Mortgage laws in Texas: closing, disclosures, costs, prepayment and foreclosure

Texas writes its mortgage law into the Constitution: an unlimited-value homestead, a spouse who must sign, and home equity loans bound by the 80 percent, 2 percent and twelve-day rules of Section 50(a)(6). What follows is the state layer — the rules that sit on top of TILA, RESPA and the federal servicing regime when the property is in Texas.

Who closes the loan in Texas

Title companies conduct virtually every Texas closing, and the premium they charge is not negotiable because the Texas Department of Insurance promulgates statewide title insurance rates and forms. No attorney is required at the table, but Government Code § 83.001 reserves the drafting of deeds and deeds of trust to Texas-licensed attorneys, so title companies use lawyer-prepared documents. Funding is wet, with disbursement the day the deed of trust is accepted for recording.

Marital property and homestead rules in Texas

Texas is a community property state under the Family Code, so a home bought during marriage is presumed community property no matter whose name is on the loan, and Family Code § 5.001 requires both spouses to join in any sale or encumbrance of the homestead, which is why the non-borrowing spouse signs the deed of trust. On FHA and VA loans the non-purchasing spouse’s debts are added to the debt-to-income ratio because they are community obligations. Couples wanting survivorship must sign a written community property survivorship agreement under the Estates Code.

Article XVI, Section 50 of the Texas Constitution protects the homestead without any dollar limit, up to ten acres in a city or 100 acres (200 for a family) in the country, and only the liens the Constitution lists can be enforced against it: purchase money, property taxes, home improvement, owelty, home equity loans meeting the 50(a)(6) rules, reverse mortgages and refinances of those liens. The residence homestead exemption for school taxes (Tax Code § 11.13) was raised to $100,000 by voters in 2023 and the legislature moved to raise it again in 2025, so verify the current figure; appraised value for a homestead cannot rise more than 10 percent a year (Tax Code § 23.23), and owners 65 or older get an additional exemption and a school-tax ceiling.

What Texas charges on the note and the deed

Texas has neither a mortgage recording tax nor an intangible tax on the note, and since a 2015 constitutional amendment the state may not impose a real estate transfer tax either. Recording a deed of trust with the county clerk costs a per-page fee, usually well under a hundred dollars for a typical instrument.

Texas has no real estate transfer tax and no mortgage tax; only recording fees apply.

Prepayment penalty law in Texas

The Texas Constitution forbids any prepayment penalty on a home equity loan (Article XVI, § 50(a)(6)(G)), and Finance Code § 302.102 bars prepayment penalties on loans secured by the homestead that carry an interest rate above 12 percent. A standard purchase-money or rate-and-term loan below that rate may carry a penalty only within the federal qualified-mortgage limits, which in practice means almost none do.

Texas’s anti-predatory lending law

Texas relies on the federal HOEPA definition but regulates high-cost home loans in Finance Code chapter 343, subchapter C, which bans balloon payments, negative amortization, default-rate interest and the financing of credit insurance on those loans and requires the borrower to complete counseling before closing. Chapter 343 also forbids a lender from requiring property insurance coverage above the replacement value of the improvements (§ 343.103). The strongest anti-predatory tool, though, remains the constitutional rulebook for home equity lending.

Texas usury law is detailed: the general ceiling is 18% (with higher optional ceilings for larger commercial loans, published weekly by the Consumer Credit Commissioner), and usury penalties are severe; business-purpose hard money lenders stay within the applicable ceiling and treat fees carefully, because Texas courts have treated some fees as interest.

Checking a Texas lender’s license

The Texas Department of Savings and Mortgage Lending licenses mortgage companies, mortgage bankers and residential mortgage loan originators under Finance Code chapters 156, 157 and 180 (the state SAFE Act), while the Office of Consumer Credit Commissioner regulates regulated lenders under chapter 342. Both agencies issue licenses through the NMLS. Owner financing is exempt only within narrow limits, and wrap lenders have had to hold a license since 2022.

Disclosures and cure periods under Texas law

Texas home equity loans under Article XVI, § 50(a)(6) come with rules found nowhere else: a twelve-day notice before closing, a total loan-to-value cap of 80 percent, fees capped at 2 percent of principal (with appraisal, survey and title costs excluded since 2018), a three-day right to rescind after closing, closing only at the lender’s, an attorney’s or a title company’s office, and no more than one home equity loan per year. A § 50(f)(2) refinance of a home equity loan into a regular lien also needs its own twelve-day notice. For default, Property Code § 51.002 requires a twenty-day notice to cure before acceleration and a twenty-one-day notice of sale.

Default and foreclosure: the Texas path

The state’s foreclosure path is non-judicial; budget 2 to 3 months to a sale in an ordinary case, longer if contested. The 20-day cure notice, the 21-day sale notice, and — for home equity loans — the court-order requirement and the constitutional bar on personal liability are Texas’s protections. The full timeline, redemption and mediation rules are on foreclosure in Texas; the investor view — usury, licensing exemptions, recovery speed — on hard money in Texas.

Frequently asked questions

Do I need a lawyer to close a mortgage in Texas?

Title companies conduct virtually every Texas closing, and the premium they charge is not negotiable because the Texas Department of Insurance promulgates statewide title insurance rates and forms. Even where the state does not require one, a borrower may hire independent counsel to review the note, the security instrument and the title commitment.

Does Texas allow prepayment penalties on home loans?

The Texas Constitution forbids any prepayment penalty on a home equity loan (Article XVI, § 50(a)(6)(G)), and Finance Code § 302.102 bars prepayment penalties on loans secured by the homestead that carry an interest rate above 12 percent. Under the federal ATR/QM rule, prepayment penalties are banned on most loans and tightly capped on the few fixed-rate qualified mortgages that may carry them.

What does Texas charge to record a mortgage?

Texas has neither a mortgage recording tax nor an intangible tax on the note, and since a 2015 constitutional amendment the state may not impose a real estate transfer tax either. Texas has no real estate transfer tax and no mortgage tax; only recording fees apply.

Who licenses mortgage lenders in Texas?

The Texas Department of Savings and Mortgage Lending licenses mortgage companies, mortgage bankers and residential mortgage loan originators under Finance Code chapters 156, 157 and 180 (the state SAFE Act), while the Office of Consumer Credit Commissioner regulates regulated lenders under chapter 342. Federally chartered banks and credit unions are exempt from state licensing but their employees are registered in NMLS.

Federal layer: TILA / Reg Z · RESPA · TRID disclosures · ECOA · Fair Housing Act · all federal regulations. Buying here: first-time buyer programs in Texas.