Refinancing your mortgage in Texas
A straight read on when it makes sense, what it costs, and how to do the math before you call a lender. Drop your current loan into our comparison tool to see the numbers for your situation.
The Texas picture
Texas is a high-property-tax, low-loan-balance market by national standards. The statewide median home price in early 2026 sits around $310,000, with Austin in the high $500,000s, Dallas and Houston in the high $300,000s, and San Antonio closer to $290,000. A typical Texas mortgage runs $250,000 to $350,000, which is roughly half of what a California homeowner is carrying.
That changes the refinance math in two ways. First, closing costs are a bigger share of a smaller loan, so break-even takes longer per basis point of rate improvement. Second, Texas has the strictest cash-out refinance rules in the country, written into the state constitution after the 1995 amendment. If you are doing a rate-and-term refinance, those rules barely touch you. If you are pulling cash out, they shape everything.
Texas 30-year fixed rates in 2026 are running close to the national average, in the low 6s. Effective property tax rate is roughly 1.68 percent, among the highest in the country. There is no state transfer tax. Cash-out refinances are capped at 80 percent loan-to-value and 2 percent in lender fees.
When refinancing makes sense in Texas
For a Texas rate-and-term refinance, the math is the same as anywhere else: divide closing costs by monthly savings and compare to how long you will keep the home. Because Texas property taxes are high, your total monthly payment is more tax than interest in many cases, which means even a meaningful rate cut produces a smaller percentage drop in total payment than it would in a low-tax state.
The signals worth acting on in Texas:
- Rate drop of 0.75 percent or more. On a typical $300,000 loan that saves roughly $140 a month, clearing $6,000 to $8,000 in closing costs in four to five years.
- FHA to conventional. If you bought with FHA financing and now have 20 percent equity, refinancing to conventional drops the permanent mortgage insurance premium, which on most FHA loans is 0.55 percent of the balance per year and never goes away unless you refinance out.
- Adjustable-rate or interest-only resetting. ARM loans originated in 2020 to 2021 are now hitting their first reset. If your current rate jumps above the prevailing 30-year fixed rate, lock.
- Term shortening. Texas borrowers who have been in their home five to seven years often benefit more from moving to a 15-year fixed than from cash-out, even at today's rates, because the lifetime interest swing is enormous.
On cash-out, the 80 percent ceiling and 2 percent fee cap are the constraints. If you have $80,000 in equity in a $400,000 home, the constitution says you cannot pull any of it out via a cash-out refinance, because that would push total liens above 80 percent. A home equity line of credit sits under the same 80 percent cap. The workaround in those cases is usually waiting for more amortization or appreciation, or considering a personal loan if the use is specific and short-term.
What is actually happening in the Texas market
Texas housing in 2026 looks healthier than it did in 2023 and 2024. The state added roughly 1.2 million net new residents between 2020 and 2025, mostly into the Dallas-Fort Worth, Houston, and Austin metros, which kept demand strong even through the rate spike. Inventory has normalized; the months-of-supply figure across the major metros is now in the 3 to 4 range, which is balanced.
Austin specifically went through a sharp correction. After peaking in spring 2022, median prices fell roughly 18 percent and have only recently stabilized. Homeowners who bought in 2021 or 2022 in Austin may still be near or below their purchase price. For refinancing, that matters because it can push you above 80 percent loan-to-value, which either requires PMI or rules out conventional refinancing entirely. Check your current value before assuming you have equity.
Houston, Dallas, and San Antonio held up better. Year-over-year price changes in those metros are running flat to modestly positive in 2026. The combination of stable prices and stable rates means refinancing decisions can be made on their own merits, without trying to predict where the market is going.
Insurance is the other thing that has shifted. Texas homeowner insurance premiums are up roughly 40 percent over the last three years, driven by hail in North Texas and hurricane exposure on the coast. When you refinance and the lender requires an updated insurance binder, do not assume the old premium carries over. Get a fresh quote before locking, because the higher premium increases the escrow portion of the new payment.
A worked example
Take a homeowner in Plano with a $325,000 conventional 30-year loan at 7.25 percent, taken out in late 2023. They are paying roughly $2,217 a month in principal and interest. Refinancing to a 6.375 percent 30-year today would drop that payment.
| Item | Current | After refinance |
|---|---|---|
| Loan balance | $325,000 | $325,000 |
| Rate | 7.25% | 6.375% |
| Principal & interest | $2,217 | $2,028 |
| Monthly savings | — | $189 |
Closing costs on this Texas rate-and-term refinance would land around $7,800: $2,800 in lender and origination fees, $1,400 title insurance, $600 appraisal, $300 recording, and roughly $2,700 in prepaid property tax and homeowner insurance to fund the new escrow account. Strip out the escrow prepaid, which is money the borrower would owe anyway, and the true sunk cost is closer to $5,100.
Break-even: $5,100 divided by $189 a month equals 27 months, about two and a quarter years. Plan to stay longer than that and the refinance pays back. Over a 7-year hold, that is $10,800 in interest savings net of cost, plus a faster amortization curve.
A useful Texas-specific footnote: the total payment including property tax (roughly $460 a month on a $325,000 home at 1.68 percent) and insurance (roughly $200 a month) is closer to $2,700, not $2,000. The rate cut moves the interest piece, not the tax and insurance pieces. Refinance only changes the part of the payment that goes to the lender.
Run the same math with your own loan in the Texas mortgage comparison tool.
Frequently asked questions
What is the 80 percent rule on Texas cash-out refinances?
Texas constitutional law caps total mortgage debt at 80 percent of the home's appraised value on any cash-out refinance or home equity loan. If your home appraises at $400,000, the most you can owe across all liens on it after a cash-out is $320,000. This rule is unique to Texas and is the single biggest difference between a Texas cash-out and one in any other state.
Is there a waiting period to refinance in Texas?
Yes. Texas requires a 12-day cooling-off period between when you sign the initial loan application and disclosures and when the loan can close. There is also a one-year waiting period between cash-out refinances; you can only do a Texas Section 50(a)(6) home equity loan once every 12 months. A rate-and-term refinance, which does not take cash out, does not have the 12-month wait.
How much does it cost to refinance a mortgage in Texas?
Texas refinance closing costs typically run 2 to 4 percent of the loan amount, with cash-out refinances capped at 2 percent of the loan in fees by state law. On a $300,000 loan that is roughly $6,000 to $12,000 covering origination, title insurance, escrow, recording, appraisal, and prepaid taxes and insurance. Texas has no state transfer tax, which keeps the total bill lower than in coastal states.
Can I do a cash-out refinance to pay off my primary residence in Texas?
Yes, with restrictions. The home must be your homestead, you must have at least 20 percent equity after the new loan, and the loan is subject to the Texas Section 50(a)(6) rules including the 12-day notice, 2 percent fee cap, and one-per-year limit. Once you do a 50(a)(6) loan, every future refinance on that property is also subject to those rules unless you do a one-time conversion to a non-home-equity loan after 12 months.
What is my Texas property tax going to do when I refinance?
Refinancing does not change your appraised value, your taxable value, or your homestead exemption. Texas property taxes are reassessed annually by your county appraisal district based on market value, capped at 10 percent year-over-year growth on homestead properties. Your refinance has no effect on this. What does matter for your monthly payment: your new escrow account will collect 1/12 of the annual tax bill each month, and Texas effective property tax rates are high at roughly 1.7 percent statewide, so the escrow portion is a big share of the payment.
Should I refinance from a 30-year to a 15-year in Texas?
A 15-year fixed typically prices 0.5 to 0.75 percent below a 30-year, so on a $300,000 loan you might trade a 6.3 percent 30-year for a 5.65 percent 15-year. The monthly payment goes up because the loan amortizes faster, but lifetime interest can drop by $150,000 or more. The question is whether you can comfortably carry the higher payment. If your income is stable and you do not need the cash flow for retirement contributions or higher-return investments, a 15-year is usually the better long-term choice.
Are Texas rates higher than the national average?
Generally Texas mortgage rates are within a few basis points of the national average for conforming loans. Texas is a non-recourse state on most home purchase loans, which keeps lender risk reasonable. Where Texas borrowers pay more is on property taxes and home insurance, especially in coastal counties exposed to wind and hail, not on the underlying mortgage rate.