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Program 01

Second Mortgage in Waco

A second mortgage on your Waco rental, first mortgage kept.

Our second mortgage lends $50K to $1M against a 1-4 unit rental worth $100K or more, up to 80% combined loan-to-value at fixed rates from 6.99%, and your first mortgage stays in place. Waco, Hewitt and Woodway deals record in McLennan County, and Waco zoning decides where an owner-absent short-term rental can run. Business purpose only, subject to underwriting.

Second Mortgage in Waco, TX from USA Mortgage
$1M
max loan
80%
max CLTV
660
min FICO
3-4 weeks
to close

Typical figures, subject to underwriting and market conditions. Not a commitment to lend.

How it works

We lend against the equity in a rental you already own, as a lump-sum second or a line of credit, so your first mortgage and its rate stay in place. Combined loan-to-value, counting every lien, goes up to 80%, subject to underwriting. The prepayment penalty runs 0 to 5 years. Check that your first mortgage allows a junior lien.

Who it's for
Rental owners who want to keep their first mortgage
Investors funding a down payment or renovation
Non-owner-occupied investment property only, including short-term rentals
Individuals and entities, such as an LLC
Borrowers with a 660 or higher credit score
Business-purpose use of the funds
Typical terms
Loan amount$50K to $1M
Max CLTVUp to 80%
RateFrom 6.99% fixed*
Min FICO660
Property1-4 units, $100K+ value
Closing3-4 weeks
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*Typical terms, subject to underwriting and market conditions.

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Local FAQ

Second Mortgage in Waco, answered.

Does Texas homestead law block a second mortgage on my Waco rental?
No, if the rental is not your homestead. Article XVI, section 50 of the Texas Constitution permits liens on a homestead only for a closed list of debts, and the home equity rules on that list (consent of each owner and spouse, total homestead debt capped at 80% of value, a 2% fee cap with exclusions, foreclosure only by court order) protect the homestead. A rental you do not live in falls outside them, and a second lien on it is an ordinary deed-of-trust lien. Homestead 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 checked, not assumed. This is not legal advice; your attorney or title company has the final say. Terms are on the second mortgage program page, and the Texas investment property second mortgage guide goes deeper.

Sources: texaslegalguide.com, mortgagelaw.com

What does it cost to record a second lien in McLennan County?
$15 for the first page and $4 for each added page. The McLennan County Clerk's schedule, effective January 1, 2024, uses that one rate for deeds of trust, releases and assignments, so a 6-page deed of trust would record for $35 ($15 + 5 x $4), an illustration, not a quote for your documents. The clerk adds $0.25 for each grantor or grantee beyond five, $4 per rider, double for pages larger than 8 1/2 by 14 inches, and a $25 penalty when a deed of trust leaves out the grantee's mailing address. The schedule has no transfer, stamp or deed tax line, and Texas has no transfer tax. Documents need original signatures, an acknowledgment, a document-type heading, a return address and a legal description. County fees are not USAM terms.

Sources: mclennan.gov

What happens to a second lien on a Waco rental if the first is foreclosed?
A first-lien sale can wipe out the second. McLennan County sales are held on the first Tuesday of the month at the McLennan County Courthouse in Waco, usually from 10 a.m., run by the trustee named on each notice rather than the County Clerk, with notices posted 21 days ahead under Property Code section 51.002. The Texas Supreme Court has held that foreclosure of a senior lien extinguishes inferior liens, so a second only holds its value while the first stays current, which is why combined loan-to-value counts every lien. See lien position explained before you stack debt.

Sources: mclennan.gov, codes.findlaw.com

Can I borrow against a Waco short-term rental?
The program accepts them, subject to underwriting, but the zoning and the license have to hold up. Waco does not allow a Type II short-term rental (owner not on site, single-family or duplex) in the R-E, R-1A, R-1B or R-1C districts, and allows it by right in R-2, R-3A through R-3E, O-1 through O-3 and C-4; the special-permit path was removed in June 2021. A current license does not mean the rental can keep operating under a new owner, and grandfathered permits stay valid only for the same person or entity with continuous renewal. An owner outside McLennan County needs a designated operator who lives in the county, and hotel occupancy tax totals 15% (7% city, 6% state, 2% county). Confirm zoning and license status with Development Services before you count on nightly income, including who holds the license if the property sits in an LLC.

Sources: waco-texas.com

Is a second mortgage on a Waco rental a consumer loan under Texas law?
Texas decides that by purpose. Finance Code chapter 342, the secondary mortgage loan chapter, covers a loan only if, among other conditions, it is extended primarily for personal, family or household use, and the residential mortgage licensing chapters use the same test. We found no Texas regulator guidance on business-purpose seconds specifically, so this describes the statutes and is not a licensing opinion. Talk to your attorney about your own structure.

Sources: texas.public.law

What tax bill should I underwrite on a Waco rental before adding a second payment?
The full investor rate, with no homestead relief. A rental gets no homestead exemption and no 10% homestead appraisal cap, and the 2025 combined rate inside Waco comes to about $2.25 per $100 of value (2.2484: McLennan County, McLennan Community College, the city and Waco ISD). Use the full bill when you test whether the rent carries both payments, and run the payment side with the second mortgage calculator. Talk to your CPA about your own figures.

Sources: mclennan.gov

More Second Mortgage questions, answered on the program page

Resources

Guides for Second Mortgage

Second Mortgages · 6 min read
What Is a Second Mortgage on an Investment Property?
Read the guide
Second Mortgages · 6 min read
Second Mortgage vs Cash-Out Refinance on a Rental Property
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Second Mortgages · 5 min read
Second Mortgage vs HELOC on an Investment Property
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Second Mortgages · 6 min read
Investment Property Second Mortgage Requirements: What Lenders Check
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Browse all guides
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About the local figures on this page

Local rules move. Every tax rate, fee, ordinance and market figure here comes from a primary source and carries the date we read it, and we correct them as the rules change. Where a number is mid-change or we could not verify it, we say so rather than guess. Before you commit a budget, confirm anything that drives it with the city or county, and talk to your attorney or CPA on questions of law or tax.

Published by USA Mortgage Funding, LLC, NMLS #152588. Researched from primary sources by our team, drafted with AI assistance, and every figure checked against its source before publishing. Where an answer rests on a public record, that record is linked under it. Figures read on 2026-08-13.

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