A sweeping zoning reform bill in Texas is promising to reshape how homes are built across the state, but mortgage professionals may not need to rewrite their playbooks just yet
Texas is on the brink of a significant housing shift as lawmakers push forward Senate Bill 15 — a proposed state law that would ban cities from imposing minimum lot sizes larger than 1,400 square feet.
But according to Ryan Leahy, a seller financing specialist at Leahy Lending, the change isn’t likely to spark major disruption in lending structures.
“From a lending perspective, the solutions already exist,” Leahy said. “A lot of these small-lot builds are structured as detached condos. They’re essentially treated like single-family homes in terms of underwriting and interest rate pricing.”
For mortgage brokers, that means the zoning change may increase the volume of applications for smaller homes, but not require major adjustments to financing strategy—at least for now.
Leahy emphasized that real affordability gains will depend more on reducing construction and permitting costs than changing lot sizes. “Until those numbers come down, we’re not going to see a true shift in what buyers can actually afford. In Austin, for example, permitting costs are four times higher than in Dallas or Houston.”
Still, brokers should keep an eye on how municipalities and developers respond to the bill. If local governments streamline approval processes and builders begin to capitalize on increased density allowances, more entry-level product could come to market—a potential win for first-time buyers and originators alike.
“The goal is clearly to increase density, and it’s a step in the right direction,” Leahy said. “But this isn't a silver bullet. Lenders and brokers should see this as an opportunity to stay informed and ready—not to overhaul how they’re doing business.”
With demand for affordable housing showing no signs of slowing, Texas' push for zoning reform could open doors. But as Leahy points out, mortgage professionals would be wise to view it as one piece of a much larger affordability puzzle.
