Most investors shopping Texas look at the rent, look at the price, and feel good. Then the tax line shows up. A DSCR loan qualifies on the property: the rent divided by the full monthly payment, which means principal, interest, taxes, insurance and any HOA dues. In a state where local taxing units carry the whole load, the T in that payment is bigger than most people coming from other states expect. Our Texas DSCR loan page covers the program and the statewide rules. This post does the arithmetic on the tax bill itself.

Every rate below comes from the Texas Comptroller's 2025 tax rate lists, which the Comptroller compiles from what each appraisal district reports under Tax Code Section 5.091. Rents are HUD Fair Market Rents for fiscal year 2027. Home values are U.S. Census Bureau medians for each county from the American Community Survey, 2020 to 2024. I pulled all three on November 4, 2026.

Why taxes decide Texas DSCR

Taxes decide it because they scale with the price and they never go away. Principal and interest shrink if you put more down. The tax bill does not care how you financed the house.

Two Texas rules make it heavier on a rental than on the same house owned by the person living in it. First, school districts must give a $140,000 residence homestead exemption under Tax Code Section 11.13(b), and a rental is not a residence homestead, so you pay school tax on the full appraised value. Second, the 10% yearly cap on appraised value increases applies to homesteads, not rentals. Non homestead property worth $5,320,000 or less has had a 20% circuit breaker cap instead, and the Comptroller lists that limitation as expiring December 31, 2026. Your neighbor who lives in an identical house can have a noticeably smaller bill than you do.

In Texas the tax line is not a rounding error. On a median priced house it can be a fifth of the rent before you pay a dime of interest.

Five metros, three tax rates each

Inside the core city of each metro, the county, city and school district rates alone add up to between 1.78 and 2.30 per $100 of value.

Rates are 2025 total tax rates per $100 of taxable value from the Comptroller's county, city and school district lists. The last column is our addition. It is a floor, not a full bill: hospital districts, community college districts, flood control, emergency services districts and municipal utility districts can sit on top. Harris County Hospital District alone reported 0.187610 for 2025.

The surprise for most people is El Paso. It has the cheapest houses in the table and the highest combined rate, because El Paso County, the City of El Paso and El Paso ISD together levy about 2.30% before any special district. Austin is the opposite problem: a middle of the pack rate on a much more expensive house.

The DSCR before and after tax

Run each county's median value through the same simple deal and the tax line takes a ratio that looks comfortable down to roughly break even.

The setup: buy at the county median value, put 25% down, and use Freddie Mac's 30 year fixed average of 7.24% from October 29, 2026 as a reference rate. That survey tracks conventional loans, not DSCR loans and not a rate we are quoting, but it puts every row on the same footing. Taxes are the combined rate from the table times the median value. Insurance is a flat $175 a month in every row, which is an example number, not market data and not a quote.

Look at the gap between the last two columns. Houston goes from 1.43 to 1.01. Dallas goes from 1.47 to 1.03. That drop is mostly tax. In Austin, tax alone eats about 36% of the three bedroom HUD rent on a median valued house, which is why Austin rentals usually only work with more cash down, a lower price, or rent well above the benchmark.

One more Texas detail hides in the HUD column. Houston's FY2027 three bedroom Fair Market Rent fell to $2,017 from $2,116 in FY2026, and Dallas fell to $2,275 from $2,431. Fort Worth went the other way, up to $2,284 from $2,273. If you underwrote a Houston deal last year on last year's benchmark, rerun it.

Run the DSCR on your deal

Insurance: the other Texas line

Insurance is the second line Texas investors underestimate, and where the house sits on the map changes it more than the house itself.

The Texas Department of Insurance notes that the Texas Windstorm Insurance Association writes wind coverage in 14 coastal counties, and in the parts of Harris County east of Highway 146 that sit inside the city limits of La Porte, Morgan's Point, Pasadena, Seabrook and Shore Acres. A rental there can need a separate wind policy on top of the main one. A rental in Fort Worth or El Paso will not. Same loan, very different T and I.

Two practical points. Ask for a landlord or dwelling policy quote, not a homeowners quote, because that is the policy that fits a house you rent out. And get the quote before you are under contract. A DSCR lender uses the actual premium, and a quote that arrives two weeks into escrow is how a 1.05 deal becomes a 0.95 deal.

What you can actually change

You cannot change the rate, but you can change the value it is applied to, the price you pay, and how you structure the payment.

1. Pull the real bill, not an average. The county assessor collector must post the rates for every taxing unit in the county under Tax Code Section 26.16. Look up the property's own account and list every unit on it.
2. Underwrite on the sale price. Appraisal districts value property at market value as of January 1. After you buy, assume the appraisal moves toward what you paid.
3. Protest when the value is wrong. The Comptroller says the usual deadline is May 15 or 30 days after the appraisal district mails the notice of appraised value, whichever is later. A rental owner has the same right to protest as a homeowner.
4. Price the deal to the ratio. Work backward from the rent and the tax rate to the price that clears your target. The calculator above does it in a few seconds.
5. Look at interest only. On the Dallas example, interest only cuts the principal and interest line from $1,549 to $1,371 and moves the ratio from 1.03 to 1.12.

How the loan handles it

A DSCR loan in Texas works on the same terms as in the other 34 states where we place them. These are the terms that matter most when taxes are heavy.

• Ratios as low as 0.50. We place DSCR loans with ratios as low as 0.50, so a deal that lands just under 1.00 after taxes is not automatically dead.
• Interest only. Ten years interest only on a 40 year term, or a 30 year term with interest only. Interest only goes up to 70% LTV on a purchase or rate and term refinance and 65% on a cash out.
• No reserves under $1 million and under 75% LTV. Stay under both lines and reserves are not required.
• No asset sourcing or seasoning. No large deposit sourcing and no asset seasoning.
• Gift funds. A 100% gift can cover the down payment, closing costs and reserves. See using gift funds on a DSCR loan.
• First time investors. No primary residence ownership and no rental history (VOR) required.

If you want to check the math on one house the way a lender does, our walk through of how to calculate DSCR on a rental uses Arizona numbers, but every step is the same in Texas. Planning to buy below value, fix it and pull cash back out? Read the BRRRR method with a DSCR loan, and keep in mind that a higher value after rehab also means a higher tax bill. Every program we place is on our loan programs page.

What these numbers leave out

They leave out every taxing unit beyond the big three, and they assume the house sells at the county median.

The other thing they leave out is the house. HUD Fair Market Rents describe a standard rental across a whole metro area. The lender will use the appraiser's rent schedule and your lease, which can land above or below the benchmark.

Sources

All sources checked November 4, 2026. Data changes, so confirm before you rely on it.

1. Texas Comptroller of Public Accounts, Tax Rates and Levies (2025 county, city, school district and special district lists). 2025 total tax rates per $100: Harris County 0.380960, City of Houston 0.519190, Houston ISD 0.878300, Harris County Hospital District 0.187610; Dallas County 0.215500, City of Dallas 0.698800, Dallas ISD 0.993835; Tarrant County 0.186200, City of Fort Worth 0.670000, Fort Worth ISD 1.029100; Travis County 0.375845, City of Austin 0.574017, Austin ISD 0.925200; El Paso County 0.458889, City of El Paso 0.759649, El Paso ISD 1.080700
2. Texas Comptroller, Property Tax Exemptions. School district residence homestead exemption of $140,000 under Tax Code Section 11.13(b)
3. Texas Comptroller, Valuing Property. Circuit breaker limitation for non homestead real property valued at $5,320,000 or less; expires Dec. 31, 2026
4. Texas Comptroller, Appraisal Protests and Appeals. Protest deadline May 15 or 30 days after the notice of appraised value is mailed, whichever is later
5. Texas Department of Insurance, Texas homeowners insurance market overview. TWIA wind coverage in 14 coastal counties and parts of Harris County east of Highway 146
6. HUD User, FY2027 Fair Market Rents, Harris County, TX (Houston, The Woodlands, Sugar Land HUD Metro FMR Area). 3 bed $2,017 (FY2026 $2,116)
7. HUD User, FY2027 Fair Market Rents, Dallas County, TX (Dallas HUD Metro FMR Area). 3 bed $2,275 (FY2026 $2,431)
8. HUD User, FY2027 Fair Market Rents, Tarrant County, TX (Fort Worth, Arlington HUD Metro FMR Area). 3 bed $2,284 (FY2026 $2,273)
9. HUD User, FY2027 Fair Market Rents, Travis County, TX (Austin, Round Rock, San Marcos MSA). 3 bed $2,292 (FY2026 $2,347)
10. HUD User, FY2027 Fair Market Rents, El Paso County, TX (El Paso HUD Metro FMR Area). 3 bed $1,559 (FY2026 $1,633)
11. U.S. Census Bureau QuickFacts, Harris, Dallas, Tarrant, Travis and El Paso counties, Texas. Median value of owner occupied housing units, ACS 2020 to 2024: Harris $276,600, Dallas $303,000, Tarrant $323,900, Travis $523,000, El Paso $180,400
12. Freddie Mac Primary Mortgage Market Survey. 30 year fixed average 7.24% as of October 29, 2026 (reference only)

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