Yes, HELOCs are allowed in Texas. Your revolving line of credit is secured by your primary homestead and governed by Article XVI, Section 50 of the Texas Constitution. All existing home-secured debt plus the HELOC cannot exceed 80% of appraised value. Estimate your maximum: appraised value times 0.80, minus existing home-secured debt.
Looking for a fixed lump-sum loan instead of a revolving line? This guide compares a HELOC to a home equity loan and a cash-out refinance.
Texas HELOC Rules at a Glance
- 80% combined LTV cap: All home-secured debt, including your first mortgage and the HELOC, cannot exceed 80% of the home’s fair market value under the Texas Constitution, Article XVI, Section 50.
- One home equity loan at a time: Only one Section 50 home equity loan or HELOC may be secured by your homestead at any given time. An existing home equity loan must be paid off or refinanced before opening a HELOC.
- Homestead only: Texas HELOCs apply only to owner-occupied homestead property. Investment properties, rental homes, and vacation properties do not qualify.
How Much You Can Borrow
- Formula: Appraised value times 0.80, minus all existing home-secured debt, equals your maximum HELOC line under the Texas Constitution.
- Example: On a home appraised at $400,000 with a $200,000 mortgage balance, the 80% ceiling is $320,000. Subtract the $200,000 mortgage and the maximum available HELOC line is $120,000.
- Minimum per advance: Each draw on a Texas HELOC must be at least $4,000 under the Texas Constitution.
Costs and the 2% Fee Cap
- Constitutional fee cap: Fees and charges to originate a Texas home equity loan or HELOC may not exceed 2% of the loan amount under the Texas Constitution.
- Excluded from the cap: Appraisal fees by a third-party appraiser, a property survey performed by a state registered or licensed surveyor, the state base premium for a mortgagee title insurance policy with endorsements, and a title examination report if its cost falls below the state base premium for a mortgagee policy of title insurance without endorsements are excluded from the 2% cap.
- No per-advance fees: Fees may be collected only when the line of credit is established. The lender may not charge a fee for any individual advance.
Texas HELOC Timeline
- 12-day pre-closing wait: The loan may not close before 12 days after you submit a loan application or 12 days after you receive the required constitutional notice, whichever date is later.
- 3-day post-closing rescission: You may rescind the loan within 3 days after closing without penalty or charge.
- One-year seasoning: A new home equity extension of credit under Section 50 may not close before the first anniversary of the closing date of any other home equity extension of credit secured by the same homestead, unless on oath the owner requests an earlier closing due to a declared state of emergency.
Are HELOCs allowed in Texas?
Yes. Texas lifted its longstanding ban on home equity lending through a 1997 constitutional amendment, and a 2003 amendment specifically authorized HELOCs. All Texas HELOCs fall under Article XVI, Section 50 of the Texas Constitution, which imposes an 80% combined loan-to-value cap, a 12-day pre-closing waiting period, and a one-loan-at-a-time rule on homestead property. These are constitutional provisions that apply to every Texas HELOC.
How much can I borrow with a Texas HELOC?
Start with your home’s appraised value and multiply by 0.80. Subtract your remaining mortgage balance and any other home-secured debt. The result is your maximum HELOC line under the Texas Constitution. On a home appraised at $400,000 with $280,000 in existing debt, the 80% ceiling is $320,000. The maximum HELOC would be $40,000.
What fees come with a HELOC in Texas?
The Texas Constitution caps fees and charges to originate a home equity loan at 2% of the loan amount. That cap excludes appraisal fees by a third-party appraiser, a property survey performed by a state registered or licensed surveyor, the state base premium for a mortgagee title insurance policy with endorsements, and a title examination report if its cost falls below the state base premium for a mortgagee policy of title insurance without endorsements. The lender may collect fees only when the line is established and may not charge a fee for any individual advance. Title insurance premiums in Texas are set by the Texas Department of Insurance and do not vary by title company.
The Bottom Line Up Front
Texas homeowners can access up to 80% of their home’s value through a HELOC, but the Texas Constitution controls home equity lending directly through Article XVI, Section 50. The 80% combined loan-to-value cap, 2% fee ceiling, 12-day pre-closing waiting period, and one-loan-at-a-time restriction are constitutional provisions that no lender can override. This guide covers the rules the Constitution imposes, shows how to calculate your borrowing capacity, separates Texas law from lender requirements, walks through the application process, and compares a HELOC against a home equity loan and a cash-out refinance.
Texas HELOC Rules: What the Constitution Requires
Every Texas HELOC falls under Article XVI, Section 50 of the Texas Constitution. These are constitutional provisions, not ordinary statutes. The table below lists the rules that apply to every Texas HELOC regardless of lender.
| Rule | What Texas requires | Why it matters |
|---|---|---|
| 80% combined LTV cap | All existing home-secured debt plus the HELOC cannot exceed 80% of the home’s fair market value | Determines your maximum line |
| One home equity loan at a time | Only one Section 50 home equity loan or HELOC may be secured by the homestead at any given time | An existing home equity loan or cash-out refinance must be resolved before opening a HELOC |
| Homestead property only | The property must be your primary homestead | Investment properties, rentals, and second homes do not qualify |
| 12-day pre-closing wait | The loan may not close before 12 days after the application or 12 days after the borrower receives the required notice, whichever is later | Adds time between application and closing |
| 3-day rescission | The borrower may rescind the loan within 3 days after closing without penalty or charge | Protects your right to cancel without penalty |
| $4,000 minimum per advance | Each advance under the line of credit must be at least $4,000 | You cannot draw small amounts the way you would with a credit card |
| No card or unsolicited check draws | Advances may not be obtained using a credit card, debit card, similar device, or a preprinted check you did not solicit | Texas HELOCs do not function like credit cards |
| No per-advance fees | The lender may charge fees only when the line is established and may not charge a fee in connection with any individual advance | Protects against incremental draw costs |
| No unilateral amendment | The lender may not unilaterally amend the terms of the line of credit | Protects against unilateral changes by the lender |
| 2% fee cap | Fees to originate, evaluate, maintain, record, insure, or service the loan may not exceed 2% of the loan amount, excluding fees for a third-party appraisal, a property survey performed by a state registered or licensed surveyor, the state base premium for a mortgagee title policy with endorsements, and a title examination report if its cost falls below the state base premium for a mortgagee policy of title insurance without endorsements | Limits origination costs |
| Closing location | The loan may close only at the office of the lender, a title company, or an attorney at law | Limits where the loan can close |
| No prepayment penalty | The borrower may prepay the loan without penalty or charge | No cost to pay off the line early |
| Repayment schedule | Repayment must be in regular periodic installments, monthly to biweekly frequency, starting within two months of the extension of credit | No negative amortization; structured repayment required |
| No recourse | The loan must be without recourse for personal liability against the borrower and spouse, unless the borrower or spouse obtained the loan by actual fraud | The lender may pursue the property securing the loan but not personal assets, with an exception for actual fraud |
| Court order required for foreclosure | The lien may be foreclosed only with a court order | Protects against foreclosure without court oversight |
Every provision above is from the Texas Constitution, Article XVI, Section 50. The full constitutional text is published by the Texas Legislative Council.
How Much You Can Borrow
The Texas Constitution caps all home equity borrowing at 80% of your home’s fair market value. The 80% includes your existing mortgage balance and any other home-secured debt. To calculate your maximum HELOC line, take the appraised value, multiply by 0.80, then subtract all existing home-secured debt. The remainder is your constitutional maximum.
Texas HELOC Borrowing Scenarios
| Appraised value | 80% cap | Existing mortgage | Maximum HELOC | Enough equity? |
|---|---|---|---|---|
| $400,000 | $320,000 | $0 | $320,000 | Yes |
| $400,000 | $320,000 | $200,000 | $120,000 | Yes |
| $400,000 | $320,000 | $280,000 | $40,000 | Yes, but a line this small may not justify closing costs |
| $400,000 | $320,000 | $325,000 | $0 | No — existing debt exceeds the 80% cap |
| $500,000 | $400,000 | $280,000 | $120,000 | Yes |
Formula for every row: appraised value times 0.80, minus existing mortgage balance, equals maximum HELOC. The 80% cap comes from the Texas Constitution, Article XVI, Section 50.
- The appraisal controls: Under the Texas Constitution, the fair market value of the homestead is determined by an appraisal or evaluation prepared in accordance with state or federal requirements. If the appraised value comes in under your expectations, your available line shrinks.
- Rising values help: If your home has appreciated since purchase while your mortgage balance has dropped, the 80% ceiling rises and your debt falls, potentially opening borrowing capacity that did not exist at closing.
- Each advance must be at least $4,000: Under the Texas Constitution, you cannot draw less than $4,000 in any single advance.
Who Qualifies Under Texas Law
The Texas Constitution sets the floor for HELOC requirements. The table below lists the constitutional requirements by topic.
| Topic | What Texas law requires |
|---|---|
| Combined LTV | Cannot exceed 80% of fair market value |
| Minimum advance | Each advance must be at least $4,000 |
| Property type | Must be owner-occupied homestead |
| Fees | Covered fees capped at 2% of loan amount, with exclusions for appraisal, survey, title insurance, and title examination subject to a cost limitation |
| Draw period length | Not specified by the Constitution |
| Installment frequency | Regular periodic installments, monthly to biweekly frequency, starting within two months of the extension |
Texas law sets the minimum at $4,000 per advance, not per line.
Costs, Fees, and the 2% Cap
The Texas Constitution caps covered fees and charges on a home equity loan or HELOC at 2% of the loan amount. That cap covers fees necessary to originate, evaluate, maintain, record, insure, or service the extension of credit, but it explicitly excludes four categories of charges.
- Included in the 2% cap: Lender origination fees, document preparation, recording fees, and other charges to make the loan fall under this ceiling. The 2% cap is constitutional and cannot be waived or restructured by the lender.
- Excluded from the 2% cap: An appraisal fee charged by a third-party appraiser, a property survey performed by a state registered or licensed surveyor, the state base premium for a mortgagee policy of title insurance with endorsements, and a title examination report if its cost falls below the state base premium for a mortgagee policy of title insurance without endorsements. These costs are separate and not counted toward the 2% ceiling.
- Title insurance rates are state-set: Texas title insurance premiums follow the rate schedule published by the Texas Department of Insurance. The premium does not vary by title company, so the cost is the same regardless of which company you use.
- No per-advance fees: Under the Texas Constitution, the lender may charge fees only when the line of credit is established and may not charge a fee in connection with any individual advance. Drawing on your HELOC after it is open does not trigger additional lender fees.
How to Apply for a HELOC in Texas
The application process follows a sequence shaped by the constitutional waiting period and document requirements.
- Estimate your available equity: Calculate appraised value times 0.80, minus existing home-secured debt. If the result is below $4,000 per advance, the constitutional minimum has not been met.
- Compare lenders: Request a fee schedule and rate structure from each lender you consider.
- Submit a formal application: The 12-day pre-closing clock starts when you submit your application to the lender or when you receive the required constitutional notice, whichever is later.
- Receive the constitutional notice: The lender must provide a written notice on a separate instrument summarizing your rights under Article XVI, Section 50 before the loan can close. This notice is required by the Texas Constitution.
- Appraisal or evaluation: Under the Texas Constitution, fair market value is determined by an appraisal or evaluation prepared in accordance with state or federal requirements. This value sets the 80% ceiling for your HELOC line.
- Receive final disclosure: The loan may not close without your consent before one business day after you receive a copy of your loan application and a final itemized disclosure of fees, points, interest, costs, and charges.
- Close at an approved location: The loan may close only at the office of the lender, a title company, or an attorney at law. This is a constitutional requirement.
- 3-day rescission period: After closing, you have 3 days to rescind the loan without penalty or charge.
- Draw on the line: Under the Texas Constitution, each advance must be at least $4,000.
HELOC vs Home Equity Loan vs Cash-Out Refinance
Three products let you access home equity in Texas, and all three fall under the same constitutional framework. The table below compares how each one works.
| Feature | HELOC | Home equity loan | Cash-out refinance |
|---|---|---|---|
| How funds are delivered | Revolving line: request advances, repay, and reborrow during the draw period | Single disbursement at closing | Single disbursement that replaces the existing first mortgage |
| Interest rate | Usually variable; fixed-rate HELOCs are available but uncommon | Fixed or variable | Fixed or variable |
| Payment predictability | Payments change as the rate changes and as you draw or repay | Fixed monthly payment if the rate is fixed | Fixed if the refinance is a fixed-rate loan |
| Texas 80% LTV cap | Applies to all combined home-secured debt | Same rule | Same rule |
| One-loan rule | Only one Section 50 loan at a time | Same rule | Same rule; a homestead cash-out refinance is a Section 50 loan |
| 12-day wait and 3-day rescission | Both apply | Both apply | Both apply |
| Good fit for | Ongoing or phased expenses where you want to draw only what you need | A single defined expense where you want payment certainty | Replacing your first mortgage while pulling cash, if the new rate justifies the change |
All three products share the 80% combined LTV cap, 2% fee ceiling, 12-day waiting period, 3-day rescission, and one-loan-at-a-time restriction. The differences are in how you receive and repay the funds. For a detailed guide to Texas home equity loans, see the Texas home equity loan guide. For VA-eligible borrowers, see the Texas VA cash-out refinance guide.
Refinancing a Texas HELOC
A variable-rate Texas HELOC can be refinanced into a fixed-rate home equity loan. Because the refinance is a new home equity extension of credit under Section 50, all constitutional requirements apply again.
- One-year seasoning: Under the Texas Constitution, a new home equity extension of credit under Section 50 may not close before the first anniversary of the closing date of any other home equity extension of credit secured by the same homestead, unless on oath you request an earlier closing due to a declared state of emergency.
- 80% LTV applies: The 80% combined LTV cap under the Texas Constitution applies to the refinanced loan. Fair market value is determined by an appraisal or evaluation prepared in accordance with state or federal requirements.
- 2% fee cap resets: Closing costs on the refinance fall under the same 2% constitutional ceiling that applied to the original line.
- 12-day wait and 3-day rescission restart: The full constitutional timeline applies again.
- Refinancing into a non-home-equity loan: Under Section 50, a home equity loan may be refinanced into a non-home-equity loan if certain conditions are met, including a one-year wait and an 80% combined LTV cap. This changes the loan’s classification and removes certain consumer protections, including the court-order requirement for foreclosure. The lender must provide a separate written notice about the protections that would no longer apply.
The Bottom Line
A Texas HELOC gives homeowners revolving access to their equity under rules that are written into the state constitution. The 80% combined LTV cap, 2% fee ceiling, 12-day pre-closing waiting period, and $4,000 minimum per advance all come from Article XVI, Section 50, and no lender can waive them. What matters is knowing these rules before you apply, calculating your available equity with the formula in this guide, and comparing lenders on the criteria they control: rates, draw terms, underwriting standards, and service quality. The constitutional framework is the same everywhere; compare lenders on rates, draw terms, underwriting standards, and service quality.
Frequently Asked Questions
Are HELOCs illegal in Texas?
No. Texas prohibited home equity lending until a 1997 constitutional amendment, and a 2003 amendment specifically authorized HELOCs. All Texas HELOCs fall under Article XVI, Section 50 of the Texas Constitution, which imposes the 80% combined LTV cap, the 12-day pre-closing waiting period, and other protections. The claim that Texas does not allow HELOCs has been outdated since the 2003 constitutional amendment.
What is the minimum HELOC draw in Texas?
Under the Texas Constitution, each advance on a HELOC must be at least $4,000. This is the constitutional floor.
Can I get a HELOC on a rental property or second home in Texas?
No. Texas home equity lending under Article XVI, Section 50 applies only to your primary homestead. Investment properties, rental properties, and vacation homes do not qualify under Section 50.
Can I get a HELOC if I already have a Texas cash-out refinance?
The Texas Constitution allows only one Section 50 home equity loan or HELOC secured by your homestead at any given time. A Texas homestead cash-out refinance is a home equity extension of credit under Section 50. You would need to pay off or refinance the existing loan before opening a new HELOC, and the one-year seasoning period applies. Confirm with each lender whether the path you are considering is available.
How long does a Texas HELOC take to close?
The Texas Constitution requires a 12-day pre-closing waiting period that starts when you submit your application or when you receive the required constitutional notice, whichever is later. After closing, a 3-day rescission period applies before the transaction becomes final. These waiting periods are constitutional requirements.
What closing costs can a Texas HELOC have?
The Texas Constitution caps covered fees at 2% of the loan amount. The cap excludes fees for a third-party appraisal, a property survey performed by a state registered or licensed surveyor, the state base premium for a mortgagee title insurance policy with endorsements, and a title examination report if its cost falls below the state base premium for a mortgagee policy of title insurance without endorsements. Title insurance premiums in Texas follow the rate schedule published by the Texas Department of Insurance and do not vary by title company.
Can I use a debit card or checks to draw on a Texas HELOC?
No. The Texas Constitution prohibits obtaining HELOC advances using a credit card, debit card, similar device, or a preprinted check you did not solicit. Each advance must be at least $4,000.
Can I refinance a Texas HELOC into a fixed-rate loan?
Yes, but the full constitutional framework applies to the new loan. The 80% combined LTV cap, 2% fee ceiling, 12-day waiting period, and 3-day rescission all reset. You must also satisfy the one-year seasoning requirement if the HELOC closed within the past year. Fair market value is determined by an appraisal or evaluation prepared in accordance with state or federal requirements.
What happens when the HELOC draw period ends?
Once the draw period ends, you can no longer request new advances. The HELOC enters a repayment period during which you repay the outstanding balance. The Consumer Financial Protection Bureau notes that monthly payments are often significantly increased once you enter repayment because you are paying both principal and interest. Check your lender’s terms for the specific draw and repayment periods on your line.
Data and Methodology
Legal and regulatory claims in this guide cite the Texas Constitution, Article XVI, Section 50, as published by the Texas Legislative Council. The constitutional text was verified against the current published version. General HELOC mechanics reference the Consumer Financial Protection Bureau. No figures from commercial real estate portals, search-result snippets, or AI-generated reviews are used. Lender-specific details such as rates, minimum lines, and underwriting criteria are described in general terms because they change by institution and over time. Readers should verify current details directly with each lender.
