R Concepts Check a claim
Concept · updated 2026-09-29

Home Equity Loans

Every way to borrow against a Texas home: the 80% rule, the best case, the worst case, and who gets paid. Eleven chapters, every claim tagged.

Status: complete first pass

V verified — safe P primary read — safest S secondary — hedge it ? unsourced — never on air

How to Use This

This is the prose layer. The evidence layer is Home Equity Loans. Every claim there carries a confidence tag and a source. Web version: https://concepts.rycolston.com/home-equity-loans/

Rule before you record anything: if a sentence here matters, open Home Equity Loans and check its tag. V and P are safe. S needs a hedge. ? does not get said out loud.

This is Section 2, question 3 of the seller course (RYR-657): the loan side of "Which option is best?" The cash side comes next.

Three ideas from Section 1 run through every chapter: - Every option has a worst case and a best case. The worst case is the part people get paid to leave out. - Staying is a real option. A loan is often how someone stays. - For each option, ask who gets paid, and what they might not tell you.

Table of Contents

  1. Two Ways to Get Money From a House — a loan or cash, and why this chapter is the loan half
  2. The Texas Rule — the 80% line, and why Texas is different
  3. Who Gets Paid on Any Loan — the one pay rule, and what it leaves open
  4. Refinance — with cash, and without
  5. A Second Loan — the lump sum and the line of credit
  6. The Reverse Mortgage — for owners 62 and older
  7. Buy Before You Sell — bridge loans and equity advances
  8. When You Don't Fit the Box — non-QM and hard money
  9. The "Not a Loan" — home equity contracts
  10. Selling Your Rate — letting a buyer take over your loan
  11. What We Still Don't Know

1. Two Ways to Get Money From a House

Evidence: §0.

There are only two ways to get money out of your house. You can borrow against it, or you can sell it. This chapter is the borrowing half.

Borrowing lets you stay. That matters, because in Section 1 we said a good reason to move does not mean you should move. Sometimes the right answer is to keep the house and borrow against it.

But a loan is not free money. It is your house, pledged. Every loan below has a best case and a worst case. Look at both before you sign.

2. The Texas Rule

Evidence: §1.

Texas protects your home more than almost any other state. The Texas Constitution says a lender can only put a lien on your homestead for the reasons it lists. Anything else is void.

If you want cash out of your home in Texas, it has to be a "home equity loan" under Section 50(a)(6). That label comes with rules:

  • The 80% line. Everything you owe on the house, new loan included, cannot go over 80% of what it is worth.
  • You can't be sued for the rest. If the lender forecloses and the house sells short, it cannot come after you personally, unless you lied to get the loan.
  • A judge has to approve a foreclosure.
  • Fees are capped at 2% of the loan, not counting interest, discount points, the appraisal, the survey, and title.
  • One at a time. You can have a first mortgage and one equity loan. Not two equity loans.
  • Wait 12 days from the application or the notice before closing.
  • Once a year. You cannot close a new equity loan within a year of the last one.
  • Three days to change your mind after closing, with no penalty.

Here is the part most people miss. In Texas, a cash-out refinance on your home is one of these equity loans. It gets all of the rules above, no matter what the loan program allows in other states.

And one more: the Texas Attorney General said in 2018 that a VA cash-out refinance is not allowed on a Texas homestead. That is an opinion, not a court ruling. If you are a veteran, get your lender's answer in writing.

3. Who Gets Paid on Any Loan

Evidence: §3.

Federal law says the loan officer cannot be paid more for giving you a worse rate. That is a real protection.

But it does not stop a bigger loan from paying more. The loan officer is paid on the amount. The lender makes money on the rate and any points. The loan is often sold to an investor, and a servicer is paid to collect your payments.

So when someone suggests you borrow more than you need, ask one question: "Who gets paid more if I do?"

4. Refinance

Evidence: §4.1, §4.2, §6.

Rate-and-term refinance. You replace your loan to change the rate or the term. You take little or no cash. It helps if your rate is well above today's. Right now the 30-year average is about 7%. If you locked a 3% rate in 2021, this does nothing for you.

Cash-out refinance. You replace your loan with a bigger one and take the difference in cash. - Best case: one loan, one fixed payment, cash for a real need. - Worst case: you give up a low rate on your whole balance to get a small amount of cash. Cash-out loans also cost a little more. - Who gets paid: the loan officer, on a bigger loan. The lender. The investor who buys it. - In Texas: it is a home equity loan, so the 80% line, the 12-day wait and the once-a-year rule all apply.

5. A Second Loan

Evidence: §4.3, §4.4.

If your first mortgage has a great rate, you may not want to touch it. A second loan sits on top of it.

Home equity loan. A lump sum, usually at a fixed rate. - Best case: keep your low first rate and borrow only what you need. - Worst case: two payments, and the second one has a higher rate.

HELOC (home equity line of credit). A credit line you can draw on, pay back, and draw again. - Best case: you pay interest only on what you use. Good for a remodel paid in stages. - Worst case: the rate usually moves. The CFPB says lenders can freeze or cut the line if your home's value falls. Some plans end with the whole balance due at once. - In Texas: each draw must be at least $4,000. No cards or checks. No fee per draw. And the lender cannot change the terms on its own.

6. The Reverse Mortgage

Evidence: §4.5.

A reverse mortgage is for owners 62 and older. You get money from your equity, and you make no monthly payment. The balance grows over time.

  • Best case: you stay in your home with no house payment. You are never personally on the hook. The lender can only collect by selling the house.
  • Worst case: the loan comes due if you move out, if you are away more than 12 months in a row for health reasons, or if you stop paying taxes or insurance. Your heirs get less equity.
  • Who gets paid: the FHA charges 2% up front and 0.5% a year for insurance. The lender's fee is capped at $6,000. You must see a counselor who is paid by no one in the deal.
  • The limit for 2026: a home value of up to $1,249,125 counts toward the loan.
  • One use most people don't know: a HECM for Purchase lets someone 62 or older buy the next home with a big down payment and no monthly mortgage. Texas allows it.

7. Buy Before You Sell

Evidence: §4.6, §4.7.

Most sellers are also buyers. The hard part is the order.

Bridge loan. A short loan against your current home to buy the next one. - Best case: you make a clean offer with no "if my house sells" condition. - Worst case: your old home doesn't sell, and you carry three payments. Fannie Mae makes the lender prove you can carry all three. - In Texas: we believe a bridge loan on your homestead has to follow the home equity rules. We have not confirmed that with a lender or lawyer yet, so we won't say it on air.

Equity advance programs. Some brokerages advance part of your equity so you can buy first, then sell your old home for you. Orchard's version is called Move First, and it describes the advance as "an interest-free loan." (I work at Orchard. You should know that.) - Best case: one move, a non-contingent offer, and no showings while you still live there. - Worst case: if the old home doesn't sell in time, you may sell it to a backup buyer below market. There are program fees on top of the commission. - Who gets paid: the brokerage, its partner lender, and its title company.

8. When You Don't Fit the Box

Evidence: §2, §4.8, §4.9.

Non-QM loans. "QM" stands for qualified mortgage, a federal set of safe features. A non-QM loan is just a loan that falls outside them. It is legal, and the lender still has to check that you can repay it.

They exist for people whose paperwork doesn't fit: - Self-employed: qualify on 12 or 24 months of bank statements, a profit-and-loss statement, or 1099s. - Retirees with savings: qualify on your assets instead of a paycheck. - Rental owners: a DSCR loan qualifies on the rent the property earns, not your income. - A past foreclosure or bankruptcy: allowed after a waiting period.

  • Best case: a loan the big agencies would not make.
  • Worst case: a higher rate and a bigger down payment. On rentals, a penalty if you sell or refinance early. One lender's guide bans that penalty on your own home.
  • In Texas: a non-QM cash-out on your home is still a home equity loan with all the Texas rules.

Hard money. A short loan from a private lender, priced on the property. In 2026, rates run about 9% to 13.5%, plus 1 to 4 points, for 6 to 18 months, with everything due at the end. - Best case: speed. - Worst case: the big final payment comes due, and you can't refinance or sell in time. - In Texas: we believe it can't go on your homestead. Hard money is for investment property. We will confirm that before we say it on air.

9. The "Not a Loan"

Evidence: §4.10.

Some companies offer cash now for a share of your home's future value. They call it a home equity "investment" and say it is "not debt," with "no monthly payments" and "no interest."

Here is how the government's consumer bureau describes the math. You might get 10% of your home's value today and owe 20% of its value later. That is a 2-times multiple. The company doubles its money before your home gains a dollar. If you sell, their share comes off the full price, and you pay all the selling costs yourself.

The CFPB says the formula "generally ensures that the repayment amount is significantly larger" than the cash you got. The complaints include surprise at the payback, fights over appraisals, and people who felt their only way out was to sell.

The largest national provider does not list Texas as a state where it operates.

10. Selling Your Rate

Evidence: §4.11.

This one is for the seller, not the borrower. If you have a low-rate FHA or VA loan, a buyer may be able to take it over.

  • Best case: your low rate helps sell the house, maybe for more.
  • Worst case: the buyer has to bring cash for all your equity above the loan balance. And if you have a VA loan, your VA benefit stays tied to that house unless the buyer is a veteran who swaps in their own. That can block your next VA loan.
  • Most regular loans can't be taken over. They must be paid off when you sell.

11. What We Still Don't Know

Evidence: "Not covered."

  • Today's average rates on second loans, HELOCs, reverse mortgages and non-QM loans.
  • Whether the Texas rules have changed since 2017.
  • Bridge and hard-money loans on a Texas homestead. We need a Texas lawyer or lender to confirm.
  • Whether any home equity contract company works in Texas.

Until these are checked, they don't go on camera.

Evidence file

Every claim, tagged

The prose above is only as good as the tag on each sentence here. Read the tag before you say the sentence out loud.

Narrative companion: Home Equity Loans - Curriculum — the read-through written to be taught. Web: https://concepts.rycolston.com/home-equity-loans/ Siblings: Mortgage Rates (where the rate comes from), Loan Buydowns (buying the rate down), Builder Rate Buydowns. Built for: RYR-657, seller course Section 2 ("Which option is best?"), question 3: "Walk through every loan option you know. For each: who it is for, the best case, the worst case, and who gets paid." Loan side only. The cash side (selling, cash offers) is a later run.

Home Equity Loans — Evidence File

Every claim below carries a confidence tag. Read the tag before you say the sentence out loud.

Tag Means Safe to teach?
V Verified. Two independent primaries agree Yes
P Primary. I pulled the original document this session and read the sentence Yes — strongest tier
S Secondary. A lender page, trade site or search summary; the original was not opened Only with hedge
? Unsourced. Believed true, never checked No. Do not say on air.

Scope. Texas, 2026, a homeowner who wants money out of (or against) the house without selling it. Owner-occupied homestead unless the line says otherwise. Rates carry an as-of date.

Conflict note. §4.7 covers Orchard's Move First program. Ry works at Orchard. The course must say so wherever it names the program.

0. The one-paragraph answer V

In Texas you can only borrow against your homestead in the ways the Texas Constitution lists, and cash out is one of them with a hard cap: everything owed on the house, new loan included, may not pass 80% of its value. That single rule shapes every option below. Inside it, the choices are: refinance the first loan (with or without cash), add a second loan (lump sum or line of credit), take a reverse mortgage if you are 62 or older, borrow short-term to bridge a move, use a non-standard (non-QM) loan if your income does not fit the usual paperwork, or use private "hard" money on property that is not your homestead. Home equity "investments" are sold as not-a-loan; the CFPB's own description is a lump sum now for a larger lump sum later, and the big national provider does not list Texas. Every option has a worst case. The ones that are hardest to see are the ones people get paid to leave out.

Sources: §1–§4 below.

1. The Texas rule that changes everything P

Source: Texas Constitution, Article XVI, §50, text as published at statutes.capitol.texas.gov (fetched 2026-09-29 through a 2023 Wayback copy; the live site is a JavaScript app that returns no text to curl). The section's history line ends "Subsecs. (a), (f), (g), and (t) amended and (f-1) added Nov. 7, 2017." A later amendment was not checked ?.

1.1 A homestead lien is void unless it is on the list P

"No mortgage, trust deed, or other lien on the homestead shall ever be valid unless it secures a debt described by this section" (§50(c)). The list (§50(a)(1)–(8)) is: purchase money; taxes; owelty (a divorce or partition split); "the refinance of a lien against a homestead"; work and material for improvements; an extension of credit under (a)(6) (the home equity loan); "a reverse mortgage"; and converting a manufactured-home lien.

1.2 The (a)(6) home equity loan — the terms that matter on air P

All quoted from §50(a)(6): - 80% cap: the new loan plus "all other indebtedness secured by valid encumbrances of record against the homestead does not exceed 80 percent of the fair market value" (B). - No personal liability: "without recourse for personal liability against each owner and the spouse of each owner, unless the owner or spouse obtained the extension of credit by actual fraud" (C). - Court order to foreclose: "may be foreclosed upon only by a court order" (D). - 2% fee cap: fees "that exceed, in the aggregate, two percent of the original principal amount" are not allowed, not counting interest, "bona fide discount points," a third-party appraisal, a survey, the state base title premium, or a title exam report (E). - Only one at a time: "is the only debt secured by the homestead at the time the extension of credit is made unless the other debt was made for a purpose described by Subsections (a)(1)-(a)(5) or Subsection (a)(8)" (K). So a first mortgage plus one equity loan is fine; two equity loans are not. - 12-day wait: closed not before "the 12th day after the later of" the application or the lender's notice (M)(i). - Once a year: not before "the first anniversary of the closing date of any other extension of credit described by Subsection (a)(6)" on the same homestead (M)(iii). The Finance Commission's interpretation says the same: "An equity loan may not be closed before the first anniversary of the closing date of any other equity loan secured by the same homestead property" (7 TAC §153.14, via Cornell LII, fetched 2026-09-29). - Where it closes: "only at the office of the lender, an attorney at law, or a title company" (N). - 3-day undo: the owner and spouse "may, within three days after the extension of credit is made, rescind the extension of credit without penalty or charge" (Q)(viii). - Signed value: owner and lender "sign a written acknowledgment as to the fair market value" (Q)(ix). - Lender penalty: a lender that fails to fix a violation "shall forfeit all principal and interest" (Q)(x). - No other collateral: "An equity loan must not be secured by any additional real or personal property other than the homestead" (7 TAC §153.8, Cornell LII, fetched 2026-09-29).

1.3 Refinancing an (a)(6) loan later P

§50(f): a refinance of a homestead debt that includes an (a)(6) loan must itself be an (a)(6) or (a)(7) loan, or meet all of: not closed before the first anniversary; no new money beyond paying off the debt and "actual costs and reserves"; the 80% cap; and a 12-day notice that says, in capitals, "YOUR EXISTING LOAN THAT YOU DESIRE TO REFINANCE IS A HOME EQUITY LOAN… A HOME EQUITY LOAN MAY HAVE A HIGHER INTEREST RATE AND CLOSING COSTS THAN A NON-HOME EQUITY LOAN." Teaching line: once you take cash out in Texas, you can later refinance out of the equity-loan rules after a year, but only if you take no new cash.

1.4 Texas HELOC rules P

§50(t): each draw "is not less than $4,000"; no card, debit card or unsolicited check to draw; fees only at setup, "no fee is charged or collected in connection with any debit or advance"; the 80% cap applies to the maximum line; "the lender or holder may not unilaterally amend"; payments at least monthly, at least the interest during the draw period and "substantially equal" after it.

1.5 Reverse mortgage, Texas definition P

§50(k): made to "a person who is or whose spouse is 62 years or older"; "without recourse for personal liability"; advances "based on the equity in a borrower's homestead" or "for the purchase of homestead property that the borrower will occupy as a principal residence." The second clause is what makes HECM for Purchase legal in Texas.

1.6 A Texas cash-out refinance is an (a)(6) loan V

The constitution allows cash out of a homestead only through (a)(6) (§1.1–1.3 above). Two lender documents say it the same way: Fannie Mae's Selling Guide has a whole section, B5-4.1, "Texas Section 50(a)(6) Loans," and requires the loan be "secured by a single-unit principal residence constituting the borrower's homestead under Texas law. Loans secured by two- to four-unit properties, investment properties, or second homes are not eligible" (B5-4.1-02, fetched 2026-09-29). AD Mortgage's non-QM guide (effective 2026-09-24) calls it "a home equity (or cash-out) loan originated under the provisions of Article XVI, Section 50(a)(6)." So: every cash-out refinance on a Texas homestead carries the 80% cap, the 12-day wait, the once-a-year rule and the rest, no matter what the loan program allows elsewhere.

1.7 VA cash-out is barred on a Texas homestead P

Texas Attorney General Opinion KP-0183 (2018), summary: "Because of the guaranty by the federal government, which is additional collateral, Texas Constitution, article XVI, subsection 50(a)(6)(H) prohibits a U.S. Department of Veterans Affairs cash-out refinance loan." (texasattorneygeneral.gov PDF, fetched 2026-09-29.) Hedge: an AG opinion is persuasive, not a court ruling. Some Texas lenders advertise workarounds S. Do not promise a veteran either way without a lender's written answer.

2. What "QM" and "non-QM" mean P

Source: 12 CFR 1026.43 (Regulation Z, ability-to-repay rule), eCFR as of 2026-09-01, fetched 2026-09-29. - Every lender on a home loan must make "a reasonable and good faith determination at or before consummation that the consumer will have a reasonable ability to repay the loan according to its terms" (§1026.43(c)(1)). - A qualified mortgage (QM) has regular payments that do not grow the balance, no interest-only, no balloon (with small-lender exceptions), a term that "does not exceed 30 years," and points and fees no more than "3 percent of the total loan amount" on loans of about $100,000 or more (indexed) (§1026.43(e)(2)–(3)). The general QM also has a price test: a first lien of about $110,260 or more loses QM status if its rate is "2.25 or more percentage points" above the average prime offer rate. FHA, VA and USDA loans count as QM under their own agencies' rules (§1026.43(e)(4)). - Non-QM is simply a home loan that does not meet those tests. It is still under the ability-to-repay rule. It is not illegal and not automatically bad; it gives the lender less legal protection, so it usually costs more S. - Business-purpose loans are outside Regulation Z: the rule does not apply to "an extension of credit primarily for a business, commercial or agricultural purpose" (12 CFR 1026.3(a)(1)). That is why DSCR rental loans (§4.8) are underwritten on the property's rent, not your income.

3. Who gets paid — the general rules P / S

  • The loan officer cannot be paid more for a worse rate. "No loan originator shall receive and no person shall pay to a loan originator, directly or indirectly, compensation in an amount that is based on a term of a transaction" (12 CFR 1026.36(d)(1)(i)) P. And a broker paid by you cannot also be paid by the lender on the same loan (§1026.36(d)(2)(i)) P.
  • What that leaves: the originator is paid on volume (the loan amount), the lender earns the rate spread and any points, and the loan is often sold to an investor while a servicer collects a fee for handling payments S. A bigger loan still pays the originator more S — the rule caps how they are paid, not whether they want you to borrow.
  • Points: paying points buys a lower rate; see Loan Buydowns §4.4 for break-even P (sibling file).
  • Texas caps fees on equity loans at 2% (§1.2) P, which is one reason some lenders do not offer Texas equity loans at all ?.

4. The options, one by one

Each option: what it is · who it is for · best case · worst case · who gets paid · Texas note.

4.1 Rate-and-term refinance (no cash out)

  • What: a new first loan that pays off the old one to change the rate or term. Fannie Mae calls it "limited cash-out" and allows cash back of no more than "the greater of 1% of the new refinance loan amount or $2,000" (Selling Guide B2-1.3-02, fetched 2026-09-29) P.
  • Who for: someone staying put whose rate is well above today's ?.
  • Best case: a lower payment for the same house ?.
  • Worst case: paying closing costs and restarting a 30-year clock for a small saving ?. Today's 30-year average is 7.03% (Freddie Mac PMMS, week of 2026-09-24) P, so anyone who bought or refinanced in the 2020–2021 lows gains nothing here.
  • Who gets paid: originator, lender, title, appraiser S.
  • Texas note: refinancing an existing (a)(6) loan without cash has its own rules (§1.3) P.

4.2 Cash-out refinance (conventional, FHA, VA)

  • What: a new, larger first loan; the difference comes to you in cash P (Fannie B2-1.3-03 lists "taking equity out of the subject property that may be used for any purpose").
  • Program limits (outside Texas):
  • Conventional: an existing first mortgage being paid off "must be at least 12 months old," and "At least one borrower must have been on title for at least for six months" (Fannie B2-1.3-03) P. Maximum 80% LTV on a one-unit principal residence per Fannie's Eligibility Matrix S (matrix not opened).
  • FHA: HUD cut "Maximum LTV and CLTV percentages from 85 to 80 percent of the Adjusted Value on cash-out refinance mortgages," effective September 1, 2019 (Mortgagee Letter 2019-11) P.
  • VA: the federal rule allows up to "100 percent of the reasonable value" (38 CFR 36.4306) P — but not on a Texas homestead (§1.7) P.
  • Who for: someone with a lot of equity and an old loan whose rate is near or above today's ?.
  • Best case: one loan, one payment, a fixed rate, cash for a real need ?.
  • Worst case: you trade a low rate on the whole balance for today's rate on the whole balance to get a small amount of cash. Cash-out also carries extra pricing (Fannie: "An LLPA applies to certain cash-out refinance transactions") P. Foreclosure risk is on the whole house ?.
  • Who gets paid: originator (on the larger amount), lender, investor, title, appraiser S.
  • Texas note: it is an (a)(6) loan — 80% cap, 12 days, once a year, no personal liability (§1.6) V.

4.3 Home equity loan (closed-end second)

  • What: a second loan, lump sum, usually fixed rate, on top of the first mortgage. CFPB: "A home equity loan (sometimes called a HEL) allows you to borrow money using the equity in your home as collateral… You receive the money from a home equity loan as a" lump sum (consumerfinance.gov, fetched 2026-09-29) P.
  • Who for: someone with a low-rate first mortgage they want to keep ?.
  • Best case: keep the 3% first loan, borrow only what you need at a second-lien rate ?.
  • Worst case: two payments; second-lien rates run higher than first-lien rates S; if values fall you can owe more than the house nets at sale ?.
  • Who gets paid: lender (rate), originator, title S.
  • Texas note: it is an (a)(6) loan; only one allowed at a time; 80% combined cap (§1.2) P. Texas A&M's Real Estate Center: "may have only one home equity loan at a time" (TRERC, fetched 2026-09-29) P.

4.4 HELOC (home equity line of credit)

  • What: a credit line against the house; draw, repay, draw again during a draw period, then a repayment period P (CFPB HELOC brochure; TRERC).
  • Who for: someone with a phased need (a remodel paid in stages) and steady income ?.
  • Best case: interest only on what you use; the first mortgage stays untouched ?.
  • Worst case (CFPB, all P): the rate is "Generally… Variable"; "HELOCs generally permit the lender to freeze or reduce your credit line if the value of your home falls or if they see a change for the worse in your financial situation"; some plans end with the whole balance due at once, "a balloon payment," and "If you are unable to pay the balloon payment in full, you could" lose the home.
  • Who gets paid: lender (rate margin), setup fees S.
  • Texas note (§1.4) P: $4,000 minimum draw, no card or checks, no per-draw fees, the lender cannot change the terms on its own, and payments must at least cover interest during the draw and be "substantially equal" after. The Texas rule against unilateral changes is stronger than the federal default the CFPB describes P (both texts read).

4.5 Reverse mortgage (HECM), including HECM for Purchase

  • What: a loan to an owner 62 or older with no monthly payment; interest and insurance are added to the balance. "The youngest borrower shall be 62 years of age or older at the time of loan closing" (24 CFR 206.33) P. "The borrower shall have no personal liability… The mortgagee shall enforce the debt only through sale of the property" (24 CFR 206.27) P.
  • Limit: for 2026 the HECM "Maximum MCA will be $1,249,125 (150 percent of… Freddie Mac… national conforming limit of $832,750)" (Mortgagee Letter 2025-22) P.
  • Who for: an owner 62+ who wants to age in place, or a 62+ buyer who wants to buy the next home with a large down payment and no mortgage payment (HECM for Purchase; legal in Texas under §50(k)(4)(B)) P.
  • Best case: stay in the home, stop a monthly payment, keep title P (206.27: no personal liability).
  • Worst case (all P): the loan comes due when the home "ceases to be the principal residence," after more than "12 consecutive months" away for illness, or if the borrower "does not provide for the payment of property charges" (taxes, insurance) (24 CFR 206.27(c)). CFPB: "the loan may need to be paid back sooner, such as if you fail to pay property taxes or homeowner's insurance or fail to keep your home in good repair" (consumerfinance.gov reverse mortgages, modified 2026-09-25). The balance grows, so heirs inherit less equity ?.
  • Who gets paid (all P): FHA takes an initial insurance premium of "two percent (2.00%)" of the maximum claim amount and an annual premium of "one-half of one percent (0.50%) of the outstanding mortgage balance" (Mortgagee Letter 2017-12; later changes not checked ?). The lender's origination fee is capped at "the greater of $2,500 or two percent of the maximum claim amount of $200,000, plus one percent of any portion… greater than $200,000," and "may not exceed $6,000" (24 CFR 206.31). Counseling is required from a counselor "not, either directly or indirectly, associated with or compensated by, a party involved in originating, servicing, or funding the HECM" (24 CFR part 206, definition of "HECM counselor").

4.6 Bridge (swing) loan

  • What: a short loan against the current home to buy the next one before the current one sells. Fannie Mae accepts one as a down-payment source if "The bridge loan cannot be cross-collateralized against the new property" and the lender documents "the borrower's ability to successfully carry the payments for the new home, the current home, the bridge loan, and other obligations" (Selling Guide B3-4.3-14) P. Regulation Z exempts "A temporary or “bridge” loan with a term of 12 months or less, such as a loan to finance the purchase of a new dwelling where the consumer plans to sell a current dwelling within 12 months" from the ability-to-repay requirements (12 CFR 1026.43(a)(3)(ii)) P.
  • Who for: a move-up seller with strong income and equity who must buy first ?.
  • Best case: a non-contingent offer on the next house; one move ?.
  • Worst case: the old house does not sell in time and you carry three payments (old mortgage, new mortgage, bridge) — which is exactly what Fannie makes the lender prove you can afford P. Higher rates and fees than a normal mortgage S.
  • Who gets paid: the bridge lender (rate plus points) S.
  • Texas note ? — do not air yet: a bridge loan secured by your current homestead does not appear on the §50(a) list except as an (a)(6) equity loan, so in Texas it likely has to be written as one (80%, 12 days) or secured by something other than the homestead. That is a reading of the text (§1.1 P), not a lender's or lawyer's answer.

4.7 Buy-before-you-sell equity advance (lender / brokerage programs)

  • What: a company advances part of your current home's equity so you can buy first, then sells your old home. Orchard's version: "Move First allows homeowners to buy their new home before they sell, then list for top dollar… get approved for our equity advance: an interest-free loan you can use to make a down payment on your new home" (orchard.com/faq, fetched 2026-09-29) P. If the old home has not sold by the end of the listing timeline, "you may be able to extend your listing period for another 60 days, or choose to sell your home to your pr[ovider]" (same page) P.
  • Who for: a move-up seller who wants one move and a non-contingent offer ?.
  • Best case: no double move, no contingent offer, no showings while you live there P (Orchard FAQ lists these).
  • Worst case: the old home does not sell on the timeline and you sell to the provider's backup offer, which is below market ?; program fees on top of commission. Trade reviews report fees of about 1.9–2.4% with a $9,000 minimum S (HomeLight and other reviews via search; Orchard's own fee page not opened).
  • Who gets paid: the brokerage (commission plus program fee), the affiliated lender ("Orchard at Envoy Mortgage") and title company (Orchard FAQ names both) P.
  • Conflict: Ry works at Orchard. Disclose on air.

4.8 Non-QM loans

All program details from AD Mortgage, "Non-QM Loan Eligibility Guidelines," effective 2026-09-24 (public PDF, fetched 2026-09-29) P unless tagged. One lender's rules; others differ S. - Bank statement: "available for self-employed borrowers only," qualifying on "12-month personal bank statements," 24-month personal, or 12- or 24-month business statements P. - P&L and 1099: listed as documentation types ("Profit and Loss Statement," "1099 Income") P. - Asset utilization (asset depletion): assets "may be used to determine qualifying income as the sole source of income or to supplement other income," from "stocks, bonds, mutual funds, vested amount of retirement accounts and bank account[s]" P. - DSCR (rental): "Debt-Service Coverage Ratio = Gross Income / Proposed PITIA"; below 1.00 the limits tighten, and below 0.75 the maximum is "70% for Purchase and Rate/Term and 65% for Cash-out" P. Business purpose, so outside Regulation Z (§2) P. - Credit events: "Bankruptcy, Foreclosure, Short-Sale, Deed-in-Lieu, Loan Modification, Forbearance, Deferrals and 120+ days delinquent" are "a prior Credit Event," with waiting periods set by the product matrix P. - Prepayment penalties: "Prepayment penalties on primary residence and second home transactions are prohibited"; on investment property a charge may apply "between six (6) months and five (5) yea[rs]" P. - Who for: the self-employed, retirees with assets and little income, investors, and people a few years out from a credit event P (the programs above). - Best case: a loan the standard agencies would not make ?. - Worst case: higher rate and larger down payment than agency loans S; on rentals, a prepayment penalty if you sell or refinance early P. - Who gets paid: lender and broker (often a broker channel), and the investor who buys the loan into a private securitization S. - Texas note: a non-QM cash-out on a homestead is still an (a)(6) loan — AD's guide says so ("must comply with the more restrictive of… Non-QM Underwriting Guidelines or the Texas Sectio[n 50(a)(6)]") P.

4.9 Hard-money / private-money loans

  • What: a short, asset-based loan from a private lender, priced on the property, not your income S.
  • Terms as of 2026: rates about 9–13.5% interest-only, 1–4 points, 6–18 month terms, principal due at the end as a balloon (Texas lender blogs and rate surveys via search, 2026) S.
  • Who for: investors and flippers; a seller who must close a purchase in days S.
  • Best case: speed; a closing in days when a bank would take weeks S.
  • Worst case: the balloon comes due and you cannot refinance or sell in time S; points plus double-digit rates S.
  • Who gets paid: the private lender (points up front plus rate), and often a broker S.
  • Texas note ? — do not air yet: under §50(c) a lien on a homestead is void unless it is on the §50(a) list P. A typical hard-money loan is not, so in Texas it is used on investment or non-homestead property. The reading is ours; confirm with a Texas real estate attorney before saying it.

4.10 Home equity contracts ("home equity investments") — not a loan; the gray area

Source: CFPB, "Issue Spotlight: Home Equity Contracts: Market Overview" (consumerfinance.gov, fetched 2026-09-29). All P. - What: "homeowners get an upfront payment from a company and, in exchange, must repay a single lump sum repayment in the future that is based, in part, on the home's value." Terms "often 10 to 30 years, or when a triggering event such as a home sale occurs." - How it is sold: ads "claim home equity contracts are not debt… 'no monthly payments' and 'no interest,' and are available to homeowners who have no income and low credit scores." - Who gets paid, and how: the company takes a multiple. "A homeowner may get paid 10% of the value of their home in exchange for a 20% stake in their home's future value. This 2x multiple means that the company would double their money before factoring in any home price appreciation." Some contracts cap the payback at a rate "mathematically equivalent to 18% annual interest." The homeowner also pays fees (the CFPB example: "a 4% transaction fee paid to the company and another $2,000 in third-party fees"), and at a sale "the company's share is calculated based on the total sales price, while the consumer is solely responsible for all the costs of selling the home." - Worst case: the formula "generally ensures that the repayment amount is significantly larger than the upfront payment under most home price scenarios." Complaints: "surprise at the size of the repayment amounts, disputes about appraisal values, difficulty with refinancing… and frustration that they felt their only option to get out of the contract was to s[ell]." - Texas note: Hometap's FAQ lists the states where it invests; Texas is not on the list (hometap.com/faqs, fetched 2026-09-29) P. Other providers in Texas: unclear ?.

4.11 Letting a buyer assume your loan (seller side)

  • What: the buyer takes over your existing loan at its rate. Most conventional loans have a due-on-sale clause that federal law lets the lender enforce (Garn-St Germain, 12 U.S.C. 1701j-3, which lists the transfers where a lender "may not exercise its option pursuant to a due-on-sale clause") P.
  • FHA: HUD's FAQ says FHA loans are assumable, with a creditworthiness review for most S (answers.hud.gov returned a script shell to curl).
  • VA: an assumption is "an approved transfer of ownership with a release of liability"; "Original Veteran's entitlement remains tied to the property" unless the buyer is an eligible veteran who substitutes entitlement (VA Loan Guaranty Conference 2023, "Assumptions," slides) P.
  • Who for: a seller with a low-rate FHA or VA loan ?.
  • Best case: a buyer pays more for the house because the rate comes with it ?.
  • Worst case: the buyer needs cash for your whole equity above the loan balance ?; a VA seller whose entitlement stays tied up may not get a new VA loan for the next house P (entitlement line above).
  • Who gets paid: the servicer charges an assumption fee; VA charges an assumption funding fee "unless the assumer is exempt" P (VA slides).

5. Summary table

Option Who for Best case Worst case Who gets paid Texas
Rate-and-term refi Staying, high rate Lower payment Costs for small saving Originator, lender, title (f) rules if replacing an (a)(6)
Cash-out refi Big equity, rate near today's One fixed loan New rate on whole balance Originator (bigger loan), lender, investor Is an (a)(6): 80%, 12 days, 1/yr; no VA
Home equity loan Keep a low first rate Borrow only what you need Two payments, higher rate Lender, originator (a)(6); only one at a time
HELOC Staged needs, steady income Pay only on use Variable rate, freeze, balloon Lender margin, setup fees $4,000 draws; no one-sided changes
Reverse (HECM) 62+, aging in place or buying No monthly payment, no personal liability Due if you move, or skip taxes/insurance FHA 2% + 0.5%/yr; lender ≤ $6,000 §50(k); purchase allowed
Bridge Move-up, must buy first Non-contingent offer Three payments if no sale Bridge lender On homestead, likely must be (a)(6) ?
Equity advance (e.g., Move First) Move-up, one move Buy first, no double move Backup sale below market Brokerage, affiliated lender, title Orchard offers in TX metros
Non-QM Self-employed, asset-rich, investors, credit event A loan the agencies would not make Higher rate; rental prepay penalty Lender, broker, private investor Homestead cash-out still (a)(6)
Hard money Investors, speed Close in days Balloon you cannot refinance Private lender, broker Not on a homestead ?
Home equity contract "No income, low credit" per ads Cash, no monthly payment Payback far larger than cash Company's multiple + fees Hometap not in TX
Loan assumption Seller with low FHA/VA rate Rate sells the house Buyer needs the equity in cash; VA entitlement tied Servicer fee; VA funding fee —

6. Rates today P

Freddie Mac PMMS, week of 2026-09-24: 30-year fixed 7.03%, 15-year 6.42%; two weeks earlier (2026-09-10) 6.76% and 6.09% (PMMS_history.csv, fetched 2026-09-29). Why rates move: Mortgage Rates.

Not covered ? — do not air

  • Current second-lien, HELOC, HECM and non-QM rate averages (no public primary pulled).
  • Any Texas constitutional amendment after November 2017 to §50.
  • Whether HECM MIP rates changed after Mortgagee Letter 2017-12.
  • Bridge and hard-money treatment on a Texas homestead (§4.6, §4.9) — needs a Texas lender or attorney.
  • Fannie Mae's Eligibility Matrix (the 80% conventional cash-out figure is S).
  • USDA, Texas Veterans Land Board loans, 401(k) loans, and personal loans (not secured by the house).
  • The cash side: selling on the market, cash offers, iBuyers (next run).

Method, and what it cost

  • Session 1 (2026-09-29): about 40 curl fetches — statutes.capitol.texas.gov through Wayback (the live site is a JavaScript app), eCFR's versioner API (needs --compressed, or it returns an error asking for compression), Fannie Mae Selling Guide pages, HUD mortgagee letters, the Texas AG opinion PDF, CFPB pages and PDFs, Cornell LII for 7 TAC 153, Orchard and Hometap pages, and one lender's public non-QM guide. Eight WebSearch calls found URLs. No reading agents.
  • New sources for references/sources.md: eCFR versioner API; Texas Constitution via Wayback; Cornell LII for Texas Administrative Code.

Open questions worth chasing

  1. A Texas real estate attorney's answer on bridge and hard-money liens on a homestead.
  2. Which home equity contract providers, if any, write contracts on Texas homesteads, and how they treat §50.
  3. The current HECM MIP rates (check for a mortgagee letter after 2017-12).
  4. Orchard's own Move First fee page (to lift §4.7's fee line from S to P), with the conflict disclosed.