How Much Do MUD Taxes Add to Your Payment in Katy, TX?
A MUD tax adds roughly $200 to $400 per month to a new construction payment in Katy, TX and Greater Houston, and most online mortgage calculators exclude it entirely. Mohebbi Realty Group pulls the exact rate for every taxing jurisdiction at a specific address before a client writes a builder offer.
TL;DR
A MUD tax is a property tax charged by a Municipal Utility District, the special district that financed water, sewer, drainage, and roads in most newer Katy, Cypress, Fulshear, and Richmond subdivisions.
MUD rates in the Houston area generally run between $0.20 and $1.20 per $100 of assessed value, depending on district debt and buildout stage.
On a $400,000 home, the gap between a 2.2% total tax rate and a 3.0% total tax rate is about $267 per month.
At the 6.66% average 30-year mortgage rate reported by Freddie Mac on August 27, 2026, that $267 equals roughly $41,500 in lost mortgage principal.
Texas Water Code Section 49.452 requires the seller, including a builder, to hand every buyer a written Notice to Purchaser disclosing the district, its tax rate, and its bonded debt.
As of August 2026, the Texas school district residence homestead exemption is $140,000, and it does not apply to MUD taxes.
Key Takeaways
Pull the address-level tax rate from the county appraisal district before writing an offer, not after the option period starts.
Ask the lender in writing to escrow on the completed home value rather than the land-only assessment, which prevents the year-two payment jump.
Compare two homes on total monthly payment at their actual tax rates, not on list price.
What is a MUD tax in Texas?
A MUD tax is a property tax levied by a Municipal Utility District, a special-purpose district created under Texas Water Code Chapter 49 to finance water, sewer, drainage, and road infrastructure outside city utility service. When a developer buys raw land beyond city limits, no water or sewer line exists to connect to. The developer petitions the state to create a district, the district issues bonds to build the infrastructure, and every home inside the district repays those bonds through an annual property tax.
The MUD tax appears as a separate line on the property tax bill alongside the school district, county, and any city taxes, and a lender collects it monthly in escrow.
Why is the payment on a mortgage calculator wrong for Houston new construction?
Generic mortgage calculators apply a county-average or state-average property tax rate and have no address-level data about special districts. A buyer prices a floor plan on Zillow or a builder website, sees an attractive payment, then discovers the real number is several hundred dollars higher once the MUD rate is added.
In the fast-growing suburbs west and northwest of Houston, most new construction sits inside a district. This is the most common payment surprise our team sees among first-time new construction buyers in Katy, TX and Greater Houston, and a ten-minute lookup prevents it.
How much does a MUD tax add to a monthly payment in Katy, Cypress, and Fulshear?
A MUD tax commonly adds $200 to $400 or more per month in the Houston suburbs. Rates generally run between $0.20 and $1.20 per $100 of assessed value. Newer districts that borrowed heavily and have few completed homes to spread the cost across sit at the high end; mature districts that have paid down bonds for twenty years sit at the low end.
At the 6.66% average 30-year rate Freddie Mac reported on August 27, 2026, $267 per month carries roughly $41,500 in mortgage principal. Two homes listed at the same price in two different districts are not the same purchase. These rates are illustrative; the number that matters is the one attached to a specific lot.
How do you look up the MUD tax rate for a specific address?
Search the address on the county appraisal district website and read the list of taxing jurisdictions on the property record. The full process takes about ten minutes:
Identify the county. Katy spans Harris, Fort Bend, and Waller counties. Cypress is Harris. Fulshear is mostly Fort Bend with some Waller. Richmond is Fort Bend.
Search the address at hcad.org, fbcad.org, or waller-cad.org. For a home still under construction, search a completed neighboring address on the same street.
Find the taxing jurisdictions. Look for a line reading "Harris County MUD #" or "Fort Bend County MUD #" and record the district number. Two sections of the same master-planned community can sit in different districts at different rates.
Pull the current rate. Harris County publishes a jurisdiction rate table at hctax.net; Fort Bend publishes rates at fbcad.org. Many districts also post rate history and bond documents on their own sites.
Add every rate together. School district + county + city, if applicable + MUD + any other special district, multiplied by assessed value, divided by twelve.
Ask the harder question. Request the district's five-year rate history and its authorized but unissued debt from the tax assessor-collector. A district holding unissued bonds can raise its rate later.
Texas Water Code Section 49.452 requires the seller to provide a written Notice to Purchaser disclosing the district, its tax rate, and its bonded debt. It arrives inside a stack of builder paperwork, and it is a financial document rather than a formality
What is the difference between a MUD, a PID, and a WCID?
A MUD and a WCID are taxing districts; a PID levies an assessment instead.
MUD (Municipal Utility District) — the most common structure in the Houston area. Funds water, sewer, and drainage infrastructure through bonds repaid by a property tax.
WCID (Water Control and Improvement District) — functionally similar to a MUD and common in Fort Bend County. Harvest Green in Richmond sits within Fort Bend County WCIDs. Treat it the same way.
PID (Public Improvement District) — an assessment levied to pay for public improvements benefiting properties inside the district. Texas Property Code Section 5.014 requires seller notification. PID assessments can run for decades and are generally not deductible the way property taxes are.
A home can sit in a MUD and a PID at the same time. Ask the model home sales agent directly: does this property have a MUD, a PID, or both? An agent who cannot answer immediately has told you something too.
Do MUD tax rates ever go down?
MUD tax rates generally decline over time, but the timeline runs fifteen to twenty years and no buyer should budget on it. As a district builds out, bond debt spreads across more rooftops, and as bonds retire, the debt-service portion of the rate falls. That is why Cinco Ranch, developed decades ago, carries a lighter MUD burden than a community that broke ground three years ago. Several Houston-area districts have raised rates recently as buildout accelerated and new bonds were issued, so budget on today's rate and treat any future reduction as a bonus.
Why do property taxes jump in year two on a new construction home?
The county often appraises a new construction property on unimproved lot value in the first year, because the house was not complete on the January 1 appraisal date. The lender sets up escrow using that low bill. The following January, the county appraises the finished home, the bill rises, and the servicer raises the monthly escrow payment to cover the higher ongoing bill while spreading the prior year's shortage across the next twelve months.
Monthly payments can climb $400 to $600 in year two for buyers who did nothing wrong except trust the figure on the closing disclosure. The protection is to ask the lender before closing to escrow based on the completed home value. Not every lender agrees, and some require funding the difference upfront, which still beats a surprise twelve months later. Our first-time homebuyer clients get this answered in writing before a contract is signed.
Does the 2026 Texas homestead exemption reduce MUD taxes?
The residence homestead exemption applies to school district taxes, not to MUD taxes. Texas voters approved Proposition 13 in November 2025, raising the school district residence homestead exemption from $100,000 to $140,000 effective with the 2026 tax year, and Proposition 11 added $60,000 more for homeowners 65 or older or with a qualifying disability.
Three things matter for a MUD comparison:
The exemption reduces school district taxes only. Cities, counties, and special districts set their own optional exemptions, and those are typically much smaller.
The exemption reduces both sides of a comparison by roughly the same amount, so the gap between a low-MUD home and a high-MUD home stays the same.
Filing is required. Form 50-114 is free, the deadline is April 30, and approval renews automatically. Filing also activates the 10% annual cap on appraised value increases under Texas Tax Code Section 23.23, though that cap does not apply in the first year of qualification, which is exactly the year a new build gets reassessed.
Which Houston-area communities carry MUD taxes?
Nearly every master-planned community built outside city utility service in the last thirty years carries a MUD or WCID, including the communities Greater Houston new construction buyers are touring in August 2026.
Bridgeland and Towne Lake in Cypress, Cross Creek Ranch and Firethorne in Fulshear, Elyson and Cane Island in Katy, and Harvest Green, Aliana, and Candela in Richmond all sit inside districts. Rates vary between them and sometimes between sections of the same community. Cinco Ranch carries a lighter burden than newer districts because its bonds have been amortizing for decades, which means a buyer weighing Elyson against Cinco Ranch at the same price point is weighing two different monthly payments.
Why do buyers work with Mohebbi Realty Group on new construction?
Mohebbi Realty Group runs the actual address-level tax rate for every home a buyer considers in Katy, TX and Greater Houston, including the MUD, the school district, and every other taxing entity. Bobby Mohebbi holds the Accredited Buyer Representative (ABR) and Pricing Strategy Advisor (PSA) designations with Keller Williams Signature and ranks in the top 1.5% of agents nationwide per RealTrends. Our team maintains working relationships with more than 40 builders across new construction communities in Katy, Cypress, Fulshear, and Richmond. Buyer representation on new construction is negotiated with the builder, so there is no separate cost to the buyer.
What else do buyers ask about MUD taxes in Katy, TX?
What is a MUD tax in Texas? A MUD tax is a property tax levied by a Municipal Utility District, a special-purpose district that finances water, sewer, drainage, and road infrastructure in areas outside city utility service. Homeowners inside the district pay the tax as part of the annual property tax bill. The revenue repays the bonds the district issued to build that infrastructure.
How much do MUD taxes add to a monthly payment in Katy or Cypress? MUD taxes commonly add $200 to $400 or more per month in the Houston suburbs. On a $400,000 home, the difference between a 2.2% and a 3.0% total tax rate is roughly $267 per month. At the 6.66% average 30-year rate reported in late August 2026, that difference equals about $41,500 in reduced buying power.
How do I find out if a house is in a MUD? Search the address on the county appraisal district website: hcad.org for Harris County, fbcad.org for Fort Bend County, and waller-cad.org for Waller County. The property record lists every taxing jurisdiction, including any MUD. Texas Water Code Section 49.452 also requires the seller to provide a written Notice to Purchaser disclosing the district and its tax rate.
Do MUD taxes go away? MUD tax rates generally decline over time as bond debt is repaid and the cost spreads across more homes, but the process takes many years. Some districts raise rates when they issue new bonds. Budget based on the current rate rather than an expected future reduction.
Why did my property taxes go up so much in the second year? New construction homes are often appraised on land value only in the first year, because the house was not complete on the January 1 appraisal date. Once the county appraises the finished home, the tax bill rises and the escrow account is recalculated to cover both the higher bill and the prior year's shortage.
How do you get the real payment before you sign?
Call or text Mohebbi Realty Group at (832) 455-3565 for an address-level tax breakdown on any new construction home in Katy, Cypress, Fulshear, Richmond, or Hockley. Email Bobby@mohebbirealtygroup.com to request our current builder tour list at mohebbirealtygroup.com/new-construction, which pairs active inventory with the district and total tax rate for each community.
Bobby Mohebbi, Mohebbi Realty Group, Keller Williams Signature, 920 S Fry Rd, Katy, TX 77450. Accredited Buyer Representative (ABR), Pricing Strategy Advisor (PSA), Veterans Affairs Certified Agent (VA), Short Sales & Foreclosure Resource (SFR). Top 1.5% of agents nationwide per RealTrends and Keller Williams Signature Top Producer. Published August 28, 2026.