Home Equity Estimator
Source: Texas Legislature, SJR 60 (85th Legislature), Texas Constitution Art. XVI §50(a)(6), last checked 2026-10-07. All data sources
What You Need to Know (TL;DR)
The 80% limit applies to home-equity loans, HELOCs, and cash-out refinances. It comes from Texas Constitution Article XVI, Section 50(a)(6). A purchase mortgage can be above 80% loan-to-value. The calculator subtracts the current balance from 80% of value to show what is left for that kind of borrowing.
Understanding the Texas 80% LTV Rule
In many states, banks will allow you to borrow against your home until you have almost 0% equity left. Texas is completely different.
Section 50(a)(6) of the Texas Constitution establishes strict parameters for equity lending. Whether you are getting a cash-out refinance or opening a Home Equity Line of Credit (HELOC), lenders are legally barred from extending credit if it pushes your Loan-to-Value (LTV) ratio over 80%.
The Calculation:
- Home Value: $500,000
- 80% of value: $400,000 (cap for home-equity or cash-out borrowing)
- Current Mortgage: -$320,000
- Usable Equity (Max HELOC): $80,000
Even though this homeowner technically has $180,000 in total equity ($500k - $320k), Texas law only allows them to access $80,000 of it. Read more about Houston Home Equity Trends to see how rising appraisals are increasing borrowing power.
Frequently Asked Questions (FAQ)
What is the Texas 80% home equity rule?
Article XVI, Section 50(a)(6) limits home-equity loans, HELOCs, and cash-out refinances to 80% of fair market value. A purchase mortgage can exceed 80% loan-to-value.
Why does Texas have such strict equity laws?
The cap is a homestead protection on home-equity and cash-out borrowing. It does not require every homeowner to keep 20% equity, because a purchase loan can be above 80% loan-to-value.
Can I use a HELOC for anything in Texas?
Yes, once you secure a Home Equity Line of Credit (HELOC), the funds can be used for anything—home renovations, debt consolidation, or emergency expenses. However, be aware that Texas law requires the initial draw on a HELOC to be at least $4,000.
Can I close on a home equity loan anywhere?
No. Texas law strictly dictates that home equity loans must be closed at the office of a lender, an attorney, or a title company. You cannot do a remote or mail-away closing at your kitchen table for a Texas equity loan.