If you live in Texas and own a home, you may want to take out equity for a major purchase, such as home renovations. In the Loan Star State, you can get a Texas HELOC or home equity loan to access the cash you need, but there are certain rules that lenders must follow that are outlined in Texas law.
What are the Rules and Laws in Texas for Home Equity and HELOC Loans?
Below, learn more about HELOCs and specific rules for these home equity loans in Texas. The bottom line is that local resident want to to know if they can get a HELOC in Texas?
When considering a home equity line of credit in Texas, it’s essential to understand the unique regulations and features that apply. At BD Nationwide, we are dedicated to helping you find mortgage lenders that know how to navigate the complexities of Texas HELOCs and home equity loans, ensuring you have the information needed to make an informed decision.
Texas HELOC Rules
Many second mortgage companies have decided they do not provide home equity credit lines and 2nd mortgages in Texas because they do not want to maker separate guidelines for one of fifty states.
Since the state of Texas continuously has a booming economy, home values increase significantly, even high than national averages, therefore the mortgage lenders that are refusing to approve home equity loans in Texas are missing out on lending to good borrowers.
Learn more about home equity loans and lines of credit from the experts at BD Nationwide.
Like all states, you can get a HELOC in Texas, but the state has several rules that lenders must follow when providing home equity loans to TX homeowners:
Cannot Borrow More Than 80% of Home Equity
First, the law states in Texas that you cannot borrow more than 80% of the home’s equity. The purpose of this law is to prevent the owner and lender from taking too much risk. So, if your home is worth $200,000 and don’t have a mortgage, the most you can borrow with a HELOC is $160,000. If you still owe $60,000, you would only be able to borrow $100,000.
This law is in place to avoid a situation where people borrow too much home equity, can’t make the payments, and then default. This problem is in part what caused the mortgage meltdown and recession of 2008.
Some lenders will allow you to borrow more than 80% of your home’s equity, but this isn’t allowed in Texas. Even in 2024, most lending companies do not offer home equity loans in Texas.
You Can Have Only 1 HELOC
Texas law also states that you can only have one HELOC or home equity loan at a time. If you want to get another HELOC, you have to pay off the first one.
Only 1 HELOC Every 12 Months
If you repay the first HELOC, you can only tap the equity one time per year. This is important to remember if you think you will need to get another loan in the near future.
The HELOC Cannot Close Sooner Than 12 Days From The Application
There are HELOC requirements in Texas regarding fact checking the loan, so a HELOC cannot legally close any sooner than 12 days after you apply and receive a notice of your rights as a borrower.
However, most lenders take at least 30 days to close a home equity loan. This is important to remember if you need the money as soon as possible. If you need to close your loan quickly, talk to your lender and make sure you provide all of the documentation they need as soon as you can.
Texas HELOCs Are Only Allowed On Primary Residences
Do you want to take out a HELOC on a rental property? In Texas, you can only take out a second mortgage on the property you live in. The state wants to prevent people from taking out loans on homes they don’t live in and defaulting.
There also are several rules in place for lenders in Texas:
Lenders Can Only Charge Up To 2% In Fees on Texas HELOC Loans
The law caps lender fees on second mortgages to 2% of the principal. This does not include appraisal, survey, and title fees. The lender also must give you a detailed list of fees you are being charged to close the loan.
Other Collateral Cannot Be Required
The collateral for your HELOC is the home itself. The lender cannot require you to provide other collateral, such as your car.
Texas HELOC FAQs for 2026
Can I get a HELOC loan in Texas in 2026?
Yes, you can get a HELOC loan in Texas in 2026, but Texas HELOCs operate under unique constitutional rules that do not apply in other states. Article XVI, Section 50 of the Texas Constitution caps combined loan-to-value at 80%, requires a minimum line of $4,000, prohibits prepayment penalties, caps lender fees at 2% of the loan amount, and limits borrowers to one active home equity loan or HELOC per property. House Bill 152, signed in June 2025, streamlined several of these rules.
What are the LTV rules for Texas HELOCs?
The LTV rules for Texas HELOCs cap combined loan-to-value at 80% across all liens, including your first mortgage and the new HELOC. This is the hardest LTV cap in the country. On a $450,000 home with a $280,000 first mortgage, the maximum total liens allowed would be $360,000 ($450,000 × 80%), giving you up to $80,000 in HELOC availability. Texas applies this 80% ceiling uniformly to all Section 50(a)(6) loans regardless of credit score.
How is a Texas HELOC different from a HELOC in other states?
A Texas HELOC differs from a home equity line of credit in other states in five key ways. First, the LTV cap is 80% (vs. 85% to 95% elsewhere). Second, lender fees are capped at 2% of the loan amount. Third, you can have only one active home equity loan or HELOC per property. Fourth, all closings must occur at a lender’s office, attorney’s office, or title company. Fifth, a 12-day cooling-off period applies before closing.
Are Texas HELOC lenders different from regular HELOC lenders?
Yes, Texas HELOC lenders must be specifically licensed and experienced with the Section 50(a)(6) constitutional framework. Many national HELOC lenders avoid Texas because of the legal complexity and compliance requirements. The active HELOC loan Texas lender pool typically includes Texas-based banks, regional credit unions, and specialty Texas mortgage brokers with deep Section 50(a)(6) expertise. For broader product context across the country, national HELOC qualification requirements explain how standard HELOCs work outside Texas.
Can I get a home equity line of credit in Texas if I already have a home equity loan?
No, Texas constitutional law limits you to one active home equity loan or HELOC per property at a time. If you already have a Section 50(a)(6) home equity loan on your Texas homestead, you cannot add a HELOC on top of it. To get a Texas HELOC, you would first need to pay off the existing home equity loan or refinance both into a single new transaction. Borrowers exploring fixed-rate options can review fixed-rate home equity loan options in Texas.
Does a Texas HELOC permanently classify my home as a cash-out property?
Yes. Once a Texas property has carried any Section 50(a)(6) home equity loan or HELOC, the property is permanently classified as a cash-out property for all future refinances — even rate-and-term refinances on the first mortgage. This means future refinances are also capped at 80% LTV regardless of whether new cash is taken. This is one of the most important Texas-specific rules borrowers should understand before opening any Section 50(a)(6) loan.
How long does it take to close a Texas HELOC in 2026?
Closing a Texas HELOC typically takes 4 to 8 weeks in 2026, longer than HELOCs in most other states because of the mandatory 12-day cooling-off period plus standard Texas constitutional disclosures. The timeline includes application (1-2 weeks), appraisal and underwriting (2-3 weeks), and the 12-day wait between final disclosures and closing. Borrowers with strong files and Texas-experienced lenders sometimes close in 30 days. For broader refinance options, see refinance mortgage options for Texas homeowners.
Top 7 Reasons Texas Homeowners Are Taking Out a Home Equity Line of Credit (HELOC)
In recent years, Texas homeowners have increasingly turned to Home Equity Lines of Credit (HELOCs) as a flexible financial tool. A HELOC allows borrowers to access the equity they’ve built in their homes, offering a revolving credit line for various purposes. But what’s driving this surge in demand for HELOCs among Texans? Below, we explore the top seven reasons homeowners in the Lone Star State are tapping into their home equity—and how a HELOC can serve as both a financial lifeline and an opportunity.
1. Home Improvement and Renovation Projects
One of the most popular reasons Texas homeowners opt for a HELOC is to fund home improvements or renovations. Projects such as remodeling a kitchen, upgrading HVAC systems, or adding a pool can increase both the home’s comfort and market value. HELOCs are ideal for these projects because they allow borrowers to access funds as needed, accommodating fluctuating project costs over time.
Why settle for outdated countertops and old appliances when a HELOC can help you transform your Texas home into the space you’ve always dreamed of?
2. Debt Consolidation
Another significant reason homeowners turn to HELOCs is to consolidate high-interest debt. Many Texans carry credit card balances or personal loans with steep interest rates. Since HELOCs typically offer lower interest rates, consolidating these debts under a single HELOC can lead to lower monthly payments and long-term savings.
3. Emergency Medical Expenses
Unexpected medical expenses can strain any family’s budget. Some Texas homeowners use a HELOC to cover emergency healthcare costs, such as surgery or long-term care. The revolving nature of a HELOC provides flexibility, ensuring funds are available if additional treatments or follow-ups are required.
4. Education Expenses
Whether it’s college tuition or private school fees, many families tap into their home equity to cover educational costs. A HELOC can act as a more affordable alternative to student loans, especially if the borrower qualifies for a low interest rate. This approach helps parents manage the high cost of education without disrupting their monthly cash flow.
5. Real Estate Investments
Texans are also taking advantage of HELOCs to invest in real estate. Some homeowners use their home equity to make down payments on rental properties or vacation homes, expanding their real estate portfolios. With Texas’ thriving real estate market, HELOCs offer a strategic way to access the capital needed for new investments.
6. Business Startups and Expansion
Entrepreneurs in Texas often rely on HELOCs to fund business ventures. Whether starting a new company or expanding an existing business, the ability to borrow against home equity provides a more accessible source of capital compared to traditional business loans. The flexibility of a HELOC allows entrepreneurs to withdraw funds when needed, supporting growth and cash flow management.
A Texas HELOC is like a seed—it provides the capital to plant new opportunities that can grow into something fruitful.
7. Preparing for Retirement
Finally, some Texas homeowners use HELOCs to supplement their retirement income. By accessing the equity in their homes, retirees can manage unexpected expenses or enhance their lifestyle without dipping into savings too early. HELOCs offer a safety net, allowing retirees to enjoy their golden years with more financial freedom.
HELOCs have become a popular financial tool for Texas homeowners seeking flexibility and control over their finances. Whether it’s funding renovations, consolidating debt, investing in real estate, or managing healthcare costs, a HELOC offers numerous benefits. However, like any financial decision, it’s essential for homeowners to use HELOCs responsibly and with a clear repayment plan.
Rhetorical Question: With so many advantages, could a HELOC be the solution you’ve been looking for to achieve your financial goals?
What Is a HELOC?
A home equity line of credit is a second mortgage that allows the homeowner to access some of their equity. Rather than waiting to access the equity in the home when you sell, you can take out a line of credit while owning the home to get the cash you need. Many Texas homeowners use a HELOC to pay off credit cards, renovate the home, pay for college or healthcare costs, and much more.
Home equity lines of credit have a variable interest rate that can rise or fall based on market conditions. Many loans have a fixed rate for a few months that eventually will reset to market rates. In recent times, HELOC rates have risen, as has most interest rates in the US. This has happened as the Federal Reserve has hiked rates to combat inflation. In 2024, people with good credit can get a variable rate in the 8% or 9% range.
HELOCs usually have a draw period of 10 years in which you can access your equity. You only pay interest during the draw period, but you will have to pay principle and interest when the draw period ends. Homeowners can pay off the credit line and reuse it if they like. Keep in mind that HELOCs have a variable rate, so if you prefer having a fixed payment, a Texas home equity loan may be a better choice.
You generally need to have at least a 640-credit score to get a HELOC, and 680 or higher is better. People will lower credit scores and a debt-to-income ratio of more than 43% will probably pay a higher rate.
When Is the Best Time for Home Refinancing? Obtaining a lower interest rate may not be feasible at the moment. If your objective is to minimize interest expenses, refinancing might not be advisable at this time. Chances are, you might secure a higher rate, coupled with the necessity to manage closing costs for your new mortgage. Therefore, if you can’t lower your interest rate in a refinance, consider taking out a home equity loan from a Texas mortgage lender that you trust.
What is the difference between a bridge loan and HELOC?
The bridge loan mortgage is a unique short-term loan designed to temporarily bridge the gap between selling your current home and purchasing a new one. In contrast, a Texas HELOC is a revolving line of credit that lets you access your home’s equity for various purposes, such as home improvements, and is typically used over a longer period with greater flexibility in borrowing amounts. In most cases, bridge loans carry higher interest rates than HELOCs due to their short-term and high risk nature.
Highlights on Taking out Home Equity Loans and HELOCs in Texas
Taking out a HELOC is a popular option in Texas for homeowners to get the cash they need for large expenses. For example, you might want to renovate your home to add to its value, and then sell in a year or two. Getting a HELOC can give you access to $20,000, $30,000, and sometimes much more for those important home improvements.
HELOCs are popular in 2026 because interest rates have risen, and many homeowners have a first mortgage rate that is lower than current rates. So, getting a cash-out refinance doesn’t make sense for many borrowers. Talk to your lender today about taking out a HELOC on your Texas home and find out if it is a fit for your financial needs.
Reviewed and Updated by John Tappan NMLS# 394171 | Updated June 2026
This information is general in nature and current as of 2026, based on Article XVI, Section 50 of the Texas Constitution, House Bill 152, and current Texas lender practices. Texas HELOC rules, lender availability, and program guidelines vary and may change. The figures above are not a quote, an offer of credit, or legal advice. Because a Texas HELOC permanently affects future refinance options on your homestead, borrowers should consider consulting a Texas-licensed real estate attorney before signing. BD Nationwide connects Texas borrowers with HELOC lenders and does not directly originate loans.