Texas-compliant from day one
Every disclosure, every closing location, every signature is set up to satisfy Section 50(a)(6). A non-compliant equity loan in Texas can be unenforceable — we don’t risk that.
Home equity loans and HELOCs in Texas.
Texas has unique constitutional protections for home equity borrowers. We structure your HELOAN or HELOC to comply with Section 50(a)(6) — without the surprises that catch out-of-state lenders.
- Texas Section 50(a)(6) compliant
- 80% combined LTV cap
- 12-day cooling-off period
Texas home equity lending is a constitutional matter.
A home equity loan (HELOAN) is a fixed lump-sum second mortgage secured by your home. A home equity line of credit (HELOC) is a revolving line of credit secured the same way. In Texas, both are governed by Article XVI Section 50(a)(6) of the Texas Constitution — which adds borrower protections that don’t exist in any other state. Until 1997 Texas didn’t allow consumer home equity lending at all; when the state finally permitted it, the rules were written into the constitution rather than into ordinary statute. That means the protections (80% combined LTV cap, 12-day cooling-off period, 2% closing-cost cap, one-equity-loan-at-a-time, spousal consent) cannot be eroded by legislation. Lenders who don’t live in Texas mortgage compliance every day frequently get this wrong.
How a Texas home equity loan goes from inquiry to funding.
- 01
Get an appraisal of current home value
Lender orders a current appraisal to establish the home’s fair market value. The 80% combined LTV cap is calculated from this value, so an accurate appraisal is foundational.
- 02
Apply with full income and asset documentation
Texas equity loans are full-doc: income (W-2, pay stubs, tax returns), assets, debts, and 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 application, Texas mandates a 12-day cooling-off period before the loan can close. You cannot waive it. We schedule the file around this from day one.
- 04
Underwriting
Lender clears credit, income, and value conditions. Combined LTV is verified against the 80% cap. Closing-cost cap (2% of loan amount) is verified against the constitutional limit.
- 05
Final closing
Closing happens at the lender’s office, an attorney’s office, or title company — the constitution requires one of these specific locations. Both spouses must consent if married.
- 06
Funds disbursed
On a HELOAN, you receive a single lump sum after the rescission period. On a HELOC, your line of credit becomes available to draw against per the credit agreement.
Built for Texas families tapping equity the right way.
Texas Section 50(a)(6) is the single most-misunderstood area of consumer mortgage law in the state. Out-of-state lenders quote terms that violate the constitutional cap, miscalculate the closing-cost limit, or schedule closings that miss the 12-day period — and the consequence isn’t a fine, it’s an unenforceable lien. We close Texas equity loans the way Texas wrote them: 80% combined LTV, 2% closing-cost cap, 12-day cooling-off, spousal consent, and the right closing location. No surprises, no compliance gaps, no deals that have to be unwound.
A Texas home equity loan is the right tool when:
- You are funding home improvement or remodel projects
- You are consolidating high-interest credit card debt at a lower secured rate
- You are paying college tuition or other education costs
- You are covering a major expense (medical, family event, buying out an interest)
- You need bridge funds between selling one home and buying another
Why Texas-compliant equity lending matters.
Fixed-rate HELOAN or revolving HELOC
Both structures are available. Lump sum at a fixed rate (HELOAN) when you know the cost; revolving line (HELOC) when you want flexibility to draw over time.
Up to 80% combined LTV
The Texas constitutional cap is 80% — your existing first mortgage plus the new equity loan can’t exceed 80% of the appraised value. We model the exact dollar number on every file.
Closing-cost cap (Texas-specific)
Total closing costs are capped at 2% of the loan amount under Section 50(a)(6) (with limited exclusions for appraisal, survey, and title premium). That’s a real consumer protection — and a math problem most non-Texas lenders get wrong.
Tax-deductible interest if used for home improvement
Under current federal tax law, interest on home equity debt used to substantially improve the home may be tax-deductible. Consult your CPA — every taxpayer’s situation is different.
Speed-conscious processing
The 12-day cooling-off period is mandatory and non-negotiable, but the rest of the file can move quickly when documentation is clean. We sequence around the 12-day window so the file closes the moment it can.
80%
Texas combined LTV cap
Texas home equity questions, answered.
What is Texas Section 50(a)(6)?
Section 50(a)(6) is the part of Article XVI of the Texas Constitution that authorizes — and tightly regulates — home equity lending in Texas. It sets the 80% combined LTV cap, the 12-day cooling-off period, the 2% closing-cost cap, the requirement that closings happen at a lender, attorney, or title office, and the rule that you can have only one home equity loan on the property at a time. These rules are constitutional, not statutory, which means they can’t be changed by ordinary legislation.
Why is the 80% cap a constitutional rule and not just a lender policy?
When Texas first authorized home equity lending in 1997, the legislature put the borrower protections directly into the state constitution rather than into the property code. The 80% cap was set as a hard limit to keep Texas homeowners from over-leveraging. Because it sits in the constitution, no lender can offer a 90% combined-LTV equity loan in Texas — it would be unconstitutional and unenforceable.
What is the 12-day cooling-off period?
After you receive the required Section 50(a)(6) notice and submit a written application, Texas requires at least 12 calendar days to elapse before the loan can close. The period exists so borrowers have time to review terms and reconsider. It cannot be waived, even at the borrower’s request — closing earlier than 12 days creates an unenforceable lien.
How is the closing-cost cap calculated?
Section 50(a)(6) caps total fees and closing costs at 2% of the loan amount. A few items are excluded from that cap (most notably the appraisal fee, the survey fee, and the title insurance premium itself), but origination fees, processing, underwriting, document preparation, and most third-party charges all count against the 2%. We pre-calculate the cap and structure the fee sheet to comply on every file.
Can I have more than one home equity loan on my Texas home?
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 or HELOC and want a new one, the existing equity loan has to be paid off as part of the new closing. A first-lien purchase or rate-and-term refinance is a different category and doesn’t count against this rule.
HELOAN vs HELOC — which is right for me?
A HELOAN is a fixed-rate, fixed-payment lump sum — best when you know exactly how much you need and want a predictable payoff. A HELOC is a revolving line you can draw against as needed at a variable rate — best when you want flexibility and don’t need all the money on day one. We model both side by side based on your project, timeline, and rate sensitivity.
Is the interest tax-deductible?
Under current federal tax law, interest on home equity debt is generally deductible only when the proceeds are used to buy, build, or substantially improve the home that secures the loan. Equity used for debt consolidation, tuition, or other purposes is generally not deductible. This is federal tax law, not Texas-specific. Always confirm with your CPA — your individual situation may change the answer.
Can I use my Texas home equity loan for any purpose?
Yes — once funded, the proceeds can be used for any legal purpose. The Texas constitutional restrictions are on the loan structure (LTV cap, closing-cost cap, cooling-off period, one-at-a-time rule, spousal consent), not on how you use the money after closing.
Need to tap your Texas home equity?
Texas home equity loan requirements at a glance.
- 680+ FICO typical
- 20%+ remaining equity after the new loan (max 80% combined LTV — constitutional cap)
- 12-day cooling-off period mandatory and non-waivable
- Closing costs capped at 2% of the loan amount (Texas constitutional cap, with limited exclusions)
- Only one Section 50(a)(6) home equity loan allowed on the property at a time
- Some agricultural-use property is restricted from equity lending under the constitution
- Texas property
- Owner-occupied primary residence
- If borrower is married, both spouses must consent — even if only one is on the loan
HELOAN vs HELOC vs Cash-Out Refinance.
| Structure | Rate | Best for | Texas-specific notes | |
|---|---|---|---|---|
| HELOAN | Fixed lump sum, fixed payment | Fixed | Known one-time expense (renovation budget, debt consolidation) | Subject to 80% combined LTV cap, 12-day cooling-off, 2% closing-cost cap |
| HELOC | Revolving line of credit | Variable | Flexible draws over time (phased renovation, ongoing tuition) | Same Section 50(a)(6) protections apply; one equity loan at a time rule still in effect |
| Cash-Out Refinance | New first mortgage replacing the existing one | Fixed (typical) | Borrowers who can also benefit from a new first-mortgage rate or term | Texas cash-out is also Section 50(a)(6) — same protections; counts as your one equity loan |
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Other ways we close
Cash-Out Refinance
Replace your first mortgage and take cash out — also governed by Texas Section 50(a)(6).
Learn moreConventional Loans
Standard conventional first-mortgage financing for purchase or rate-and-term refinance.
Learn moreFHA Loans
Government-insured first-mortgage option — lower down payment for first-time and credit-rebuilding buyers.
Learn more