Central Texas

McLennan County Mortgage Lender: What the County Controls

McLennan County holds 272,020 people across 1,042 square miles in Central Texas. Waco is the seat and the only large city. The other nineteen incorporated places and the unincorporated remainder make up the rest, and the lending work out there looks nothing like the lending work inside the city.

This page is about the things the county decides, because those are the things that break files. The appraisal district sets the value your escrow is built on. The county engineer decides whether a parcel in the floodplain can be developed. A joint city-county health district issues the septic permit. The county clerk holds the plat, or the affidavit saying no plat was needed. None of that is a city function, and all of it can stop a closing.

For the Waco market specifically, including renovation financing and the historic districts, see our Waco mortgage broker page. What follows stays at county level.

The McLennan County Appraisal District, and the year-one escrow trap

The McLennan County Appraisal District, known locally as MCAD, appraises every parcel in the county for all of its taxing units. Its office is on South 26th Street in Waco. Two mechanics matter to a loan.

The protest calendar is statutory. Under Texas Tax Code Section 41.44, a protest is due by May 15 or 30 days after the appraisal district delivers your notice of appraised value, whichever is later. Notices generally go out in April. The date printed on your own notice controls, and missing it means living with the value for the year.

Homestead exemptions got larger, and they are not automatic. Texas voters approved Propositions 13 and 11 on November 4, 2025, raising the school district residence homestead exemption to $140,000 and lifting the combined exemption for homeowners 65 or older or disabled to $200,000. You still have to file for it with MCAD. The seller's exemptions come off the parcel at closing, and yours do not attach by themselves.

Now the part almost nobody explains. On new construction, the appraisal district values what existed on January 1. If the slab was poured in March, the January 1 value was bare dirt. Your lender sets the first year's escrow off the only tax figure that exists, which is the land. Twelve months later the county appraises a finished house, the bill multiplies, the escrow account comes up short, and the payment rises twice over: once to cover the new bill and again to repay the shortage.

This is the single most common payment shock in a growing county, and McLennan is building. Census QuickFacts reports 1,442 building permits in McLennan County in 2025, up from 1,046 in 2024 and down from 1,750 in 2023, per the Census Building Permits Survey. Every one of those buyers is exposed to it.

The fix is not complicated. Ask us to escrow off an estimate of the completed value rather than the land, and understand the first-year payment as a provisional number. We would rather over-collect and refund than hand you a surprise in month fourteen.

What actually stacks on a McLennan County tax bill

This is where McLennan differs from its neighbors, and from what most buyers assume.

The Texas Comptroller's county directory for McLennan County, updated October 2025, lists the active taxing units: McLennan County, 20 independent school districts, 19 cities, the McLennan Community College District, and three water and watershed districts, being the McLennan-Hill County Tehuacana Creek WCID #1, the Castleman Creek Watershed and the Elm Creek Watershed District.

It lists no hospital district, no emergency services district and no municipal utility district. That matters in both directions.

The college district is a real line on every bill. McLennan Community College published an adopted rate of $0.131974 per $100 of value for 2025. It applies countywide, not just in Waco, and buyers moving in from a county without a community college district routinely leave it out of their own math.

The county rate is moving. McLennan County's adopted 2025 rate was $0.334805 per $100. KWTX reported in July 2026 that commissioners proposed raising it to $0.394805 per $100 in the fiscal 2027 budget, which the station described as the county's first proposed increase in years. Verify what was adopted before you rely on a number.

No ESD is unusual for a Central Texas county, and it is an insurance question rather than a tax question. Rural fire protection here is funded through volunteer departments and city contracts rather than a dedicated district tax. Commissioners accepted a petition in June 2022 to create what KWTX reported would be the county's first emergency services district, covering roughly 37 square miles around Elm Mott, Chalk Bluff and Lincoln City. The practical effect on a loan is on the hazard insurance side: a carrier prices off distance to a responding station and the station's rating, and a rural McLennan address can draw a materially different premium than a Hewitt or Woodway address three miles away. Premium goes into escrow, and escrow goes into qualifying.

Twenty school districts across 1,042 square miles means the school line on your bill changes with the address, not with the city. China Spring is a good example. It has a school district and no city, so a China Spring address carries the county, the college and China Spring ISD, with no municipal rate. Bellmead, Hewitt, Woodway, Robinson, Lorena, Mart, West, Crawford, McGregor, Moody, Lacy-Lakeview, Beverly Hills, Riesel, Golinda, Gholson, Leroy and Hallsburg each levy their own. Send us the address and we will pull the parcel's real combination rather than averaging the county.

Unincorporated McLennan County: no zoning, plenty of rules

Texas counties have no zoning authority. People hear that and conclude the county has no say. The county has a great deal of say, exercised through platting, floodplain administration and septic permitting.

Platting runs through Commissioners Court. The county's preliminary and final plat checklists require the plat to show whether any part of the subdivision lies in the 100-year floodplain along with the FIRM community panel number, and to carry an approval statement with a signature line for the County Judge. Where an owner claims a platting exemption under Section 1.7 of the McLennan County Subdivision Regulations, the county requires an affidavit obtained from the Engineering Department, notarized, and recorded with the County Clerk. Without either the plat or the recorded affidavit, you have a tract that a title company may not be willing to insure as described, and a lender cannot lend against a legal description nobody will insure.

This is the thing to check before you go under contract on a split-off piece of family land. "We just divided it between the kids" is how most unplatted, unexempted parcels in this county came to exist.

Road access and maintenance. A county-maintained road and a private easement are different animals to an underwriter. Appraisers are asked to comment on access, and a landlocked or prescriptive-easement-only tract raises a marketability question that can end a conventional or government loan. Confirm whether the road is on the county's maintained system, and if it is not, who is obligated to maintain it and whether that obligation is recorded.

Septic and water, and whether the parcel is financeable at all

Outside the municipal systems, a house needs its own sewage disposal and often its own water.

Septic permits go through a joint health district, which surprises people. The Waco-McLennan County Public Health District administers the on-site sewage facility program as the designated representative for McLennan County under an agreement between the City of Waco and the county, and it covers the unincorporated county, the other cities in the county, and Waco itself. Its published fee schedule runs $510 for a conventional single-family system and $710 for an aerobic single-family system, with separate fees for minor repairs, plat review site evaluations, failed-system reinspections and annual aerobic maintenance.

Three things follow for a loan:

System type is driven by the dirt. The health district selects system type from soil type, site characteristics and physical features. Across much of eastern McLennan County the soils are Blackland Prairie clays, which drain poorly, and that pushes a site toward an aerobic system with a larger footprint and a maintenance contract. An aerobic system is financeable. An aerobic system that needs land the lot does not have is not.

FHA, VA and USDA all apply property condition standards to the septic system and to private water. Expect questions about separation distance between a well and the drainfield, and expect an appraiser to call out a system in visible failure as a repair condition.

Water wells need a potability and sometimes a flow result on government loans. Order it early. A dry or contaminated well discovered in the final week is the most common cause of a blown closing date on rural McLennan files.

USDA eligibility outside Waco

USDA Rural Development guaranteed financing is available on eligible properties and is one of the genuinely useful tools in this county, because so much of McLennan sits beyond the Waco urbanized area.

The mechanics, and only the mechanics. Eligibility is set by the property address, checked against USDA's own property eligibility map, not by acreage or by how rural a place feels. There is a household income limit that varies by county and household size. The program is for an owner-occupied primary residence, so it will not finance a rental or a second home. USDA applies property standards, which interacts directly with the septic and well items above. The guarantee carries fees that are financed into the loan rather than paid as a separate charge, and we will walk you through the structure on your file.

Run the address before you fall in love with the house. Two parcels on the same road can land on opposite sides of an eligibility boundary. More on USDA loans.

Agricultural valuation and the rollback

A great deal of McLennan County land carries a 1-d-1 open space agricultural valuation, which taxes it on productivity value rather than market value. That keeps the current owner's bill low and creates a trap for the buyer who changes the use.

When land under open space valuation is taken out of agricultural use, Texas Tax Code Section 23.55 imposes additional tax for the preceding years. The Texas Comptroller's guidance on land use bills states that HB 3833 (87th Legislature) reduced the look-back period to three years and removed all interest from the rollback calculation under Sections 23.55, 23.76 and 23.9807. Delinquent amounts still carry the ordinary penalty and interest.

Practically: if you buy 20 acres under ag valuation and build a house on five of them, the five change use and the rollback is assessed. That bill lands on the buyer, not the seller, and it is not prorated at closing unless somebody negotiates it there. We raise it at pre-approval on every acreage file, because it is a four-figure or five-figure number that nobody budgeted.

Two related points. The valuation does not transfer automatically. A new owner must apply to MCAD to continue it. And a lender looks at the taxes as they will be, not as the seller paid them, which on a tract losing its ag valuation can change qualifying materially.

Floodplain administration outside the city limits

The Brazos River runs through Waco, the North Bosque comes down from the northwest, and Lake Waco sits on the city's western side. Outside the municipalities, flood permitting is a county function.

The McLennan County Engineer's Office administers the county's flood damage prevention order, which applies to all development in the unincorporated areas of the county. The office makes the floodplain determination from a survey or drawing showing the specific tract, the fronting road and the nearest road intersection. The county's Floodplain Development Permit form, revised February 29, 2024, produces one of three outcomes: exempt, permitted subject to flood-proofing, or a request for further documentation such as lot dimensions and lowest-floor elevations, flood-proofing certification for non-residential structures, or waterway alteration information.

For lending, the order of operations is what counts. Federally related mortgages require flood insurance where the structure sits in a Special Flood Hazard Area, and that is determined from the FEMA map and the structure's location, not from whether the house has ever flooded. An elevation certificate often reprices the policy substantially, and occasionally supports a map amendment. Order the determination early. A flood zone discovered after the appraisal has rewritten more than one McLennan County payment at the worst possible moment.

Hail, roof age, and the deductible that is not a dollar amount

Central Texas sits in the hail corridor, and this is now an underwriting issue rather than a footnote.

The Insurance Information Institute counted 902 hail events causing major damage in Texas in 2025, more than any other state and more than twice the next highest. State Farm reported about $1.4 billion paid on Texas hail claims in 2025 across roughly 95,200 claims, averaging about $15,000 per claim.

What that does to a file:

Roof age gates the policy. Many carriers will not write a composition roof past a certain age, or will write it on actual cash value only. No bindable policy means no closing, so the roof question belongs in the inspection week, not the week of funding.

The wind and hail deductible is usually a percentage, not a flat amount. The Insurance Information Institute notes these typically run between 1% and 5% of the dwelling coverage amount. On a Texas policy that is a very different exposure from the all-other-perils deductible, and it is the number most buyers never read.

Actual cash value versus replacement cost is the other one. An actual cash value roof endorsement pays depreciated value, leaving the owner to fund the gap on a full replacement. It lowers the premium, which lowers the escrow, which helps qualifying, and it is a bad trade on a 15-year-old roof in this county. Ask your agent which settlement basis the quote assumes and have us model the payment both ways.

Manufactured housing, and the real property election

A real share of the housing stock in rural McLennan County is manufactured, and whether it is financeable turns on paperwork, not on the house.

A manufactured home is personal property in Texas until the owner elects otherwise. Under Texas Occupations Code Chapter 1201, the owner applies to the Texas Department of Housing and Community Affairs for a Statement of Ownership electing real property treatment. As amended by HB 1510, the election is not perfected until a certified copy of the statement is filed in the real property records of the county where the home sits and both TDHCA and the chief appraiser of the appraisal district are notified. In McLennan County that means a recording with the County Clerk and notice to MCAD.

Until that is done, there is nothing for a mortgage to attach to. A real-property mortgage cannot encumber a chattel.

The rest of the checklist: the home must be on a permanent foundation with an engineer's foundation certification, the towing hitch, axles and running gear removed, the HUD data plate and certification label present, and the land and home conveyed together. FHA, VA and USDA all finance manufactured housing meeting their standards, and conventional programs do as well, with narrower appetite. Pre-1976 units are not financeable on any of these programs. A singlewide narrows the lender list considerably.

Get the Statement of Ownership status checked at pre-approval. On a rural McLennan file this is the item most likely to add four weeks.

The Baylor rental market, and the three positions lenders take

Baylor University reported a spring 2025 headcount of 19,613 students, including 14,098 undergraduates, per its Office of Institutional Research enrollment report. That supports a deep rental market in and around Waco, and investors buy into it from across the state.

The county-level underwriting question is how the rent gets counted, and it turns on how the property is leased.

Leasing by the bedroom is common here, and lenders take one of three positions on it:

One, some will count the aggregate of the individual room leases as the property's rent, treating the house as a single rental unit with multiple co-tenants. This is the most favorable treatment and the least common.

Two, some will require a single lease covering the whole property and will not credit room-by-room leases at all, which can make a fully leased house look vacant on paper.

Three, most agency and DSCR lenders will use the appraiser's single-family market rent opinion, which values the house as one unit let to one household, regardless of what the room leases actually gross. Where by-the-bedroom rent exceeds whole-house market rent, and it usually does, the extra income simply does not count.

Know which position your lender takes before you write the offer, because it changes the deal.

Purpose-built student housing and a converted single-family house appraise differently. A purpose-built property with many small bedrooms and a bathroom for each is frequently appraised as a commercial or small-income property rather than against single-family comparable sales, which moves it out of residential financing entirely. A converted house still appraises against neighborhood single-family sales, and the conversion itself may be treated as functional obsolescence rather than as added value. Four bedrooms turned into six does not reliably appraise as six.

DSCR financing qualifies on the property's rent against its payment without tax returns, which is the usual tool here, and the three positions above apply to it the same way. Leasing follows the academic calendar, so a unit vacant in October is likely vacant until summer, and that belongs in your own underwriting as much as in ours.

Thin comparable sales in the rural county

Census QuickFacts puts McLennan County at 112,290 housing units as of July 1, 2025, with an owner-occupied rate of 61.8% and a median owner-occupied value of $243,600 on the 2020 to 2024 American Community Survey five-year estimates. Median gross rent on the same estimates is $1,173.

Those are county aggregates, and they hold almost no information about a 14-acre tract with a barndominium outside Crawford. That is the real rural lending problem here. There may be three arguably comparable sales in two years inside a reasonable radius.

What thin comps do to a file:

The appraiser reaches, for distance, for date, and for dissimilar properties, and every reach becomes an adjustment a reviewer can question. A low appraisal in a thin market is frequently an adjustment argument rather than a value argument, and it is sometimes winnable with better data.

Outbuildings carry less value than they cost. A $90,000 shop does not add $90,000. Appraisers in thin markets typically give limited contributory value to outbuildings because there are no paired sales to support more.

Acreage beyond the typical lot size for the area gets discounted, and on a government loan excess acreage with its own separate utility can raise a question about whether the property is residential at all.

Protect the contract. Give the appraisal a realistic amount of time, keep an appraisal contingency, and agree in advance with the seller what happens if the number comes in short. On rural McLennan files we start the appraisal conversation at pre-approval rather than after an offer is accepted.

Which programs fit McLennan County

USDA loans on eligible addresses outside the Waco urbanized area, which is a large part of this county.

FHA loans, which carry a great deal of the county's purchase volume and are flexible on credit.

Conventional loans, including renovation financing on older housing stock.

VA loans for eligible veterans, with the Texas disabled veteran property tax exemption applied for through MCAD rather than through a lender.

DSCR loans for the rental market, subject to the rent-counting positions above.

Bank statement loans for self-employed borrowers, common across the county's agricultural and trades economy.

Jumbo loans for the higher end around Woodway, China Spring and the lake.

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

Where people buy across McLennan County

Waco holds the county's older housing stock and its renovation market, and has its own guide.

Woodway and Hewitt sit southwest of Waco with their own municipal rates and the Midway ISD boundary.

Robinson and Lorena run south along the I-35 corridor, each with its own city and school rate.

Bellmead and Lacy-Lakeview sit northeast of Waco toward Elm Mott.

China Spring is unincorporated with its own school district, so an address there carries no municipal tax line.

West, Mart, Crawford, McGregor, Moody and Riesel are the smaller municipalities, each a distinct tax combination.

The unincorporated remainder, toward Gholson, Hallsburg, Golinda and the Bosque bottoms, is where the platting, septic, well and floodplain work on this page actually happens, and where most of the county's USDA-eligible addresses sit.

Assistance programs that reach McLennan County

TDHCA and TSAHC programs reach the whole county, including the Homes for Texas Heroes program for teachers, first responders, veterans and corrections officers. The comparison worth running is not assistance versus no assistance. It is whether an assisted loan beats an unassisted USDA loan on an eligible rural address, since USDA requires no down payment at all. At McLennan County price points it frequently does not. More on assistance programs.

Neighboring counties

McLennan borders Bell, Bosque, Coryell, Falls, Hill and Limestone. Our Bell County mortgage lender page covers the Fort Cavazos market to the south.

Towns and cities we lend in across McLennan County

Waco is the seat and the largest city. Bellmead, Beverly Hills, Hewitt, Lacy-Lakeview, Lorena, Robinson and Woodway form the ring around it. West sits north on I-35, Mart and Riesel to the east, McGregor, Moody and Crawford to the southwest, and Bruceville-Eddy on the Falls County line. Gholson, Golinda, Hallsburg and Leroy are the county's smallest incorporated places, and China Spring, Elm Mott, Speegleville, Lorena's outskirts and the Bosque and Brazos bottoms are unincorporated.

Frequently asked questions

Who are the best mortgage lenders in McLennan County, TX? The ones that handle the county-level items fluently: escrowing a new-construction file off completed value rather than land, reading a plat exemption affidavit, getting a septic and well cleared through the Waco-McLennan County Public Health District, and defending a rural appraisal with thin comparable sales. Those are routine here and still unfamiliar to lenders who mostly write inside city limits.

Which appraisal district covers McLennan County? The McLennan County Appraisal District, known as MCAD, on South 26th Street in Waco. It appraises every parcel in the county for all of its taxing units and handles exemptions and protests.

When is the property tax protest deadline in McLennan County? Texas Tax Code Section 41.44 sets it at May 15 or 30 days after the appraisal district delivers your notice of appraised value, whichever is later. Notices generally go out in April, and the date printed on your notice controls.

Why did my payment jump in the second year on a new build? Because the appraisal district valued the parcel as it existed on January 1, which on new construction is usually bare land. The first year's escrow is set off that figure. When the finished house is appraised the following year, the bill rises and the escrow account is short, so the payment goes up to cover both the new bill and the shortage. Ask to escrow off an estimate of the completed value instead.

Does McLennan County have a hospital district or a MUD on the tax bill? The Texas Comptroller's county directory for McLennan County, updated October 2025, lists no hospital district, no emergency services district and no municipal utility district among the county's active taxing units. What it does list is the county, 20 school districts, 19 cities, the McLennan Community College District and three water and watershed districts. Always verify the specific parcel, since districts can be created.

Can I get a USDA loan in McLennan County? On a large share of the county outside the Waco urbanized area, yes. Eligibility is set by the property address against USDA's property eligibility map, and there are household income limits and an owner-occupancy requirement. Run the exact address, because two parcels on the same road can fall on opposite sides of a boundary.

I am buying land that has an agricultural exemption. What happens? If you change the use, such as building a house on part of it, Texas Tax Code Section 23.55 assesses additional tax for the preceding three years. The Comptroller's guidance states that HB 3833 reduced the look-back to three years and removed interest from the calculation. The bill lands on the buyer and is not prorated unless it is negotiated at closing. The valuation also does not carry over automatically, so a new owner has to apply to MCAD to continue it.

Can I finance a tract in unincorporated McLennan County that was never platted? Sometimes, and it depends on the paperwork rather than the dirt. The county requires either a recorded plat approved by Commissioners Court or, where a platting exemption under Section 1.7 of the McLennan County Subdivision Regulations applies, an affidavit from the Engineering Department that is notarized and recorded with the County Clerk. Without one of those, a title company may decline to insure the legal description, and a lender cannot lend against a description nobody will insure.

Who issues septic permits outside Waco? The Waco-McLennan County Public Health District, acting as the designated representative for McLennan County under an agreement between the City of Waco and the county. It covers the unincorporated county, the other cities in the county, and Waco itself. Its published fees are $510 for a conventional single-family system and $710 for an aerobic single-family system, with separate fees for repairs, site evaluations and reinspections.

Will a lender finance a manufactured home in rural McLennan County? Yes, if the real property election is perfected. Under Texas Occupations Code Chapter 1201, the owner elects real property treatment through a TDHCA Statement of Ownership, and the election is not perfected until a certified copy is filed in the county real property records and both TDHCA and the chief appraiser are notified. The home also needs a permanent foundation with an engineer's certification, the hitch, axles and running gear removed, and the HUD label present. Pre-1976 units are not financeable on FHA, VA, USDA or conventional programs.

How do lenders count rent on a house leased by the bedroom near Baylor? Three ways, and it varies by lender. Some count the aggregate of the individual room leases. Some require one lease covering the whole property and credit nothing room by room. Most use the appraiser's single-family market rent opinion, which values the house as one unit let to one household regardless of what the room leases gross. Confirm which position your lender takes before you write an offer.

Is a purpose-built student rental financed the same as a converted house? Often not. A purpose-built property with many small bedrooms and a bathroom for each is frequently appraised as a small income or commercial property rather than against single-family comparable sales, which can move it out of residential financing. A converted single-family house still appraises against neighborhood sales, and the conversion may be treated as functional obsolescence rather than added value.

What should I know about hail insurance before I close here? Two things. Roof age can decide whether a carrier will write the policy at all, or will write it on an actual cash value basis, and no bindable policy means no closing. And the wind and hail deductible is usually a percentage of the dwelling coverage rather than a flat amount, which the Insurance Information Institute puts typically between 1% and 5%. The Institute counted 902 hail events causing major damage in Texas in 2025, more than any other state. Get the quote during the inspection period, not the week of funding.

Why did my rural appraisal come in low? Usually because there were not enough recent sales of similar properties nearby, so the appraiser reached on distance, date or property type and made large adjustments. In a thin market that is often an adjustment argument rather than a value argument, and better comparable data sometimes moves it. Build appraisal time into the contract and agree with the seller in advance on what happens if the number falls short.

Do I need flood insurance outside the city limits? If the structure sits in a FEMA Special Flood Hazard Area, a federally related mortgage requires it. Outside the municipalities, the McLennan County Engineer's Office administers the county's flood damage prevention order and makes the determination from a survey showing the tract, the fronting road and the nearest intersection. An elevation certificate often changes the premium substantially, so order the determination early.

Send us the address, not the city

Almost everything on this page changes with the parcel. The school district, the municipal line, whether there is a plat, whether the septic will pass, whether USDA reaches it, whether the ag valuation is about to roll back. We will pull the real tax picture and model the payment before you write an offer rather than after.

Start your application · Run the numbers · Call 512-588-2771

Neighboring Counties