Buy Your Next Texas Home Before This One Sells
Program and regulatory figures verified September 17, 2026. Details change; confirm your scenario with us.
You found the house. Your current one is not sold. In most states the move here is to tap the equity you already have. Texas writes that option down to a much smaller size, so Texas move-up buyers need a different plan.
Why is buying before selling harder in Texas?
Because the limit is in the state constitution, not in a lender's policy manual. Article XVI, Section 50(a)(6)(B) says a home equity extension of credit, added to the outstanding balance of every other debt secured by that homestead, may not exceed 80 percent of the homestead's fair market value on the day the credit is made. Your existing mortgage counts against that ceiling. Fannie Mae states the same limit from the lending side: the maximum LTV and CLTV for a Texas Section 50(a)(6) loan is 80 percent, notwithstanding any conflicting provision or any Desktop Underwriter recommendation.
Run the arithmetic on a normal Texas move-up owner and the room disappears fast. If you still owe 65 percent of what the house is worth, the constitution leaves you 15 percent, minus closing costs, before you hit the wall. That is rarely a down payment on a bigger house.
Then there are the rules around the rule, and this is the part most people find out too late:
- No second lien behind it. Subordinate HELOC financing is prohibited on a Section 50(a)(6) loan. The stacking move that works in other states is simply unavailable.
- A 12-day floor. The loan may not close before the 12th day after the later of your application or the lender's required notice. In a market where you are trying to perform quickly, twelve days is a real constraint.
- One per year. It may not close before the first anniversary of any other Section 50(a)(6) loan on the same homestead, absent a sworn request during a declared emergency.
- Where you sign is regulated. Closing happens only at the office of the lender, a title company, or an attorney at law.
Texans get something back for all that: the loan is without recourse for personal liability against you or your spouse unless you obtained it by actual fraud, and fees are capped at two percent of the original principal. The protection is real. It is also why the flexibility is not there.
Full detail, with the constitutional citations, is on the Texas 80 percent homestead rule.
What are the three ways to buy first in Texas?
| Structure | Works best when | What it needs |
|---|---|---|
| Bridge financing | You have real equity and a firm timeline for selling | Room under the 80 percent ceiling, or a structure outside Section 50(a)(6) |
| Buy first, recast after | You can close on the new home without the sale proceeds | Other funds or a higher loan amount up front, then a recast once the sale closes |
| Keep it and rent it | The old house cash flows and you are not desperate to sell | Qualifying rental income, documented per Fannie Mae B3-3.1-08 |
The third one surprises people. If your current Texas home would rent for enough, we can often qualify you on that income instead of waiting for a sale, which removes the timing problem entirely. That path is spelled out on keeping your current home as a rental.
What we actually do here
We are a lender. We do not write your offer, advise you on terms, or touch the purchase paperwork; your real estate agent does all of that and should. What we do is tell you, with your real numbers, which of those three structures you qualify for and what the payment looks like on both houses at once. That answer is usually what decides whether you can go after the house you want.
Start with the full Texas guide, or see how the three structures compare.
Frequently asked questions
Can I use my Texas home's equity to buy the next house?
Sometimes, but Texas limits it more than any other state. Everything secured by your homestead, including the mortgage you already have, must fit under 80 percent of the home's fair market value. If you still owe 65 or 70 percent, there is very little room left. We look at your actual numbers first, because for many Texas owners a different structure is the one that works.
Why can't I just get a HELOC behind my mortgage in Texas?
You can have a home equity line in Texas, but you cannot place a subordinate HELOC behind a Section 50(a)(6) home equity loan. Fannie Mae notes this directly: HCLTV ratios do not apply to those loans because subordinate HELOC financing is prohibited. The stacking approach that works elsewhere is not available here.
How fast can a Texas home equity loan close?
Not before the 12th day after the later of the date you submit your application or the date the lender gives you the required notice. That floor is constitutional, so no lender can compress it. If your timeline is shorter than that, we should be looking at a different structure.
Do I have to sell before I can qualify for the new house?
No, and that is the point of this site. If the new payment plus the old one fits your numbers, you qualify on both. If it does not, rental income from the departing home can often close the gap, documented with a lease and a Form 1007 comparable rent schedule. Selling first is one option among several, not a requirement.
Mike Certo · NMLS #260555 · Cornerstone First Mortgage NMLS #173855 · Equal Housing Lender. Educational content about financing, not a loan commitment and not legal, tax, or real estate advice. Texas homestead lending rules, property tax treatment, and loan limits change and depend on your facts; your real estate agent handles the purchase paperwork and your CPA or a Texas attorney handles legal and tax questions. Loans are subject to borrower and property qualification.