Are property taxes included in your mortgage in Texas?

Yes, usually: meet the stock tank

Usually, yes. On most Texas home loans, your property taxes ride along inside your monthly payment, and you don't write the tax check yourself. The thing doing the work is called escrow.

Think of a stock tank out on a ranch, with a windmill beside it. (For anyone not from here: a stock tank is a big metal water trough. For anyone from here: yes, it's also somebody's backyard pool now.) The windmill pumps a little water in, steady, all year. Then the herd shows up and drinks. That's escrow. Part of each monthly payment trickles into an account, and when the tax bill comes due, your mortgage company pays it from there. Homeowners insurance usually drinks from the same tank.

As for where the bill comes from: Texas has no state property tax. (Texas does plenty of things big. That isn't one of them.) Your bill comes from local taxing units, like your county, your city and your school district, and it's based on your home's appraised value.

Federal rules keep the tank from overflowing. Your servicer (the company that collects your payments) can collect one-twelfth of the yearly bills it expects to pay, plus a small cushion that can't go over one-sixth of a year's total. The cushion is the water left in the bottom, so the tank doesn't run dry the week the herd arrives.

The tax bill goes to the mortgage company, too. The Texas Comptroller notes that when your mortgage company pays your taxes, it's the one that receives the bill.

Could you pay the taxes yourself instead? Some loans allow it and some don't. Whether it fits depends on the loan program and your file, which makes it a good question for your first conversation.

1. Escrow pays it

On most loans, part of each payment is set aside so your servicer pays the tax bill.

2. $140,000 off

The homestead exemption takes $140,000 off your home's value for school taxes.

3. Yearly reset

Your escrow is reviewed each year, and the tax share of your payment changes then.

The herd shows up in October

Texas property taxes are paid for the year behind you, not the year ahead. (Yes, it feels backwards. You get used to it.) Taxing units usually mail bills in October. Under Tax Code Section 31.02, taxes are due when you receive the bill and become late if they aren't paid before February 1 of the following year.

So your 2026 taxes are billed in the fall of 2026 and are late if they're still unpaid on February 1, 2027. A bill that's mailed late in January gets a later deadline, and your tax office can tell you the date.

With escrow, that deadline is your servicer's. Federal rules require it to pay on time to avoid a penalty, as long as your own payment isn't more than 30 days overdue. Your end of the deal is simple: keep the windmill turning.

Splitting the tab with the seller

Because Texas bills arrive at the end of the year, the current year's taxes usually haven't been paid when you close. Somebody owned the house this spring, somebody else gets the bill, and neither of you has seen it. (Nobody panics. There's a paragraph for this.)

The standard Texas resale contract, TREC No. 20-18, handles this in paragraph 13: taxes for the current year are prorated, or split by the calendar, through the closing date.

In plain terms, the seller owes for the days they owned the home, and you owe for the rest. Since your mortgage company will pay the whole bill later, the seller's share often shows up as a credit to you on the closing statement. It's one of several lines covered in Texas closing costs.

That split is an estimate, because the real bill isn't out yet. The contract lets the proration take into account any change in exemptions for the year, and if the final bill comes in different, buyer and seller adjust once the tax statements are available.

You'll also fill the stock tank at closing. The first escrow deposit is sized so the account can cover the bill that's coming, plus the allowed cushion. It isn't a fee; it's your own money waiting for your own bill.

The form that shrinks your tax bill

If the home is your main residence, the homestead exemption takes a slice of its value off before some of your taxes are figured. Texas school districts are required to exempt $140,000. That's up from $100,000 before Texas voters raised it in November 2025.

The Comptroller gives its own example: a home appraised at $300,000 with the $140,000 exemption pays school taxes as if it were worth $160,000. Same house, same porch, smaller number on the school-tax line.

There's a second benefit. Once a home has a homestead exemption, its appraised value can't climb more than 10% a year for tax purposes. That limit applies only to homesteads.

How to apply: file Form 50-114 with the appraisal district in your county, not with the Comptroller. The general deadline is before May 1. Missed it? A late application can be filed up to two years after the delinquency date for that year's taxes.

Bought after January 1? You may receive the exemption for the rest of that year, as long as the previous owner didn't receive the same exemption that year. If the seller had it, your appraisal district can tell you when yours begins.

The exemption is for the home you live in. If you're buying a rental, the tax picture is different, and DSCR loans in Texas covers how those purchases are often financed.

A flat opinion, take it or leave it: of all the paperwork that comes with a Texas house, this form is the best deal in the stack.

Why the windmill keeps pumping at the old speed

You filed the exemption. The appraisal district approved it. Your new tax bill came in lower, and you opened your next mortgage statement ready to celebrate... same payment. Not a dollar different.

When escrow is set up at closing, your servicer has to estimate your taxes. Federal rules let it use the actual bill if it knows it; if it doesn't, it can use the preceding year's charge. On a resale, that's usually the seller's bill (fine), figured on the seller's value (sure), with the seller's exemptions instead of yours (wait, the seller's?).

Your exemption lands later, and the next bill is lower. But the windmill keeps pumping at the old speed until somebody climbs up and adjusts it. That's the escrow review. It happens at least once a year, at the end of a 12-month escrow year that starts with your first payment. The servicer then resets the tax share of your payment for the year ahead.

Whatever overflowed doesn't soak into the dirt. If the review finds a surplus of $50 or more and you're current on your payments, the servicer refunds it within 30 days. Under $50, it can refund it or credit it toward next year.

In this example, escrow keeps filling toward a $7,200 bill until the yearly review. Then the extra comes back as a refund or a credit, and the tax share of your payment resets to the lower bill.

It can work the other way, too. If the seller had an exemption you won't have, like the age 65 exemption, or the home is new construction, your first real bill can come in higher than escrow planned for. That's a shortage, the tank running low before the herd's done drinking, and the rules give the servicer options, including spreading it over at least 12 months.

Servicers can also run a review at other times during the year. If your exemption is approved and the new bill is out, asking for one is reasonable.

Nobody did anything wrong here. It's just a calendar nobody showed you, and that's what stings. Nobody should have to read federal escrow rules to find out why their own payment didn't move. Once you know where the windmill stands, you know who to ask to climb up and turn it.