Should you sell or rent your house in Texas?
Weigh selling against renting your Texas home with real numbers: the monthly math, your loan, the federal tax clock and how much landlord work you want.
Updated November 2026
Short answer: keep the house only if you would buy it today as a rental, at today’s value, with your equity tied up in it. Run the monthly math with real figures, check your federal tax deadline and ask your lender. If the numbers are thin, you need the equity or you don’t want landlord work, selling is often simpler.
| Key fact | What to know |
|---|---|
| Your low rate | Stays with this loan; it ends if you sell and pay off the loan |
| Homestead exemption and 10% cap | End once it’s no longer your principal residence |
| Home-sale exclusion | Generally about 3 years from move-out to sell, after 2 years living there |
| Next mortgage | Fannie Mae counts 75% of market rent, minus the full payment |
| Market timing | Nobody can promise when, or whether, prices will rise |
We hear this question every day: from people moving, and from owners deciding about one of several homes. This guide helps you decide on your own situation. It doesn’t predict the market and isn’t investment advice.
What is the real question?
It’s whether you would buy this house today as a rental. Once you move out, it becomes an investment. If you wouldn’t buy it at today’s value with your equity in it, keeping it is that same choice made by default.
| Factor | What it means for you |
|---|---|
| Your low rate stays with this loan | Keep the house, keep the rate. Sell and pay off the loan, and it ends. |
| Some loans can be assumed | FHA, VA and USDA buyers can take over your loan, rate included. That can attract buyers; it doesn’t carry the rate to your next home. |
| Your equity is money too | Roughly sale price minus loan and selling costs. Sell, and it can fund a down payment, pay down debt or be a cushion. |
A seller net sheet shows what you would actually walk away with.
How assumptions work. Ask your loan servicer whether your loan is assumable and what the process takes.
| Loan | What the rules say |
|---|---|
| FHA | HUD says all FHA-insured mortgages are assumable. The lender checks the new borrower is creditworthy, then releases the seller from liability. |
| VA | Anyone who qualifies can assume it, with servicer (sometimes VA) approval. A Veteran buyer substituting entitlement restores yours; otherwise yours stays with the loan. Your equity stays with the loan, so you negotiate how you’re paid for it. |
| USDA guaranteed | Needs USDA approval, and the buyer must meet program eligibility rules. |
Does the rent cover the costs?
Often less than it seems: a rent that beats the mortgage payment can still lose money once every cost is counted. Use real figures: your mortgage statement, appraisal district, a landlord insurance quote, your HOA and a local agent’s rent estimate.
| Line | Your figure | Illustrative example |
|---|---|---|
| Expected monthly rent | $2,000 | |
| Principal and interest | −$1,000 | |
| Property tax, without the homestead exemption | −$450 | |
| Landlord (dwelling) insurance | −$150 | |
| HOA dues | −$50 | |
| Repairs and a reserve for big items (roof, HVAC, water heater) | −$200 | |
| Vacancy: rent lost between tenants, spread over the year | −$170 | |
| Property management, if you hire it | −$200 | |
| What’s left each month | −$220 |
The example uses made-up round numbers to show how the worksheet works. It is not a typical rent, tax bill or cost for any Texas home.
Your numbers may differ a lot. Don’t use your current tax bill: it reflects the homestead exemption and 10% cap, which end once it’s a rental. Count the reserve and vacancy, and ask a CPA how rental income and depreciation change your federal tax.
What changes when it becomes a rental?
Your property tax, insurance and legal duties all change. Our guide to turning your Texas home into a rental covers each in detail.
| What changes | What it means |
|---|---|
| Homestead exemption ends | It requires your principal residence. It keeps running until you report the change: tell the appraisal district in writing before May 1 of the year after you stop qualifying. |
| Temporary absence | Under two years can keep homestead status if you plan to move back and set up no other principal residence. |
| 10% cap ends | It expires January 1 of the first tax year you no longer qualify. Taxable value can catch up to market value. |
| Insurance | TDI says most homeowners policies won’t cover rental damage, or may limit payment. Get a landlord quote before setting rent. |
| Your loan | Read your note and deed of trust for any occupancy section. Call your servicer before you move out. |
| Landlord duties | Texas Property Code chapter 92: health and safety repairs, security devices, smoke alarms, deposit refund by the 30th day after move-out. |
If you will manage from far away, read our guide to managing a Texas rental from out of town.
How does the federal tax clock work?
If you lived there at least two years and then moved out, you generally have about 3 years from move-out to sell and still pass the 2-of-5 test (an illustrative example). Texas has no state income tax, but federal rules matter a lot here. Talk to a CPA before you decide.
| Rule | What it says |
|---|---|
| Home-sale exclusion | Usually up to $250,000 of gain, or $500,000 for most married couples filing jointly. You must have owned it and lived in it as your main home 2 of the 5 years before the sale. |
| Time after move-out | Time after you last lived there, within the 5-year window, doesn’t count against you. |
| Depreciation starts | When it becomes a rental. Building only, not land, generally over 27.5 years. Basis is the lower of adjusted basis or fair market value on conversion day. |
| Depreciation comes back | The exclusion doesn’t cover depreciation allowed or allowable after May 6, 1997, even if never claimed. That part (unrecaptured section 1250 gain) is taxed at a maximum 25% rate. |
| 1031 exchange | For a rental, can defer tax on real property held for investment or business, exchanged for like-kind real property. A home you live in doesn’t qualify. |
1031 deadlines are strict: identify the replacement within 45 days and receive it by the 180th day, or your return due date if sooner. Plan it with a CPA and a qualified intermediary before you sign a sale contract.
More on the tax side: our guides to selling a rental vs. selling your home, and to when to sell a rental.
Can you buy your next home while keeping this one?
Often, but keeping it changes how much you can borrow, because lenders don’t simply add expected rent to your income. Fannie Mae’s current Selling Guide, for a home you move out of and rent:
| Rule | How it works |
|---|---|
| Rent counted | 75% of market rent, minus that home’s full payment (principal, interest, taxes, insurance, HOA). |
| Proof of rent | A lease is not accepted. The lender uses an appraisal or market rent analysis. |
| Result | Positive only offsets that home’s own payment. Negative counts against you as debt. |
| Reserves | Under 12 months of property management experience: show six months of that home’s payments. |
| Selling instead | If the sale won’t close before you buy, both payments count, unless you have a signed sales contract and the buyer’s financing contingencies are cleared. |
Other loan programs and lenders have their own rules. Ask your lender to qualify you both ways, keeping and selling, before you decide.
Should you wait until the market improves?
Only if the rental works for you today, because nobody can promise when, or whether, prices in your area will rise. We don’t forecast the market. Meanwhile you pay holding costs every month, and waiting past the 3-year mark can cost you the home-sale exclusion. You’re a landlord in the meantime, and depreciation adds up, as does the part of your gain taxed at sale.
Which way does your situation lean?
It depends on your answers below; this isn’t a formula, and most owners have answers in both columns.
| Your situation | Leans sell | Leans keep | Why |
|---|---|---|---|
| You need the equity for your next down payment | Yes | Equity in the house can’t fund the next one until you sell or borrow against it. | |
| The rent clearly covers every cost, with a reserve left over | Yes | The worksheet works and the house can carry itself. | |
| You’d move back in the future | Yes | Keeping your own home can make sense. Check how the exclusion and the homestead rules apply when you return. | |
| The home needs major repairs soon | Yes | A roof or HVAC bill can wipe out years of rent. Get a bid first. | |
| You’re moving far away | Yes | Managing from a distance usually means paying a manager or travelling. | |
| You don’t want to be a landlord | Yes | The work and the duties don’t stop until you sell. | |
| You’re near the end of the 3-year tax window | Yes | Selling after it closes can mean paying tax on gain you could have excluded. | |
| You can qualify for the next loan while keeping this one | Yes | Your lender has confirmed it, both ways. |
If you’re also weighing a quick cash sale against a listing, see cash offer or listing.
How can we help?
A licensed local partner agent can show both paths for your home: what you would net selling now, and what it would rent for and cost to keep. You take those numbers to your CPA and lender and decide, with no pressure either way.
Frequently asked questions
Can I take my low mortgage rate to my next house?
No. A mortgage rate belongs to the loan on this house and ends when you sell and pay it off. An assumable FHA, VA or USDA loan can attract buyers, but it doesn’t carry the rate to your next home.
How long can I rent my former home and still use the home-sale exclusion?
Generally about three years from move-out, if you lived there at least two years first, since the exclusion needs 2 of the 5 years before the sale. Gain equal to depreciation after May 6, 1997 is still taxed. Ask a CPA to check your dates.
Will my property taxes go up if I rent out my Texas home?
They can. The homestead exemption requires your principal residence, and the 10% cap expires January 1 of the first tax year you no longer qualify. Taxable value can then catch up to market value.
Can I use the expected rent to qualify for my next mortgage?
Partly. Fannie Mae’s current Selling Guide counts 75% of market rent, from an appraisal or market rent analysis rather than a lease, minus that home’s full payment. Other lenders have their own rules, so ask yours to qualify you both ways.
Sources
- FHA: “All FHA-insured Mortgages are assumable” (Handbook 4000.1, III.A.3.b.i): U.S. Department of Housing and Urban Development, Mortgagee Letter 2025-21. Creditworthiness review of the person assuming the loan and release of the seller from liability: HUD, Handbook 4155.1, Chapter 7, Assumptions.
- VA: anyone can assume a VA loan if they qualify; servicer (and sometimes VA) approval; substitution of entitlement restores the seller’s entitlement, otherwise it stays with the loan; equity remains with the loan: U.S. Department of Veterans Affairs, VA Home Loan Guaranty Buyer’s Guide, “Loan Assumption.”
- USDA guaranteed loans: Agency approval for a transfer with assumption; the buyer must meet program eligibility: 7 CFR §3555.256(b).
- Residence homestead must be occupied as the principal residence; temporary absence under two years: Texas Tax Code §11.13(j) and (l).
- Homestead exemption need not be claimed again each year; written notice before May 1 after the right to it ends: Texas Tax Code §11.43(c) and (g).
- 10% homestead appraisal limit and when it expires: Texas Tax Code §23.23(a) and (c); Texas Comptroller, Appraisal and Tax Limitations.
- Most homeowners insurance won’t cover damage to a rental or may limit it; landlord insurance mainly for long-term leases: Texas Department of Insurance, Renting out your home? Check your insurance.
- Landlord repair duty and security deposit refund by the 30th day: Texas Property Code §92.052 and §92.103; other chapter 92 duties are listed in our home-to-rental guide.
- Home-sale exclusion: $250,000 / $500,000; ownership and use for 2 of the 5 years before the sale; time after the last use as a main home is not nonqualified use; depreciation after May 6, 1997 can’t be excluded: IRS Publication 523, Selling Your Home; 26 U.S.C. §121(a), (b) and (d)(6).
- Depreciation starts when a home is converted to rental use; basis is the lesser of adjusted basis or fair market value; land isn’t depreciable; 27.5-year recovery period; basis reduced by depreciation you could have claimed: IRS Publication 527, Residential Rental Property.
- Unrecaptured section 1250 gain; like-kind exchanges of real property held for business or investment, not property held mainly for sale; 45-day identification and 180-day / return-due-date deadlines; receiving the money first makes it a sale; qualified intermediaries: IRS Publication 544, Sales and Other Dispositions of Assets. Maximum 25% rate on unrecaptured section 1250 gain: IRS Topic No. 409.
- Departing residence rental income (75% of market rent less PITIA, no leases, positive result offsets only that home’s payment, negative counts in DTI, six months’ reserves under 12 months’ management experience; both payments counted when the current home hasn’t sold): Fannie Mae Selling Guide B3-3.8-05 and B3-6-06, both dated September 2, 2026.