A young couple in Pflugerville does the math at the kitchen table. They have steady jobs, a little saved for a down payment, and a pre-approval letter. Then the lender walks them through the monthly payment with property taxes and homeowners insurance folded in, and the number is bigger than they expected. The sticker price of the house was never the whole story.
This piece breaks down what it actually takes to buy a median-priced home in Texas: the income lenders look for, how the state’s high property taxes and rising insurance costs change the calculation, and why the answer is so different in Austin than it is in El Paso. The figures here are approximations drawn from public data, because the exact number depends on your rate, your down payment, and your other debts.
The starting point: the median Texas home price
The Texas Real Estate Research Center at Texas A&M University tracks home prices and sales across the state in its housing activity data. The statewide median sale price has hovered in the low-to-mid $300,000 range in recent reporting. That single number hides enormous variation, but it is the right place to start, because affordability math always begins with the price of the home you are trying to buy.
Lenders generally do not let your total monthly housing payment exceed a set share of your gross income, often around 28 percent under traditional guidelines, with broader debt capped near 36 to 43 percent depending on the loan. Those ratios, not the home price alone, are what determine how much income you need.
How property taxes change the Texas math
Texas has no state income tax, but it makes up much of that revenue through property taxes that run well above the national average. The Texas Comptroller explains the structure in its property tax overview, and effective rates across the state commonly land in the neighborhood of 1.5 percent to 2 percent of a home’s value per year.
That matters enormously for affordability. On a $340,000 home, a property tax bill in that range can add several hundred dollars to the monthly payment before you have paid a cent toward the mortgage itself. Lenders include those taxes in the qualifying payment, which means the income you need to buy in Texas is higher than it would be for the same-priced home in a low-tax state. The homestead exemption reduces the taxable value of your primary residence and softens the blow, but it does not erase the gap.
Insurance is the other hidden cost
Homeowners insurance is the second cost that catches Texas buyers off guard. The state’s exposure to hail, wind, and severe storms makes it one of the more expensive markets in the country. The Texas Department of Insurance publishes market data and consumer guidance through its homeowners insurance market overview, and average annual premiums in Texas have run well above the national figure in recent years.
Like property taxes, insurance is rolled into the monthly payment that lenders use to qualify you. A higher premium pushes up the payment, which pushes up the income you need. When you estimate affordability, the realistic monthly cost is mortgage principal and interest plus taxes plus insurance, often abbreviated PITI, not just the loan payment a basic online calculator shows.
What the income figure roughly looks like
Put those pieces together and the income needed to comfortably buy a median-priced Texas home generally lands in the range of roughly $75,000 to over $100,000 a year, depending heavily on the mortgage rate, the size of your down payment, and your other monthly debts. National affordability trackers such as the one maintained by HSH publish metro-by-metro salary estimates that fall within that band for the major Texas markets.
Mortgage rates are the single biggest swing factor. Freddie Mac publishes the weekly average 30-year fixed rate in its Primary Mortgage Market Survey, and small moves in that rate can change the required income by thousands of dollars a year. A larger down payment cuts the loan amount and lowers both the payment and the income threshold, which is why saving more upfront does double duty.
Why Austin and El Paso are not the same question
The statewide median is a useful anchor, but no one buys “the statewide median.” Austin’s metro median has run far above the state figure, which is why affordability estimates for that market climb toward and past $130,000 in household income. Markets like El Paso, the Rio Grande Valley, and parts of the Panhandle sit well below the state median, where a more modest income can carry a mortgage.
The Texas Real Estate Research Center’s home price data lets you check the median for your specific metro rather than relying on the statewide number. That is the figure to run your own math against, because the difference between metros can be larger than the difference between two income brackets.
The down payment myth
One of the most persistent misunderstandings among Texas buyers is that you need 20 percent down. You do not. Putting 20 percent down lets you avoid private mortgage insurance and lowers your monthly payment, but plenty of Texans buy with far less. Conventional loans can go as low as 3 percent down, and government-backed FHA loans require as little as 3.5 percent, with VA loans for eligible veterans requiring nothing down at all, as outlined by the federal Consumer Financial Protection Bureau.
The trade-off is that a smaller down payment means a larger loan, a higher monthly payment, and, below 20 percent on most loans, an added mortgage-insurance premium until you build enough equity. That pushes up the income you need to qualify. So the down payment and the required salary move together: save more upfront and you can qualify on less income; put less down and you will need to earn more to carry the larger payment. There is also down-payment assistance available to qualifying buyers through the Texas Department of Housing and Community Affairs, which can change the math for first-time and lower-income buyers.
How to figure your own number
Start with the median price in the metro you are targeting. Add a realistic property tax estimate using the effective rate for that county, add an insurance estimate, and assume a mortgage rate from the current Freddie Mac survey. Then work backward from the 28 percent guideline to see what gross income supports that payment. The result will not be exact, but it will be far more honest than a price tag alone.
The larger lesson for Texas buyers is that the purchase price is only the down payment on the conversation. Taxes and insurance are the part of the bill that never goes away, and in Texas they are big enough to move the income you need into a higher bracket than the home price by itself would suggest. Knowing that before you sit down with a lender is the difference between a comfortable payment and a stretched one.
This article was produced with AI assistance and reviewed by a human editor. Figures are linked to their primary sources; where a claim could not be verified from the public record, we say so.
