How to borrow against a paid-off house: HELOC, loan or cash-out
If your house is paid off, you can usually borrow against it with a HELOC, a home equity loan or a cash-out refinance. With no mortgage to subtract, the most you can borrow is your home's value times the lender's limit: at a common 80% limit, a $350,000 home could support up to $280,000. Which option fits depends on whether you need one lump sum or money in stages, and whether you want a fixed or variable rate.
Owning your home outright gives you the most equity you'll ever have, but it doesn't guarantee approval. Lenders still look at your credit, income and debts. Below is how much you could borrow, how each option works on a home with no mortgage, a worked example, and the special 80% rule in Texas. Limits and rates vary by lender, so comparing several lenders can change both the amount and the cost.
The paid-off formula
Most you can borrow = home value × lender's limit. On a $350,000 home: $280,000 at 80%, $297,500 at 85%, $315,000 at 90%.
Can you borrow against a paid-off house?
Yes. A paid-off home is the simplest case for a lender: there are no other loans on it, so the new loan or line would be the only lien. All three main ways to tap equity are open to you:
- HELOC: a line of credit you draw from as needed, usually at a variable rate.
- Home equity loan: one lump sum at a fixed rate, repaid over a set term.
- Cash-out refinance: a new mortgage on a home that has none, with the loan amount paid to you in cash. Fannie Mae's Selling Guide allows a cash-out refinance where "the borrower owns the property free and clear."
What a paid-off home doesn't do is replace the rest of the application. The lender will still check your credit, verify your income and measure your credit score and debt-to-income ratio against its limits.
How much can I borrow against my paid-off house?
Lenders cap the total of all loans on a home at a percentage of its value, called combined loan-to-value (CLTV). Normally you'd subtract your mortgage from that cap. With a paid-off home there's nothing to subtract, so the whole cap is available:
| Lender limit | $350,000 home | Equity left in the home |
|---|---|---|
| 80% | $280,000 | $70,000 |
| 85% | $297,500 | $52,500 |
| 90% | $315,000 | $35,000 |
Which limit applies depends on the product and the lender. Fannie Mae's Eligibility Matrix (August 5, 2026) caps a cash-out refinance on a one-unit primary home at 80% loan-to-value. HELOC limits are set by each lender: one home equity lender, for example, says you can "borrow up to 90% of your home's value" with its HELOC (accessed October 21, 2026), and higher limits usually require stronger credit. In Texas, every lender is capped at 80%. Our guide on how much equity you can borrow explains the formula in detail, and the home equity calculator runs it for you (enter $0 for what you owe).
HELOC on a paid-off house
A HELOC gives you a credit limit you can draw from during a draw period that the CFPB says could last 10 years, followed by a repayment period. You pay interest only on what you've drawn, not on the full limit. HELOCs usually have a variable rate, typically the prime rate (7.00% as of October 20, 2026) plus a margin set by the lender.
On a paid-off home, a HELOC works well when costs come in stages, such as a renovation paid in phases, or when you want a standby line you may not fully use. The trade-offs: the payment can change with the rate, and the CFPB notes that payments are often much higher once the draw period ends. HELOCs also generally let the lender freeze or reduce the line if your home's value falls or your finances worsen. Read what a HELOC is and how it works for the full picture.
Home equity loan on a paid-off house
A home equity loan pays you one lump sum, usually at a fixed rate, with the same payment every month until it's paid off. It suits one large, known expense where you want certainty. You pay interest on the whole amount from day one, so it's less efficient than a HELOC if you won't need all the money right away. Closing costs vary by lender; the CFPB says closing costs on a home equity loan "can be hundreds or thousands of dollars."
Cash-out refinance on a paid-off house
A cash-out refinance on a paid-off home is really a new first mortgage. Key rules under Fannie Mae's Selling Guide (B2-1.3-03, December 10, 2025):
- Free-and-clear homes qualify. The borrower may own the property outright at the time of the refinance.
- Six months on title. At least one borrower generally must have been on title for at least six months before the loan closes.
- Recent cash buyers. A "delayed financing" exception covers borrowers who bought the home within the past six months, if all its requirements are met.
- 80% maximum for a one-unit primary home (Eligibility Matrix, August 5, 2026).
The upside of a cash-out refinance on a paid-off home: you aren't giving up a low existing rate, which is the usual reason to avoid one. The downsides are cost and size. Freddie Mac says refinancing typically costs 3% to 6% of the loan principal, and you're taking on a full mortgage, often for 15 or 30 years. For a full comparison, see cash-out refinance vs HELOC or the refinance calculator.
HELOC vs home equity loan vs cash-out refinance on a paid-off house
| HELOC | Home equity loan | Cash-out refinance | |
|---|---|---|---|
| How you get money | Draw as needed | Lump sum | Lump sum |
| Rate | Usually variable | Usually fixed | Fixed or adjustable |
| Interest charged on | What you draw | Full amount | Full amount |
| Typical limit | Set by lender | Set by lender | 80% (Fannie Mae, 1-unit primary) |
| Closing costs | Vary; some lenders waive | Vary by lender | Typically 3% to 6% (Freddie Mac) |
| Fits best | Costs in stages, standby cash | One known expense, fixed payment | Large amount over a long term |
Worked example: $100,000 from a $350,000 paid-off home
Say your home is worth $350,000, you own it outright, and you need $100,000. At an 80% limit you could borrow up to $280,000, so $100,000 is about 29% of the value and well inside every limit above. Here's how the payments compare, using current averages and an example HELOC rate:
| Option (example rate) | Monthly payment | Upfront cost |
|---|---|---|
| Cash-out refinance, 30-year at 7.40% | $692 | $3,000 to $6,000 |
| Cash-out refinance, 15-year at 6.71% | $883 | $3,000 to $6,000 |
| HELOC at 8.00%, interest only during the draw | $667 | Varies by lender |
| HELOC at 8.00%, paid off over 10 years | $1,213 | Varies by lender |
Rates used: Freddie Mac's averages of 7.40% (30-year) and 6.71% (15-year) for the week of October 15, 2026, and an example HELOC rate of 8.00% (the 7.00% prime rate as of October 20, 2026, plus a 1.00% example margin). Freddie Mac's survey covers purchase loans, so a cash-out refinance quote may differ. Upfront cost for the refinance uses Freddie Mac's 3% to 6% range. The 30-year loan has the lowest payment but the most total interest: about $149,000 over its full term, compared with about $59,000 on the 15-year. The HELOC's interest-only payment is lower only while the draw period lasts, and the rate can change. Try your own numbers in the HELOC payment calculator or the mortgage calculator.
Borrowing against a paid-off house in Texas
Texas sets a hard ceiling. Under Article XVI, Section 50(a)(6)(B) of the Texas Constitution, a home equity loan plus all other debt on the homestead may not exceed 80% of its fair market value on the day the loan is made. Taking cash out against a Texas homestead, whether through a HELOC, a home equity loan or a cash-out refinance, generally has to follow these home equity rules. On a paid-off $350,000 Texas home, that means a maximum of $280,000, no matter which lender you use. Texas also has a 12-day waiting period before closing and other rules covered in our Texas HELOC guide.
What to weigh before you borrow against a paid-off home
- Your home becomes collateral again. The CFPB's warning on HELOCs makes the stakes plain: "If you fall behind or can't repay the loan on schedule, you could lose your home."
- Your costs don't go away. Property taxes and homeowners insurance continue on top of the new payment.
- Taxes on interest. IRS Publication 936 (2025) says interest on home-secured debt is deductible as mortgage interest only when the money is used to buy, build or substantially improve the home, within the $750,000 limit. Using the money for other purposes means no deduction.
- Borrow what you need, not what you can. A paid-off home can support a large number. Leaving equity untouched keeps a cushion if home values fall or you need cash later.
Frequently asked questions
Can you get a HELOC on a paid-off house?
Yes. Many lenders offer HELOCs on homes with no mortgage. Because nothing is owed, your borrowing room is simply the home's value times the lender's limit. You still have to qualify on credit, income and debts.
How much can I borrow against my paid-off house?
Multiply your home's value by the lender's limit. At 80%, a $350,000 home supports up to $280,000; at 85%, $297,500; at 90%, $315,000. Each lender sets its own limit, and Texas caps every lender at 80%.
Can you do a cash-out refinance on a paid-off house?
Yes. Fannie Mae's Selling Guide allows a cash-out refinance when the borrower owns the property free and clear. For a one-unit primary home, its Eligibility Matrix caps cash-out loans at 80% of the value, and at least one borrower generally must have been on title for six months.
Is a HELOC or a mortgage better on a paid-off house?
It depends on how you will use the money. A cash-out refinance or home equity loan suits one large, known expense you want at a fixed payment. A HELOC suits costs that come in stages, since you pay interest only on what you draw, but its rate is usually variable.
What if I bought my house with cash recently?
Fannie Mae has a "delayed financing" exception for borrowers who bought the home within the past six months, if they meet all its requirements. Ask lenders whether they offer it.
Does LenderMatch check my credit?
No. LenderMatch never pulls your credit. A lender you choose may check it, with your permission, when you apply.
See what lenders could offer on your paid-off home →
Sources
- Fannie Mae Selling Guide, B2-1.3-03 Cash-Out Refinance Transactions (December 10, 2025), and Eligibility Matrix (August 5, 2026)
- Freddie Mac, Primary Mortgage Market Survey: 30-year fixed 7.40%, 15-year fixed 6.71% (week of October 15, 2026); Freddie Mac My Home, "Understanding the costs of refinancing" (accessed October 21, 2026)
- Federal Reserve, H.15 Selected Interest Rates: bank prime loan rate 7.00% (as of October 20, 2026)
- Consumer Financial Protection Bureau, "What is a home equity line of credit (HELOC)?" (last reviewed August 28, 2026), "What you should know about home equity lines of credit" (last updated August 2022), and "What do I need to know about consolidating my credit card debt?" (last reviewed September 2, 2026)
- A home equity lender's variable-rate HELOC page (accessed October 21, 2026)
- Texas Constitution, Article XVI, Section 50(a)(6); 7 Texas Administrative Code 153.45 (accessed October 21, 2026)
- IRS, Publication 936 (2025), Home Mortgage Interest Deduction
Example payments are principal and interest only, calculated by LenderMatch for illustration, and are not rate quotes. They exclude taxes and insurance. Last reviewed October 21, 2026.