Many homeowners want to know how much equity they can borrow against a Texas home. They are concerned that the state’s limits may affect their Texas home loan review. This guide explains what lenders may look for so you can move forward with confidence.
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How Much Equity Can You Borrow Against a Texas Home?
SHORT ANSWER
Texas caps a home equity loan at 80% of your home’s fair market value, counting every lien already against the property. The limit sits in the state constitution rather than a lender guideline, so it does not vary by company. A Texas home equity loan is also non-recourse, so the lender can take the home and cannot pursue you personally.Smart Loan Savings Educational Content
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| Texas Home Equity and Home Loan Factor | Rule or Amount |
|---|---|
| Texas home equity loan limit | 80% of fair market value, counting all liens |
| Property a Texas home equity loan can be secured by | Homestead property only |
| Texas home equity loans allowed on a home at one time | 1 |
| Waiting period before a Texas home equity loan can close | 12 days after you apply or receive the notice, whichever is later |
| Wait between one Texas home equity loan and the next | 1 year from the previous closing date |
| Where a Texas home equity loan may be closed | At the permanent physical address of the lender, a title company, or an attorney |
| Electronic documents and signatures on a Texas home equity loan | Permitted under state rules that set specific requirements |
| Personal liability on a Texas home equity loan | None, unless the loan was obtained by actual fraud |
| How a Texas home equity lien can be foreclosed | Only with a court order |
| Prepayment penalty on a Texas home equity loan | Not allowed |
| Right to cancel a Texas home equity loan after closing | 3 days |
| Cap on lender fees for a Texas home equity loan | 2% of the loan amount, with certain third-party charges excluded |
| Minimum advance on a Texas home equity line of credit | $4,000 |
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| Texas Home Equity Element | What It Means for Your Home Loan File |
|---|---|
| The 80% Ceiling and What Counts Against It | Texas limits a home equity loan to 80% of the home’s fair market value, and that limit counts every lien already secured by the property. A home worth $400,000 with a $250,000 first mortgage has a ceiling of $320,000, leaving $70,000 available rather than the $150,000 of raw equity. The rule sits in the Texas Constitution rather than a lender guideline, so it does not vary by company and cannot be waived. Only 1 such loan may be secured by your home at a time. The 80% ceiling is the outer limit, and your income may set a lower one. Our What Is Mortgage Debt-to-Income Ratio (DTI)? guide explains how that calculation works. This page covers the Texas equity rules only. |
| The Lender Cannot Come After You Personally | A Texas home equity loan is non-recourse. If the loan is not repaid, the lender can foreclose on the home and cannot come after you personally for any shortfall. The only exception is a loan obtained by actual fraud. The lien can also be foreclosed only with a court order, which differs from the ordinary Texas process where a lender may foreclose without going to court. The constitution goes further. If a lender fails to comply with its obligations, it forfeits all principal and interest unless it cures the failure within the process the constitution allows. |
| The Waiting Periods Built Into the Loan | Texas builds waiting periods into the loan by constitutional requirement. A home equity loan cannot close until 12 days after you submit the application or 12 days after you receive the required notice, whichever comes later. You also get a final itemized disclosure of the actual fees, points, interest, and charges at least 1 business day before closing. After closing you have 3 days to rescind the loan without penalty or charge. If your home secured the same type of loan within the past year, the new one cannot close until a year has passed from that closing date. |
| Where the Loan Can Be Signed | Texas controls where the loan is signed, and that rule has been modernized without being removed. A home equity loan may close only at the permanent physical address of the lender, a title company, or an attorney. State rules clarify that any area at that address counts, including an outdoor space. Electronic disclosures, documents, and signatures are permitted under requirements the state adopted, so the paperwork itself can be digital. What has not changed is that you go to one of those 3 places rather than signing at home. |
| What the Loan Is Allowed to Cost | Fees and charges to make the loan may not exceed 2% of the loan amount, which sits below ordinary closing costs on a purchase. The constitution excludes 4 items from that 2%: a third-party appraisal, a survey by a licensed surveyor, the state base premium for a mortgagee title policy, and a title examination report. You may prepay the loan at any time without penalty or charge. No additional collateral may secure the loan beyond the home itself. |
| How a Texas Line of Credit Differs | A Texas home equity line of credit follows the same 80% ceiling and the same waiting periods, and it adds rules of its own. Each advance has to be at least $4,000, so you cannot draw small amounts as needed. Fees may be charged only when the line is established, and the lender cannot charge a fee on an individual advance. The 80% test is measured on the date the line is established, and the lender cannot change the terms on its own. The broader picture of a home loan in this state sits on our Texas mortgage guide. |
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| What Lenders Check | How Texas Home Equity Rules Affect Your Loan File |
|---|---|
| Combined Loan Amount Against the 80% Ceiling | The underwriter adds the new loan to every lien already on the property and measures the total against 80% of fair market value. An appraisal coming in low can shrink or eliminate the amount available. |
| Homestead Status of the Property | A Texas home equity loan can only be secured by homestead property. A second home or a rental does not qualify for this loan type. |
| The 12-Day Waiting Period | The file cannot close until 12 days after your application or the required notice, whichever falls later. That period is constitutional and cannot be shortened to hit a closing date. |
| Timing Since Your Last Home Equity Loan | If the home secured the same type of loan within the past year, the new loan cannot close until a year has passed from that closing date. |
| Where the Closing Can Happen | A Texas home equity loan may be signed only at the permanent physical address of the lender, a title company, or an attorney. Electronic documents and signatures are permitted, and the location requirement still applies, so signing at home is not an option on this loan type. |
| Debt-to-Income With the New Payment | The new payment is added to your housing obligations for the debt-to-income calculation. On a line of credit, the underwriter works from the payment structure rather than the unused portion of the line. |
| Fee Total Against the 2% Cap | Lender fees on the loan are capped at 2% of the loan amount, though a third-party appraisal, survey, title premium, and title examination report sit outside that cap. The file is reviewed against the ceiling before closing. |
| Sources Used on This Page | Texas Constitution, Article XVI, Section 50, home equity provisions | Texas Finance Commission, required home equity consumer disclosure notice | Joint Financial Regulatory Agencies, home equity lending interpretations, 7 Texas Administrative Code Chapter 153, including the 2020 and 2022 amendments on location of closing and electronic documents | Texas Legislature, Senate Joint Resolution 60, 85th Legislature, bill analysis |
| Texas home equity rules are set by the Texas Constitution and interpreted by the state’s joint financial regulatory agencies. Terms, rates, and eligibility vary by lender and by borrower. This page is provided for educational purposes only. Smart Loan Savings Educational Content | |
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| People Also Ask | Why These Questions Matter |
|---|---|
| How much can you borrow with a Texas home equity loan? | Texas limits a home equity loan to 80% of the home’s fair market value, counting all liens already on the property. A home worth $400,000 with a $250,000 first mortgage has $70,000 available. The limit comes from the Texas Constitution. |
| How long does a Texas home equity loan take to close? | A Texas home equity loan cannot close until 12 days after you apply or 12 days after you receive the required notice, whichever is later. You also receive a final itemized fee disclosure at least 1 business day before closing. Those waiting periods are constitutional and cannot be waived. |
| Can a lender come after you personally on a Texas home equity loan? | A Texas home equity loan is non-recourse. The lender can foreclose on the home and cannot pursue you personally for a shortfall. Foreclosure also requires a court order. The constitutional exception is a loan obtained by actual fraud. |
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