reach out directly and we can work through what actually makes sense for your income, debts, and goals, no pressure, just clarity.

Frequently Asked Questions

How much income do I need to buy a $350,000 home in Texas?

At a 6.5% rate with 10% down and Texas property taxes included, a $350,000 home produces a total monthly housing cost of approximately $2,500 to $2,700. Using the 43% back-end DTI benchmark, you would need around $6,200 to $7,000 per month in gross income ($74,000 to $84,000 annually) with no other significant debts. Add existing debt payments to that figure, because they reduce the housing budget dollar for dollar.

What percentage of my income should go to a mortgage in Texas?

Most lenders will approve loans where total housing costs are up to 43 to 50% of gross monthly income, depending on loan type. A more sustainable target for most Texas households is 25 to 33% of gross income for all housing costs, including principal, interest, taxes, insurance, and HOA fees. Staying closer to 25 to 30% leaves room for savings, home maintenance, and unexpected expenses without financial stress.

Does Texas have higher housing costs than other states?

Texas has no state income tax, which increases take-home pay compared to most states. However, property taxes in Texas are among the highest in the country, with effective rates typically ranging from 1.7 to 3% of home value depending on the county. On a $400,000 home, that’s $6,800 to $12,000 per year added to ownership costs, or $567 to $1,000 per month in escrow. Factor that into affordability calculations, not just the principal and interest.

Can I afford more house if I have a higher credit score?

Yes, because a higher credit score qualifies you for a lower interest rate, which reduces your monthly payment and therefore the loan amount you can qualify for within a given DTI limit. Moving from a 680 to a 740 credit score can reduce your rate by 0.5 to 0.75 percent on a conventional loan. On a $350,000 loan, that’s roughly $95 to $145 per month less in payment, which effectively increases the home price you can qualify for by $15,000 to $25,000.

How does a 20% down payment affect what I can afford in Texas?

A 20% down payment eliminates PMI, which can save $100 to $400 per month depending on loan size and score. That savings increases your effective housing budget. It also reduces the loan amount, lowering the monthly payment further. However, the larger down payment reduces your cash reserves after closing, which matters for home maintenance, emergencies, and financial flexibility. There is a tradeoff between a lower payment and keeping more liquidity, and the right balance depends on your overall financial picture.

What is the maximum DTI for a mortgage in Texas in 2026?

The maximum DTI varies by loan type. Conventional loans (Fannie Mae / Freddie Mac) allow up to 50% back-end DTI with strong compensating factors, though 45% is a more comfortable ceiling. FHA loans allow up to approximately 57% in automated approval scenarios. VA loans have no hard DTI cap but lenders typically apply their own limits around 41 to 50%. A DTI at the maximum is achievable but leaves little margin. Most financial planners suggest targeting a housing DTI that leaves room if income changes or expenses rise.

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. Payment examples are illustrative only and based on a 6.5% fixed rate; actual rates depend on creditworthiness and market conditions at the time of application. Equal Housing Lender.