DSCRLensState Guide · TX
DSCR Loans in Texas
DSCR loan Texas: how the state's high property tax, no-income-tax appeal, and non-judicial foreclosure reshape investor math — plus the markets that pencil.
Data as of 2026-05-22
Key Takeaways
- ✓22 major DSCR lenders fund in Texas, with rate adjustments of roughly -5 bps over baseline for non-judicial foreclosure.
- ✓Effective property tax rate of 1.74% and average insurance of $1,100 per $100K of dwelling coverage drive the PITIA math.
- ✓State-specific closing-cost adders total roughly 0.03% of purchase price — above the national norm and routinely missed by out-of-state investors.
- ✓Rent control: none statewide. Eviction timeline: 3–5 weeks.
- ✓LLC closing is supported with $300 filing fee and $0 annual fee; series LLC available.
- ✓Top investor markets: Houston, Dallas-Fort Worth, San Antonio.
Texas at a Glance
Texas is the second-highest-volume DSCR state and the cleanest non-judicial foreclosure jurisdiction in the country — both of which make it a lender favorite. The state offers no income tax, no rent control, fast evictions, no documentary or transfer tax on closings, and a series-LLC option that Texas was among the first to enact. The countervailing reality: Texas has some of the highest effective property tax rates in the US (1.74% average vs. ~1.10% national median), which lands directly on every DSCR calculation. A property that would clear at 1.30 DSCR in a 1.0%-tax state often lands at 1.10 or below in Texas with the same rent and purchase price. Insurance is also a moving variable — wind and hail coverage in the Panhandle and coastal regions costs meaningfully more than the statewide average suggests.
Median home
$308,000
Median 2BR rent
$1,750
Gross yield
6.8%
YoY appreciation
1.2%
Population trend: High growth (top-decile inbound migration).
The DSCR Math, Texas-Calibrated
Two state-specific inputs reshape the DSCR ratio versus a generic national-average calculation: the effective property tax rate and the cost of landlord insurance. Both feed directly into PITIA, which is the denominator of every DSCR calculation.
| Input | Texas Value | National Reference |
|---|---|---|
| Effective property tax rate | 1.74% | ~1.10% (national median) |
| Avg insurance per $100K dwelling | $1,100 | ~$900 (national avg) |
| Insurance volatility within state | moderate | varies |
On a $308,000 property, the Texas property-tax line alone is roughly $5,359 per year. Combined with state-typical insurance of about $3,388on the same property, the "T" and "I" of PITIA total roughly $8,747 annually — before principal and interest.
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| Factor | Status |
|---|---|
| Foreclosure type | Non-judicial |
| Typical state rate adjustment | ~-5 bps over national base |
| Active major DSCR lenders | 22+ |
| Title closing | Escrow closing state |
State-Specific Closing Cost Adders
The following closing-cost line items are unique to Texas. Out-of-state investors routinely budget national-average closing costs and find the actual number is meaningfully higher.
| Adder | Description | Est. % of Purchase |
|---|---|---|
| No state transfer tax | Texas has no documentary stamp or transfer tax on real estate | 0.000% |
| Recording fees | $30–$100 per document recorded; minimal in the closing stack | 0.030% |
Total state-specific adders: roughly 0.03% of purchase price, on top of standard origination, title, and recording fees.
Lenders Active in Texas
| Lender | In-State Notes |
|---|---|
| Kiavi | High Texas volume; competitive on stabilized SFR portfolios |
| Lima One Capital | Strong on Houston and DFW BRRRR; flexible appraisal handling |
| LendingOne | Active across Texas; competitive 30-year fixed DSCR pricing |
| Visio Lending | Accepts 0.75 DSCR; useful for tight-margin Austin / Dallas deals |
What Costs Investors Money in Texas
Property tax is the single biggest swing factor in Texas DSCR math. Sub-market variance is significant — Austin and parts of Dallas can hit 2.5–2.9% effective rates including ISD, MUD, and PID assessments. Pull the actual tax roll for the specific property, not the county average. Newly-built homes in MUD/PID districts can carry total tax burdens 30–50% above the county effective rate, which routinely sinks deals that pencilled on average assumptions. The second cost most out-of-state investors miss is wind/hail insurance in the Hill Country and Panhandle — these aren't coastal exposures but they raise DSCR insurance costs by 40–80% over the Midwestern baseline.
Important
Eviction timeline: 3–5 weeks typical, from filing to possession.
Entity & Closing
| Item | Value |
|---|---|
| Initial LLC filing fee | $300.00 |
| Annual LLC fee | $0.00 |
| Series LLC available | Yes |
| Closing convention | Escrow closing state |
Top Investor Markets in Texas
Texas investor markets divide sharply by yield. Houston, San Antonio, and El Paso retain the cleanest DSCR math — gross yields in the 6.5–7.5% range, with DSCR ratios on standard SFR purchases regularly clearing 1.20 after realistic property tax and insurance. DFW remains rentable but tighter; Austin's price-to-rent ratio puts most standard purchases below the 1.0 floor without significant equity. Lubbock and other smaller TX metros offer strong nominal yields but operational variability (vacancy, tenant turnover, hail) requires deeper reserve modeling.
| City | Median Home | 2BR Rent | Gross Yield | Notes |
|---|---|---|---|---|
| Houston | $285,000 | $1,650 | 6.9% | Largest rental inventory in TX; broad investor SFR appeal |
| Dallas-Fort Worth | $358,000 | $1,950 | 6.5% | Strong rent growth; DSCR margins tightened post-2022 appreciation |
| San Antonio | $268,000 | $1,500 | 6.7% | Cleanest cash flow of the major Texas metros |
| Austin | $478,000 | $2,150 | 5.4% | Yields compressed post-COVID; DSCR rarely clears 1.0 on standard SFR |
| El Paso | $224,000 | $1,280 | 6.9% | Smaller market but consistent 1.20+ DSCR territory |
| Lubbock | $218,000 | $1,180 | 6.5% | College-town rental demand; hail insurance is the variable to model |
Frequently Asked Questions
FAQ
What is the minimum DSCR for a DSCR loan in Texas?+
Most Texas-active lenders accept 1.0 as the program minimum, with best pricing at 1.20+. Texas's high property tax rate makes hitting these thresholds harder than it appears — a property that would clear at 1.30 DSCR in a lower-tax state can land at 1.05 in Texas with identical rent and purchase price. Underwrite to 1.30+ for operational safety.
How does Texas property tax affect DSCR loan qualification?+
Texas property tax is part of the PITIA payment used to calculate DSCR. The statewide average effective rate is 1.74%, but specific properties can be 2.5%+ in MUD, PID, or high-ISD districts. On a $300K property, the tax line alone runs $5,200–$8,700 annually — meaningful PITIA impact. Always pull the specific property's actual tax roll before underwriting.
Are DSCR loan rates lower in Texas than other states?+
Slightly. Texas's non-judicial foreclosure process — one of the fastest in the country — typically earns a small lender-side discount (roughly 5 bps) versus comparable judicial-foreclosure states. The bigger borrower-side variable is the property tax that affects DSCR qualification, which can push borrowers into worse tier pricing if it tightens the ratio.
Are there closing-cost taxes I should know about in Texas?+
No. Texas does not impose documentary stamp tax, transfer tax, or intangible tax on real estate transactions. Closing costs are essentially origination fees, title insurance, appraisal, and recording — typically 2.5–3.5% of the purchase price, which is roughly 1.0–1.5% lower than states with documentary taxes (Florida, New York, Maryland).
Can a foreign national get a DSCR loan in Texas?+
Yes. Texas is one of the largest foreign-national DSCR markets in the US, with all major foreign-national-friendly lenders actively funding here. Standard terms apply: 65–75% LTV, 6–12 months reserves, and the same closing-cost profile as domestic borrowers. Texas's no-state-income-tax structure is an additional appeal for non-resident investors.
Is rent control a risk for DSCR investors in Texas?+
No. Texas statute preempts municipal rent control statewide. No Texas city or county can impose rent stabilization, and the preemption has been consistently affirmed. Combined with one of the fastest eviction timelines in the country (3–5 weeks typical), Texas is one of the most predictable states for DSCR operating-income underwriting.
Run Your Texas Numbers
Texas-specific defaults (effective property tax rate, average insurance cost) are pre-loaded into the calculator on this site, so the DSCR number you see reflects Texas PITIA — not a generic national average.