How to Calculate Your Mortgage Payment in Texas

Every mortgage payment in Texas — as in every state — is built from four parts: principal, interest, taxes, and insurance (PITI). The principal-and-interest portion comes from the standard amortization formula: M = P × r(1+r)^n / ((1+r)^n − 1), where P is the loan amount, r is the monthly interest rate, and n is the number of payments. On a $315,000 loan at 6.75% for 30 years, that formula gives a principal-and-interest payment of about $2,043 per month.

But principal and interest are only half the story in Texas. Property taxes and homeowners insurance — the T and I in PITI — are collected monthly into an escrow account and can add hundreds of dollars to the bill. In Texas, property taxes are the dominant extra cost, so an accurate Texas calculation must estimate them carefully rather than using a national average.

Texas has no state income tax, but it makes up the revenue with some of the highest property tax rates in the country. Effective rates typically run 1.6% to 2.2% of assessed value per year, depending on the county and city — so a $350,000 home can carry a $5,600 to $7,700 annual tax bill. Your rate is the sum of levies from the county, city, school district, and special districts, each setting its own rate.

Each county has an appraisal district (CAD) that revalues your home annually. If you think the appraised value is too high, Texas law gives you the right to protest — and many homeowners successfully lower their bills by filing a protest each spring. When estimating your payment, use 1.8% as a middle-of-the-road Texas figure, then divide by 12 for the monthly escrow amount.

Texas offers one of the most generous homestead exemptions in the nation. If the home is your primary residence, you can exempt $100,000 of its value from school district taxes — usually the largest single levy. On a $350,000 home, that exemption alone can save roughly $1,000 to $1,200 per year, depending on your school tax rate.

The homestead also caps annual appraisal increases at 10%, shielding you from sudden spikes when the market surges. You must apply for the exemption through your county appraisal district — it is not automatic — and you can only claim it on one property. File as soon as you close, because the savings apply from the date of eligibility.

Put it together for a $350,000 home with 10% down ($35,000), a $315,000 loan at 6.75% for 30 years, a 1.8% property tax rate, and $2,500 per year in homeowners insurance. Principal and interest: $2,043. Property taxes: $6,300 per year, or $525 per month (before homestead savings on the school portion). Insurance: $208 per month. Total PITI: about $2,776 per month.

With less than 20% down, private mortgage insurance (PMI) would add roughly $100 to $200 more per month until you reach 20% equity. Run your own numbers with local tax rates for the most accurate estimate.