McLennan County

Waco Mortgage Broker: Home Loans in McLennan County

Waco has a deep stock of 1900s-through-1940s housing and a decade-long culture of renovating it. Anyone who has watched a home improvement show filmed in Texas has seen the result.

That makes renovation financing more relevant here than almost anywhere else in the state — and it is the product most Waco buyers do not know exists.

Median prices run below most Texas metros. Here is how to finance the house that needs work, and what else matters locally.

Renovation loans, which is the Waco product

The common Waco situation: a well-located older home at an attractive price that needs $40,000 to $80,000 of work. Buyers assume they must buy it conventionally and then find cash for repairs. Frequently they cannot, and the deal dies.

Renovation loans solve this by financing the purchase and the repairs in one loan, underwritten against the home's value after improvement rather than its current condition.

Two main products:

FHA 203(k) — the more flexible on credit and down payment, at 3.5% down. A Standard 203(k) handles structural work, room additions and major systems. A Limited 203(k) covers smaller projects with a lower cost ceiling and less paperwork. FHA mortgage insurance applies and is generally permanent.

Fannie Mae HomeStyle — conventional, so mortgage insurance falls off at 20% equity. Generally requires stronger credit than 203(k) but allows a wider range of improvements, including some that 203(k) excludes.

How they work in practice:

• You submit contractor bids and a scope of work as part of the application
• The appraiser values the home as completed, from the plans
• Funds for repairs go into an escrow account and release in draws as work is verified
• There are timelines — work must generally begin and finish within defined windows

The most common failure point is the contractor. Renovation loan programs have requirements around licensing, insurance and willingness to work within a draw schedule, and not every contractor will. Line that up before you are under contract.

The historic districts

Waco has several designated historic districts, including areas around Austin Avenue and the neighborhoods near Baylor, with genuinely fine Victorian, Craftsman and Prairie-style housing.

Two things to verify before buying in one:

Design review. Exterior changes in a designated district frequently require approval. That affects renovation plans — window replacement, siding, roofing material and porch alterations are commonly reviewed. It does not affect your loan, but it affects your scope of work, and a renovation loan with a scope that cannot be approved is a problem.

Condition realities. Knob-and-tube wiring, original plumbing, foundation movement over a century, and lead paint or asbestos in pre-1978 construction. FHA, VA and USDA all apply property condition standards, and lead-based paint rules specifically apply to pre-1978 homes under FHA.

None of this is disqualifying. It is the reason a renovation loan rather than a conventional purchase is usually the right structure.

Taxes

Combined rates in Waco typically run in the 2.3% to 2.7% range — city of Waco, McLennan County, Waco ISD, McLennan Community College and a hospital district.

Verify the parcel with the McLennan County Appraisal District. A sale resets the appraised value, and the seller's exemptions end at closing.

Properties outside the city limits drop the municipal portion and often run meaningfully lower. Several surrounding communities — Hewitt, Woodway, China Spring, Lorena — have their own rates and school districts, and the differences are worth comparing if location is flexible.

Baylor, and the rental market

Baylor University enrolls roughly 20,000 students, and the neighborhoods around campus support a substantial rental market.

If you are buying to rent:

Conventional investment financing requires 15% down on a single unit, 25% on two-to-four units, with full income documentation and a qualifying DTI. Agency rules count only 75% of gross rent and generally require it documented on a Schedule E first.

DSCR financing qualifies on the property's rent against its payment, with no tax returns and no DTI calculation, typically at 20-25% down. This is what most investors here end up using. Full detail on DSCR loans.

Two local realities to underwrite honestly: leasing is seasonal and follows the academic calendar, so a property vacant in October is likely vacant until summer. And student rentals take more wear than a family tenancy, which belongs in your maintenance reserve rather than being discovered later.

Programs

Renovation loans — 203(k) and HomeStyle, as above.

FHA loans at 3.5% down, widely used at Waco price points.

Conventional loans at 3-5% down, which avoids FHA's permanent mortgage insurance.

VA loans for eligible veterans — zero down, no monthly mortgage insurance, plus the Texas disabled veteran property tax exemption, worth a great deal against a 2.5% rate.

USDA loans on eligible properties in McLennan County outside the city limits at zero down — verify by address. Coverage here is reasonably broad.

Down payment assistance through TSAHC and TDHCA, and Waco has had city programs as well. More on assistance.

The city

Waco sits on the Brazos River at the edge of the Blackland Prairie, roughly halfway between Austin and Dallas on I-35.

The Waco Suspension Bridge, completed in 1870, was the first bridge to span the Brazos and once carried Chisholm Trail cattle across the river. It is pedestrian-only now and anchors a riverfront park system.

The Waco Mammoth National Monument preserves the only recorded discovery of a nursery herd of Columbian mammoths — a genuinely significant paleontological site, now a National Park Service unit.

Cameron Park is one of the largest municipal parks in Texas, with 400-plus acres of river bluffs, trails and limestone cliffs, and the Cameron Park Zoo sits within it.

Magnolia Market at the Silos turned a pair of 1950s grain silos into a destination that draws millions of visitors annually and has materially changed downtown Waco's economy.

Lake Waco on the north side offers boating and camping, and the Texas Ranger Hall of Fame and Museum covers the state law enforcement history properly.

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

Frequently asked questions

What is a renovation loan and how does it work in Waco? It finances the purchase and the repairs in one loan, underwritten on the home's after-improvement value. Funds for repairs escrow and release in draws as work is verified. FHA 203(k) and Fannie Mae HomeStyle are the two main products.

Which renovation loan is better, 203(k) or HomeStyle? 203(k) is more flexible on credit and allows 3.5% down, but FHA mortgage insurance is generally permanent. HomeStyle is conventional, so mortgage insurance falls off at 20% equity, but it generally requires stronger credit.

What are property taxes in Waco, TX? Combined rates typically run 2.3% to 2.7%. Properties outside the city limits often run lower. Verify with the McLennan County Appraisal District.

Can I buy a rental near Baylor? Yes. Conventional investment financing requires 15-25% down with full income documentation; DSCR loans qualify on the property's rent instead, typically at 20-25% down.

Do historic district rules affect my loan? Not the loan itself, but they can affect your renovation scope — exterior changes frequently require design review. Verify before finalizing a scope of work.

Can I get a zero-down loan in Waco? VA for eligible veterans. USDA on eligible properties outside the city limits, where McLennan County coverage is reasonably broad. Verify by address.

What about lead paint in older homes? Pre-1978 homes are subject to lead-based paint rules, and FHA applies specific requirements. Your renovation scope needs to account for proper handling.

If the house needs work, say so early

Most Waco deals that fall apart do so because the buyer found the right house in the wrong condition and had no financing path for the repairs. There usually is one — but it has to be set up before you are under contract.

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

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