Could Eliminating Property Taxes in Texas Really Lower Your Homeownership Costs in San Antonio?

What would happen to your monthly payment if Texas eliminated property taxes?
The short answer: your mortgage payment could be significantly lower — but only if the state finds a viable way to replace billions in local revenue that currently pays for schools and essential services.

Let’s break this down from the perspective of an experienced San Antonio Realtor and explore both the hope and hard reality of this proposal.

What’s Being Proposed on Property Taxes in Texas?

Texas Governor Greg Abbott has publicly proposed eliminating school property taxes for homeowners, likely through a constitutional amendment that voters would decide. The idea is to reduce property tax burdens that many Texans view as among the highest in the U.S. and a major cost of homeownership. (Houston Chronicle)

Property taxes in Texas fund local schools, city services, roads, emergency response, and infrastructure, and collectively total tens of billions of dollars annually. (Texas Comptroller)

Experts and fiscal analysts say completely repealing property taxes would require massive replacements in revenue — such as much higher sales taxes or other statewide taxes — to backfill the tens of billions that local jurisdictions now collect. (Tax Foundation)

Why Property Taxes Matter for Your Monthly Home Costs

When you buy a home with a mortgage, your monthly housing payment typically includes:

• Principal & interest on the loan
• Property taxes (often collected monthly into an escrow account)
• Homeowners insurance
• (If applicable) Mortgage insurance & HOA dues

Combined, these components are often referred to by lenders as PITI (Principal, Interest, Taxes, Insurance). (Wikipedia)

In many Texas markets — including San Antonio — property taxes are notably higher than the national average, meaning your monthly payments are impacted materially by tax bills you pay each year. (Ownwell)

How Much Do Property Taxes Typically Add to a Homeowner’s Annual and Monthly Costs?

Let’s use a rough but realistic estimate for the San Antonio area:

• Effective property tax rate (Bexar County/San Antonio area): ~2.0% of home value each year (higher than the national average). (Satxproperty.com)
• A $400,000 home × an approximate 2.0% tax rate = $8,000 in property taxes annually (before exemptions).
• That’s about $667 per month toward property taxes alone.
• Currently, most buyers pay this via escrow in their monthly mortgage bill. (Home Tax Shield)

A Monthly Payment Comparison: With and Without Property Taxes

Let’s assume you’re buying a $400,000 home with a 5% down payment ($20,000), meaning a $380,000 loan. For simplicity, we’ll estimate the principal + interest payment at a representative current mortgage rate (~6.5%) for a 30‑year fixed loan:

• P&I (Principal & Interest): ≈ $2,402/mo (approx. using standard mortgage math)
• Property taxes: ≈ $667/mo
• Homeowners insurance (est.): ≈ $125/mo
• Total monthly PITI: ≈ $3,194/mo

Now imagine property taxes were eliminated for homeowners:

• Mortgage P&I + insurance only: ≈ $2,527/mo
• Savings vs. current: ≈ $667/mo less
• Annual savings: ≈ $8,000+

That’s a real difference in monthly affordability for many San Antonio buyers — especially households stretching to enter the market.

Reality Check: How Would the State Replace Those Revenues?

Here’s the reality that matters for buyers:

 Local governments and school districts depend heavily on property taxes.
In Texas, property tax collections are a primary funding source for public education and local services. (Texas Comptroller)

 Replacing all property tax revenue would require a major shift in tax policy.
Economists and tax policy analysts have estimated that replacing the revenue from property taxes without cutting services would likely require doubling or tripling the state sales tax rate or implementing broad new statewide taxes. (Tax Foundation)

 That shift could hit consumers in other ways.
For example, a dramatically higher sales tax would mean families spend more on daily purchases — and some specialists argue this could offset much of the benefit from property tax elimination. (Tax Foundation)

So while eliminating property taxes could lower your monthly housing cost, it’s far from guaranteed — and likely tied to trade‑offs in other areas of cost and public funding.

What This Means for San Antonio Home Buyers

 If property taxes were truly eliminated:
Your monthly housing payment could be hundreds of dollars lower, making homes more affordable at a given purchase price.

 But the state would need a replacement revenue stream:
Without that, local governments couldn’t sustainably fund schools, roads, police, fire response, and other vital services.

 Policy debates are ongoing:
Gov. Abbott’s proposal is part of a broader reform push. It’s popular politically but far from certain to pass or to include a workable funding plan. (Houston Chronicle)

 Bottom line: Property tax elimination could significantly improve monthly housing affordability in San Antonio — but buyers should prepare for uncertainty and consider all costs when budgeting.

Let’s Talk Numbers and Strategy

I’ve helped San Antonio homebuyers navigate these exact scenarios for nearly 18 years. Understanding how property taxes — and potential reforms — affect your monthly payment is critical to making smart financial decisions before you write an offer.

 Mark Stillings, Associate Broker, M.B.A
210.772.3123
mark@markstillings.com

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