The single biggest surprise for buyers relocating to Texas — especially from California, Illinois, or the Northeast — is the property tax bill. Texas has no state income tax, which draws people in. But property taxes here are among the highest in the country, and they have a direct, significant impact on your monthly mortgage payment. Before you lock in a budget for a home purchase in Garland, McKinney, Frisco, or anywhere in DFW, you need to understand exactly how this works.
How Property Taxes Work in Texas
Texas property taxes are levied by multiple local taxing entities — not the state itself. Your total tax rate is the sum of rates from several sources that typically include:
- School district (usually the largest portion — often 1.0%–1.4% alone)
- County
- City or municipality
- Special districts (hospital district, community college, MUD — Municipal Utility District — in newer subdivisions)
MUD districts are especially common in newer master-planned communities in Forney, Royse City, and Prosper. They fund infrastructure (water, sewer, roads) for developments that outpaced existing municipal systems. MUD rates can add 0.3%–0.7% on top of base county rates — which is why a brand-new home in a newer suburb sometimes has a higher effective tax rate than a comparable older home closer to Dallas.
Texas appraisal districts assess your property value annually. Your tax bill = assessed value × total combined rate. Both variables can change each year.
Property Tax Rates Across DFW Cities (Approximate 2026)
| City | County | Est. Rate | Annual Tax on $400k Home |
|---|---|---|---|
| Garland | Dallas | ~2.35% | ~$9,400 |
| Frisco | Collin | ~2.15% | ~$8,600 |
| McKinney | Collin | ~2.10% | ~$8,400 |
| Plano | Collin/Dallas | ~2.20% | ~$8,800 |
| Rockwall | Rockwall | ~2.25% | ~$9,000 |
| Forney | Kaufman | ~2.40% | ~$9,600 |
| Royse City | Rockwall | ~2.30% | ~$9,200 |
| Fort Worth | Tarrant | ~2.25% | ~$9,000 |
Rates are estimates for general planning purposes only. Actual rates vary by year, taxing entities, and specific address. Always verify with the county appraisal district or your lender before finalizing your budget.
How Property Taxes Affect Your Monthly Mortgage Payment
Most mortgage lenders require an escrow account. Each month, 1/12th of your estimated annual property tax (plus homeowner's insurance) is collected alongside your principal and interest payment and held in escrow. When the tax bill is due (typically in January in Texas, though some counties allow installments), the lender pays it from your escrow account.
This means your true monthly mortgage cost is not just principal + interest. It's PITI: Principal, Interest, Taxes, Insurance. Here's how the math looks at a 7% rate with 5% down:
| Home Price | P&I Only | + Taxes (2.25%) | + Insurance Est. | Total PITI |
|---|---|---|---|---|
| $300,000 | $1,899 | +$563 | +$125 | $2,587 |
| $400,000 | $2,532 | +$750 | +$160 | $3,442 |
| $500,000 | $3,165 | +$938 | +$190 | $4,293 |
Illustrative only. 5% down, 7% rate, 2.25% property tax rate, 30-year term. Does not include PMI or HOA. Actual totals vary.
Notice how taxes add $563–$938/month on top of principal and interest. This is why budgeting from the principal-and-interest payment alone misleads buyers — the real number is 25–35% higher once taxes and insurance are added.
The Texas Homestead Exemption: File It Immediately
The Homestead Exemption is the most powerful tool available to Texas homeowners to reduce their tax bill. Filing it is free, takes about 10 minutes online, and must be done after closing on your primary residence.
What it does:
- Removes $100,000 from your home's taxable value for school district taxes (as of recent Texas legislation)
- Caps annual increases in your assessed value at 10% per year (the "10% cap") — protecting you from sharp tax spikes even if market values surge
- Additional exemptions available for seniors (65+), disabled individuals, and veterans with service-connected disability ratings
On a $400,000 home in a district with a 1.2% school tax rate, the $100,000 exemption saves $1,200/year or $100/month. Senior and disability exemptions can eliminate school district taxes entirely.
File with your county appraisal district — not the tax assessor. Most counties have online filing. In Dallas County, file at dallascad.org. Collin County: collincad.org. Rockwall County: rockwallcad.com. Kaufman County: kaufmancad.org.
How to Protest Your Texas Property Tax Appraisal
Every spring, county appraisal districts send out Notices of Appraised Value. If you believe your home has been over-assessed — meaning the appraised value is higher than what comparable homes actually sell for — you have the right to protest. The deadline is typically May 15 or 30 days after you receive your notice, whichever is later.
How to protest effectively:
- File your protest online or by mail before the deadline. Simply filing preserves your right.
- Gather comparable sales (comps) — recent sales of similar homes in your neighborhood at prices below your assessed value. Your Realtor or county CAD website can help.
- Request the evidence packet the appraisal district is using to justify your value. You're entitled to it.
- Attend the informal hearing — many protests are settled informally before reaching the Appraisal Review Board.
- Consider a protest service — many Texas property tax firms handle protests on a contingency basis (no savings, no fee). They're especially useful for higher-value homes where the potential savings justify professional help.
How I Factor Property Taxes Into Your Payment
When I issue a pre-approval or run loan scenarios, I use the actual estimated property tax rate for your target city and price range — not a generic placeholder. That means the total monthly payment number you see reflects what you'll actually pay, including escrow, not just principal and interest. No surprises at closing, and no moment where the payment turns out to be $400/month higher than you planned.
Frequently Asked Questions
How much are property taxes in DFW Texas?
DFW property tax rates typically range from 1.8% to 2.8% annually depending on city, school district, and special districts. Most DFW buyers should budget 2.0%–2.5% of their home's assessed value per year. On a $400,000 home that's $8,000–$10,000/year or $667–$833/month added to your mortgage payment through escrow.
Are Texas property taxes included in my mortgage payment?
Yes, in most cases. Lenders require an escrow account that collects 1/12th of your estimated annual property tax each month alongside principal and interest. The lender pays your tax bill from escrow when it's due. Your real monthly payment is PITI: Principal, Interest, Taxes, and Insurance.
What is the Texas Homestead Exemption and how do I get it?
The Homestead Exemption reduces your home's taxable value by $100,000 for school district taxes and caps annual assessed value increases at 10%. File with your county appraisal district after closing — it's free and takes about 10 minutes online. File as soon as possible after you take ownership. It can save $1,000–$3,000+/year.
Can I lower my Texas property tax bill?
Yes — two main ways. First, file for the Homestead Exemption (and any other exemptions you qualify for, such as senior or disability). Second, protest your annual appraisal if you believe your assessed value is too high. Many Texas homeowners successfully reduce their assessed value and tax bill through the annual protest process.
Want to know your real monthly payment in DFW?
I build property taxes and insurance into every payment estimate — so the number you see is the number you'll actually pay. Text or call me at 469-545-7180 for a free pre-approval with full PITI breakdown.