Two Items on the Same List, With Very Different Conditions Attached
Program and regulatory figures verified October 10, 2026. Details change; confirm your scenario with us.
The whole Texas divorce-finance conversation turns on which item of one constitutional list a debt falls under. Here are both, verbatim, side by side.
★★ One list, different items
Tex. Const. art. XVI § 50 protects the homestead from forced sale "for the payment of all debts except for" an enumerated list. Two items on that list matter here:
| § 50(a)(3) | § 50(a)(6) | |
|---|---|---|
| What it is | ★★★ an owelty of partition | an extension of credit (home equity) |
| Divorce named in the text? | ★★★ yes, expressly | no |
| Created by | court order or written agreement of the parties | a written agreement with the consent of each owner and spouse |
| ★★★ Loan-to-value cap in the text | ★★★ none stated | ★★★ 80 percent |
| ★★ Fee cap in the text | ★★ none stated | ★★ two percent |
The § 50(a)(6) conditions, verbatim
| Condition | What the constitution says | Sub |
|---|---|---|
| ★★★ Loan-to-value cap | ★★★ "does not exceed 80 percent of the fair market value of the homestead" | (B) |
| ★★ Fee cap | ★★ fees may not "exceed, in the aggregate, two percent of the original principal amount", excluding appraisal, survey, title premium and title examination report | (E) |
| Personal liability | "without recourse for personal liability… unless… actual fraud" | (C) |
| Foreclosure | "may be foreclosed upon only by a court order" | (D) |
| Prepayment | "payable in advance without penalty or other charge" | (G) |
| Other collateral | "not secured by any additional real or personal property" | (H) |
| Acceleration | "may not be accelerated because of a decrease in the market value" | (J) |
| ★★★ Only-debt rule | ★★★ must be "the only debt secured by the homestead… unless the other debt was made for a purpose described by Subsections (a)(1)-(a)(5)" | (K) |
★ That is not the complete list — § 50(a)(6) runs much further, with notice, timing and closing-location requirements we do not reproduce. It is enough to show the shape: this is the most heavily conditioned lien in American home finance.
★★★ Subsection (K) is the clincher
Of all those conditions, (K) is the one that shows the constitution treating the two items as different animals:
"is the only debt secured by the homestead at the time the extension of credit is made unless the other debt was made for a purpose described by Subsections (a)(1)-(a)(5) or Subsection (a)(8) of this section"
★★★ A § 50(a)(6) home-equity loan generally has to stand alone on the homestead — except where the other debt was made for an (a)(1)–(a)(5) purpose. The owelty is (a)(3), squarely inside that range.
★★ So the drafters contemplated an owelty coexisting with homestead debt, and wrote the exception for it. That is a textual point, not an inference from practice.
★★ Why this decides real transactions
A spouse keeping the house has to produce money for the other spouse. If that is done as a § 50(a)(6) home-equity extension of credit, the 80 percent ceiling and the two percent fee cap are live constraints, and in a buyout, where the loan often has to retire the existing mortgage and fund the payment, an 80 per cent ceiling can simply be too low.
★★ The owelty route is a different limb with different conditions. ★★★ That is the reason the mechanism exists in Texas practice, and it is why the structure of a Texas buyout is settled by lawyers before a lender is involved rather than after.
★★★ The hard line on what we will say
We have quoted both subsections because a borrower is entitled to read the rules that govern their own house. We are not:
- ★★★ telling you which subsection your transaction falls under;
- ★★★ telling you how to create, document or close an owelty lien, or in what order;
- ★★ telling you whether a particular lender will finance a particular structure;
- ★ acting as counsel. We are not a law firm and we make no attorney referrals.
★★ In Texas, homestead protection is constitutional and the consequences of getting a lien wrong fall on everyone in the transaction. Your attorney and your title company decide the structure. What the owelty provision says.
Mike Certo, NMLS #260555. (480) 296-6513 · mcerto@cfmtg.com.
Frequently asked questions
What is the 80 percent rule in Texas?
Texas Constitution article XVI section 50(a)(6)(B) requires a home-equity extension of credit to be of a principal amount that, added to other indebtedness secured by the homestead, does not exceed 80 percent of the fair market value of the homestead on the date the credit is extended.Is an owelty lien subject to the Texas 80 percent cap?
The 80 percent cap appears in section 50(a)(6), which governs a home-equity extension of credit. The owelty is a separate item, section 50(a)(3), and the constitution states no loan-to-value cap in that subsection. Which subsection a particular transaction falls under, and how it must be structured, is a question for your attorney and title company.What is the Texas 2 percent fee cap?
Section 50(a)(6)(E) provides that a home-equity extension of credit may not require the owner to pay fees necessary to originate, evaluate, maintain, record, insure or service the credit that exceed, in the aggregate, two percent of the original principal amount, excluding fees for a third-party appraisal, a survey, a state base title insurance premium, and a title examination report in certain circumstances.Can a Texas homestead have a home equity loan and another lien at the same time?
Section 50(a)(6)(K) requires the home-equity loan to be the only debt secured by the homestead unless the other debt was made for a purpose described by subsections (a)(1) to (a)(5) or (a)(8). The owelty of partition is (a)(3), which falls inside that range.Mike Certo · NMLS #260555 · Cornerstone First Mortgage NMLS #173855 · Equal Housing Lender. Educational content about mortgage financing during and after a divorce. Not a loan commitment, and not legal, tax or financial advice. Cornerstone First Mortgage is a lender; it is not a law firm, does not represent any party to a dissolution, does not make attorney referrals, takes no position on how property should be divided, and does not advise on how an owelty of partition should be documented or closed. Texas homestead and property-division rules are set by the Texas Constitution and the Family Code and applied by the courts; homestead tax exemptions are administered by county appraisal districts. Agency requirements described here are Fannie Mae Selling Guide provisions current as of the date shown and are subject to change and to lender overlays. Housing market figures describe the twelve months to August 2026 and are not a forecast. All loans are subject to borrower, property and program qualification.