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

The Quick Read: It depends on which property secures the line: a line on your Texas homestead can reach 80% combined loan-to-value, while a line secured by the rental itself tops out at 70% combined loan-to-value on this network, with a $500,000 maximum line, subject to lender guidelines.

• Homestead line: the cap is 80% of the home’s value, minus the first mortgage and every other lien. Credit and program rules can only lower that number.
• Rental-secured line: the network ceiling is 70% combined loan-to-value, a 700 minimum credit score, and a $500,000 maximum line.
• Homestead rules stop at the homestead: state law does not let a rental secure a homestead-style equity loan, so the two properties follow different rulebooks.
• Using the cash: a homestead line can fund a rental down payment, but the purchase lender decides whether borrowed funds are acceptable, and your home is the collateral.
• Availability: Lendmire brokers these lines through select wholesale partners in its 16 full-service states, and Texas is one of them.

Which Property Is the Title Really Asking About?

The question has two readings, and the answer changes with each one.

Reading A is a line secured by the home you live in, with the cash used toward a rental. Texas homestead law controls the amount. Reading B is a line secured by the rental property. Homestead rules do not apply there, and the lender’s investment-property guidelines set the limit.

The two should not be blended. The rental cannot sit under the homestead’s 80% cap, and a lender cannot stretch the homestead past it. The sections below size each line separately, then combine them.

How Much Can the Homestead Line Be?

The homestead line is capped at 80% of the home’s fair market value, counting every debt secured by the home. The line you can get is 80% of value, minus the first mortgage and any other liens. A lender cannot go above that, no matter how strong the credit is.

On Lendmire’s wholesale network, a Texas primary residence caps at 80% combined loan-to-value. The higher tiers that exist for primary homes in other states never apply to a Texas homestead.

The Texas Constitution sets this ceiling. Article XVI, Section 50 protects the homestead from forced sale except for listed debts, and it sets the conditions for a home equity loan. Under those conditions, a line’s maximum principal plus all other debts secured by the home may not exceed 80% of fair market value on the date the line is established. If the balance later rises above 80% of that fixed value, further advances stop until it falls back.

Here is the sizing in plain steps:

1. Fix the home’s value on the loan date. Lender and owner agree on it in writing.

2. Multiply that value by 80%.

3. Subtract the first mortgage and every other lien of record.

4. What remains is the most the line can be. Credit, debt-to-income, and program rules can reduce it further.

Say a homestead has a first mortgage equal to 50% of its value. The most the line can be is 30% of value, because 80% minus 50% leaves 30%. A homeowner with no mortgage could reach the full 80%, subject to the program’s line-size limits.

What Else Texas Requires on the Homestead Line

A few procedural rules apply on top of the cap. Across the network, these bind primary residences only:

• A 12-day waiting period before closing.
• One lien at a time. If the first mortgage is itself a Texas cash-out loan, a homestead line is generally blocked until that loan is paid off.
• 12-month seasoning on the equity loan.
• A $4,000 minimum subsequent draw after closing in Texas. The usual minimum elsewhere is $1,000.
• A 10-acre limit on Texas properties.

A property listed for sale, or listed within the past 60 days, is ineligible in Texas.

The program also requires that at least 75% of the line is drawn at closing, and pricing floats across the draw and repayment periods without converting to a fixed structure. Primary-residence lines come in two draw structures: a 3-year interest-only draw with 17 years of repayment, or a 5-year draw with 25 years of repayment. Confirm which structure a file carries before running the carrying cost.

Can a Rental Secure a Homestead-Style Line?

No. The Texas A&M Real Estate Research Center explains that Section 50 home equity loans cannot be taken on a secondary residence, a rental, or an investment property, and cannot be secured by additional property beyond the homestead.

That does not mean Texas bans lines on rentals. A rental line is an ordinary lien on non-homestead property, so the 80% homestead cap, the 12-day wait, and the one-lien rule do not apply to it. Texas investment properties are eligible as non-homestead transactions. The lender’s own guidelines set the limits instead, including any rules on where the borrowed cash may be used.

How Much Can the Rental-Secured Line Be?

On this network, an investment-property line caps at 70% combined loan-to-value, with a 700 minimum credit score and a maximum line of $500,000. Credit above 700 buys eligibility, not extra leverage: a 720 profile reaches the same 70% ceiling as a 700 profile.

The sizing math mirrors the homestead, with a lower percentage. Multiply the rental’s value by 70%, then subtract the existing mortgage. A rental with a first mortgage equal to 40% of its value could support a line up to 30% of value, as long as that stays inside the $500,000 cap. Leverage on the first mortgage matters a great deal here, since the existing balance eats into a smaller ceiling.

Some structural points that matter on a rental line:

• Draw structure: investment lines run the 5-year interest-only draw with 25 years of repayment only.
• Valuation: a line capped at $500,000 is ordinarily handled with an automated valuation, often with no traditional appraisal. A borrower may request a full appraisal.
• Title: the individual borrower or a revocable living trust must hold title. LLCs, corporations, partnerships, and irrevocable or land trusts cannot. A rental already deeded to an LLC needs a vesting change, or a DSCR cash-out refinance instead.
• Property types: single-family, 2-4 units, townhomes, PUDs, and condominiums are eligible. Manufactured homes, log homes, condotels, and mixed-use properties are not.
• Exposure: a borrower is limited to three lines in total, and an owner of more than 15 financed properties is not eligible.

Every figure is subject to lender guidelines and full file review.

The Two Lines Side by Side

Worked Example: Funding a Rental Down Payment From the Homestead

Consider an owner whose homestead carries a first mortgage equal to half its value. Under the 80% cap, the owner could open a line up to 30% of value. The owner then plans to buy a rental through a DSCR loan.

Most DSCR purchase files on the network land at 75% to 80% loan-to-value, which means 20% to 25% down. Select high-leverage programs reach 85% with a score around 700 or higher. So the line’s draw would target that down payment, plus reserves, which often run around six months of PITIA but vary by lender, leverage, and loan size.

Here is where this plan gets decided:

• Source of funds. The cash from the line is borrowed money. The purchase lender decides whether documented borrowed funds are acceptable, and the answer varies by program.
• Two debts, one test. The DSCR loan itself still qualifies primarily on property-level rental income covering the payment, subject to lender guidelines. The homestead line has its own test, with debt-to-income capped at 50% and qualification run on the interest-only payment calculated on the maximum draw.
• Coverage is not cash flow. Rent that clears 1.00 against PITIA does not mean positive cash flow. Repairs, vacancy, management, and the line’s own payment sit outside that ratio. The ratio can look fine while the owner pays two debts out of pocket.

BiggerPockets members discussing HELOC-funded down payments note that these down payments are generally permitted and that cash flow must cover the line’s payment. Nasdaq’s SmartAsset explainer warns that missed payments can lead to foreclosure on the primary residence. That is the real cost of using homestead equity: the protection Texas gives the home does not extend to this loan.

A line also fits a short plan better than a long one. If the plan is to refinance the rental or repay the line within a year or two, the structure works. Tying the home to a 30-year hold is a different risk. The complete DSCR loans guide covers how the rental-side loan is sized and what a DSCR file needs.

Is the Property Actually a Homestead?

Texas treats a primary residence as a homestead, and the label controls which cap applies. A short check:

• Do you live there as your primary residence?
• Is it your only homestead claim?
• Is the title in your name or a revocable trust, not an LLC?
• Has the property ever been your homestead and later converted to a rental? A former homestead that is now a rental follows non-homestead rules, and the file should document the change.

A partly owner-occupied property needs careful handling. Lendmire’s piece How to Qualify for an Investment Property HELOC Under Texas Homestead Rules walks through the qualification side in more detail.

Key Terms Defined

Homestead: the Texas home you live in as your primary residence, which state law protects from most forced sales.

Combined loan-to-value (CLTV): all debt secured by the property, divided by its value.

Draw period: the stretch of the line during which you can borrow and pay interest only, before repayment begins.

DSCR: the property’s rent divided by its full housing payment (PITIA), used to qualify a rental purchase loan.

Seasoning: the minimum time you must hold a loan or property before the next transaction.

Common Mistakes

• Applying the homestead 80% cap to a rental line. The rental’s cap is set by lender guidelines, and on this network it is 70%.
• Forgetting the first mortgage. The cap counts every lien, not just the new line.
• Missing the one-lien rule. An existing Texas cash-out loan on the homestead can block a new line.
• Assuming borrowed down-payment cash is always accepted. Confirm with the purchase lender before relying on it.
• Sizing only by equity. A bigger line does not erase credit floors, reserve rules, or property eligibility. The strongest files clear both tests: enough equity and enough rental coverage.

Next Steps

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. An illustrative calculator on this page can give a rough sense of scale. You can also reach the team at 828-256-2183.

About Lendmire

Lendmire — NMLS# 2371349 — is a mortgage broker that arranges home equity lines of credit in its 16 full-service states through wholesale lenders, on primary residences, second homes and investment properties. Every line is subject to the lender’s guidelines and full underwriting. Scotsman Guide named Lendmire a Top Mortgage Workplace in both 2025 and 2026.

References

1. Texas Constitution Art. XVI §50

2. Texas A&M Real Estate Research Center

3. BiggerPockets: HELOC as a down payment for an investment property

4. Nasdaq/SmartAsset: How to Use a HELOC for a Down Payment