Texas Home Equity Loans and Selling Your House

By Cindy Dunnican | Originally published July 4, 2026 · Updated September 9, 2026

If you've got a home equity loan on your house and you're getting ready to sell, the good news is straightforward: selling isn't complicated by the fact that your loan falls under Texas's Section 50(a)(6) rules. Those rules govern how the loan was made, not how it gets paid off. But understanding what 50(a)(6) actually means can help you make sense of your closing disclosure and avoid confusion at the title company.

Texas is unusual here. It's the only state with a constitutional provision specifically regulating home equity lending, and the protections built into Section 50(a)(6) of Article XVI of the Texas Constitution are more consumer-protective than most other states' rules. I get questions about this regularly from sellers in Rockwall County and across Northeast Dallas who took out a home equity loan years ago and aren't sure how it interacts with their sale.

What makes a 50(a)(6) loan different

A Section 50(a)(6) loan is any loan secured by your homestead where the proceeds can be used for any purpose — unlike a purchase-money mortgage, which is tied directly to buying the home. Because Texas treats homestead protection seriously, the state built specific safeguards into how these loans can be made.

• A capped lender fee. Lender-charged origination fees are capped at 2% of the loan amount, not counting certain third-party costs like the appraisal, survey, and title policy. This cap was reduced from 3% to 2% effective January 1, 2018, following a 2017 constitutional amendment Texas voters approved — so if you're recalling an older "3%" figure, that was the rule before 2018.
• A mandatory waiting period. Closing can't happen sooner than 12 days after you apply and receive the required disclosure. There's also a separate 3-business-day right to cancel after closing.
• One loan at a time. Only one Section 50(a)(6) loan can exist on a homestead at once, and roughly 12 months must pass between home equity loan closings on the same property.
• Specific closing location rules. These loans can only close at the office of the lender, an attorney, or a title company — not at the homeowner's kitchen table or a remote location.

None of these rules are things you need to think about again once the loan is originated. They exist to protect you at the point of borrowing, and they don't create any special hurdle when it's time to sell.

How the payoff actually works at closing

This is where most sellers' real question lives: what happens to this loan when I sell?

If you also have a first mortgage, both payoffs happen simultaneously at closing — the title company coordinates all of it so you don't have to manage separate transactions. This is a routine part of a Texas seller closing timeline, not a special complication tied to the loan type.

Where 50(a)(6) rules show up on the title side

One place the special nature of these loans does surface is in title insurance. Texas requires a home equity loan policy written on specific Texas Land Title Association forms, supplemented by an equity loan mortgage endorsement. Your title company handles this automatically as part of a normal closing — it doesn't require anything extra from you as the seller, but it explains why your closing documents may reference "Texas home equity" language even though you're simply selling, not refinancing.

It's also worth understanding that Texas requires strict compliance with the original 50(a)(6) closing requirements — meaning if there was ever a procedural defect when the loan was originated (for example, it closed somewhere other than a lender's office, an attorney's office, or a title company), it could theoretically affect the lien's validity. This is rare, and it's exactly the kind of thing a title search at the start of your listing process is designed to catch well before closing, not something that should cause concern on its own.

Why this matters if you're thinking about a new home equity loan before selling

Where the 50(a)(6) rules do become relevant to a seller's decision-making is if you're weighing whether to take out or refinance a home equity loan shortly before listing. Because of the one-year rule between home equity closings, a homeowner who took one out recently can't simply refinance into a better rate or larger amount right before selling — that door is closed until roughly 12 months have passed since the last 50(a)(6) closing.

This occasionally surfaces for sellers who are also weighing an assumable mortgage question, or who are trying to decide whether pulling equity out now versus waiting until after the sale makes more financial sense. In most cases, if you're already planning to sell within the next year, taking on a new home equity loan first rarely makes sense — the closing costs and fees are better spent elsewhere, and any cash need is usually better solved by timing the sale itself rather than borrowing against equity you're about to convert to cash anyway.

Agent professional fees are fully negotiable regarding how much and who pays, and that's a separate conversation from any loan payoff mechanics discussed here — happy to walk through both when we talk about your specific numbers.

What to check before you list

A few practical steps make the payoff process smoother once you're ready to sell a home with a 50(a)(6) loan on it.

• Request an informal payoff estimate early. Your servicer can typically give you a rough balance before you're officially under contract, which helps with pricing and net-proceeds planning.
• Confirm there's only one home equity loan on the property. If you've refinanced or taken a second loan at any point, make sure your title company has a complete picture — Texas law only allows one 50(a)(6) loan at a time, so this is rarely an issue, but older or inherited properties sometimes carry surprises.
• Don't assume your rate or fees from origination affect your sale. The 2% fee cap and 12-day waiting period applied when the loan was made. They have no bearing on your closing costs or timeline as a seller today.
• Ask your title company to run a preliminary title search before you list. This is the fastest way to confirm exactly what liens are recorded against the property, including the home equity loan, and to catch any recording issues with enough runway to resolve them before a buyer's closing date is on the calendar.

None of this is meant to suggest a 50(a)(6) loan makes selling harder than a typical mortgage payoff — in the vast majority of cases I see across Rockwall, Heath, Wylie, and Sachse, it's a non-event at closing. The rules exist to protect homeowners while they're borrowing, and once you're on the selling side of the transaction, your title company and lender simply execute a standard payoff.