Payday Loans in Texas and What State Law Allows

Is a payday loan legal in Texas? Yes, and state law does not cap what it costs. Most Texas payday loans are arranged by a credit access business, a licensed broker that connects you with a separate lender and adds its own fee. The statute that licenses these brokers says regulators cannot limit that fee.

This matters if you are weeks from closing and short on cash. The loan leaves a trail on the bank statements your mortgage lender will read.

A payday loan is a cash advance. In exchange, you hand over a personal check or a debit authorization for the advance plus a fee, and the lender agrees not to cash it until a set date. That definition comes from 7 Texas Administrative Code § 83.604.

In Texas the cost usually comes in two parts. The credit access business, or CAB, charges a brokerage fee, and the third-party lender charges its own. The Office of Consumer Credit Commissioner (OCCC) licenses CABs under Texas Finance Code Chapter 393. That chapter states that nothing in it grants the OCCC "authority to establish a limit on the fees charged by a credit access business."

With no power to cap fees, the state relies on disclosure. Since September 1, 2024, CABs must use revised OCCC forms that itemize both fees and the total cost before you sign. OCCC rules also let you cancel by the close of the next business day without penalty.

The 488% figure is the OCCC's estimate from fees that licensees reported for 2024, published in its 2025 consumer credit study. DebtHammer, a consumer guide, cites a $300 loan that carried $1,008 in fees, a 730% APR.

Our sources describe no statewide loan database and no required extended payment plan. We could not confirm that either exists.

More than 45 Texas cities have passed their own CAB ordinances, including Austin, Dallas, Houston and San Antonio. Austin's took effect January 1, 2012, and Houston's on July 1, 2014, per the Texas State Law Library.

The common local rules work like this:

• Loan size: capped at 20% of gross monthly income.
• Rollovers: no more than three, and each must pay down at least 25% of the principal.
• Repeat loans: a new loan taken within 7 days of paying off the last one counts as a rollover.

A CAB license covers online payday lending as well as storefronts, so a lender serving Texans online should hold one. DebtHammer reports that tribal lenders must still hold a Texas license, and that loans from unlicensed lenders may not be legally collectible.

You can check a license through the OCCC's credit access business pages or call its helpline at (800) 538-1579. Borrowers can also file complaints with the CFPB. Active-duty service members are covered by the federal Military Lending Act's rate cap.

The brief asked for cheaper options, such as credit union payday-alternative loans and named Texas assistance programs. Our sources do not name any, so we list none here.

A payday loan is repaid by check or automatic debit, so it appears on the bank statements your lender reviews. Before you take one mid-escrow, or if one is already open, ask your loan officer three things:

1. Will the payment count in your debt-to-income ratio?
2. Will underwriting want a letter of explanation for the deposit and the debits?
3. Does paying it off before you apply, or before closing, change either answer?

Your lender and loan program set those rules, and the sources behind this page do not cover them. Get the answers in writing before the money moves.