A Texas homeowner wants to take out a home equity loan on their homestead. Under the Texas Constitution Article XVI §50(a)(6), what is the maximum combined loan-to-value ratio permitted for home equity loans on the homestead?
Correct Answer
C) 80% of the fair market value of the homestead
Under Texas Constitution Article XVI §50(a)(6)(B), a home equity loan on a Texas homestead may not exceed 80% of the fair market value of the homestead on the date the extension of credit is made. This includes all outstanding liens (including the home equity loan itself). This 80% LTV cap is a constitutional protection unique to Texas.
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Previous Question
A Texas homeowner hires a contractor to build a $40,000 addition to their homestead. The homeowner refuses to pay the contractor. Under Texas law, can the contractor place a mechanic's lien on the homestead and force a sale?
Next Question
A single adult in Texas owns a 150-acre rural property where they reside. Under Texas homestead law, how much of this property is protected as a homestead?