Financing

Texas Real Estate Financing Exam: Texas Real Estate Salesperson Last Updated: June 2026 --- ## Overview Texas has unique financing rules — particularly around homestead property — that differ from most other states. These distinctions are heavily tested on the Texas exam. Understanding the Texas homestead laws, the deed of trust foreclosure process, and specialty loan programs is essential. --- ## Texas Homestead Law Texas homestead law provides strong constitutional protections to homeowners. ### Constitutional Basis Article XVI, Section 50 of the Texas Constitution governs homestead protections. It restricts liens that can be placed on a homestead. ### Types of Homestead | Type | Description | Size Limit | |---|---|---| | Urban homestead | Located within city limits | Up to 10 acres | | Rural homestead | Located outside city limits | Up to 200 acres (family); 100 acres (single adult) | ### Homestead Protections - A homestead cannot be forced to be sold to pay most debts - Certain liens ARE allowed on a homestead (see below) - Homestead designation is automatic — no formal filing required - Surviving spouse retains homestead rights after death of other spouse ### Liens Allowed on a Homestead | Lien Type | Allowed? | |---|---| | Purchase money mortgage (to buy the property) | Yes | | Home equity loan (Article XVI §50(a)(6)) | Yes, with restrictions | | Home improvement loan | Yes, with restrictions | | Tax liens | Yes | | Mechanic's/materialman's lien (for improvements) | Yes, with written contract signed by both spouses | | Refinance of purchase money mortgage | Yes | | Reverse mortgage | Yes, with restrictions | > Exam Tip: Texas historically prohibited…