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Waco Hard Money and Investor Loans

Hail, not hurricane wind, sets the insurance math in McLennan County.

Non-owner short-term rentals are barred from Waco's core single-family districts. An STR license does not convey to a buyer. The city's tax stack runs high and keeps climbing. Business-purpose loans only, and every structure is set in underwriting.

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A flat, low-cost yield market

The city of Waco's mid-tier home value ran $200,115 in June 2026 against a $1,369 monthly rent, roughly an 8.2% gross yield, the highest of the metro's tracked submarkets, against 6.2% in Hewitt and 5.7% in Woodway. Values are drifting down (the city index is off 2.1% year over year, the metro 0.6%) while rents inch up, the yield-expansion pattern rather than an appreciation story.

The Airbnb story most people repeat here is wrong

Non-owner-occupied short-term rentals (STR Type II) are not allowed in Waco's core single-family districts, and the city removed the special-permit path effective June 15, 2021. A license also does not convey to a new owner, so a buyer has to qualify the property fresh rather than inherit a seller's Airbnb permit.

Institutional payrolls, and taxes that are climbing

Baylor University, two competing hospital systems, a full VA medical center, and a SpaceX test facility in McGregor anchor a metro with roughly flat overall employment. An investor with no homestead exemption pays 2.2484 per $100 of value in the city of Waco, and McLennan County proposed raising its own rate 6 cents, to 0.394805, for tax year 2026.

Loan programs in Waco

Acquisition through exit, all funded or arranged by one lender.

Fix and Flip in WacoRental / DSCR in WacoGround-Up Construction in WacoCRE Bridge in WacoTransactional Funding in WacoBank Statement / No-Doc in WacoConventional Investment in WacoPortfolio Loans in WacoCRE Permanent in WacoSBA Financing in Waco

Waco lending questions

Why is a non-owner-occupied Airbnb not allowed in Waco's R-1A, R-1B and R-1C districts?
Because the city zoned it out, and then closed the special-permit path. Waco's own zoning schedule lists non-owner-occupied short-term rentals (STR Type II) as "Not Allowed" in the R-E, R-1A, R-1B, and R-1C districts, and the special-permit path that used to exist there was removed effective June 15, 2021. STR Type II is only allowed by right in denser districts (R-2, the R-3 districts, the O districts, and C-4). An existing STR license also does not transfer with the property at sale, so a buyer has to qualify the address fresh. If you're underwriting a purchase to short-term rental income, confirm the zoning district before you fund the deal. Apply now. Subject to underwriting.

Sources: waco-texas.com

Do you lend in the Waco area?
Yes, across McLennan County. We're a direct lender headquartered in Bee Cave, Texas, and we fund deals in Waco, Hewitt, Woodway, Robinson, Bellmead, Lacy-Lakeview, China Spring, and McGregor. Every loan is business-purpose only, on investment property, and terms are subject to underwriting. See how we lend across Texas or talk to us.

Sources: mclennan.gov

Why does a city of Waco rental carry 2.2484 per $100 when China Spring carries 1.4487?
Because the city stack adds a city rate and Waco ISD, and it's headed up. That's McLennan County (0.334805) plus McLennan Community College (0.131974) plus the City of Waco (0.755000) plus Waco ISD (1.026600) on the county's 2025 adopted rate table, with no homestead exemption available to an investor. China Spring, unincorporated with no city tax, runs about 1.4487 per $100 instead, the lowest stack among the metro's named submarkets. The county proposed a 6-cent increase, to 0.394805, for tax year 2026, about an 18% jump over the current rate, so don't underwrite a five-year hold on a flat tax line. Confirm the exact stack for a parcel with the McLennan County Appraisal District, since city limits and school district lines aren't the same boundary.

Sources: mclennan.gov

Is there a cap on unrelated roommates for a long-term rental near Baylor?
No general cap. Waco's zoning code defines "family" as an individual, related persons, or "a group of unrelated persons living together as a single housekeeping unit," with no number attached. The only caps in the code are narrow: a small-lot single-family dwelling (under 50 feet wide and under 6,000 square feet) is limited to two unrelated occupants, and short-term rentals in the lowest-density districts cap at four unrelated individuals. By-the-bedroom long-term leasing near Baylor is not fighting a general headcount rule the way it once was in some other Texas university towns. A heavy rehab near campus can still trigger the city's College and University Neighborhoods overlay once renovation cost crosses 30% to 50% of the building's appraised value, which brings its own parking and design requirements. DSCR rental loans. Subject to underwriting.

Sources: library.municode.com

How far does McLennan County's hail loss swing from a quiet year to a bad one?
From $1,216 per policy in 2025 to $2,575 in 2023, so plan for the bad one. McLennan County paid $58.2 million in homeowners losses across 47,827 policies in 2025, about $1,216 per policy, with wind and hail at 53% of that total. In 2023, a worse hail year, the county paid $120.6 million, about $2,575 per policy, with wind and hail at $1,986 per policy alone. The county sits about 180 miles from the Gulf and isn't in the state's coastal wind pool, so the insurance conversation here is roof age and hail deductibles, not hurricane wind. Underwrite carry costs to a 2023-shaped year, not a quiet one.

Sources: tdi.texas.gov

What credit score do I need for an investor loan in Waco?
It depends on the program, and on the asset-based ones there is no minimum at all. We run credit, but on a fix and flip, bridge, or construction loan it carries far less weight than at a bank and there is no floor score. Weak credit is usually answered with lower leverage rather than a decline. DSCR and bank statement loans start at 640, conventional investment starts at 580, and transactional funding has no credit check at all. There is no hard credit pull to start. Subject to underwriting.
What cash does a purchase at Waco's $200,115 mid-tier value actually take?
Anywhere from nothing to about 25% of it, depending on the program. A fix and flip funds up to 90% of the purchase and up to 100% of the rehab budget, capped to ARV. A DSCR rental runs up to 80% LTV, so on a $200,000 Waco purchase that is $160,000 from us and $40,000 from you (200,000 x 80% = 160,000), a realistic number against the city's $200,115 mid-tier value in June 2026. A commercial bridge runs up to 75% LTV, and transactional funding covers up to 100% of the A-to-B purchase. Subject to underwriting.

Sources: files.zillowstatic.com

Does a single rental house at Waco's $200,115 mid-tier value clear your loan floor?
Comfortably. The floor is $100,000 on most residential programs. Fix and flip, DSCR, and bank statement loans all start at $100,000, portfolio loans start at $500,000 across five or more doors, and SBA files start at $350,000. At the city of Waco's $200,115 mid-tier value, a single rental house clears the residential floor comfortably. Ceilings run to $3,000,000 on DSCR, $5,000,000 on fix and flip and construction, and $10,000,000 on a commercial bridge. Subject to underwriting.

Sources: files.zillowstatic.com

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About the local figures on this page

Local rules move. Every tax rate, fee, ordinance and market figure here comes from a primary source and carries the date we read it, and we correct them as the rules change. Where a number is mid-change or we could not verify it, we say so rather than guess. Before you commit a budget, confirm anything that drives it with the city or county, and talk to your attorney or CPA on questions of law or tax.

Published by USA Mortgage Funding, LLC, NMLS #152588. Researched from primary sources by our team, drafted with AI assistance, and every figure checked against its source before publishing. Where an answer rests on a public record, that record is linked under it. Figures read on 2026-08-13.

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