Marcus, a veteran, and his wife Elena own a homestead in Texas with a VA loan. They want to take out a home equity loan on the same property. Under Texas Constitution Article XVI, Section 50, which requirement must be satisfied regarding the combined liens?
Correct Answer
D) The total of all liens, including the VA loan and home equity loan, cannot exceed 80% of the property's fair market value
Under Texas Constitution Article XVI, Section 50(a)(6)(B), the total of all liens on a homestead cannot exceed 80% of the fair market value. This applies regardless of whether the first lien is a VA loan, FHA loan, or conventional loan. Both Marcus and Elena must sign the home equity deed of trust.
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