HELOC in Texas: What Every Dallas Homeowner Needs to Know

What are the rules for a HELOC in Texas?

Texas is the most restrictive state in the country for home equity lending. A Texas HELOC caps your total home equity debt at 80% of your home's appraised value, requires a mandatory 12-day waiting period before closing, limits you to one home equity loan or HELOC at a time, and prohibits a new home equity transaction within 12 months of closing a prior one. These rules apply to every homeowner in Dallas, Plano, Frisco, and across the metroplex — no exceptions.

By Paul Blair | July 9, 2026

If you own a home in Dallas and you've built up equity over the last several years, a HELOC — a home equity line of credit — is probably on your radar. Maybe you want to renovate before selling. Maybe you want to consolidate high-interest debt. Maybe you're trying to fund a major expense without touching your savings.

Here's what most Texas homeowners find out too late: the rules here are nothing like the rest of the country.

Texas has some of the most homeowner-protective — and restrictive — home equity laws in the United States, written directly into the Texas Constitution. That means your brother-in-law in Georgia, your colleague who refinanced in Colorado, and every national lender's website you've been reading are giving you a picture that doesn't apply in Texas.

Let's walk through what actually applies here, and what it means for your situation in DFW.

Why Texas HELOC Rules Are Different

Most states let you borrow against your home equity with relatively few restrictions. Texas does not.

The protections go back to the Texas homestead law — one of the oldest and strongest in the country — and they're written into Article XVI, Section 50 of the Texas Constitution. This is not a lender policy or a state regulation that can be amended by a bank. It's constitutional. And it applies uniformly across every county, every city, and every lender operating in Texas.

The result: Dallas homeowners with significant equity often discover they can borrow far less than they expected — or are subject to timelines and limitations that change their plans entirely.

Here's what you're actually working with.

The Four Rules Every Dallas Homeowner Needs to Know

Rule 1: The 80% cap.

Texas limits your total home equity debt to 80% of your home's current appraised value. That includes your existing mortgage balance and any new HELOC or home equity loan combined. You can never exceed 80%.

Here's how the math works on a typical DFW home:

• Home value: $450,000
• Existing mortgage balance: $220,000
• Maximum total home equity debt (80%): $360,000
• Maximum HELOC: $360,000 − $220,000 = $140,000

If you owe $330,000 on a $400,000 home, your HELOC ceiling is $320,000 (80% of $400K) minus $330,000 — which gives you negative $10,000. In other words: you don't qualify at all, because you're already above 80% LTV.

This catches a lot of homeowners off guard, especially those who bought in the past few years with a small down payment and haven't built substantial equity yet.

Rule 2: The 12-day waiting period.

Once your lender provides the required disclosure documents, Texas law mandates a 12-day cooling-off period before the loan can close. No exceptions, no waivers. If you're planning around a specific date — a contractor start date, a closing on a new purchase — build 12 days of buffer into your timeline from the moment you apply.

Rule 3: One home equity loan at a time.

Texas only allows one home equity loan or HELOC open against your homestead at once. If you already have a home equity product, you must pay it off in full before opening a new one.

Rule 4: Once per 12 months.

Even after you close a home equity loan, you cannot open a new one on the same property within 12 months. This rule applies to refinances and modifications too — not just new originations.

And there's one more restriction worth knowing: Texas HELOCs are only available on your primary residence. Your investment property, your vacation home, your rental — none of them qualify. The homestead protection that makes Texas HELOCs so homeowner-friendly in some ways is also what limits them.

What This Means for Dallas Homeowners Right Now

DFW home values peaked in early 2022 and have moderated somewhat since, but many homeowners who bought between 2015 and 2021 are still sitting on meaningful equity. If you paid $280,000 for a Plano home that's now worth $390,000, and you owe $210,000 on your mortgage, your maximum HELOC is approximately $102,000 ($390,000 × 80% − $210,000).

That's real money. And it's tempting — especially if you're weighing a renovation before listing, thinking about a down payment on a second property, or managing a large expense.

A few scenarios where Dallas homeowners are running these numbers right now:

Pre-listing renovation. With one in five DFW listings now carrying a price reduction, some sellers are weighing whether to spend $30,000–$60,000 on kitchen and bath updates before listing rather than cutting their asking price. A HELOC can fund that work — but only if the equity math clears the 80% cap. (See also: should you get a pre-listing inspection before selling in Dallas, which often determines what renovation makes sense.)

Move-up financing. Some homeowners are using HELOC funds as a down payment on a new home before selling the current one. This is technically possible but creates layered complexity — and you'll want to understand how it interacts with the sell-first versus buy-first decision before committing.

Equity unlock without selling. If you're considering whether to sell or rent out your Dallas home, a HELOC is sometimes part of the analysis — unlocking equity for other uses while holding the property.

How to Apply for a HELOC in Texas

The process is similar to getting a mortgage, with a few Texas-specific steps:

1. Get an estimate of your home's current value. Your lender will order an appraisal, but having a solid estimate helps you run the 80% math before applying.
2. Request the disclosure documents. Once your lender provides them, the 12-day clock starts. Don't delay reviewing them.
3. Gather documentation. Most lenders require tax returns, W-2s or 1099s, pay stubs, and bank statements.
4. Wait the 12 days. Non-negotiable.
5. Close and draw. Once closed, you draw during the draw period (typically 5–10 years), paying interest only on what you've drawn.

Most Texas HELOC rates are variable, tied to the prime rate plus a lender margin. That means your payment can change if rates move — factor that into your planning.

On credit requirements: most Texas lenders want at least a 620 credit score to qualify. To get the best rates in 2026, you're looking at 720 or higher. Lenders also evaluate your debt-to-income ratio, generally preferring it stay below 43% including the new HELOC payment.

One more thing worth knowing: Texas caps HELOC closing costs at 2% of the loan amount. On a $120,000 HELOC, that's a maximum of $2,400 in lender fees. Some national lenders are not familiar with this cap — a Texas-based lender will know it automatically.

HELOC vs. Home Equity Loan: What's the Difference in Texas?

Both products are subject to all the same Texas restrictions. The difference is in how you access the funds:

• A HELOC is a revolving line of credit. You draw what you need when you need it, up to your limit, during the draw period. You pay interest only on what you've drawn.
• A home equity loan is a lump sum. You receive the full amount at closing and make fixed monthly payments immediately.

For renovation projects with unpredictable costs, HELOCs tend to be more flexible. For a known, one-time expense, a home equity loan with a fixed rate can be simpler to plan around.

Either way, the 80% cap, the 12-day wait, and the once-per-year rule apply to both.

One Thing to Watch Out For

Texas homeowners sometimes try to get around the 80% cap by refinancing into a larger first mortgage instead of opening a HELOC. This is a cash-out refinance — and while it's structured differently, lenders in Texas are required to treat it under the same Section 50 framework if the funds are being used for non-purchase purposes. Work with a lender who specifically understands Texas home equity law, not a national call center rep who's quoting national guidelines.

If your goal is to tap equity in Texas, the path needs to be built around what Article XVI, Section 50 actually permits — not what worked for someone in another state.

Your specific situation — how much equity you have, what you plan to use it for, and how it interacts with your sale or purchase timeline — is worth a focused conversation. Reach out here and I'm happy to walk through the numbers with you.

Frequently Asked Questions

How much can I borrow with a HELOC in Texas?

Your maximum HELOC amount is your home's appraised value multiplied by 80%, minus your current mortgage balance. On a $450,000 home with a $220,000 mortgage, that's $450,000 × 80% − $220,000 = $140,000. The 80% cap is constitutional and applies to every Texas homeowner without exception.

Can I get a HELOC on an investment property or second home in Texas?

No. Texas home equity loans and HELOCs are only available on your primary residence — your homestead. Investment properties, rental homes, and vacation homes do not qualify under Texas law.

How long does it take to get a HELOC in Texas?

Plan for 3–5 weeks from application to closing. Texas requires a mandatory 12-day waiting period after your lender delivers the required disclosure documents before the loan can close. This is non-negotiable and applies to every applicant.

Can I have both a HELOC and a home equity loan in Texas at the same time?

No. Texas only allows one home equity product — either a HELOC or a home equity loan — on your homestead at a time. You must fully pay off an existing home equity product before opening a new one.

What happens to my Texas homestead exemption if I take out a HELOC?

Your Texas homestead exemption is not affected by a HELOC. The exemption and the home equity lending rules operate independently — the exemption reduces your taxable value for property tax purposes regardless of whether you've borrowed against the home.

Texas HELOC rules are designed to protect homeowners — but they also require more planning than most people expect. If you're sitting on significant equity in your Dallas home and trying to figure out the best way to use it, the first step is running your numbers against the 80% cap with your actual mortgage balance and a current home value estimate.

If you'd like to talk through how this fits into your bigger picture — whether you're planning to sell, renovate, hold, or move up — connect with me here or get a home value estimate at greysq.com/home-value.

About Paul Blair

Paul Blair is the founder and broker of Grey Square, a virtual real estate brokerage representing buyers and sellers across Dallas and Los Angeles. With 22 years in the business and more than $200 million in closed transactions, Paul works the full range of the market, from luxury homes in the Park Cities and Preston Hollow to estates in the Hollywood Hills and across the Westside. Connect with Paul and the Grey Square team at greysq.com. TX TREC #9011505 · CA DRE #01792671.