Texas Contractor Bonds & Surety

Texas does not have a statewide general contractor license — so there is no statewide contractor license bond requirement. Instead, Texas bonds are city-specific or transaction-specific. A general contractor in Houston registers with the city and posts a $10,000 contractor bond. A plumber or electrician licenses through TDLR and posts a trade-specific bond. A contractor bidding public works posts bid, performance, and payment bonds under the Texas Little Miller Act (Texas Government Code Chapter 2253). This patchwork makes Texas uniquely transaction-driven compared with California, Arizona, or Nevada, where a single state license bond covers most work.

Houston requires a $10,000 general contractor bond filed with the Building Code Enforcement / Building and Licensing office as part of contractor registration. Dallas requires a contractor registration bond (typically $10,000) with the city's building inspection department. Austin's Development Services Department (DSD) requires a DSD contractor bond that varies by registration class — generally $5,000 to $25,000. San Antonio requires a contractor registration bond through its Development Services Department, typically $10,000. Fort Worth, Arlington, and Plano each have their own bond rules, and requirements can change based on whether you're doing residential, commercial, or utility work.

The Texas Little Miller Act is codified at Texas Government Code Chapter 2253. It mandates surety bonds on public works contracts with any Texas governmental entity — including state agencies, counties, municipalities, school districts, and special districts. A performance bond equal to 100% of the contract price is required for public works contracts over $100,000. A payment bond equal to 100% of the contract price is required for public works contracts over $25,000. These bonds protect both the public owner (performance) and subcontractors and suppliers (payment). TxDOT projects have additional requirements layered on top of Chapter 2253.

Texas contractor bond premiums depend on bond type, face amount, and the contractor's credit. City license bonds (Houston, Dallas, San Antonio) typically cost $100–$300 per year for a $10,000 penal sum — about 1–3% of face value. Austin DSD bonds run $75–$500 per year depending on class. TDLR electrical and plumbing trade bonds cost $100–$300 per year for most licensees. Bid bonds for public works typically cost 1–3% of the bond amount. Performance and payment bonds run 0.6–3% of the contract amount, with the best rates reserved for contractors with strong personal credit, audited financial statements, and a track record of completed bonded work.

Yes. Most Texas city license bonds and TDLR trade bonds can be issued for contractors with credit scores as low as 550, though the premium rate will be higher — often 3–5% of face value instead of 1%. Performance and payment bonds for public works are more credit-sensitive because the surety is guaranteeing contract completion, not just a fixed penal sum. Contractors with scores below 650 can still qualify through specialty markets, collateral programs, SBA bond guarantee programs, and funds-control arrangements. We place bonds across 30+ surety carriers to find the right home for every credit profile.

A bid bond (typically 5% of the bid amount on Texas public works) guarantees that if you win the contract, you will sign it and post the required performance and payment bonds. A performance bond (100% of the contract) guarantees you will complete the project according to plans, specifications, and schedule — if you default, the surety either finishes the work or pays the owner the cost to complete. A payment bond (100% of the contract) guarantees your subcontractors, laborers, and suppliers get paid, protecting them from your nonpayment and protecting the public owner from lien-equivalent claims. On most Texas public projects, all three are required in sequence.

It depends on the trade and license class. TDLR-licensed electrical contractors must meet financial responsibility requirements, which most satisfy with a surety bond — typically a $10,000 bond costing $100–$300 per year. TDLR-licensed master plumbers and plumbing contractors face bond requirements that vary by license class and municipality. HVAC contractors licensed under TDLR's air conditioning and refrigeration program have their own rules. Some cities layer additional trade-specific bond requirements on top of TDLR. We regularly issue TDLR trade bonds same-day for contractors with average or better credit.

Most Texas contractor bonds — city license bonds, TDLR trade bonds, and small bid bonds — can be issued the same business day for contractors with credit scores above 650. We collect basic information (business name, owner SSN for credit pull, bond form from the obligee), run the underwriting, and email the signed and sealed bond within 2–4 hours. Larger performance and payment bonds over $500,000 typically require 2–5 business days for underwriting review of financial statements, work-in-progress schedules, and bank references. Contractors with prior bonded-job history and a standing surety relationship can often bind larger bonds within 24 hours.