Midland County

Midland Mortgage Broker: Home Loans in the Permian Basin

Midland's housing market is tied to the price of one commodity more tightly than any other city in Texas.

When drilling activity is strong, housing is scarce, rents climb sharply and values follow. When activity contracts, the same market can move the other way with a speed that surprises people who have only bought in steadier places.

That is not a reason to avoid buying here. Plenty of people have done very well owning Midland real estate. But it does mean that two questions that barely matter elsewhere matter enormously here: how much equity cushion you start with, and how long you expect to hold.

Why hold period is the central question

In a market that appreciates steadily, a short hold is merely inefficient — you pay transaction costs and move on. In a cyclical market, a short hold is where people actually lose money.

The arithmetic is worth being explicit about:

Selling costs run roughly 7% to 9% of the sale price once you count agent commissions, title, and typical seller-paid closing costs.

That means a home needs to appreciate meaningfully just to break even on a sale. In a flat year you lose the transaction costs. In a down year you lose the transaction costs and the value decline — and if the combined figure exceeds your equity, you are bringing money to closing in order to sell.

A low down payment magnifies this. At 3.5% down, a modest decline in value puts you underwater immediately. There is nothing wrong with a low down payment — it is the right tool for a great many buyers — but the risk profile is genuinely different in Midland than in a market that has never declined.

The practical guidance:

If your assignment here is two or three years, run the rent comparison seriously. That is not a lender talking against his own interest so much as it is the honest answer. Rents in Midland are high precisely when buying is most tempting, which makes the comparison feel obvious in the wrong direction.

If you are here for the long term, the cycle matters much less. Someone who bought in a peak year and held ten years has generally done fine. The danger is concentrated in short holds.

Consider a larger down payment than you would elsewhere, if you have it. Equity cushion is what converts a downturn from a crisis into an inconvenience.

Appraisal behavior in a volatile market

Appraisals are built from closed sales, which means they lag the market in both directions.

On the way up, appraisals come in below contract price, because closed comparables reflect what the market supported months ago. The buyer covers the gap in cash or the deal renegotiates. We cover appraisal gap strategy in detail on our Brownsville page.

On the way down, the lag runs the other way — appraisals can support values that the current market no longer does. That protects a purchase transaction and creates a different problem later, at refinance, when the appraisal has caught up.

What this means for a refinance plan. Buyers here sometimes take a higher rate expecting to refinance in a couple of years. That plan depends on two things: rates falling, and the appraisal supporting enough value. In a cyclical market the second is not a given. If your purchase only works on the assumption of a future refinance, it is worth stress-testing what happens if values are 10% lower when you go to do it.

Income that moves with the same cycle

Much of Midland's household income is linked to the same commodity as its housing, and underwriters look closely at the pattern.

Bonus and commission require a two-year average with a stable or rising trend. In a sector where compensation swings with activity, a strong year followed by a weaker one means the lower figure is generally used.

Rig and field work with heavy overtime follows the same variable income rules we set out on our Pasadena page — two-year history, averaged, with the trend supporting continuation.

Consultants and contract landmen are self-employed for underwriting purposes, qualifying on net income after expenses from filed returns. Where returns understate the cash flow, a bank statement program may fit; the mechanics are on our Laredo page.

The compounding risk worth naming: your income and your home value can move in the same direction at the same time. That correlation is unusual, and it is the strongest argument for a larger equity cushion and a longer intended hold than you would need elsewhere.

The rental side

Midland has one of the most volatile rental markets in Texas — rents can climb dramatically during an expansion and fall just as fast.

For investors, that argues for underwriting conservatively:

DSCR financing qualifies on the property's rent against its payment rather than on your tax returns, typically at 20% to 25% down. It is the most used investor product here.

Underwrite to a normalized rent, not a peak rent. A DSCR calculated on a boom-year lease will not hold when that lease turns over into a softer market. A deal that only works at peak rent is not a deal, it is a bet on timing.

Vacancy assumptions should reflect the cycle. A property that leases in a week during an expansion can sit for months in a contraction.

Midland County taxes

Combined rates in Midland generally run in the 1.7% to 2.2% range — City of Midland, Midland County, Midland College, a hospital district, and Midland ISD. Rates here are moderate by Texas standards, because the mineral and industrial tax base carries a substantial share of the load.

That is itself a cyclical feature worth knowing: a tax base heavily weighted to mineral values can shift, and rates are periodically adjusted in response.

Verify the parcel with the Midland Central Appraisal District. A sale resets the appraised value and the seller's exemptions end at closing. File your homestead exemption the year you buy.

Where people buy

Northwest Midland along Loop 250 holds most of the newer single-family development and the higher end of the market.

Grassland Estates and the Racquet Club area carry established 1970s and 1980s stock on larger lots.

Central Midland near downtown and the older grid holds mid-century and pre-war housing, including some substantial homes from earlier booms.

South and east Midland are the more affordable parts of the city, with older stock and steady FHA activity.

Greenwood and the unincorporated county move into acreage, well and septic, and a separate school district.

Odessa, 20 miles west in Ector County, is a distinct market with its own rates and districts and is worth comparing.

The city

Midland was founded in 1881 as Midway Station, the midpoint on the Texas and Pacific Railway between Fort Worth and El Paso, and renamed when it turned out another Texas town already held the name.

It stayed a ranching town until the 1923 Santa Rita No. 1 strike in Reagan County opened the Permian Basin, and the administrative side of the industry settled here while the field operations concentrated in Odessa — a split that still largely describes the two cities.

The Petroleum Museum holds one of the most comprehensive collections on the history of the industry anywhere, including a significant Chaparral race car collection.

The George W. Bush Childhood Home on West Ohio Avenue is a restored 1950s house museum, and Midland is the only American city to have been home to two future presidents and two future first ladies.

Wadley-Barron Park and the Sibley Nature Center, which interprets the Llano Estacado's ecology, handle most of the local outdoor use, and the Midland County Horseshoe arena complex draws regional events.

Not sure which fits? Compare every loan program we place.

Frequently asked questions

Is buying in Midland risky? It carries a risk profile most Texas markets do not, because values track one commodity. Long holds have historically done well. Short holds are where people get hurt, because selling costs of roughly 7% to 9% plus a possible value decline can exceed a small down payment.

Should I rent instead if I am only here a few years? It is worth running the comparison honestly. Midland rents are highest exactly when buying feels most urgent, which biases the decision. On a two or three year assignment, renting frequently comes out ahead once transaction costs are counted.

How much should I put down in Midland? More than you might elsewhere, if you have it. Equity cushion is what protects you in a downturn. A low down payment is still the right tool for many buyers — just understand that it removes the buffer.

Can I count on refinancing later? Not without stress-testing it. A refinance requires both lower rates and an appraisal supporting sufficient value. In a cyclical market the second is genuinely uncertain, so a purchase that only works on the assumption of a future refinance deserves a hard look.

How does the oil cycle affect my qualifying income? Bonus and commission require a two-year average with a stable or rising trend, so a strong year followed by a weaker one generally means the lower figure is used. Your income and your home value can move together, which is the unusual risk here.

What are property taxes in Midland, TX? Combined rates generally run about 1.7% to 2.2% — moderate for Texas, because the mineral and industrial tax base carries a large share. Verify the parcel with the Midland Central Appraisal District.

What DSCR should I underwrite a Midland rental to? Use a normalized rent rather than a peak-cycle lease, and a vacancy assumption that reflects the downside. A deal that only clears at boom rents is a bet on timing rather than an investment.

Tell us how long you plan to stay

It is the first question we ask here and it changes the answer more than anything else about the file.

A five-year-plus horizon opens up the whole conversation. A two-year assignment deserves an honest comparison against renting, and we will run it either way.

Start your application · Run the numbers · Call 737-347-1314

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