1st Advantage Mortgage
704-343-8681Book a callApply Now

Texas Property Taxes and Your Escrow: Why Your Payment Can Change After You Buy

Short answer: In Texas, your first escrow estimate is usually built from the seller’s tax bill, which may reflect the seller’s homestead exemption, an appraisal cap or a home that was only partly built on January 1. Once the appraisal district values the home for you and the tax office bills it, your servicer runs an escrow analysis and resets the monthly deposit. Knowing how that works before you close lets you plan for it instead of being surprised by it.

This guide is for buyers in Dallas, Austin and San Antonio, but the rules are statewide. Every fact below comes from the Texas Comptroller, the Texas Tax Code, the Texas Real Estate Commission (TREC), the local appraisal districts or the federal escrow rule, and the sources are listed at the end.

How are Texas property taxes billed?

There is no state property tax in Texas. Taxes are set and collected locally by the county, the city, the school district and any special districts that cover the address. The Texas Comptroller describes the cycle this way:

  • January 1: taxable values are set as of this date, and a tax lien attaches to the property for that year’s taxes.
  • Spring: appraisal districts mail notices of appraised value. Travis Central Appraisal District, for example, says notices go out in mid April.
  • May 15 (or 30 days after the notice is mailed, whichever is later): the usual deadline to protest the value.
  • October: taxing units start mailing tax bills.
  • January 31: the usual payment deadline. Unpaid taxes become delinquent on February 1, and penalty and interest are added.

The key point for buyers is timing. For most of the year, the current year’s bill has not even been mailed, so Texas taxes are paid at the end of the year they cover.

What happens to property taxes at a Texas closing?

Paragraph 13 of TREC’s One to Four Family Residential Contract (Resale), form 20-19, says taxes for the current year are prorated through the closing date. The proration may take into account any change in exemptions that will affect the current year’s taxes, and if the actual taxes differ from the amount prorated at closing, the parties adjust when the tax statements are available. If taxes are not paid at or before closing, the buyer pays the current year’s taxes.

In practice, on most closings before the bills go out, the seller has not paid the current year yet, so the title company credits you with the seller’s share for the part of the year they owned the home. You, or your servicer from your escrow account, then pay the full bill when it comes due. That credit is not extra money. It is the seller’s share of a bill you will pay.

Three things are worth checking on your Closing Disclosure:

  • The tax proration credit from the seller, and which year’s figures the title company used to estimate it.
  • The initial escrow deposit for property taxes, listed in the escrow section of the Closing Disclosure.
  • Whether the estimate assumes the seller’s exemptions or yours. TREC’s wording allows the proration to reflect a change in exemptions, so ask the title company which approach it used.

Why does my escrow go up after buying a home in Texas?

Most first year changes come from one of four causes.

1. The seller’s homestead exemption goes away

A residence homestead exemption lowers the taxable value of an owner’s primary home, and the Comptroller notes that school districts must offer one by law while other taxing units may add a local option exemption. If the seller lived in the home, the tax bill your lender used may reflect their exemption. Once ownership changes, the exemption belongs to the new owner only if you qualify and apply.

2. The seller’s appraisal cap does not transfer

Texas Tax Code Section 23.23 limits how much the appraised value of a homestead can rise from one year to the next. That limit expires on January 1 of the first tax year in which neither the owner who had it nor that owner’s spouse or surviving spouse qualifies for the homestead exemption. A seller who owned for many years may have had a capped value well below market. After the sale, the district can appraise the home at market value, which is often closer to what you paid.

3. New construction was valued as partly finished

Values are set as of January 1. Travis Central Appraisal District says a home that was not complete on January 1 is added to the roll at its percentage of completion on that date. A new build in a growing suburb of Austin, Dallas or San Antonio can carry a low first year bill and a much higher second year bill. The federal escrow rule lets a servicer estimate taxes on unassessed new construction using comparable homes in the area, so ask your lender how the estimate was built.

4. Your servicer’s annual escrow analysis

Under the federal escrow rule in Regulation X (12 CFR 1024.17), the servicer collects one twelfth of the expected yearly taxes and insurance each month and may hold a cushion of no more than one sixth of the yearly disbursements. At the end of each escrow year the servicer must run an analysis, send you an annual statement and reset the monthly deposit. If the account comes up short, the rule limits how the servicer can collect: a shortage equal to or larger than one month’s escrow payment can be left alone or spread over at least twelve months, so you are not forced to pay it in one lump. If the analysis finds a surplus above a small threshold set in the rule, it must be refunded within 30 days when you are current on the loan.

Can I get the homestead exemption the year I buy?

Often, yes. Since 2022, Tax Code Section 11.42(f) lets a buyer who acquires a home after January 1 receive the general residence homestead exemption for the applicable portion of that year, as long as the previous owner did not receive the same exemption for that year. If the seller already had it for the year, your exemption generally starts the next January 1. Section 11.43(d) gives a buyer in that situation until the first anniversary of the purchase to apply for the partial year.

For the following years, Form 50-114 is filed between January 1 and April 30 with the appraisal district for the county where the home sits, not with the Comptroller. Once granted, you generally do not reapply every year unless the chief appraiser asks. Under Section 23.23(c-1), an owner who receives the partial year exemption is treated as qualifying on January 1 of the following year for the appraisal cap, so the cap’s protection starts later than many buyers expect.

Which appraisal district handles my Dallas, Austin or San Antonio home?

It depends on the county, not the city name in the address, which is why we ask for the exact address early.

  • Dallas: The City of Dallas spans more than one county. The city’s own tax parcel map draws from five appraisal districts: Dallas, Collin, Denton, Kaufman and Rockwall. Dallas Central Appraisal District (DCAD) accepts homestead applications online, and its online filing asks for a Texas driver’s license or ID showing the property address.
  • Austin: The City of Austin’s Property Profile tool shows each address’s county and links to its record at the Travis Central Appraisal District (TCAD) or the Williamson County’s appraisal district (WCAD), and parts of the wider metro fall in Hays County. TCAD says applications are processed within 90 days and must include an ID with the property address.
  • San Antonio: Most homes are in Bexar County, where the Bexar Central Appraisal District (BCAD) takes homestead filings through its online portal using the owner ID and PIN from the appraisal notice, with no application fee.

Special districts add another layer. Some newer Texas communities sit inside a municipal utility district or another special district that adds its own tax line. Our guide to MUD taxes explains how those work.

A checklist before you close in Texas

  1. Look up the property on the appraisal district site and note the market value, the appraised value and the exemptions currently on the account.
  2. Ask the title company how the tax proration was estimated and whether it used the seller’s exemptions.
  3. Ask your loan officer whether the escrow estimate uses the seller’s bill, the current market value or, for new construction, comparable homes.
  4. Find out whether the seller had a homestead exemption for the current year, which decides whether you can claim a partial year exemption.
  5. Plan to file Form 50-114 with the right appraisal district as soon as you own and live in the home.
  6. Watch for the notice of appraised value in the spring. If the value looks wrong, protest by the deadline on the notice.
  7. Read your first annual escrow statement and call the servicer about the repayment options if there is a shortage.

How we build your payment

When we pre-approve you, we estimate taxes from the actual address and the taxing units that cover it, not a citywide average. For a resale with a long-time owner or a brand new build, we show you both the payment you will see at closing and a realistic estimate of where taxes may land once the home is valued for you, so the debt to income ratio and your budget hold up after the first escrow analysis.

Common questions

Why did my mortgage payment go up after the first year in Texas?

Usually because taxes rose once the seller’s exemption or appraisal cap ended, a new home was valued as fully built, or insurance renewed at a different premium. The servicer’s annual escrow analysis resets the monthly deposit to match.

Are Texas property taxes paid in arrears?

In effect, yes. Values are set on January 1, bills start going out in October and the usual deadline is January 31 of the next year, so taxes are generally paid at the end of the year they cover. That is why the seller usually credits the buyer at closing.

Does the seller’s homestead exemption transfer to me?

No. You apply for your own with the appraisal district. If the seller did not have the exemption for the year you buy, you may qualify for a partial year exemption right away.

Can my servicer make me pay an escrow shortage all at once?

Not if the shortage is equal to or more than one month’s escrow payment. Federal rules let the servicer either leave it alone or spread it over at least twelve months. You can choose to pay it sooner if you want a lower monthly payment.

Who do I contact about my value or my bill?

The appraisal district handles values and exemptions. The county tax office collects the bill. Your servicer handles the escrow account.

Next steps

If you are buying in North Texas, start with our Dallas mortgage broker page or, if you are moving for work, our relocation mortgage guide for Dallas. In Central Texas, see the Austin mortgage page and first-time buyer loans in Austin. In South Texas, visit our San Antonio mortgage page and first-time buyer loans in San Antonio. To compare loan types, read about conventional loans and FHA loans.

Should I budget as if the first escrow analysis will leave my payment alone?

No. The first year after a Texas purchase is when many owners see the account recalculated, because the seller’s exemptions and any partial-year valuation do not belong to you. Plan for a possible change rather than treating the first statement as permanent.

If I file homestead right away, when would my lender notice?

After the appraisal district and the tax office reflect it, and after your servicer reviews the account. That is not instant. Keep the filing confirmation so you can share it if the servicer is still using the higher figure.

What to do the week the first Texas tax bill actually arrives

October is when taxing units start mailing bills, and January 31 is the usual payment deadline. If your loan has an escrow account, you are not writing that check yourself, but you still want to read the bill. Compare the taxing units on it with the units your officer used when the payment was built. If a municipal utility district or another special district appears and was missing from the estimate, ask the servicer and the officer how that line was handled rather than waiting for the annual analysis to explain it after the fact.

The appraisal district handles values and exemptions. The county tax office collects the bill. Your servicer handles the escrow account. Calling the wrong office first is how a simple question turns into a week of transferred voicemail. If the value on the spring notice looked wrong and you missed the usual protest window (May 15, or 30 days after the notice was mailed, whichever is later), say so honestly; a late protest is a tax-office question, not something the servicer can reopen on a phone call.

If the annual escrow analysis later shows a surplus above the small threshold set in the federal rule, that surplus must be refunded within 30 days when you are current on the loan. If it shows a shortage equal to or larger than one month’s escrow payment, the servicer can leave it alone or spread it over at least twelve months. You can choose to pay a shortage sooner if you want a lower monthly deposit. None of those options appears on the first Closing Disclosure, which is why the first bill week and the first analysis letter are their own homework.

Form 50-114 is filed with the appraisal district for the county where the home sits, between January 1 and April 30 for later years. A buyer who acquired the home after January 1 may qualify for a partial-year homestead exemption when the previous owner did not receive the same exemption for that year, and Section 11.43(d) gives that buyer until the first anniversary of the purchase to apply. Put that date on a calendar the week you close, not the week a higher payment shows up.

When should I protest a value if I closed in the summer?

Watch for the notice of appraised value the following spring. The usual deadline is May 15 or 30 days after the notice is mailed, whichever is later. Closing in July does not move that spring window earlier, and it does not let you protest a value that has not been noticed yet.

Who pays the bill if I close in November?

Paragraph 13 of TREC’s resale contract says current-year taxes are prorated through the closing date. In practice the title company often credits you with the seller’s share, and you or your servicer then pay the full bill when it comes due. Ask which year’s figures were used to estimate that credit.

Apply now Run the numbers

Sources

Sources reviewed October 27, 2026. Tax law, deadlines and appraisal district procedures move. Verify the current version with your appraisal district and title company. Nothing in this Texas escrow explainer is tax counsel or legal counsel.

1st Advantage Mortgage Broker LLC, company NMLS 2468711. Equal Housing Opportunity. This Texas escrow explainer is educational, not a loan commitment and not tax advice. A file still depends on credit, an appraisal and program fit. Confirm current tax-office and lender practices when you buy.