1st Advantage MortgageA DSCR loan in Waco turns on rent versus payment. Citywide medians from the Census are $1,165 a month for rent, $221,700 for home value and $3,537 a year for real estate taxes.
Waco rents, values and tenants
The Census Bureau's 2020 to 2024 American Community Survey puts median gross rent in Waco at $1,165, about 17% below the Texas median of $1,403. Median home value sits at $221,700, which is about 22% below the Texas median of $283,800. The gross rent-to-value ratio for Waco works out to 6.3% (twelve months of median rent divided by median value), a middle-of-the-road gross ratio. The figure combines all rental types with all owner-occupied homes, so it is a screening number and not an appraisal.
| Indicator | Texas | Waco | Difference |
|---|---|---|---|
| Persons per household | 2.69 | 2.51 | |
| Share in 2-4 unit buildings | 5.3% | 10.2% | +94% |
| Share of homes detached | 64.4% | 59.2% | -8% |
| Degree holders, age 25+ | 33.8% | 28.7% | -15% |
| Workers on their own account | 10.5% | 7.6% | -28% |
| Renters paying 30%+ of income | 51.7% | 58.3% | +13% |
| Units sitting vacant | 9.4% | 11.9% | +27% |
| Typical construction year | 1992 | 1979 | |
| Annual rent divided by value | 5.9% | 6.3% | +6% |
| Households that rent | 37.4% | 50.6% | +35% |
| Tax as a share of home value | 1.49% | 1.60% | +7% |
| Annual property tax bill, median | $4,232 | $3,537 | -16% |
| Household income, median | $78,476 | $54,365 | -31% |
| Typical monthly rent | $1,403 | $1,165 | -17% |
| Residents (Census estimate) | 30,188,424 | 143,570 |
Tenure leans toward renters here, at 50.6% of occupied housing (well above the Texas median of 37%), which supports a durable pool of prospective tenants. Household income runs a median $54,365 (well below the Texas median of $78,476), while 58% of renters spend 30 percent or more of income on housing.
Property types and condition in Waco
Multifamily matters in Waco. About 38% of housing units are in multi-unit buildings, and 10% are in two to four unit properties that fit standard DSCR programs. The median home was built in 1979, a middle-aged stock where roofs, HVAC and water heaters are the main repair items.
Roughly 12% of units in Waco sit vacant, and the share of rentals available for rent is 4.8% at the survey's snapshot.
What the data means for Waco buyers
A 6.3% gross yield makes Waco a market where the ratio is achievable but not automatic. A few hundred dollars of extra insurance or dues can decide a borderline file. Housing here is neither new nor ancient, so condition varies widely from block to block and the inspection tells you more than the median. A large renter population (51%) supports leasing, though it also means many competing landlords, so condition and price positioning count.
Carrying costs in Waco
Tax drag is easy to underestimate. Waco owners report a median $3,537 in annual real estate taxes, about 16% below the Texas median of $4,232, an effective 1.60% of median home value. Set beside the median rent, the tax alone consumes about 25% of annual rent.
McLennan County carries a relatively moderate overall rating in FEMA's National Risk Index, where lightning (very high), tornadoes (relatively high) and cold waves (relatively high) rank highest.
| Hazard in McLennan County, FEMA index | Level |
|---|---|
| Heat waves exposure | Relatively Moderate |
| Cold waves exposure | Relatively High |
| Tornadoes exposure | Relatively High |
| Lightning exposure | Very High |
| Social vulnerability score | Relatively High |
| Annualized loss estimate | Relatively Moderate |
| Composite risk | Relatively Moderate |
Many investors meet insurance too late, so get a quote tied to the Waco property's roof age and flood zone before you waive your inspection period.
Working the Waco rent math
Take the median rent ($1,165), subtract median taxes spread over twelve months ($295), and you have $870 of room at a 1.00 ratio. A lender asking for 1.25 cuts that to $637. Real quotes for the address decide the rest.
Legal checks before a Waco purchase
For Waco, treat local rental rules as an open question to close before you offer. Ask the city and McLennan County about landlord registration, inspections and short-term rental permits, and check association documents too. Guests who book by the night in Waco are taxed under state law as follows. Texas imposes a state hotel occupancy tax on rentals of 29 days or less, collected by the owner unless a booking platform collects for the owner, and cities, counties and special districts can add a separate local hotel tax that the owner must register for and remit.
A landlord collecting a deposit in Waco works under Tex. Prop. Code §§ 92.103, 92.104, 92.107, which sets the limit as follows: No statutory cap. On rent control, No; local rent control is preempted except in declared disasters (Local Gov't Code 214.902). A landlord who wants a Waco month-to-month tenant out must give 1 month (unless the lease says otherwise) of notice.
Other Texas cities for context
Statewide context for Waco: median home values in the other Texas cities below run from $304,700 to $642,100, and Waco is $221,700.
| Market | Renter share | Tax bill | Home value | Residents | Rent |
|---|---|---|---|---|---|
| Denton | 50% | $5,493 | $348,200 | 152,866 | $1,420 |
| Frisco | 34% | $9,572 | $642,100 | 219,304 | $2,014 |
| Arlington | 46% | $4,716 | $304,700 | 397,742 | $1,470 |
| Waco | 51% | $3,537 | $221,700 | 143,570 | $1,165 |
Employers and institutions near Waco rentals
About 7.6% of Waco workers are self-employed, the kind of borrowers whose tax returns understate cash flow and who often prefer a loan sized on rent. Around the edges, government workers are about 13% of employment, 29% of adults hold a bachelor's degree or higher and 6% of commuters travel 45 minutes or more.
Wikipedia's employer table for Waco names Baylor University, Ascension Providence, Waco Independent School District, H-E-B and Baylor Scott & White Health (Hillcrest) among the largest employers, a useful starting point for judging how steady renter demand is. The Waco area is home to Baylor University, McLennan Community College, Texas State Technical College and Texas Christian University. Students and employees at schools like these are a recurring source of rental demand. For getting around, Waco has interstate access via I-35 and air service through TSTC Waco Airport and Waco Regional Airport, which matters to commuters and to out-of-town owners planning a visit.
Before you make an offer in Waco
Gather the lease or rent estimate, the tax estimate and an insurance quote for the Waco address, check them in the calculator, and begin your application or get a quote first.
More Texas markets
- All Texas DSCR loans
- DSCR loans in Arlington, TX
- DSCR loans in Frisco, TX
- DSCR loans in Denton, TX
- Every market we cover
Sources and data notes
- Encyclopedia entry for Waco
- Text of Tex. Prop. Code §§ 92.103, 92.104, 92.107 for Waco landlords
- Texas tax source: Texas Comptroller, hotel occupancy tax
- Texas tax source: Hotel tax FAQ for short-term rentals
- Census ACS profile behind the Waco figures
- FEMA risk data used for Waco
The Waco statistics are five-year ACS estimates (2020 to 2024), which have sampling error. The Texas legal summaries are from the RedFlagLease dataset, licensed CC BY 4.0, with statute links. Verified October 2026. Ordinances and statutes change, so confirm before acting.
DSCR loan availability varies by property and lender program and is not an offer to lend. See our disclosures.
Frequently asked questions
How does a lender pick the rent for a Waco DSCR file?
On most files the lender uses the lower of the signed lease rent and the appraiser's market rent for the address in Waco. For orientation, the Census median gross rent here is $1,165 a month.
How is the DSCR figure built for a Waco property?
Taxes, insurance and dues are inside the payment the lender tests. Run $1,165 through a 1.25 ratio and the ceiling is about $932; subtract $295 for median taxes and $637 remains.
How high are property taxes in Waco?
About $3,537 a year at the median, which is 1.60% of value and about 16% below the Texas median of $4,232. Reassessment after a purchase can move that number, so get an estimate for the actual price.
What about VRBO or Airbnb income on a Waco purchase?
Possible where lender guidelines allow it, subject to Waco and McLennan County rules and to the building's association. Lenders usually average a year of bookings and discount the result.
What are the security deposit rules for a Texas landlord?
Texas limits deposits this way: No statutory cap. Return is due within 30 days after the tenant leaves. The governing section is Tex. Prop. Code §§ 92.103, 92.104, 92.107.
What does FEMA say about hazard risk near Waco?
The National Risk Index gives the county an overall relatively moderate rating. Use that as a prompt to get quotes, not as a verdict on one Waco street.
Do I need an LLC to buy a rental in Waco?
An individual can borrow too. If you prefer an entity for the Waco purchase, expect to provide formation documents and sign a personal guaranty.