Second Mortgage in Texas

Not when the rental is not your homestead. Article XVI, section 50 of the Texas Constitution allows liens on a homestead only for a closed list of debts, and a lien outside that list is invalid. The Texas home equity rules come from that list: consent of each owner and each owner's spouse, an 80% cap on all debt secured by the homestead against its value, a 2% fee cap with some exclusions, no personal liability, and foreclosure only by court order. Those rules protect the homestead, not a rental you do not live in, so a second lien on a non-homestead rental is an ordinary deed-of-trust lien. The catch is that homestead status turns on use and intent, and title companies can treat a borrower's only Texas residential property as homestead by default, so expect occupancy to be confirmed, not assumed. This is not legal advice; your attorney or title company has the final say on your property. Our Texas investment property second mortgage guide walks through it.

Texas draws the line at purpose. Finance Code chapter 342 defines a secondary mortgage loan as one on real property improved by a dwelling for four or fewer families that is already subject to a lien, but section 342.005 brings a loan under the chapter only if, among other conditions, it is extended primarily for personal, family or household use. The license in section 342.051 attaches to loans subject to that chapter. The residential mortgage licensing chapters, 156 and 157, define a covered loan the same way, through section 180.002(18): a loan primarily for personal, family or household use. Whether a loan is business purpose depends on its facts, which is why we ask what the funds are for and whether you occupy the property. No Texas regulator guidance we found speaks to business-purpose seconds directly, so this is not a licensing opinion. Talk to your attorney about your own structure.

The second can be wiped out, so position matters. Texas courts have held that foreclosure of a senior lien extinguishes junior liens. A deed of trust on a rental is usually foreclosed outside court, under its power of sale and the procedure in Property Code section 51.002: the sale is held on the first Tuesday of the month between 10 a.m. and 4 p.m. at the county courthouse or another place the commissioners court designates, after at least 21 days of notice by posting, filing with the county clerk and certified mail. The extra 20-day notice to cure applies only where the property is the debtor's residence. That is the risk a second lender prices into leverage, and it is why combined loan-to-value counts every lien. For you, it means a second only works while the first mortgage stays current. Read lien position explained before you stack debt. This is not legal advice; your attorney has the final say.

Not on a deed that conveys title: the Texas Constitution bars it. Article VIII, section 29 of the Texas Constitution, added in 2015, says that after January 1, 2016 no law may impose a transfer tax on a transaction that conveys fee simple title to real property. That is a stronger rule than a state simply not having a transfer tax: the Legislature cannot enact one. It speaks to deeds that convey title, so for the deed of trust behind a second, ask your title company for the full recording cost on your documents, line by line, before closing.

The second-lien holder generally has to sign a resubordination agreement. Fannie Mae's Selling Guide says that if subordinate financing is left in place when a first mortgage is refinanced, it requires a resubordination agreement to be signed and recorded, unless state law lets the subordinate lien keep the same position it held behind the old first. Under that rule, the second-lien holder generally has to sign one for the new first to keep its place. Check the first mortgage before you add the second, too: the Fannie Mae and Freddie Mac 1-4 Family Rider required on investment property bars any inferior lien without the first lender's prior written permission, and the federal Garn-St Germain protection for junior liens is limited to a home the borrower occupies. See a second lien behind a DSCR or conventional first.

Not on the basic premium. The Texas Insurance Commissioner is required by Insurance Code section 2703.151 to fix and promulgate title insurance premium rates, so the basic premium on a given policy amount is the same at every title company in the state. Commissioner's Order No. 2025-9697 cut those basic premium rates 6.2% effective March 1, 2026. What you can still compare is escrow service, endorsements and closing-fee items, so pick the title company on how well it closes, not on the premium. Size the combined loan on the second mortgage calculator first.