HELOC for duplex homstead

Austin, Texas
Private Lending & Conventional Mortgage Advice
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HELOC for duplex homstead

Anthony Tran
Member since 2021 · 11 posts · 0 votes

Looking for a HELOC loan for my duplex homestead. I live in one unit and rent out the other. A lot lenders don't allow 2+ MF/revenue generating units to be considered for HELOC. I know some lenders do allow this but I just need to find one. I'm located in Austin, TX if it helps.

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Kerry BairdPro Member
Rental Property Investor · Melbourne, FL · Member since 2011 · 3k+ posts · 2k+ votes
4y

Texas is a difficult place to get HELOCs due to the homestead protections.  Look at Frost Bank, East West Bank, Hanscom FCU, Trustmark Bank, Veritex, WAFD Bank

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  • Darren Byles
    Investor · Palm Beach · Member since 2021 · 18 posts · 4 votes
    4y

    great question

    0Reply
  • Jordan MoorheadBusiness Member
    Real Estate Agent · Austin, TX · Member since 2015 · 5k+ posts · 3k+ votes
    4y

    Penfed should be able to help

    [email protected]512-888-9122
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  • Kerry BairdPro Member
    Rental Property Investor · Melbourne, FL · Member since 2011 · 3k+ posts · 2k+ votes
    4y

    Texas is a difficult place to get HELOCs due to the homestead protections.  Look at Frost Bank, East West Bank, Hanscom FCU, Trustmark Bank, Veritex, WAFD Bank

    1Reply
  • Anthony Tran
    OP
    Member since 2021 · 11 posts · 0 votes
    4y

    Thank you for the recommendations everyone. What are the homestead protections specifically?

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  • Nick BelskyBusiness Member
    Lender · Orlando, FL · Member since 2021 · 1k+ posts · 704 votes
    4y

    @Anthony Tran

    You will run into what is called circular legislation. No Texas attorney will approve a loan for you. It is impossible to legally cash out or get a HELOC on a duplex that is a primary residence with a homestead on it in Texas. It is a very frustrating set of laws for many investors in Texas as it makes using the equity in your primary Duplex not possible. The catch 22 is that you must have a homestead somewhere in Texas in order to cash out your duplex (you'll need to waive your exemption and move it to another primary). If you rent and don't own, that will also cause issues as Texas will require to allocate the exemption somewhere... it can't be idle and not applied anywhere, even if its a property that cannot qualify for the exemption.

    Totally messed up laws on this in Texas on this issue. Your best bet is to buy another property to make your primary, then move the exemption to your new address, then you can cash out or put a HELOC on your duplex. I had another client who went through the same thing not 6 months ago. To my knowledge, Texas is the only state that has this restriction. The 50a6 laws are no joke and cause a lot of issues for investors.

    Cheers!

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    Belsky Mortgage, LLC521 Reviews
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  • Anthony Tran
    OP
    Member since 2021 · 11 posts · 0 votes
    4y

    Thanks Nick for your thorough answer. My current residence is already filed for a homestead. I called many banks/credit unions and found that PenFed was the only lender who was willing to lend in my situation. If Texas law prohibits HELOCs for multi-family, why are some lenders offering it?

    Thank you! 

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  • Arjun Epu
    Spring, TX · Member since 2015 · 22 posts · 5 votes
    4y

    Try Credit union of texas. CUTX

    0Reply
  • Nick BelskyBusiness Member
    Lender · Orlando, FL · Member since 2021 · 1k+ posts · 704 votes
    4y

    @Anthony Tran

    Texas only prohibits HELOC on Primary Duplexes. You can do it on 3 or 4 units. To be clear, Texas also limits all Cash Outs to 80LTV. No exceptions.

    Lenders offer it on 1-4 unit. You can do a HELOC on a duplex if you DON'T live in it and have your homestead elsewhere.

    Cheers!

    [email protected]
    Belsky Mortgage, LLC521 Reviews
    WebsiteView Page
    1Reply
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