Texas Investment Property Loans
How lending actually works in Texas, including the local rules that change your loan.
Key terms
- Fix and flip
- Buy, renovate and resell
- DSCR rental
- Long term hold qualified on rent
- Bridge
- Fast acquisition ahead of permanent financing
- New construction
- Ground up builds
- Cash out refinance
- Releasing equity to redeploy
Texas is one of the most active investor markets in the country, and it also has the most distinctive lending rules of any state we work in. Two of them change how a deal is structured, and investors coming from out of state are regularly caught by both.
Texas cash out rules and why they matter
Texas has constitutional restrictions on cash out lending against a homestead property. These rules do not apply to a non owner occupied investment property held for business purposes, which is what almost every investor loan is, but they do create real problems when a property has any homestead history attached to it or when the borrower has occupied it.
The practical effect is that title work in Texas gets scrutinised more closely on a cash out file, and it is worth raising occupancy history at the start rather than discovering it during title review. If you are executing a cash out refinance on a Texas property you have ever lived in, say so on day one.
Property taxes change the DSCR math
Texas has no state income tax and correspondingly high property taxes. Effective rates in many investor markets run well above the national average, and that lands directly in the PITIA figure that determines your debt service coverage ratio.
A property in a Texas county with a high effective rate can produce a materially lower DSCR than an identical property with identical rent in a low tax state. This is the single most common reason a Texas rental file comes back short on coverage. Run the actual county tax figure, not a national average, through the DSCR calculator before you assume the deal qualifies.
Non judicial foreclosure and what it means for pricing
Texas is a non judicial foreclosure state with one of the faster timelines in the country. For a borrower this is mostly invisible, but it affects how lenders price risk. Shorter recovery timelines generally support more competitive terms than states where foreclosure runs through the courts for a year or more.
Loan programs available in Texas
We are most active in Houston, Dallas, San Antonio, Austin and Fort Worth, and we lend throughout the state. Loan sizes run from $100,000 to $25 million with approval decisions typically inside 72 hours.
Other state guides are on the where we lend page.
Frequently asked questions
Do you lend on investment property in Texas?
Yes. We place fix and flip, DSCR rental, bridge, new construction and cash out refinance financing across Texas including Houston, Dallas, San Antonio, Austin and Fort Worth.
Do Texas cash out restrictions apply to investment property?
The constitutional homestead cash out rules apply to owner occupied homestead property, not to non owner occupied investment property held for business purposes. Occupancy history still gets close title scrutiny, so disclose it early.
Why is my Texas DSCR lower than expected?
Almost always property taxes. Texas has no state income tax and correspondingly high property tax rates, which raise the PITIA payment used in the coverage calculation. Use the actual county rate rather than a national average.
Ready to fund your next deal?
Approval within 72 hours. Close in 5 to 10 business days.
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