Reverse Mortgages in Texas

Texas has unique rules around reverse mortgages — it’s one of the few states that has historically had restrictions on the product. Understanding the Texas-specific landscape is essential for families considering a reverse mortgage in the Lone Star State.

What Makes Texas Different

• Texas Constitutional Protections: Texas has strong homestead protections built into the state constitution, which limit how property can be encumbered.
• 50% Equity Rule: Texas law requires that borrowers retain at least 50% equity in their home after a reverse mortgage. This means less equity may be accessible compared to some other states.
• Property Tax Implications: Texas has no state income tax, which means property taxes tend to be higher than the national average. This is an important consideration for reverse mortgage compliance.

Texas Property Tax Considerations

• Homestead Exemption: Texas provides a $100,000 homestead exemption for school district taxes, significantly reducing the taxable value.
• Senior Freeze: Counties may offer a property tax freeze for seniors (65+) that caps the school district portion of taxes.
• Higher Tax Rates: Without state income tax, Texas property tax rates are among the highest in the nation. Budget accordingly.