Who this guide fits

1. It fits anyone who owns the home they live in, in Texas, whether it has a mortgage or is paid off: people with a bill to pay, a project in mind, a plan for another property, or just curious what their equity is.
2. 62 or older? Section 5 covers reverse mortgages, which have their own Texas rules.
3. Borrowing against a rental or a second home? Texas's home equity rules protect the home you live in. Loans against other property work differently, and this guide doesn't cover them.
4. Bought near the 2022 peak? Start with section 1. Austin prices dipped after 2022, so the equity on paper may be thinner than you think.

What equity is, what you can actually borrow, and what it costs

Say your home is worth $500,000 and you owe $300,000. On paper, you have $200,000 in equity. That sounds like a very accommodating ATM, until you remember the ATM is your house.

Texas puts a ceiling on it. Everything you owe on your home, the new loan plus your current mortgage plus anything else, can't add up to more than 80% of the home's value on the day the new loan closes. In this example, 80% of $500,000 is $400,000. Take away the $300,000 you owe, and about $100,000 is the most you could borrow. Fees rolled into the loan come out of that, and a lender can set a lower limit.

Your equity isn't a fixed number. It's what the house would sell for, minus what you owe, and what it would sell for moves. The Federal Housing Finance Agency tracks what the same Austin-area homes sell for over time. By its count, values fell about 11% from the 2022 peak to mid-2026, but they're still about 44% above early 2020. If you bought before 2020, you likely have a real cushion. If you bought near the top with a small down payment, you may have very little.

There are three common ways to borrow against a Texas home (owners 62 and older have a fourth, a reverse mortgage, in section 5):

1. A home equity loan. One lump sum, usually at a fixed rate, paid back in equal payments. Your first mortgage stays as it is.
2. A home equity line of credit (HELOC). A credit line you draw on as you need it. In Texas each draw has to be at least $4,000, and you can't draw with a credit card, a debit card, or checks the lender sends without your asking. Checks you ask for are fine. The rate usually floats with the prime rate, so the payment can change even if you never draw more. Texas doesn't allow a balloon payment at the end.
3. A cash-out refinance. A new first mortgage that pays off the old one and hands you the difference. In Texas it follows every home equity rule below. It also replaces the rate on everything you owe. If your current mortgage rate is lower than today's, you'd be trading it in.

The Texas rules, in plain words

1. 80% cap on everything owed on the home.
2. A 12-day wait. The loan can't close until the 12th day after you apply or get the lender's state notice, whichever comes later.
3. A final list of fees at least one business day before closing.
4. Closing happens at a lender's, attorney's or title company's office. Not at your kitchen table.
5. 3 days to cancel after closing, with no penalty.
6. One home equity loan a year, and one at a time. A new one can't close until a year after the last one, even if the last one is paid off.
7. Every owner and every spouse signs.
8. Fees capped at 2% of the loan, not counting the appraisal, survey, title policy premium, interest or points.
9. No personal liability. If you stop paying, the lender can take the house through a court order, but it can't come after your other money for the rest, unless there was fraud.
10. A drop in your home's value can't make the loan come due early.
11. The lender has to follow these rules. If it breaks one and doesn't fix it within 60 days after you tell it in writing, it can lose the whole loan.

What it cost the week of 7 October 2026 (national averages; they change weekly):

1. HELOC: 7.33%, variable (Bankrate's survey of large banks). The prime rate it usually follows was 7.00% (Federal Reserve).
2. Home equity loan: 8.56% to 8.66% fixed, for 5 to 15 years (Bankrate).
3. 30-year fixed mortgage: 7.40%, up from 6.30% a year earlier (Freddie Mac). A cash-out refinance puts your whole balance on a new rate.
4. Closing costs: the CFPB says they "can be hundreds or thousands of dollars." Texas caps the counted fees at 2% of the loan, and the appraisal, survey and title policy come on top.

A line of credit's payment can jump. Draw $50,000 at 7.33% and pay interest only: about $305 a month. When the draw period ends and you repay it over 15 years at the same rate: about $459 a month. And while you're paying interest only, every quarter-point rise in the rate adds about $2 a month for every $10,000 you owe. The prime rate moves whenever the Federal Reserve moves its rate.

The interest counts as mortgage interest only if the money goes into the house. Under federal law, interest on a home equity loan counts as mortgage interest only when the money buys, builds or substantially improves the home that secures it, within the $750,000 mortgage limit, and only if you itemize. Paying off cards, tuition or a car doesn't qualify. Money for a rental or a business falls under other tax rules. Ask a tax professional about your own return.

When a home project earns its place: repairs, renovations, energy upgrades, and the pool question

Most people think a remodel pays for itself when you sell. Most don't.

Every year, Cost vs Value, a remodeling trade publication, compares what common projects cost with what they add when the house sells. In its 2025 numbers for Texas, Oklahoma, Arkansas and Louisiana:

1. A new garage door, a steel entry door and stone veneer on the front added more than they cost.
2. A midrange minor kitchen update came back at about 117%.
3. A midrange bathroom remodel came back at about 81%.
4. A midrange major kitchen remodel came back at about 51%, and an upscale one at about 35%.
5. Solar came back at about 30%.

Those are estimates, not sales, and the national numbers show the same pattern: the bigger and fancier the project, the less of it comes back.

Repairs are a different question. A new roof recovers about two-thirds of its cost at sale, but that number doesn't count the damage a failing roof does to everything under it. Borrowing to stop a problem from getting bigger is a different decision from borrowing to make a kitchen nicer.

Energy upgrades lost their federal tax credits. The federal credits for efficiency upgrades and for solar don't apply to work done after 2025. What comes back has to come from lower bills, any rebate your electric company offers, and the sale price.

The pool question. In the National Association of REALTORS' 2023 estimate, a new in-ground pool cost about $90,000 and added about $50,000 at sale, about 56 cents on the dollar. Only 1% of the REALTORS it surveyed said to add one before selling. Then there's the cost of owning it: ENERGY STAR says the pump alone can cost up to $310 a year in electricity, and Angi puts upkeep for an average Austin pool at about $1,400 a year, and chemicals, at $50 to $100 a month, aren't always included. Ask your insurer what a pool does to your policy, too. On a 15-year home equity loan at the 8.65% average (Bankrate, 7 October 2026), $90,000 is about $894 a month, and about $71,000 of what you'd pay is interest. Build a pool because you'll use it every summer, not because it pays you back.

Two things in your favor when the money goes into the house

1. The interest can be deductible if you itemize and the work substantially improves the home that secures the loan. The IRS says repairs that just keep the house in good shape, like repainting, don't count on their own.
2. In Texas, a contractor can put a lien on your homestead only under a written contract. For repairs and remodeling, the contract also has to be signed by you (and your spouse, if you're married) at a lender's, attorney's or title company's office, and it has to give you 3 days to cancel. A contract like that means the house backs the bill, so read it before you sign.

When a bill is pressing: credit cards, medical bills, taxes, escrow and legal costs

This is where Texas law changes the math.

A Texas homestead is protected from forced sale for almost every kind of debt. Credit card debt generally can't take it. Medical bills generally can't take it. Most court judgments can't attach to it. The Texas Constitution lists the debts that can: the loan you used to buy the home, property taxes, written contracts for work on the home, refinances, a few others, and home equity loans. Two more get past the shield: a lien that was on the property before it became your homestead (that's how HOA dues can reach a house when the subdivision's rules were recorded first), and unpaid federal taxes. Behind on either? Get an attorney's advice before you borrow against the house to fix it.

So when you pay off credit cards with a home equity loan, the rate usually drops, and the risk moves to your house. On $20,000 for a year, a card at the 21.19% average (Federal Reserve, August 2026) costs about $4,238 in interest. A line of credit at the 7.33% average (Bankrate, 7 October 2026) costs about $1,466, before closing costs. The federal Consumer Financial Protection Bureau still calls it "risky." The house backs the loan, and in the bureau's words, "Many people don't succeed in paying off their debt by taking on more debt unless they lower their spending." If you do it, decide before you sign how the paid-off cards will stay at zero.

Before you borrow against the house for a bill, check these first

1. Credit cards. A nonprofit credit counselor (look for the National Foundation for Credit Counseling or the Financial Counseling Association of America) can set up a debt management plan. A 2-year personal loan from a bank averaged 11.90% in August 2026 (Federal Reserve), more than a home equity loan, but it generally can't take your house.
2. Medical bills. Ask for the hospital's financial assistance policy and a payment plan. Nonprofit hospitals have to offer financial assistance, can't charge eligible patients more than they bill insured patients, and have to wait at least 120 days after the first bill before reporting it to a credit bureau or putting a lien on property. You have at least 240 days from the first bill to apply for financial assistance.
3. IRS taxes. An IRS payment plan costs nothing to $178 to set up. IRS interest is 7% a year for October to December 2026, plus a late-payment penalty of 0.25% a month while the plan is in place, if you filed on time. That's roughly 10% a year, with no closing costs, no new loan on your house and no 12-day wait. One catch: unpaid federal taxes can become a lien on your home either way. The Texas homestead shield doesn't stop the IRS.
4. Property taxes. First, make sure your homestead exemption is on file: $140,000 off your home's value for school taxes, and $60,000 more if you're 65 or older or disabled. If you're 65 or older or disabled, you can defer homestead property taxes at 5% a year, with no new penalties, until you no longer own and live in the home. The taxes and interest stay a lien on the house and get paid when it's sold or passes to your heirs. Property tax lenders can charge up to 18%, their loans are a lien that can end in foreclosure, and they can't make these loans to owners 65 and older on a homestead with the over-65 exemption.
5. An escrow shortage. Your servicer can spread it over at least 12 months. The shortage usually comes from a higher tax or insurance bill, and a loan doesn't lower either one. Protest your appraisal by May 15 (or within 30 days of the notice, if that's later), and shop your insurance. For scale: Community Impact figures a $500,000 homestead inside Austin and the Austin school district owes about $8,215 for 2026. The Texas Department of Insurance's early figure for the average Texas homeowners policy in 2025 is $3,506, up 76% from 2020.
6. Legal costs. There's no good number for these, and every case is different. Two Texas facts matter: a home equity loan needs every owner's and every spouse's signature, so a dispute between owners can stop one; and a divorce can use its own kind of lien (an owelty lien) so one spouse can keep the house and pay the other for their share. Talk to your attorney before you talk to a lender.

When the plan involves another asset: a rental, land, a second home, a business

It's one of the most common things owners search for: should I use my equity to buy another property?

The math starts against you. Borrowed at 7.33% to 8.66% (the averages in section 1), the new property has to earn more than that, after vacancies, repairs, insurance, taxes and closing costs, before it makes you a dollar. FINRA, which oversees brokerage firms, puts it bluntly: using your home's equity to invest "is always risky", and with borrowed money "you can lose more than your principal."

What changes when the plan is another property

1. Two properties, one home at risk. The new place carries its own costs. The loan that paid for it sits on the home you live in.
2. No mortgage-interest deduction for a vacation home bought this way. The IRS's own example: a home equity loan on your main home used to buy a vacation home isn't deductible. A rental or a business has its own tax rules, so ask a tax professional before you count on a deduction.
3. Raw land usually doesn't pay you while you wait. The taxes keep coming either way.
4. A business has other doors. SBA-backed loans run from $500 to $5.5 million, including microloans up to $50,000. Ask what collateral and personal guarantee the lender wants, then compare that with the house.

If the numbers work with a conservative rent, a repair budget and a few empty months, and you'd still be fine if the property sat empty for a year, then it's worth a deeper look with a lender and a tax professional. If it only works when everything goes right, it doesn't work.

When family or the future needs money: college, a parent's care, a wedding, retirement

These are the hardest ones, because the reason is good. Your kid got in. Your mom needs help. The question isn't whether it matters. It's whether the house is the right place to borrow it from.

College. For loans made from July 2026 to June 2027, the U.S. Department of Education charges 6.52% for undergraduates and 9.07% for parent PLUS loans, fixed. A 10-year home equity loan averaged about 8.66% the week of 7 October 2026 (Bankrate). The rate isn't the whole story. Federal loans are wiped out, tax-free, if the borrower dies or becomes totally and permanently disabled, and a parent PLUS loan is also wiped out if the student dies. They have repayment plans tied to income (a parent PLUS loan, only after it's consolidated). A home equity loan has none of that, and the lien stays on your house. For new loans since July 2026, parent PLUS loans are capped at $20,000 a year and $65,000 per student, so some families will hit a gap. Look at the federal loans first, then look at the gap.

A parent's care. Medicare doesn't pay for long-term custodial care, and the federal LongTermCare.gov site puts the odds that someone turning 65 will need some kind of long-term care at almost 70%. Medicaid may help if your parent qualifies: Medicare.gov says long-term care may be covered "through Medicaid (if you meet eligibility requirements in your state)." That's why so many families look at the house. Two things to know before you do:

1. A reverse mortgage is for the owner, not the child. It's for owners 62 and older, in their own home. There's no monthly loan payment, but the balance grows, and the owner still has to pay the property taxes and insurance and keep the house in good repair. In Texas, the owner and spouse have to get counseling between 180 and 5 days before closing, and closing waits 12 days after a separate state notice.
2. It comes due when the owner dies, sells or moves out. Moving out includes being away in a care facility for more than 12 months in a row. Falling behind on taxes, insurance or upkeep can bring it due too, even while the owner still lives there. So it can help someone stay at home. It can't pay for a permanent move to assisted living. And when it comes due, anyone else living there, family included, has to repay it or move out, unless they're a spouse who qualifies to stay.

For FHA-insured reverse mortgages, HUD's 2026 limit on how much a home's value can count for is $1,249,125.

A wedding. The Knot's survey puts the average 2025 wedding at $34,200, and $37,000 in Austin. Borrowed on a 10-year home equity loan at 8.66%, that's about $427 a month for 10 years and about $17,000 in interest, and none of it is deductible. If it has to be borrowed, it's worth asking whether it has to be that wedding.

Retirement. Borrowing against your house to put money into retirement accounts is the same bet as any investment with borrowed money, and the accounts have yearly limits anyway: the IRS's 2026 limits are $24,500 for a 401(k) and $7,500 for an IRA. If retirement is the worry, the equity you already have is part of your retirement. Leaving it alone (section 6) may be the plan. Already 62 or older and short on income? A reverse mortgage, under the rules above, turns equity into cash with no monthly loan payment, as long as you keep up the taxes, insurance and upkeep.

When doing nothing is the choice

Leaving your equity alone isn't doing nothing. It's choosing to keep it.

It costs nothing: no interest, no fees, no new lien. It's also your cushion. If you sell, it's what you walk away with. If prices dip, as Austin's did after 2022, it absorbs the drop, so you're not owing more than the house is worth. ATTOM's data shows Texas owners who sold in early 2026 had owned their homes about 7 and a half years on average, so a loan you take out is often still there when you sell, and it gets paid off from that same cushion.

About the "just in case" line of credit

1. The CFPB says lenders generally can freeze or cut a line of credit when your home's value falls, which is often exactly when the emergency comes.
2. It costs money to open, even if you never use it. Texas lets a lender charge a line of credit's fees only when the line is opened, never per draw.
3. Texas allows one home equity loan a year, and only one at a time. An unused line can stand in the way of the loan you actually need.

In the Federal Reserve's 2025 survey, 63% of U.S. adults said they'd cover a surprise $400 bill with cash or its equivalent. A few months of savings in the bank is still the emergency fund a lender can't freeze.

Before you borrow: the checklist

Before you borrow against your home, answer these:

• What is it for? Write it down in one sentence. Only money that buys, builds or substantially improves the house can make the interest deductible as mortgage interest. (For: ________)
• Is there a way that doesn't mean a new loan against the house? A hospital's financial assistance, an IRS payment plan, spreading an escrow shortage, a nonprofit credit counselor, federal student loans, an SBA loan, or the property tax deferral for owners 65 and older or disabled.
• What does it cost, all in? The rate, with the date you got it, plus the fees. Texas caps the counted fees at 2%, but the appraisal, survey, title policy premium and any points are extra. (Rate ____ Date ____ Fees ____)
• Can you make the payment if the rate goes up, or when the line of credit's draw period ends? For a reverse mortgage: can you keep paying the taxes, insurance and upkeep?
• How much does Texas allow? 80% of your home's value, minus everything you owe on it.
• Can you wait? At least 12 days to close, 3 days to cancel, and no new home equity loan for a year.
• Does every owner and every spouse agree to sign?
• What happens if the plan doesn't work? The worst case is losing the house. Be sure you can live with that answer. Paying off cards? Decide now what keeps them at zero.
• What's left for an emergency afterward?
• Who else should look at it? A tax professional if you're counting on the deduction. A HUD-approved counselor for a reverse mortgage (counseling is required before closing). A nonprofit credit counselor for debt.