Revolving access (draw + repay + redraw)
Use the line, pay it back, use it again — all within the 10-year draw period. Closer to a credit card than a traditional installment loan, secured by home equity.
Texas HELOC — home equity line of credit.
Revolving access to your home equity. Texas Section 50(a)(6) governs home equity loans and HELOCs alike — we structure your line to comply, with the flexibility you need.
- Revolving credit line (vs lump-sum HELOAN)
- Variable-rate (typically Prime + margin)
- Up to 80% combined LTV (Texas cap)
A revolving line of credit secured by your home.
A HELOC is a revolving line of credit secured by your home — like a credit card with your home as collateral. Draw, repay, re-draw during the draw period (typically 10 years), then enter the repayment period (typically 10–20 years) where you pay down the outstanding balance and can no longer take new draws. Variable rate, typically Prime plus a margin set at origination. In Texas, HELOCs on a primary residence are governed by Article XVI Section 50(a)(6) of the Texas Constitution — same constitutional protections that govern HELOANs and cash-out refinances (80% combined LTV cap, 12-day cooling-off, 2% closing-cost cap, one-equity-loan-at-a-time, spousal consent). The canonical 50(a)(6) explainer lives on our Home Equity Loan page; this page focuses on HELOC mechanics.
How a Texas HELOC closes and funds.
- 01
Determine equity available for the line
Appraised value times 80% minus all existing liens (first mortgage and any other recorded debt against the property) equals the maximum line under the Texas constitutional cap. We model the exact dollar number on every file.
- 02
Apply with full income and asset documentation
Texas HELOCs are full-doc: income (W-2, pay stubs, tax returns), assets, debts, and your current first-mortgage statement. The same disclosures apply as to any consumer mortgage, plus the 50(a)(6)-specific notices.
- 03
12-day disclosure / cooling-off period
Once you receive the required Section 50(a)(6) notice and submit a written application, Texas mandates at least 12 calendar days before the line can close. Non-waivable. We schedule the file around this from day one.
- 04
Closing at a permitted location
Section 50(a)(6) requires closing to happen at the lender's office, an attorney's office, or a title company. Both spouses must consent and sign if the borrower is married. Closing costs are verified against the 2% constitutional cap.
- 05
Draw funds as needed during the 10-year draw period
After closing and any applicable rescission period, the line of credit is available. You can draw up to your approved limit, repay, and redraw across the 10-year draw period. After the draw period ends, the outstanding balance moves into the repayment period (typically 10–20 years) and no further draws are permitted.
Built for Texas homeowners who need flexible access to equity.
A HELOC is the right tool when you don't need every dollar on day one. Pay-as-you-go renovation, a liquidity buffer for an emergency that may or may not come, bridge funds between selling one home and buying another, self-employed cash-flow management — these are all situations where a fixed lump-sum HELOAN would have you paying interest on money you haven't spent yet. A HELOC charges interest only on what you've actually drawn. Texas Section 50(a)(6) governs the structure, and we structure to comply: 80% combined LTV, 12-day cooling-off, 2% closing-cost cap, spousal consent, one equity loan at a time. Out-of-state lenders frequently miss these.
A Texas HELOC is the right tool when:
- You have multiple smaller projects ahead rather than a single large expense
- You want an emergency reserve or liquidity buffer secured at home-equity rates
- You are doing a phased renovation and don't need all the funds on day one
- You need bridge financing between selling your current home and closing on the next one
- You are self-employed and want a credit line to smooth seasonal or variable cash flow
Why a HELOC can beat a fixed-lump-sum option.
Pay interest only on what you draw
Your approved line might be six figures, but you only pay interest on the outstanding balance you've actually drawn. Useful when you don't need every dollar at once.
Variable rate — often lower initial than a fixed HELOAN
HELOC rates are typically Prime plus a margin, which is often initially lower than a fixed HELOAN rate. The trade-off is rate risk if Prime rises during your draw period.
Flexible draw and repayment periods
Standard structure is a 10-year draw period followed by a 10–20 year repayment period. During the draw period, payments may be interest-only on what is drawn — providing additional cash-flow flexibility while you have funds out.
Texas Section 50(a)(6) compliant
80% combined LTV cap, 12-day cooling-off period, 2% closing-cost cap, permitted closing locations, spousal consent — all structured into your file from day one so the lien is enforceable.
No prepayment penalty typical
Most HELOCs allow you to pay down the outstanding balance at any time without penalty. Useful if your project finishes under budget, an expected liquidity event arrives, or you simply want to lower your variable-rate exposure.
10/20
Year draw + repayment periods
Texas HELOC questions, answered.
HELOC vs HELOAN vs Cash-Out — which is right for me?
A HELOC is a revolving line at a variable rate, best for ongoing or uncertain expenses where you need flexibility. A HELOAN is a fixed lump-sum second mortgage at a fixed rate, best for a known one-time expense. A cash-out refinance is a brand-new larger first mortgage that pays off your existing one, best when you also benefit from a new first-mortgage rate or term and want a single consolidated payment. All three are governed by Texas Section 50(a)(6) on a primary residence — same 80% combined LTV cap, same 12-day cooling-off, same 2% closing-cost cap, same one-equity-loan-at-a-time rule.
How is the HELOC rate determined?
HELOC rates are typically tied to the Wall Street Journal Prime Rate plus a margin set at origination based on your credit profile, line size, and combined LTV. The rate is variable — when Prime moves, your HELOC rate moves with it (with caps and floors set in the credit agreement). Your monthly payment can change as the rate changes and as your outstanding balance changes.
What is the draw period and how does it work?
The draw period is the window — typically 10 years — during which you can borrow against your HELOC up to your approved limit. You can draw, repay, and redraw freely. Required minimum payments during the draw period are often interest-only on the outstanding balance, providing cash-flow flexibility. When the draw period ends, the line moves into the repayment period (typically 10–20 years), no further draws are allowed, and payments are amortized to pay down the balance.
Can I lock in a fixed rate on my HELOC later?
Some lenders offer a fixed-rate conversion option that lets you lock in a portion of your outstanding HELOC balance at a fixed rate while keeping the rest of the line variable. Availability and terms vary by lender — we identify which programs offer this feature when we structure your file.
What are the Texas-specific HELOC rules?
On a Texas primary residence, HELOCs are governed by Article XVI Section 50(a)(6) of the Texas Constitution. The constitutional protections are the same as for a HELOAN or cash-out refinance: 80% combined LTV cap (existing first mortgage plus the line), 12-day non-waivable cooling-off period before closing, 2% cap on total closing costs (with limited exclusions for appraisal, survey, and title premium), only one Section 50(a)(6) home equity loan on the property at a time, spousal consent if married, and closing must happen at a lender's office, attorney's office, or title company.
Can I have a HELOC and a HELOAN at the same time on a Texas property?
No. The Texas Constitution allows only one Section 50(a)(6) home equity loan on a property at a time. If you already have a HELOAN and want a HELOC (or vice versa), the existing equity loan has to be paid off as part of the new closing. A first-lien rate-and-term refinance doesn't count against this rule — only equity loans do.
Texas HELOC — flexible access to your home equity.
Texas HELOC requirements at a glance.
- Texas owner-occupied primary residence (investment and second-home equity follow different rules)
- 20%+ remaining equity after the new line (max 80% combined LTV — constitutional cap)
- 12-day cooling-off / disclosure period mandatory and non-waivable
- Closing costs 2% of loan amount or less (Texas constitutional cap, with limited exclusions)
- Single home equity loan rule — only one Section 50(a)(6) loan on the property at a time
- FICO 680+ typical for HELOC pricing tiers
- Stable income documentation and DTI 50% or lower
- Spouse must consent and sign if married, even if only one spouse is on the line
- Some agricultural-use property is restricted from equity lending under the constitution
- Property must appraise at value
HELOC vs HELOAN vs Cash-Out vs Personal Line.
| Structure | Rate type | Best for | Texas-specific notes | |
|---|---|---|---|---|
| HELOC | Revolving line of credit secured by your home | Variable (Prime + margin) | Flexible, pay-as-you-go access to equity over a 10-year draw period | Section 50(a)(6) — 80% combined LTV, 12-day cooling-off, 2% closing-cost cap, counts as your one equity loan |
| HELOAN | Fixed lump-sum second mortgage | Fixed | A known one-time expense without disturbing your existing first mortgage | Same Section 50(a)(6) protections; one-equity-loan-at-a-time rule still in effect |
| Cash-Out Refinance | New first mortgage replacing the existing one, paid out as a lump sum | Fixed (typical) | Tapping equity in one transaction with a single consolidated payment | Same Section 50(a)(6) protections; counts as your one equity loan |
| Personal Line of Credit | Unsecured revolving line | Variable (typically materially higher than home-secured) | Smaller amounts, faster opening, or borrowers who prefer not to lien their home | No Texas constitutional restrictions — but no home as collateral means materially higher rates |
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Other ways we close
Home Equity Loan
Fixed lump-sum second mortgage — the canonical Section 50(a)(6) explainer.
Learn moreCash-Out Refinance
New larger first mortgage that pays off the existing one and gives you cash — also 50(a)(6) governed.
Learn moreRate-and-Term Refinance
Refinance for rate or term only — no cash withdrawn, no Section 50(a)(6) constraints.
Learn more