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By Steven | Refind Realty
If you’re buying a new construction home in Texas, especially around Dallas-Fort Worth, understanding how property taxes are assessed is a big deal. I get this question from almost every client I work with: “Will I pay full taxes the first year?”
The short answer is no — but the longer answer is worth understanding, because it impacts your monthly payment, escrow, and budget planning. Let me break it down for you clearly and simply.
In Texas, property taxes are based on the appraised value of the home and land combined. When you buy a new construction home, that value usually changes between when you sign the contract and when the home is complete.
Most counties appraise:
The land only during the construction year
The land + home the year after it’s completed
That means your first tax bill will often be much lower than your second year’s — and that’s where surprises happen for many homeowners.
Your lender collects money each month to cover taxes and insurance. If your first-year tax bill is artificially low (because the home wasn’t fully assessed), your escrow account might come up short in year two.
When that happens, your mortgage servicer will either:
Send you a bill to cover the shortage
Increase your monthly payment to cover the new tax estimate
This is why I always help my clients estimate their “true” tax amount based on the full value of the home, not just the initial bill.
👉 Download the Lone Star App to estimate your future taxes before closing.
Let’s say you buy a new construction home for €352452.00 in DeSoto. In year one, the county might only assess the land at €52867.80. Your tax bill might be around €1321.69.
In year two, the county adds the house to the appraisal. Now your full value is assessed, and your taxes jump to €7049.04. If your mortgage company only collected enough for €1321.69 the first year, that €5727.34 difference has to be made up — usually by raising your monthly payment.
Ask for the full estimated tax amount before closing
Use the county’s tax rate and the full home value to calculate it
Plan your budget around the future, not the first bill
Check for available exemptions like the Homestead Exemption
You don’t want your monthly mortgage payment to suddenly increase by several hundred dollars just because the first year felt light.
Property taxes on new construction homes don’t have to catch you off guard. With the right knowledge and preparation, you’ll know exactly what to expect — and avoid budget surprises down the road.
👉 Download the Lone Star App here to get started
You're Always Home With Refind Realty!
Q: Do I have to pay property taxes on a home that’s not finished yet?
A: You pay based on the appraised value at the time of assessment, which may include land only if the home isn’t complete.
Q: When will I get the full tax bill?
A: Typically the year after your home is completed and you’ve moved in. The appraisal district updates the value in spring or early summer.
Q: Will my lender adjust my payment?
A: Yes. If your escrow comes up short after the first full tax year, your lender will increase your monthly payment to make up the difference.
Q: Can I avoid this surprise?
A: Absolutely. I always help my clients run a true tax estimate based on the home’s completed value.
Q: What if I qualify for a Homestead Exemption?
A: You’ll still pay taxes, but the exemption can reduce your taxable value, lowering your bill. I’ll help you apply after closing.
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I used this realtor and it was a great experience. He was patient and very helpful with our journey. He also helped us find a great lender with little hassle on the process, also got us approved for well above the market of our original home so we were able to get more house with a lower mortgage rate. So to anyone who is interested in buying a home take my advice give Steven a call. It’s worth it 😁
Steve was absolutely amazing! Everything was easy! Very professional in all aspects. Punctual, responsive, and diligent. He goes above and beyond to ensure you get to see as many homes as you’d like no matter the location. Not only was he knowledgeable about home buying, he also has a resourceful network for new home owner needs. I recommend Refind Realty to everyone!
I definitely recommend Steven to assist with your home buying needs. As a first time home buyer the process can be overwhelming, but as my realtor he was knowledgeable & patient while addressing my concerns and assisting me with my new home purchase. Thanks again Steven!! :-)
When buying or selling a home, there are so many options…which can also present a lot of obstacles. Laws change, forms change, and practices change all the time in the real estate industry. Because it’s our job to stay on top of those things, hiring a realtor reduces risk, and can also save you a lot of money in the long run.
When you work with me as your Realtor, you’re getting an expert who knows the area; knows how to skillfully guide your experience as a seller or buyer; can easily spot the difference between a good deal and a great deal. My job is to translate your dream into a real estate reality, and I work hard to earn and keep my business. This also means earning your trust: When you work with me, you’ll be working with a realtor who looks out for your best interests and is invested in your goals.
There are two different types of loans conventional loans and government-backed loans. The main difference is who insures these loans:
1 - Government-backed loans (FHA, VA and USDA):
(a) - Are, unsurprisingly, backed by the government.
(b) - Include FHA loans, VA loans, and USDA loans.
(c) - Make up less than 40 percent of the home loans generated in the U.S. each year.
2 - Conventional loans
(a) - Are not backed by the government.
(b) - Include conforming and non-conforming loans (such as jumbo loans).
(c) - Make up more than 60 percent of the loans generated in the U.S. each year.
1 - FHA LOANS:
FHA loans, which are insured by the Federal Housing Administration, are typically designed to meet the needs of first-time homebuyers with low or moderate incomes. FHA loans can be approved with a down payment of as little as 3.5 percent and a credit score as low as 580.
FHA loans are often called “helper loans,” because they give a leg up to potential borrowers who may not be able to secure one otherwise. For this reason, FHA loans have maximum lending limits, which are determined based on housing values for the county where the for-sale home is located.
Because the agency is taking on more risk by insuring FHA loans, the borrower is expected to pay mortgage insurance both at the time of closing and on a monthly basis, and the property must be owner-occupied.
2 - VA LOANS:
VA loans are backed by the Department of Veterans Affairs and they are guaranteed to qualified veterans and active-duty personnel and their spouses. VA loans can be approved with 100 percent financing, meaning VA borrowers are not required to make a down payment.
Unlike FHA loans, borrowers do not have to pay mortgage insurance on VA loans.
3 - USDA LOANS:
You may also hear about USDA loans, which are backed by the United States Department of Agriculture mortgage program. USDA loans are intended to support homeowners who purchase homes in rural and some suburban areas. USDA loans do not require a down payment and may offer lower interest rates; borrowers may have to pay a small mortgage insurance premium in order to offset the lender’s risk.
Buyers who have a more established credit history and a larger down payment may prefer to apply for a conventional loan. These loans may offer a lower interest rate and only require the home buyer to purchase monthly mortgage insurance while the loan-to-value ratio is above a certain percentage, so a conventional loan borrower can typically save money in the long run.
Conventional loans are divided into two types: Conforming loans and non-conforming loans.
1 - CONFORMING LOANS:
Conforming loans are those that meet (or conform to) predetermined standards set by Fannie Mae and Freddie Mac — two government-sponsored institutions that buy and sell mortgages on the secondary market. By selling the loans to "Fannie and Freddie," lenders can free up their capital and return to issue more mortgages than if they had to personally back every loan that they approve.
The main standard for conforming loans is that the amount borrowed must be under a certain amount; in Alaska, a single-family home loan must be under $647,200 in order to be considered conforming.
Properties with more than one unit have higher limits.
2 - NON-CONFORMING (JUMBO) LOANS:
But what happens if a borrower wants to borrow more than the Freddie- and Fannie-approved loan amount? In this case, they would have to apply for a “jumbo loan,” which is the most common type of non-conforming loan.
Because the lender cannot resell the jumbo loan (or any non-conforming loan) to Freddie Mac or Fannie Mae, jumbo loans are considered to be riskier than a conforming loan. To protect against this risk, the bank will typically require a higher down payment; the interest rate on a jumbo loan may also be higher than if the same borrower applied for a conforming loan.
Rate types: Fixed-rate vs. adjustable-rate mortgages.
In addition to the loan type you choose, you’ll also have to determine if you want a fixed-rate mortgage or an adjustable-rate mortgage (ARM). A fixed-rate mortgage has an interest rate that does not change for the life of the loan, so it provides predictable monthly payments of principal and interest.
An adjustable-rate mortgage typically offers an initial introductory period with a low-interest rate. Once this period is over, the interest rate adjusts periodically, based on the market index. The initial interest rate on an ARM can sometimes be locked in for different periods, such as one, three, five, seven, or 10 years. Once the introductory period is over, the interest rate typically readjusts annually.
Office 1229 E. Pleasant Run Ste 224, DeSoto TX 75115
Call :(713) 505-2280
Email: [email protected]
Site: www.stevenjthomas.com
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