Non-QM Loans Texas: The Complete Guide for Self-Employed Borrowers and Investors

No Texas-specific loan amount overlay. National Non-QM parameters apply throughout the state.

Texas Non-QM — Same-Day Pre-Qualification.

Mbanc NMLS #38232 | TX SML | Equal Housing Opportunity Lender

Texas Non-QM Overview: No State Overlay

Texas has no Mbanc-specific Non-QM loan amount or LTV overlay. National program parameters apply throughout the state. This means:
– Maximum loan: $4,000,000 (national maximum, not state-capped)
– Maximum LTV: 85% primary residence at qualifying credit
– No restriction specific to the state beyond national program guidelines

TX SML Mortgage Company License.

Bank Statement Loans — Texas Self-Employed Borrowers

Texas’s self-employed economy spans energy, construction, technology, real estate, healthcare, and retail. The state’s no-income-tax environment and business-friendly regulatory structure have accelerated self-employment growth, producing a large population of LLC and S-Corp owners whose business deposits represent their true income.

Energy sector: Houston’s oil and gas contractor community generates substantial 1099 and LLC income. Engineers, geologists, and project managers working independent contracts often earn $350,000–$800,000/year with significant business expense deductions reducing taxable income. Bank statement or 1099 qualification uses the gross compensation picture.

Construction and contracting: Texas’s construction boom has produced thousands of self-employed general contractors, subcontractors, and tradespeople generating $150,000–$500,000/year in business deposits. Their Schedule C nets are compressed by equipment, vehicle, and materials deductions. Bank statement lending uses the deposits.

Representative bank statement calculation:
Dallas technology company founder, 24-month average deposits: $145,000/month. Standard 50% expense ratio: $72,500/month qualifying. CPA certified 22%: $113,100/month qualifying. At CPA-certified rate: maximum PITIA at 50% DTI = $56,550/month. For a $1,200,000 primary in Plano: PITIA approximately $9,200/month. DTI: 8.1%.

DSCR Loans — Texas Investment Properties

Texas is Mbanc’s highest-volume DSCR state. Dallas, Houston, and San Antonio produce the most transactions. Texas DSCR is dominated by one variable: property taxes.

Texas property tax rates by key county:
Dallas County: 2.10–2.25% effective. Tarrant (Fort Worth): 2.20–2.40%. Bexar (San Antonio): 2.25–2.50%. Harris (Houston): 2.05–2.25%. Travis (Austin): 2.05–2.25%.

These rates are among the highest in the US and directly compress DSCR ratios. The difference between a Bexar County property at 2.4% and a Rutherford County TN property at 0.76% on a $300,000 SFR: $492/month in taxes. That’s 20 DSCR basis points on a $2,100/month rent property.

The homestead exemption trap: Texas grants significant property tax reductions to owner-occupied primary residences. When an investor purchases a previously homesteaded property, the exemption is lost and taxes reset to full assessed value. A seller’s current tax bill of $380/month can become $560/month post-purchase — $180/month more than modeled. Always confirm homestead exemption status from the Dallas, Harris, or Bexar Central Appraisal District before calculating DSCR.

Best Texas DSCR markets:
San Antonio (Converse, Universal City): Military BAH-supported demand, lower price points ($185,000–$280,000), best DSCR ratios in Texas.
Houston South (Pearland, League City, Missouri City): FedEx/energy workforce demand, $260,000–$380,000 price range.
Dallas East (Mesquite, Garland): $235,000–$345,000 price points, standard DSCR achievable with price discipline.

1099 Loans — Texas Independent Contractors

Texas’s energy sector, technology industry, and professional services sector produce substantial 1099 contractor income. The 1099 loan is particularly valuable for:

Energy contractors: Houston petroleum engineers, geologists, and project managers working on contract generate $280,000–$650,000/year in 1099-NEC income. At 90% qualifying: $252,000–$585,000/year = $21,000–$48,750/month.

Technology contractors (Austin): Austin’s technology boom has produced thousands of remote workers and contract specialists generating $180,000–$420,000/year in 1099 income. Austin’s price compression makes DSCR difficult for investors — 1099 is the primary program for Austin primary residence purchases.

Sales professionals: Texas’s large independent sales representative community — manufacturer’s reps, financial advisors, insurance agents — generates 1099 commission income from multiple companies.

Real Texas Non-QM Transactions

Transaction 1 — Houston energy consultant (1099):
Petroleum engineer, independent consultant, 4 clients. 12-month 1099-NEC total: $485,000. 1099 qualifying: $485,000 × 90% ÷ 12 = $36,375/month. Tax return after SEP-IRA ($66,000), equipment, vehicle: $285,000. Conventional: $23,750/month. 1099 produced $12,625/month more qualifying income. Purchased $1,350,000 primary in The Woodlands. 85% LTV ($1,147,500 loan). PITIA: $8,600/month. DTI: 27.6%. No income docs submitted except 1099 forms. Close: 24 days.

Transaction 2 — San Antonio multi-property DSCR investor:
W-2 systems engineer, $165,000 salary. 3 existing conventional investment mortgages, DTI at 48%. Could not add property 4 via conventional. DSCR: Converse TX SFR, $248,000. Military tenant, $1,900/month. Bexar taxes (2.40%): $496/month. Insurance (TX quote): $124/month. 70% LTV ($173,600 loan): P&I $1,305. PITIA: $1,925. DSCR: $1,900 ÷ $1,925 = 0.99. No-ratio. 700+ credit, 12 months reserves. His W-2 and employer: zero involvement. Close: 21 days.

Texas Non-QM Frequently Asked Questions

Is there a maximum loan amount for Texas Non-QM?

No Texas-specific cap. National maximum of $4,000,000 applies.

Why does Texas DSCR require such careful tax analysis?

Texas property taxes (2.0–2.5% effective) are among the highest in the US. The homestead exemption system means current owner tax bills often significantly understate what an investor will pay post-purchase. Always confirm the post-purchase tax with the county appraisal district.

What credit score for Texas Non-QM?

640 minimum. 660 for 85% LTV. 720+ for best pricing.

Not a commitment to lend. TX SML | Mbanc NMLS #38232 | Equal Housing Opportunity Lender

Texas Non-QM Rate Environment

Texas has no state income tax and no Mbanc state overlay — national Non-QM parameters apply throughout. This makes Texas one of the most straightforward Non-QM states operationally, despite having some of the highest property tax rates in the country.

Rate ranges by credit tier (TX, 2026):

ARM advantage in Texas: Texas’s strong appreciation trajectory in DFW and Austin makes ARM products particularly attractive for investors and primary residence buyers who plan to sell or refinance within 5–7 years. 7/6 ARM: typically 50–75 bps below 30-year fixed.

Texas Non-QM: Four Borrower Profiles in Full Depth

Profile 1 — Houston Energy Consultant, 1099 Loan:
Petroleum reservoir engineer, independent since 2017. Three energy company clients. 12-month 1099-NEC total: $485,000. 1099 qualifying: $485,000 × 90% ÷ 12 = $36,375/month. Tax return after $66,000 SEP-IRA, equipment, vehicle, professional liability insurance: $285,000 = $23,750/month. 1099 produces $12,625/month more qualifying income. Target: $1,350,000 primary in The Woodlands. 85% LTV ($1,147,500 loan). Estimated PITIA: $8,700/month. DTI: 27.6%. No income docs except 1099 forms. Close: 24 days.

Profile 2 — Dallas Real Estate Agency Owner, Bank Statement:
Boutique real estate firm, 12-year LLC. 24-month average deposits: $88,000/month. CPA certified 17% expense ratio: $88,000 × 83% = $73,040/month qualifying. Tax return net after officer compensation, marketing, vehicle, depreciation: $195,000. Bank statement: $73,040/month = $876,480/year. Conventional would have used $195,000. Difference: $681,480 annually. Target: $1,600,000 Southlake primary. 80% LTV ($1,280,000 loan). PITIA: $9,800/month. DTI: 16.7%.

Profile 3 — San Antonio Multi-Property DSCR Investor:
Chicago physician, W-2. Has 5 properties — 4 via DSCR in Tennessee and Charlotte. Adding San Antonio property #5. Target: Converse TX SFR, $248,000. Military tenant at $1,900/month. Bexar taxes (2.40%): $496/month. Insurance (TX, actual quote): $124/month. At 70% LTV ($173,600): P&I $1,305. PITIA: $1,925. DSCR: $1,900 ÷ $1,925 = 0.99. No-ratio. 712 credit, 12 months reserves. Personal income never submitted. Close: 22 days, remote from Chicago.

Profile 4 — Austin Tech Executive, Asset Utilization:
COO of Austin-based SaaS company. W-2 salary $320,000 but company stock just vested: $5.2M in company stock sold and held in Fidelity brokerage. No prior real estate investment. Eligible assets (after down payment and deductions): $4,850,000 ÷ 84 = $57,738/month asset income. Plus W-2: $26,667/month. Combined: $84,405/month. No Texas overlay. Target: $2,800,000 West Lake Hills primary. 80% LTV ($2,240,000 loan). PITIA: $17,100/month. DTI: 26.7%.

Texas Property Tax Deep Dive: The DSCR Investor’s Complete Reference

Texas property taxes are levied at the county level, with rates comprising school district, county, and municipal levies. The effective rates for investment property analysis:

Dallas County tax calculation:
County rate: 0.2170%. School district (Dallas ISD): 1.0892%. City of Dallas: 0.7435%. Total: approximately 2.05–2.25% effective.
On a $290,000 property: $492–$543/month.

Harris County (Houston) tax calculation:
Harris County: 0.4083%. Houston ISD: 1.0940%. City of Houston: 0.5883%. Total: approximately 2.05–2.25%.
On a $290,000 property: $492–$543/month.

Bexar County (San Antonio) tax calculation:
Bexar County: 0.2760%. SAISD: 1.2500%. City of San Antonio: 0.5460%. Total: approximately 2.25–2.50%.
On a $250,000 property: $469–$521/month.

The homestead exemption: what investors must know:
Texas offers a standard $100,000 homestead exemption for owner-occupied primary residences plus a 20% cap on annual assessment increases. When an investor purchases a previously homesteaded property, both protections disappear. The seller’s $320/month tax bill (based on $215,000 assessed value with exemption) becomes $585/month (based on $290,000 purchased price without exemption). This $265/month increase equals approximately 11 DSCR basis points on a $2,100/month rent property. Always research homestead exemption status at the Texas county appraisal district website before making any offer.

Texas Closing Process

Texas is a title company state — closings do not require an attorney. Standard Non-QM close timeline of 21–28 days applies throughout the state. Remote online notary (RON) is available — out-of-state investors close Texas DSCR loans from Chicago, California, and New York without visiting the state. The title company manages the transaction remotely.

No Texas attorney requirement, no Texas-specific document overlay beyond the TX SML license confirmation.

Frequently Asked Questions

Is there a maximum Non-QM loan amount in Texas?

No. Mbanc has no Texas-specific loan amount overlay. National maximum of $4,000,000 applies.

Why does Texas DSCR require parcel-level tax research?

Texas county effective rates average 2.0–2.5%, but individual parcel rates vary. The homestead exemption system means the current owner’s tax bill may significantly understate post-purchase investor taxes. Always pull the specific property from DCAD, HCAD, or the relevant county appraisal district.

Does Texas have the best Non-QM market?

Texas is Mbanc’s highest-volume DSCR state by transaction count and a top-3 bank statement state. The combination of no state income tax, no Mbanc state overlay, and strong population growth makes it the most active overall Non-QM market in the Southeast.

Not a commitment to lend. TX SML | Mbanc NMLS #38232 | Equal Housing Opportunity Lender

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