How Much Can You Borrow on an Investment Property HELOC on a Texas Rental?

The Quick Read: The maximum line is the property value times a 70% combined loan-to-value ceiling, minus every lien already on the rental, then limited to a $500,000 line cap.

• Texas’s 80% home-equity cap applies to a borrower’s own homestead, not to a rental.
• On an investment property, the network ceiling is 70% CLTV, with a 700 minimum credit score.
• Lines run $25,000 to $500,000, with a 5-year interest-only draw and a 25-year repayment period.
• Title must sit with an individual or a revocable living trust. An LLC cannot hold it.
• A HELOC is judged on the borrower, not the rent. A DSCR cash-out is the property-level alternative.

The 80% figure gets repeated so often in Texas that investors assume it caps every line. It doesn’t. It comes from the state’s homestead rules, and a rental is not a homestead. The real ceiling comes from the lender’s guidelines, and the real limits are title, credit, and how many liens already sit on the property.

Does the Texas 80% Cap Apply to a Rental?

No. The 80% cap, the 12-day waiting period, and the one-loan-at-a-time rule come from Section 50 of Article XVI of the Texas Constitution, which the Texas Legislative Council publishes. That section protects the “homestead of a family, or of a single adult person,” and home-equity liens are the exception to that protection.

A rental you don’t live in is not your homestead. Those rules don’t reach it.

Here is how the two cases compare on this network.

A Texas primary residence is a separate product. The stricter Texas rules, including 12-month seasoning, bind primary residences only. Texas second homes and investment properties are eligible as non-homestead transactions, subject to lender guidelines.

One edge case needs care. If you moved out of a former home and now rent it, whether it has stopped being a homestead is a legal question. Confirm it with a Texas title attorney or title company before you build a plan around it.

How Is the Maximum Line Calculated?

The maximum line is value times the CLTV ceiling, minus all existing liens, limited to the line cap. NerdWallet’s explainer on investment-property HELOCs describes the same approach and notes that lenders can require more than one appraisal.

Work through it in order.

1. Confirm the property is non-owner-occupied. The line is written as an investment property. If it is not your homestead, the Texas homestead rules don’t govern it.

2. Confirm title. An individual or a revocable living trust works. An LLC does not.

3. Value the property. On this network, lines at or below $500,000 ordinarily run on an automated valuation with no traditional appraisal. Because an investment line caps at $500,000, it sits in that lane, though a higher CLTV can trigger a second valuation and a borrower can ask for a full appraisal.

4. Add up every lien. CLTV counts every loan on the property, including the new line, divided by value.

5. Apply the ceiling. Multiply value by 70%, then subtract the liens.

6. Apply the line cap. The result cannot exceed $500,000.

Three Sizing Examples

These use round numbers as modeled assumptions, not market data.

Healthy equity. Say a rental is worth $800,000 with a first lien of $200,000. The 70% ceiling allows $560,000 in total debt. That leaves $360,000 of room, which is under the $500,000 cap, so the cap doesn’t bind.

Thin equity. Picture a $400,000 rental with a $200,000 first lien. The ceiling allows $280,000 in total debt, so the line tops out at $80,000. That is a long way from a flat 80% of value.

Cap-limited. Consider a $1,200,000 rental with a $100,000 first lien. The ceiling allows $840,000 in total debt, leaving $740,000 of room. The $500,000 line cap binds first.

Stacked liens shrink the number fast. A second lien already on the property comes straight out of the same 70% pool. Check the combined math before borrowing twice against one rental.

What Else Limits the Line?

Credit, income, property type, and exposure all sit alongside the equity math. Strong credit does not lift the 70% ceiling.

• Credit. The investment floor is 700. The investment table is two-tier: 720 and 700 both reach 70% CLTV. A higher score buys eligibility, not leverage.
• Debt load. Debt-to-income tops out at 50%, and the line is qualified on the interest-only payment at the maximum draw. A ratio above 45% needs a 680 minimum, which an investment file clears automatically at 700.
• Property type. Single-family, 2-4 units, PUD, townhome, and condominium (including non-warrantable) are eligible. Manufactured homes, co-ops, condotels, log homes, commercial, mixed-use, and agriculturally zoned properties are not offered.
• Texas specifics. Properties are limited to 10 acres. A property listed for sale, or listed within the past 60 days, is ineligible in Texas.
• Exposure. A borrower is limited to three lines, and an owner with more than 15 financed properties is not eligible.
• Seasoning. The rental must have been owned or refinanced for at least 6 months.

Programs differ by lender, and every file is reviewed individually, subject to lender guidelines.

How Does the Line Behave After Closing?

It is a standalone line in first or second lien position. At least 75% of the line is drawn at closing. The investment structure is a 5-year interest-only draw followed by a 25-year fully amortizing repayment. Pricing floats through both periods and never converts to fixed.

Draws after closing have a minimum, and in Texas it is $4,000. Plan on a floating payment and size the draw with that in mind.

HELOC or DSCR Cash-Out: Which Fits?

They answer different questions. A HELOC is borrower-based underwriting. Credit, debt load, and documented income decide the file, and rent matters far less. A DSCR cash-out qualifies primarily on property-level rental income covering the payment, subject to lender guidelines.

The cash-out route matters in three situations. A rental already deeded to an LLC can’t hold title on the HELOC, so it needs a vesting change first. A larger pull than the line allows needs a refinance, since a cash-out replaces the first lien and can reach more equity than a line capped at $500,000. And a borrower with heavy personal debt may clear the property test more easily than the personal one.

Coverage still matters on the cash-out side. A bigger balance can lower the ratio. A 1.00 coverage ratio is where select programs start, and a separate select-lender path takes coverage below 1.00 with leverage and terms adjusted. Clearing 1.00 is not the same as positive cash flow, because repairs, vacancy, management, and capex sit outside the calculation. Lendmire’s complete DSCR loans guide covers those mechanics.

Where Do Texas Rental HELOC Files Stall?

Most stalls come from four documentation and structure gaps.

Title. A rental held in an LLC is the most common wall. Re-vesting into your name or a revocable trust is one fix. Moving to a cash-out is the other. Each has trade-offs for liability and for how the property sits with your other holdings.

Occupancy evidence. The line is written as non-owner-occupied. Keep leases and rent records clean, and keep the property out of any for-sale listing window.

Lien math. An old second lien or a business line recorded against the property can shrink the line more than expected. Pull a title report and list every lien.

Credit and DTI. The 700 floor is hard. A thin personal profile fails even with abundant equity, because the file is judged on you.

Banks add a separate hurdle. Many simply don’t offer the product on a rental, which is a menu problem and not an equity problem. That scarcity is why a broker placing files across a wholesale network is useful for this loan.

Myths Worth Dropping

“Texas caps every HELOC at 80%.” The cap governs homestead equity loans. It isn’t a rental ceiling.

“Texas bans HELOCs on rentals.” The constitution restricts liens on the homestead. It doesn’t bar a line on a rental.

“Strong credit lifts the cap.” Past 700, the investment ceiling stays at 70% CLTV.

“A HELOC counts the rent like a DSCR loan.” It doesn’t. It is reviewed on you, not on the property’s income.

Market-wide surveys report that some lenders go as high as 80% on investment HELOCs, with many below 70%, per NerdWallet. On this network, the investment ceiling is 70% CLTV.

Key Terms Defined

CLTV: Combined loan-to-value, meaning every loan on the property, including the new line, divided by its value.

Draw period: The stretch when you can borrow from the line and pay interest only, 5 years on an investment line.

Homestead: The home you live in, which Texas protects with its own lending rules.

Non-homestead: A property you don’t live in, such as a rental, which falls outside those rules.

Revocable living trust: A trust you can change, which can hold title on this loan where an LLC cannot.

If you are considering a home equity line and want to see how the numbers work, Lendmire can help you compare HELOC options based on the property, the equity available, credit profile, combined leverage, and your goals. Program availability for this product is limited to Lendmire’s 16 full-service states, which includes Texas, and all figures are subject to lender guidelines. This is not a commitment to lend.

About Lendmire

Lendmire (NMLS# 2371349) is a mortgage broker. Home equity lines of credit — on a primary residence, a second home or an investment property — are arranged through wholesale lenders in Lendmire’s 16 full-service states, and every line is underwritten by the lender under its program guidelines. Scotsman Guide named Lendmire a Top Mortgage Workplace in both 2025 and 2026.

References

1. Texas Legislative Council, Texas Constitution

2. NerdWallet, Can You Get a HELOC on an Investment Property