Can I use a HELOC to buy my next house in Texas?

A HELOC is a home equity line of credit. It works a bit like a credit card with your house as the collateral. The lender approves a limit, and you draw only what you need, when you need it.

For someone selling and buying, the idea is simple. You tap part of the equity in your current home (what it's worth minus what you owe) for the down payment on the next one. You buy first, move once, sell after, and pay off the line from the sale.

It isn't a bridge loan, though they're cousins. A bridge loan is a short-term loan built for this exact moment. A line of credit is an open account you may or may not use. To compare, here's what a bridge loan is in Texas and when it makes sense.

Why does Texas get its own section here? Because the home you live in, your homestead, is one of the most protected things you own under Texas law. That protection is good news for you. It also means a home equity line here comes with steps and timing that a buyer moving from another state may not expect, and some lenders handle them differently than others.

• A HELOC can fund the down payment on your next home from the equity in this one, without selling first.
• In Texas, lines of credit on the home you live in follow their own rules in the Texas Constitution, Article XVI, Section 50.
• There's a waiting period before the line can close, and closing happens at the office of the lender, an attorney or a title company. So it's planned early.
• The line's payment counts when the lender on your new home decides whether you qualify.
• When your current home sells, the title company pays off the line from the proceeds.

1. Start with a lender conversation. Before you open anything and before you tour homes. Two questions matter most: can this lender open the line for you, and will the lender on your new home accept that money for the down payment? Sometimes it's the same lender, sometimes not.
2. We pin down your home's real value. The bank orders its own appraisal, but knowing your number first saves surprises. Value minus what you owe is your equity; the bank decides how much of it to lend under its rules.
3. Open the line early. Texas requires a waiting period before a loan or line against your homestead can close, and the closing takes place at a lender's, attorney's or title company's office. Also ask your lender whether it will open a line once the house is already listed. The answer changes the order of the steps.
4. Your new lender qualifies you with everything in view. Your current mortgage, the line's payment and the new mortgage. If your income can carry all three for a while, you move forward.
5. You buy and move. The line covers the down payment and whatever costs your lender allows. The title company handles the closing.
6. You sell your current home. At closing, the title company pays off your old mortgage and the line of credit from the proceeds. What's left is yours.

To see whether this option, or another one, fits your dates, answer 5 quick questions here.

It tends to fit when:

• You have solid equity and your current home should sell in a reasonable time.
• Your income can carry more than one payment for a few months. Your lender checks with real numbers.
• You want to move once, and the home you love won't wait for your sale.
• You plan ahead. A line doesn't open in a week, and it shouldn't be opened in a rush.

It usually doesn't fit when you owe close to what the house is worth, when your income barely covers the mortgage you already have, when the house needs major repairs before it can sell, or when you don't yet know what you want to buy. Then a line only adds a payment and a risk. Here's what that means for you: the line is a tool, not an obligation.

In the moves Veronica Yeary guides around Dallas-Fort Worth, this option sits side by side with the others: sell first, buy with a sale contingency, close both the same day, or a bridge loan. Your dates and your numbers choose.

1. Opening the line after you've picked the new house. With the waiting period, it may not be ready in time. Open it before.
2. Thinking the line "doesn't count" because you haven't used it yet. Once you draw it for the down payment, the payment counts. The new lender runs that math, so plan for it from the start.
3. Using the line for other things along the way. Furniture, a remodel, a car. Every dollar you draw is a dollar less in your pocket when you sell.
4. Listing your current home high "since there's time." While it sits, you're paying for more than one thing. The right price on day one is what closes out the line fast.
5. Not asking for the full cost. Get in writing the cost to open the line, how the payment can change, and any fee for closing it early. Nobody signs what they don't understand.

Picture a couple in Plano who want a bigger home in Prosper. They have solid equity, but the down payment is locked inside their current house, and they don't want to move twice.

They talk to a lender first. The lender confirms it can open a line on their home and explains the waiting period and where it closes. The lender on the new home qualifies them counting their mortgage, the line and the new loan. They open the line early, draw it for the down payment, buy and move. Then they list their empty home at the right price. At closing, the title company pays everything off.

This is an example to explain the process, not a real client or a promised result.

• Your real equity: value from real nearby sales, minus your payoff, minus the cost of selling. Run it on the walk-away calculator.
• Whether your lender opens home equity lines in Texas, and how long it takes.
• Whether your new lender accepts that money for the down payment.
• The full cost of the line, in writing.
• How long you can carry more than one payment.
• Your plan if the sale runs long.

To see every option together, read how to sell your house and buy another in Texas: 5 options.

What is a HELOC?

A home equity line of credit. The lender approves a limit and you draw only what you need. Your home is the collateral.

Can I use a HELOC for the down payment on another house in Texas?

In some cases, yes. Your lender confirms whether it can open the line and whether the lender on your new home accepts that money for the down payment. In Texas these lines follow special rules in the state constitution.

How long does it take to open a HELOC in Texas?

There's a required waiting period before closing, plus the time for the appraisal and paperwork. That's why it's planned before you pick the new house. Your lender gives you the dates for your situation.

Does the HELOC payment count when I qualify for the new home?

Yes, once you draw on it. The lender counts your current mortgage, the line's payment and the new mortgage, so it checks first whether your income can carry that stretch.

What happens to the line when I sell my house?

At closing, the title company pays off your mortgage and the line of credit from the sale proceeds. What's left after that is yours.

A line of credit on your home can be the key to moving once, if it's opened early and the numbers are clear.

Here's what happens next: you answer five questions, see which option fits, and if you'd like, we go over it together.

Answer 5 questions and see which option fits you: veronicayeary.com/sell-and-buy

Call or text 469-441-8890 · veronica@veronicayeary.com