Here is one of the more surprising housing stories of the fall: U.S. homeowners are holding near-record levels of home equity, yet very few are borrowing against it. Recent reporting on second-quarter 2026 data from Cotality estimates that homeowners hold roughly $11 trillion or more in “tappable” equity, which is the amount that could potentially be accessed while still keeping a cushion in the home. Despite that, only a tiny fraction of it was drawn during the quarter, even as home equity lines of credit and second mortgages grew from the prior quarter.
Why so little equity is being tapped
Higher borrowing costs are a big part of the answer. With 30-year mortgage rates recently climbing back above 7%, many owners are reluctant to replace a low-rate first mortgage with a cash-out refinance. Analysts have also noted that the households with the most housing wealth are often the least likely to borrow against it.
Texas has its own rules
Texas homeowners face some of the most specific home equity rules in the country, set out in the Texas Constitution to protect homesteads. One recent industry analysis even ranked Texas first for untapped equity, attributing part of that to these rules. Generally speaking:
- Total debt secured by your homestead, including the new equity loan, typically cannot exceed 80% of the home’s value.
- Borrowers generally can have only one home equity loan on a homestead at a time and are limited in how often they can take one.
- There are required waiting periods and disclosures before closing.
Your lender and title company will walk you through the specifics, but it is wise to know these limits before you plan around a certain amount of cash.
Three ways to think about your equity
- Stay and borrow carefully. For a major repair, renovation or other planned need, a home equity loan or line of credit may cost less than unsecured borrowing. Compare total costs and terms.
- Stay and leave it alone. Equity is also a financial cushion. Not every owner needs to use it, and keeping it intact is a legitimate choice.
- Sell and redeploy. For some owners, especially those whose homes no longer fit their needs, selling may be the cleanest way to put equity to work toward a better-fitting home, a smaller mortgage, or other goals.
Start with an accurate value
Every one of these decisions depends on knowing what your home is worth today. Online estimates are a starting point, but a local, neighborhood-level market analysis is far more reliable.
This post is educational information, not financial, tax or legal advice. Speak with a qualified lender or financial professional about your situation.
The Audra O’Neal Team provides complimentary home value reviews for owners throughout greater Houston, from the Heights and Memorial to Katy, Cypress, Sugar Land and beyond. Contact us to learn where your equity stands and what your options look like.
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The Audra O’Neal Team | ONTX Realty Partners
Call or Text: 281-972-8200
Email: ONealTeamRocks@gmail.com
Web: http://www.ONealTeamRocks.com
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