Texas has no state income tax, but it makes up for it with property taxes. On a $1M+ rental, that tax bill is often the biggest number after the mortgage itself, and it decides how much a DSCR loan can be.
In short: LendingStreet finances $1M+ Texas rentals with DSCR loans that qualify on the property's rent, with no W-2s or tax returns. Loans start at $150,000 with no stated maximum, and larger balances are reviewed and priced case by case. Texas property taxes are high, so the tax line can lower the ratio on a high-value home more than the rate does. Executive homes in Austin, Dallas, Houston and San Antonio usually qualify on long-term rent, while Hill Country and Gulf Coast vacation homes can qualify on projected STR revenue where local rules allow.
Each major metro has its own high-value rental pocket. In Austin, investors look at Westlake and West Lake Hills, Tarrytown, Travis Heights, Barton Hills and homes around Lake Travis. In Dallas, Highland Park, University Park, Preston Hollow and Uptown lead, along with suburbs like Southlake, Frisco and Plano. In Houston, River Oaks, West University, Memorial, Bellaire and the Heights carry high-value homes, and in San Antonio, Alamo Heights and the Dominion are common.
These homes typically rent to executives, relocating families and professionals in energy, finance, health care and tech. Many are newer builds or large renovations with high-end finishes.
Outside the metros, Hill Country towns like Fredericksburg, Wimberley, Dripping Springs and the Highland Lakes area, and Gulf Coast spots like Galveston, Port Aransas and South Padre Island, have expensive vacation homes that earn by the night.
A DSCR loan divides rent by the full monthly payment: principal, interest, property taxes, insurance and any HOA dues. In most states, principal and interest dominate. In Texas, taxes on a $1M+ home can be a much bigger share of the payment than investors from other states expect.
Combined rates vary by county, city, school district and special districts, and many newer suburban homes sit in municipal utility districts that add to the bill. Investment properties do not get the homestead exemption, and appraisal districts reassess values regularly, so the seller's bill may understate what you will pay.
Use a tax estimate based on your purchase price and the full combined rate for that address. If the ratio is close, consider protesting the assessment in future years, but underwriting will use the current figures.
This example is illustrative and not a quote. An investor buys a single-family home in the Austin area for $1,250,000 and signs a lease at $8,600 a month. Property taxes and insurance together come to about $2,300 a month. The sample rate is 7.00% on a 30-year fixed.
At 75% LTV, the loan is $937,500, principal and interest is about $6,237, the total payment is about $8,537 and DSCR is about 1.01x, just over the standard minimum. At 70% LTV, the loan is $875,000, principal and interest is about $5,821, the total payment is about $8,121 and DSCR is about 1.06x. Taxes and insurance are more than a quarter of the payment either way.
| Item | 75% LTV | 70% LTV |
|---|---|---|
| Down payment | $312,500 | $375,000 |
| Loan amount | $937,500 | $875,000 |
| Principal and interest (7.00%, 30-year) | About $6,237 | About $5,821 |
| Taxes and insurance | $2,300 | $2,300 |
| Total monthly payment | About $8,537 | About $8,121 |
| DSCR at $8,600 rent | About 1.01x | About 1.06x |
Texas insurance has its own regional pattern. North and Central Texas see frequent hail, which affects roof claims, deductibles and premiums. Houston and the Gulf Coast face hurricane and flood exposure. Along the coast, many owners get wind coverage through the Texas Windstorm Insurance Association when private carriers will not write it.
On a $1M+ home, rebuilding costs and premiums are high, and the premium goes straight into the DSCR payment. Get quotes early, and ask about roof age and impact-resistant roofing. In Houston, check the flood zone and whether the home has flooded before.
A large share of Texas's $1M+ rentals are newer homes in master-planned communities around Austin, Dallas-Fort Worth and Houston, including Southlake, Frisco, Prosper, The Woodlands, Cinco Ranch, Dripping Springs and Lakeway. These homes often appeal to relocating families who want space and strong schools.
They also tend to carry HOA dues and, in many cases, municipal utility district taxes on top of city and county rates. Both count in the DSCR payment. Read the HOA's leasing rules as well; some communities set minimum lease terms or restrict short-term rentals in their deed restrictions.
Brand-new homes may not have a rental history, so the appraiser's market rent estimate carries more weight. A signed lease to a qualified tenant before closing, or soon after for a refinance, gives the file a firmer rent figure.
Large vacation homes in Fredericksburg, Wimberley, the Highland Lakes, Galveston, Port Aransas and South Padre can qualify on projected short-term rental revenue. STR DSCR rates start at 6.49% for qualified borrowers.
Local rules vary. Some cities require STR permits, registration or hotel occupancy tax filings, and some HOAs prohibit short-term rentals outright. Austin regulates STRs closely and limits non-owner-occupied rentals in many residential areas. Confirm both the city rules and the deed restrictions before you rely on nightly income.
Gulf Coast homes add windstorm and flood insurance to the payment, and some sit on barrier islands with their own building and access rules. Plan for those costs in your projection.
Texas law generally prohibits cities from adopting rent control, so long-term rents are set by the market. The state is also known for relatively quick, non-judicial foreclosure and a landlord-tenant process that investors often find predictable, though you should confirm details with a Texas attorney.
Texas has well-known limits on cash-out refinancing, but those rules apply to homesteads. Cash-out on a non-owner-occupied investment property follows the loan program's rules instead: up to 75% LTV, with the rent covering the new payment at the program minimum and seasoning that varies by program.
None of this is a substitute for local counsel. Tenant notice rules, HOA restrictions and city ordinances still apply, and they differ across Texas cities. Ask a Texas real estate attorney or your title company about anything specific to your property.
Texas investors who build a group of high-value rentals across Austin, Dallas and Houston often end up with several large loans. Once you own five or more properties, a blanket portfolio loan can combine them under one closing with portfolio pricing, qualifying on the portfolio's combined cash flow.
That can help when one property's ratio is tight but others are strong. Each property still needs to meet program rules, and release terms for selling a single property vary by program.
DSCR rates start at 6.125% for well-qualified borrowers, and short-term rental DSCR starts at 6.49%. Larger balances are priced case by case. Purchases go up to 80% LTV and cash-out refinances up to 75%, though on large balances the maximum is often lower and reserves higher. Some programs require a second appraisal or a more detailed review.
The minimum credit score is 620, with better pricing at higher scores. LLC borrowers are allowed, 30-year fixed options are available and no W-2s or tax returns are required. The financing team reviews your scenario and comes back with 2-3 options.
Texas has a deep market of rentals in the $500K to $1M loan range. Examples include newer homes in master-planned suburbs like Frisco, McKinney, Katy, Cypress, The Woodlands and Round Rock, single-family rentals and duplexes inside Houston's Loop 610 and in East Austin, homes in San Antonio's Stone Oak area, and Gulf Coast vacation homes in Galveston and Port Aransas.
At this size, leverage is often closer to the program maximums of 80% LTV on purchases and 75% on cash-out, and reserve requirements are often lighter than on $1M+ loans. Both vary by program, and the 1.0x standard minimum DSCR still applies.
Property taxes and insurance carry the same weight as on larger homes. MUD taxes in newer suburbs, hail coverage inland and windstorm coverage on the coast all go into the payment, so get the full tax rate and an insurance quote before you settle on a price.
Texas closings run through title companies and can move quickly. Have these items ready when you send your scenario.
Yes. LendingStreet finances investment property in Texas, including executive homes in Austin, Dallas, Houston and San Antonio and vacation homes in the Hill Country and on the Gulf Coast. Loans start at $150,000 with no stated maximum.
Taxes are part of the payment used to calculate DSCR. On high-value Texas homes, they can be a large share of the payment and lower the ratio significantly.
No. Those limits apply to homesteads. Cash-out on a non-owner-occupied rental follows the program's rules, up to 75% LTV.
Possibly. STR DSCR loans can qualify on projected revenue where local rules and HOA restrictions allow short-term rentals. Confirm both before you apply.
Austin regulates short-term rentals closely and limits non-owner-occupied STRs in many areas. Many Austin investors qualify on long-term rent instead.
Purchases go up to 80% LTV, but on large balances the maximum is often lower and varies by program. High taxes can also require more equity for the ratio to work.
Yes. MUD taxes are part of the property tax bill, and the full combined bill goes into the payment used to calculate DSCR. Use the total rate for the address when you run your numbers.
Yes, if you have five or more properties. A blanket portfolio loan offers portfolio pricing and one closing, qualifying on combined cash flow.
No. The loan qualifies on the property's rent, with a 620 minimum credit score and reserves.
Yes. DSCR loans start at $150,000 with no stated maximum, and $500K to $1M loans are common for master-planned suburban homes around Dallas, Houston and Austin, in-city duplexes, and Gulf Coast vacation homes.
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