Home Equity Loan Rates in Texas

Yes, you can get a fixed-rate home equity loan in Texas, but the state’s constitution sets unusually strict ground rules: your total borrowing against the home is capped at 80% of its value, total fees are limited to 3% of the principal, and you may only carry one home-equity loan at a time. With a median home value of $258,500, a Texas owner who has paid down half of a first mortgage could tap roughly $77,550 in available equity, repaid in equal fixed monthly installments.

Home Equity Loan in Texas: What to Know in 2026

Texas is one of the most distinctive states in the country for home equity borrowing, because it writes its borrowing limits directly into its constitution rather than leaving them to lender policy. The median home in Texas is valued at $258,500, and like the rest of the nation, Texas homeowners have watched their equity grow as property values climbed over the past several years (Source: U.S. Census ACS 2022, table DP04 (median home value)). But unlike most states, Texas caps how much of that equity you can reach: combined borrowing against the home cannot exceed 80% of its value, a ceiling no single lender can bend.

Owners across the state use a fixed-rate home equity loan for the same reasons people borrow against their homes anywhere: financing a major renovation, consolidating higher-interest debt, covering medical bills, or funding a one-time expense like tuition or a small business. Because a home equity loan delivers the full amount up front at a fixed rate, it is especially popular with Texans who know exactly how much they need and want a predictable payment they can budget around for the whole term.

For 2026, the headline for Texas borrowers is stability rather than change: the constitutional 80% combined loan-to-value ceiling and the 3% fee cap remain the defining features of every Texas home-equity loan, and Texas continues to levy no state income tax, which removes one variable from how borrowers weigh the cost of tapping equity.

How a Texas Home Equity Loan Works and What Drives Your Rate

A home equity loan is a second mortgage that pays you a single lump sum, which you then repay in equal fixed monthly payments over a set term. Because the interest rate is fixed at closing, your payment never changes, and you know the total cost of the loan on day one.

The fixed rate you are offered depends on a few core factors: your credit score, the combined loan-to-value ratio after the new loan is added to your existing mortgage, your debt-to-income ratio, the loan amount and term, and broader market interest rates at the time you lock. A stronger credit profile and more remaining equity generally earn a lower rate.

This is the key difference from a HELOC. A HELOC is a revolving line with a variable rate that can rise or fall with the market, and you draw and repay as needed. A home equity loan trades that flexibility for certainty: one disbursement, one fixed rate, one steady payment until the balance reaches zero.

How to Qualify for a Home Equity Loan in Texas

Qualifying for a Texas home equity loan comes down to four pillars, each measured against figures that are typical for the state.

Credit score

Most Texas lenders look for a minimum credit score around 640, though the strongest fixed rates go to borrowers well above that floor. A higher score can move you toward the lower end of the typical 7.75 to 12.75 percent APR range.

Combined loan-to-value (CLTV)

This is where Texas is strict. The state caps combined loan-to-value at up to 80 percent, and that ceiling is written into the constitution, not just lender policy. Add your existing first-mortgage balance to the new home equity loan, divide by your home’s appraised value, and the total cannot exceed 80 percent.

Income and debt-to-income (DTI)

Lenders verify steady income with pay stubs, tax returns, or bank statements, then measure your debt-to-income ratio, your total monthly debt payments divided by gross monthly income. A lower DTI signals you can comfortably absorb the new fixed payment.

Loan size

Texas home equity loans typically run from a minimum of $10,000 up to a maximum of $400,000, with terms commonly set around 20 years, subject to how much equity sits beneath the 80 percent cap.

A Real-Cost Example for a Home Equity Loan in Texas

To see how these numbers play out, walk through a representative Texas scenario. The assumptions are explicit: a home valued at the state median of $258,500, an existing first-mortgage balance equal to 50% of that value, and the lender’s maximum combined loan-to-value of 80% as shown in the key-facts table (Source: U.S. Census ACS 2022, table DP04 (median home value)).

Start with the home’s value of $258,500. At the 80% combined loan-to-value cap, the maximum total debt allowed against the property is $206,800. This homeowner already owes $129,250 on the first mortgage. Subtracting that existing balance from the $206,800 borrowing capacity leaves $77,550 of available equity that a home equity loan could tap.

Suppose this borrower takes a loan amount of $77,000, just under the available equity, at a sample APR of 9.25% over a 20-year term. Because this is a fixed-rate, fully amortizing loan, there is no draw period and no interest-only phase: the borrower makes one consistent payment of about $705 every month from the first month to the last.

Over the full 20-year term, that steady $705 payment retires the balance and adds up to roughly $92,252 in total interest on top of the $77,000 borrowed. Seeing that total interest figure in black and white is exactly why borrowing only what you need, and not the full available equity, matters: a smaller loan or a shorter term would meaningfully reduce that long-run interest cost.

Common Home Equity Loan Fees in Texas

• Appraisal or valuation: lenders require a current valuation of your home to confirm its market value and your combined loan-to-value, and the cost is paid by the borrower as part of closing.
• Origination and processing: the lender may charge an origination or processing fee to underwrite and set up the loan, but in Texas every such fee counts toward the constitutional cap that limits total fees (excluding bona-fide discount points) to 3% of the loan principal (Source: Texas Constitution Art. XVI §50(a)(6)).
• Title and recording: a title search, title insurance, and recording the new lien with the county are standard parts of closing a second mortgage in Texas.
• Recording costs: Texas does not impose a state mortgage recording tax, so your county recording charges are administrative rather than a percentage-based transfer tax on the loan.
• Prepayment: confirm in writing whether your loan carries any prepayment penalty before you sign, since paying the balance down early is one of the most effective ways to cut the total interest shown in the worked example.
• No ongoing account fees: because a home equity loan is a one-time lump sum rather than a revolving line, the annual or inactivity fees common to a HELOC do not apply.

Texas Home Equity Loan Rules & Regulations

• Texas constitutional CLTV cap: Texas Constitution Art. XVI §50(a)(6)(B) caps combined loan-to-value at 80%, a hard ceiling that no lender can exceed regardless of your credit profile (Source: Texas Constitution Art. XVI §50(a)(6)).
• 3% fee cap and cooling-off period: Texas Constitution Art. XVI §50(a)(6)(E) caps total fees (excluding bona-fide discount points) at 3% of principal, and the law imposes a 12-day cooling-off period before closing and limits you to one home-equity loan at a time (Source: Texas Constitution Art. XVI §50(a)(6)).
• Federal Truth in Lending protections: on top of Texas law, Regulation Z under the Truth in Lending Act requires the lender to disclose your APR, finance charges, and total payments in writing, and it grants a three-day right to rescind on a loan secured by your primary residence (Source: 12 CFR Part 1026 (Regulation Z) / Truth in Lending Act).
• Where to complain: if a lender violates these terms, file a written complaint with the Texas Department of Banking, and you may file concurrently with the Consumer Financial Protection Bureau.
• Tax treatment: under IRS Publication 936, home-equity interest is deductible only when the proceeds buy, build, or substantially improve the home securing the loan, within the acquisition-debt cap, and Texas levies no state income tax to layer on top (Source: IRS Publication 936 (home-mortgage interest deduction)).

Home Equity Loan vs HELOC vs Cash-Out Refinance in Texas

These three products all let you tap equity, but they fit different needs, and in Texas all of them sit under the same 80% combined loan-to-value ceiling.

A fixed-rate home equity loan is the right tool when you know the exact amount you need and want a predictable payment. You receive a lump sum and repay it on a fixed schedule, which makes it ideal for a defined project like a kitchen remodel or a one-time debt consolidation.

A HELOC works better when your spending is spread out or uncertain, such as a phased renovation or ongoing tuition, because it is a revolving line you draw from as needed, usually at a variable rate. Learn more about how the line of credit works for owners here in our guide to the HELOC in Texas.

A cash-out refinance replaces your entire first mortgage with a new, larger loan and hands you the difference in cash; it can make sense when current rates are better than your existing mortgage rate. To weigh that trade-off, see HELOC vs cash-out refinance in Texas. When you are ready to shop offers side by side, compare home equity lenders to see what terms you qualify for.

Finding a Home Equity Loan Lender in Texas

Texas home equity loans are offered by national banks, regional and community banks, credit unions, and online lenders, and because the constitutional rules apply equally to all of them, your shopping focus should be on rate, fees, and service rather than on who can stretch the loan-to-value limit.

Banks often appeal to existing customers and may offer relationship discounts, while credit unions are member-owned and frequently post competitive fixed rates and lower fees, which matters given the 3% Texas fee cap. Online lenders can speed up the application and underwriting process, though you will want to confirm they are experienced with Texas’s specific home-equity requirements, including the 12-day cooling-off period.

To vet any lender, request a written quote showing the APR, all fees rolled into the 3% cap, the term, and the monthly payment so you can compare offers on equal footing. Confirm the lender is licensed to make Texas home-equity loans, read the disclosures required under federal Truth in Lending rules carefully, and verify the loan respects the 80% combined loan-to-value ceiling. The state regulator overseeing many of these lenders is the Texas Department of Banking, which is also where you would direct a complaint if a lender fails to honor the constitutional protections.

Common Home Equity Loan Mistakes to Avoid

• Borrowing the full available equity just because you qualify, instead of only what your project actually requires.
• Ignoring the total interest over the term and focusing only on the monthly payment.
• Stretching the term to lower the payment without realizing how much extra interest a longer term adds.
• Skipping the rate and fee comparison across multiple lenders before signing.
• Treating your home like an ATM for discretionary spending, since the loan is secured by the property itself.
• Overlooking the disclosures and your right to rescind before the closing is final.

Compare Home Equity Loan Rates in Texas

Ready to put a number on your equity? Compare fixed-rate home equity loan offers from Texas lenders side by side to see the APR, fees, and monthly payment you qualify for, all within the state’s 80% loan-to-value cap.

Texas-specific notes

• Median home value: $258,500, a baseline for estimating available equity (at an 80% combined LTV cap). (Source: U.S. Census ACS 2022, DP04)
• State HELOC rule: Texas Constitution Art. XVI §50(a)(6)(E) caps total fees (excluding bona-fide discount points) at 3% of principal; §50(a)(6)(B) caps combined loan-to-value at 80%, with a 12-day cooling-off period and one home-equity loan at a time. (Source: Texas Constitution Art. XVI §50(a)(6))
• State regulator: Texas Department of Banking.