Home Equity · Texas 50(a)(6)
A HELOC lets you borrow against your home's equity as a flexible credit line. But Texas isn't like other states: our Constitution sets its own rules for home equity lending. Here's how a HELOC works here — and exactly what Texas law requires.
The basics
A home equity line of credit (HELOC) is a revolving credit line secured by the equity in your home. Instead of receiving one lump sum, you get an approved credit limit you can draw from as needed — for a renovation, tuition, consolidating higher-interest debt, or a safety net — and you pay interest only on what you actually use.
A HELOC typically has two phases: a draw period, when you can borrow and often make interest-only payments, followed by a repayment period, when the balance amortizes and you pay it down. Most HELOCs carry a variable rate tied to a market index.
In Texas, a HELOC on your primary home is a special animal. Because your homestead has constitutional protection, any loan against its equity — including a HELOC — must follow Article XVI, Section 50(a)(6) of the Texas Constitution. Those rules protect you, and they shape the timeline, the maximum you can borrow, and how closing works. The section below walks through each one.
Best suited for
✓ Homeowners with meaningful equity built up
✓ Renovations or projects with phased costs
✓ Flexible access instead of one lump sum
✓ Consolidating higher-interest debt
✓ Keeping your existing low first-mortgage rate
Requirements
Equity does the heavy lifting, but lenders also look at your credit, income, and how the constitutional cap applies to your specific numbers.
Know your rights
Texas is the only state that writes home-equity borrower protections directly into its Constitution. Every legitimate Texas HELOC follows these rules — if an offer doesn't, that's a red flag, not a shortcut.
All debt secured by your homestead — first mortgage plus your equity line — cannot exceed 80% of the home's fair market value. This preserves a 20% equity cushion no lender can touch.
Closing can't happen sooner than 12 days after you apply and receive the required 'Notice Concerning Extensions of Credit.' Built-in time to think — no legitimate lender can rush you past it.
After closing, you have three business days to cancel the transaction entirely, no penalty and no questions asked. Funds generally aren't disbursed until this window passes.
A Texas home-equity closing must occur at the lender's office, an attorney's office, or a title company — never at your kitchen table. This exists to prevent pressure closings.
Only one 50(a)(6) home-equity loan can exist on your homestead at a time, and at least 12 months must pass between home-equity closings on the same property.
Lender fees to originate a Texas home-equity loan are capped at 2% of the loan amount. Certain third-party charges are excluded from that cap — an appraisal by a third-party appraiser, a survey by a state licensed or registered surveyor, and title insurance premiums and title examination reports. The cap dropped from 3% to 2% effective January 1, 2018.
A Texas 50(a)(6) loan is generally non-recourse: absent fraud, the lender's remedy is against the home itself — not a personal judgment against you.
Texas sets its own mechanics for equity lines: every advance must be at least $4,000, and the line cannot be accessed by credit card or a similar device. That $4,000 floor makes a Texas HELOC a poor fit for small, incidental spending — plan draws around it.
After 12 months, Texas law provides a path (§50(f)(2)) to refinance a home-equity loan into a standard rate-and-term mortgage if specific conditions are met — sometimes unlocking better terms down the road.
This page is reviewed by Jonathan Sarver, a licensed Texas loan officer. Have a question about your specific situation in Austin or the Hill Country? Reach out directly — a real person, licensed in Texas, will answer.
Answers
Texas caps all homestead-secured debt at 80% of your home's fair market value. So your available line is roughly 80% of your home's value minus your current mortgage balance, subject to lender approval. For example, on a $500,000 home with a $300,000 mortgage, the constitutional ceiling for total debt is $400,000 — leaving up to $100,000 of potential line.
Texas law requires a minimum 12-day waiting period between your application (with the required notice) and closing, plus a 3-business-day cancellation window after closing before funds disburse. These are constitutional borrower protections unique to Texas — every legitimate lender follows them.
Both are 50(a)(6) home-equity transactions subject to the same 80% cap. A HELOC keeps your existing first mortgage in place — valuable if you locked a low rate — and gives flexible, as-needed access. A cash-out refinance replaces your whole mortgage at today's rates in exchange for one lump sum. Which wins depends on your current rate, how much you need, and when.
The 50(a)(6) rules on this page apply to your homestead — your primary residence. Equity lending on investment property is a different product with different terms and fewer constitutional restrictions. We can walk you through both.
No. Texas allows only one 50(a)(6) home-equity loan on your homestead at a time, and at least 12 months must pass between home-equity closings on the same property.
Ready when you are
Get a clear read on your available line and the Texas timeline from a licensed Texas loan officer — free, no obligation.
Check my equity optionsThis is not a commitment to lend. All loans subject to credit approval, income and asset verification, and property appraisal. Rates and terms vary and are not guaranteed.