|7/1 ARM (adjustable rate)||3.229%||3.214%|
|5/1 ARM (adjustable rate)||3.774%||3.399%|
Texas is diverse and rich in history and no personal income tax is just a single great reason to call the Lone Star state home.
Saddle up with an understanding of mortgage rates before you buy or refinance a Texas property. Here’s Benzinga’s guide to current Texas mortgage rates.
What is a Mortgage Rate?
You pay more than just the purchase price when you take out a home loan. You also pay interest to cover lender expenses for administering the loan. Your mortgage rate is the amount of interest your lender charges.
You’ll often see 2 rates as you shop for a home loan — an interest rate and an annual percentage rate (APR). The APR includes lender fees and points. The interest rate doesn’t include these charges.
5 Best Mortgage Lenders in Texas
Which lenders are the best mortgage lenders in the Lone Star state? Let’s take a closer look.
1. Best Overall: Quicken Loans®
Quicken Loans® offers a wide range of home loan products and award-winning customer service. It offers proprietary and conventional home loans along with FHA and VA mortgages.
Its website is easy to navigate and informative. You can use the mortgage calculators to evaluate your options and review learning center articles to better understand the mortgage process. And check out Rocket Mortgage® by Quicken Loans® if you prefer a completely digital mortgage process.
2. Best for Veterans: Veterans United
Veterans United takes its mission to serve veterans seriously. It focuses exclusively on VA loans and has representatives available around the clock. It also employs expert advisors from every military branch to provide exceptional service.
You can start your mortgage application online or by phone. Veterans United has excellent reviews from its customers, who praise its professional, helpful staff.
3. Best for First-Time Home Buyers: Chase
Personal service makes Chase 1 of the best lenders for first-time buyers in Texas. You can start the mortgage application online and complete it with the help of a Chase advisor. Your advisor can walk you through the mortgage process and help you decide which mortgage option is the best fit.
Chase offers conventional, FHA and VA home loans. It also offers DreaMaker — a program for low- and moderate-income home buyers. It has a 3% down payment requirement. Some DreaMaker applicants may also qualify for a $2,500 home buyer grant and a $500 home buyer education benefit.
4. Best for Online Lender: Better.com
Better.com offers a completely online mortgage process with technology to streamline each step. This provider offers conventional and FHA mortgages.
Better.com also sets itself apart by offering a Better Price Guarantee. It will beat a competitor’s offer by at least $1,000. If it doesn’t, it will pay you $1,000.
You can get a basic preapproval in a few minutes. And you could save thousands without the lender fees.
5. Best for Self-Employed Individuals: Luxury Mortgage
You can qualify for this loan based on the income shown on your bank statements rather than your tax returns. Your tax returns may not reflect your true income if you’re self-employed. The bank statement qualifier loan lets you borrow up to 80% of the property value. And a credit score as low as 580 is accepted.
Luxury Mortgage also offers FHA, conventional and jumbo loans.
What Factors Impact Your Mortgage Rate?
How do lenders decide on your interest rate? Factors considered include:
- Your home’s location: In a state as big as Texas, you’ll find that the housing market varies significantly from place to place. This means that interest rates may vary as well.
- The type of loan you choose: An FHA loan will have a different rate than a conventional loan.
- Your credit history: Your lender looks at how you’ve handled debt in the past to determine how risky it is to loan you money. If you have a history of handling debt responsibly, lenders may offer you a lower interest rate.
- Your down payment: Making a larger down payment shows lenders that you’re invested in your home. It lowers the risk to the lender, and lenders may offer a lower interest rate.
What is a Mortgage Type?
Your mortgage type refers to whether your home loan is insured by a government agency. These are the most common types of mortgages:
- Conventional mortgages: These mortgages don’t have backing from a government agency.
- FHA loans: The Federal Housing Administration guarantees FHA loans. These loans require down payments as low as 3.5% and flexible credit requirements.
- USDA loans: The Department of Agriculture backs USDA loans. These loans have income limits and help borrowers buy homes in rural areas. They have no down payment requirement.
- VA loans: The Department of Veterans Affairs insures VA loans. These loans are available to veterans and service members who meet service requirements. You don’t have to make a down payment with a VA loan.
What is a Mortgage Term?
Your mortgage term is the length of time your mortgage will last if you only make the required monthly payments. Lenders offer a range of mortgage terms. Here are the most common terms:
- 30-year fixed: Your lender will schedule payments over 30 years for a 30-year fixed-rate mortgage. This means you have lower monthly payments than you would with a 15- or 20-year mortgage. A fixed-rate mortgage has the same interest rate for the loan term. This means your monthly payments are always the same.
- 15-year fixed: Your lender will spread payments over 15 years for a 15-year fixed-rate mortgage. Your interest rate and monthly payments are always the same.
- 5/1 ARM: An ARM is an adjustable-rate mortgage. This means your lender can change your interest rate, which also changes your monthly payment. Most ARMs start with an introductory period with a fixed rate. A 5/1 ARM has a fixed rate for 5 years. After that, the lender can adjust your rate annually.
Current Texas Mortgage Rates
Mortgage rates change over time to reflect inflation. Inflation is the rising cost of the things you buy every day.
Lenders also change rates on a day-to-day basis. They make changes to reflect changes in the economy. Lenders usually lower interest rates when the economy isn’t performing well to entice people to buy. Interest rates increase when the economy improves since there’s more competition for home loans.
Benzinga updates mortgage rates frequently so you have the most up-to-date data.
|7/1 ARM (adjustable rate)||3.229%||3.214%|
|5/1 ARM (adjustable rate)||3.774%||3.399%|
Calculating Interest in Texas
Your monthly mortgage payment goes toward your loan balance and interest. It typically also includes taxes and homeowners insurance.
More of each monthly payment goes toward your loan balance and less goes toward interest as time goes on. This is because your balance is lower each month so the interest charge is lower. This process is called amortization.
Here are sample mortgage payments for Texas’ largest cities.
|City||Average Home Value||Loan Term||Current Rate||Downpayment (20%)||Monthly Payment||Total Interest Paid|
|San Antonio||$178,500||30-year fixed||3.61%||$35,700||$650.04||$91,214.40|
Lender Credit Score Minimums in Texas
Your credit score is generated by a computer model. It takes into account your credit history and more. Your credit score will be higher if you have a history of on-time payments and you carry low balances on your credit cards. Late payments and accounts in collections lower your score.
Lenders use your credit score to help decide whether to offer you a home loan. They also use it to determine your interest rate.
Here are the minimum scores for 5 Texas lenders.
|Lender||Minimum credit score required|
Find the Best Mortgage Rates in Texas
Mortgage amounts are so large that even a small difference in your interest rate can save you thousands of dollars.
You can find the best rate by contacting multiple lenders. Review each quote carefully and find a lender to provide you with excellent service and great rates.
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