Texas HELOC and cash-out refinance
Borrowing against the Texas home you live in follows special rules in the Texas Constitution. Here's how they work, and how to choose between a HELOC and a cash-out refinance.
The 80% rule on a Texas homestead
On the Texas home you live in, all loans on the home combined can't exceed 80% of its value.
The limit applies to a cash-out refinance, which on your homestead is a Texas home equity loan, and to a home equity line of credit (HELOC). It counts every loan secured by the home plus the new one, and for a HELOC the full credit line counts, not just what you draw.
We'll check where your home's value and loan balance leave you before you apply.
Texas protections for home equity borrowing
- A 12-day waiting period before closing
- A 3-day right to cancel after closing
- Only one home equity loan or HELOC on your homestead at a time, and generally only one every 12 months
- These protections apply to cash-out refinances and HELOCs on your homestead
We'll walk you through each one before you decide.
HELOC or cash-out refinance?
A HELOC may fit if
- You'd like to keep the rate on your current first mortgage
- You need access to funds over time rather than all at once
- You're comfortable with a rate that's usually variable
A cash-out refinance may fit if
- You want the cash all at once
- You'd rather have one loan and one payment
- You'd like a fixed rate on the whole amount
We'll compare both with keeping your current loan, costs included, before you decide.
Second homes and rental properties
The homestead rules apply to the Texas home you live in. Second homes and investment properties can go as high as 75% of the value with a conventional cash-out refinance, and a DSCR loan lets you take cash out of a rental using its rent to qualify.
Questions about Texas home equity rules?
Nageswari Namana (NMLS #2819255) focuses on home equity lines and helps with Texas home equity questions.
Texas home equity FAQ
What is the 80% rule in Texas?
On the Texas home you live in, all loans on the home combined can't exceed 80% of its value. It applies to cash-out refinances and home equity lines of credit on your homestead.
How long does a Texas cash-out refinance take?
Texas requires a 12-day waiting period before closing, and you have 3 days to cancel afterward. The rest of the timeline depends on the appraisal and how quickly documents come in.
Can I keep my current mortgage rate?
Usually, yes, with a HELOC: it's a separate line of credit, so your first mortgage stays in place. Texas allows only one home equity loan on your homestead at a time, so if your current mortgage is already a Texas home equity loan, for example from an earlier cash-out refinance, a HELOC isn't an option.
Do these rules apply to rental properties?
No. They apply to your Texas homestead, the home you live in. See second homes and rental properties.
Programs, guidelines, and availability change and vary by lender. All loans are subject to credit approval, underwriting, and property eligibility.
Let's look at your numbers together.
Call (817) 259-1972, schedule a consultation, or start your secure application when you're ready. Talking with us is free, and there's no credit check to get started.