What Income Do I Need to Afford a $300K House in Texas?

The Complete Monthly Cost of a $300,000 Texas Home

Most affordability calculators show only the mortgage payment. In Texas, that produces a dangerously incomplete picture because Texas property taxes are among the highest in the nation — the Tax Foundation’s state data puts Texas’s average effective rate at approximately 1.74% versus the 1.10% national average. That gap adds $192/month to the PITI calculation on a $300,000 home compared to the national average, meaning the income required to afford a $300,000 Texas home is substantially higher than the same calculation in a lower-tax state.

Building the full payment from scratch using $300,000 purchase price, 1.9% representative Texas county tax rate (a reasonable mid-range for most DFW, Austin, Houston, and San Antonio suburban markets), and $2,800/year Texas homeowners insurance:

FHA, 3.5% down ($10,500 down):

• Loan: $289,500 + UFMIP $5,066 financed = $294,566
• P&I at 6.875% (FHA rate, no LLPAs): $1,934/month
• Annual MIP at 0.55%: $135/month
• Property taxes at 1.9%: $475/month
• Homeowners insurance: $233/month
• Total PITI: $2,777/month

Conventional, 5% down ($15,000 down):

• Loan: $285,000
• P&I at 7.125% (6.875% + LLPA at 680 FICO/95% LTV): $1,919/month
• PMI at 0.75%: $178/month
• Property taxes: $475/month
• Insurance: $233/month
• Total PITI: $2,805/month

Conventional, 10% down ($30,000 down):

• Loan: $270,000
• P&I at 7.0% (better LLPA at 90% LTV): $1,797/month
• PMI at 0.60%: $135/month
• Property taxes: $475/month
• Insurance: $233/month
• Total PITI: $2,640/month

Conventional, 20% down ($60,000 down), no PMI:

• Loan: $240,000
• P&I at 6.875% (minimal LLPA at 720+ FICO, 80% LTV): $1,577/month
• No PMI
• Property taxes: $475/month
• Insurance: $233/month
• Total PITI: $2,285/month

VA, 0% down (eligible veterans):

• Loan: $300,000 + $6,450 (2.15% fee financed) = $306,450
• P&I at 6.875% (VA rate, no LLPAs): $2,013/month
• No PMI or MIP
• Property taxes: $475/month
• Insurance: $233/month
• Total PITI: $2,721/month

Income Requirements at Each DTI Threshold

Lenders qualify borrowers using back-end DTI — total monthly debt payments divided by gross monthly income. Here’s the minimum gross annual income needed to qualify for each scenario above at two DTI assumptions: 43% (conservative; standard conventional automated approval comfort zone) and 50% (FHA maximum with compensating factors), assuming no other monthly debts:

FHA, 3.5% down (PITI $2,777):

• At 43% DTI: $2,777 ÷ 0.43 = $6,458/month = $77,500/year minimum
• At 50% DTI: $2,777 ÷ 0.50 = $5,554/month = $66,650/year minimum

Conventional, 5% down (PITI $2,805):

• At 43% DTI: $2,805 ÷ 0.43 = $6,523/month = $78,275/year minimum
• At 45% DTI (conventional standard): $2,805 ÷ 0.45 = $6,233/month = $74,800/year minimum

Conventional, 20% down (PITI $2,285):

• At 43% DTI: $2,285 ÷ 0.43 = $5,314/month = $63,768/year minimum
• At 45% DTI: $2,285 ÷ 0.45 = $5,078/month = $60,933/year minimum

VA, 0% down (PITI $2,721):

• At 43% DTI: $2,721 ÷ 0.43 = $6,328/month = $75,932/year minimum
• At 41% DTI residual (VA’s standard): VA actually uses residual income rather than DTI as its primary qualification standard. The VA rule of thumb is 41% back-end DTI as a reference point, but residual income — what’s left after all debts — is what VA underwriters actually evaluate.

Adding $600/month in other monthly debts (car payment + minimum credit card payments): This adds $600/0.43 × 12 = $16,744 to each income requirement above. FHA 3.5% down becomes $94,244/year; conventional 20% down becomes $80,512/year. The impact of existing debt on qualifying income is proportionally large — a $500/month car payment alone requires approximately $14,000 more in annual income at 43% DTI.

Texas Property Tax Variability: Why Location Matters

Not all Texas property taxes are equal. The effective rate varies significantly across municipalities and school districts, and on a $300,000 home the difference between a high-tax and low-tax Texas district can be $150–$250/month in PITI:

• Dallas ISD (DISD): effective rate approximately 2.15–2.40% → $538–$600/month on $300,000
• Fort Worth ISD (FWISD): approximately 1.90–2.25% → $475–$563/month
• Austin ISD (AISD): approximately 1.85–2.10% → $463–$525/month
• Houston ISD (HISD): approximately 2.05–2.45% → $513–$613/month
• Northside ISD (San Antonio): approximately 1.75–2.00% → $438–$500/month
• Collin County suburban districts (Plano ISD, Frisco ISD, McKinney ISD): approximately 1.70–2.00% → $425–$500/month
• Rural Texas counties: approximately 1.40–1.70% → $350–$425/month

The $250/month difference between a Dallas ISD address at 2.4% and a rural county at 1.5% on the same $300,000 home translates to approximately $7,000 more in annual income needed to qualify at 43% DTI. School district selection isn’t only a quality-of-education decision — it’s a meaningful financial variable that affects both your qualifying income threshold and your long-term carrying cost.

Texas Homestead Exemption: How It Changes Your Payment Starting Year 2

Filing the Texas homestead exemption (Form 50-114 with your county appraisal district by April 30 of the year after purchase) reduces your school district taxable value by $100,000. At most Texas school district tax rates of 0.80–1.20%, this saves $800–$1,200/year starting in year 2 of ownership.

Important timing note: your lender sets escrow based on the full first-year tax bill before the exemption applies. The exemption takes effect January 1 of the following year and reduces the actual tax bill beginning in year two. Expect a year-two escrow analysis from your servicer resulting in either a refund check of $400–$600 or a reduction in your monthly escrow payment. This is normal and expected — the year-one payment is modestly higher than the steady-state amount.

The homestead designation also activates a 10% annual cap on assessed value increases. Once in place, your taxable value can increase no more than 10% per year regardless of actual market appreciation. In years where Texas markets appreciate 15–25% (as occurred in 2021–2022), the capped assessment for existing homesteaders produces substantial tax savings relative to newly purchased homes that reset to full market value. The 10% cap compounds over time — a homeowner who’s been in a home for 5+ years in a high-appreciation market may have a taxable value 30–40% below actual market value, saving hundreds or thousands per year in taxes that new buyers in the same neighborhood don’t receive.

Down Payment Assistance: Reducing the Cash Needed at Closing

For buyers at the $300,000 price point in Texas, several DPA programs can dramatically reduce cash required at closing:

TSAHC Homes for Texas Heroes: 3–5% grant (no repayment required) for teachers, firefighters, police, corrections officers, veterans, and EMS. On a $285,000 FHA loan, a 5% TSAHC grant = $14,250, covering the entire FHA 3.5% down ($9,975) with $4,275 remaining toward closing costs. Income limits apply (typically 115% of area median income); purchase price limits vary by county. Herring Bank is a participating TSAHC lender — ask about combining TSAHC with your mortgage application.

TSAHC Home Sweet Texas: Same 3–5% grant structure for general buyers meeting income qualifications — not limited to specific occupations.

TDHCA My First Texas Home: 0% interest second lien for up to 5% of the loan amount. No required monthly payment — repaid at sale, refinance, or payoff. Functions as a deferred soft second that reduces cash at closing without adding to monthly debt obligations for DTI calculation purposes (deferred-payment seconds with no required payment are treated differently by some programs — confirm treatment with your lender).

Local programs: Fort Worth Housing Solutions, Dallas Homebuyer Assistance Program, Austin Homebuyer Assistance Program, Tarrant County DPA, and dozens of city and county programs provide additional assistance with varying geographic and income restrictions. Stacking a city program with a TSAHC grant can produce very low cash-to-close outcomes on purchases in the $250,000–$320,000 range.