Texas Private Money Lending:
Licensing, Compliance & Documents

By Anthony Geraci, Managing Partner & CEO, Geraci LLP  |  September 2025

Texas is the second-largest private money lending market in the United States, driven by strong population growth, robust real estate development, and a business-friendly regulatory environment. Major lending markets include Dallas-Fort Worth, Houston, Austin, and San Antonio. Texas's non-judicial foreclosure process and absence of usury limits on commercial loans make it one of the most lender-friendly states in the country.

This guide covers the essential licensing, usury, foreclosure, and document requirements for private money lenders originating loans in Texas.

Related: Usury Laws by State  |  Deed of Trust vs. Mortgage Guide  |  How to Lend in Multiple States

Licensing Requirements

Texas does not require a specific lending license for private money lenders making business-purpose loans secured by real estate. However, lenders who make consumer-purpose loans or act as mortgage brokers must obtain appropriate licenses from the Texas Department of Savings and Mortgage Lending. Most private money lenders in Texas operate without a state lending license because their loans qualify as business-purpose.

Key Compliance Considerations

Texas is a community property state, which affects how liens are created and enforced. Both spouses must typically sign the deed of trust, even if only one spouse is the borrower.

Texas has unique homestead protections under its constitution. Home equity loans on homestead property are subject to strict requirements including a maximum 80% LTV, mandatory 12-day cooling-off period, and restrictions on fees. These rules apply to consumer loans on primary residences — not to business-purpose investment property loans — but lenders must be careful about classification.

Texas uses a deed of trust with power of sale, allowing non-judicial foreclosure. The process requires a minimum 21-day notice period before the foreclosure sale, which occurs on the first Tuesday of the month at the county courthouse.

Deficiency judgments are available in Texas following foreclosure, but the lender must file within two years and the court may reduce the deficiency based on fair market value rather than the foreclosure sale price.

Document Requirements for Texas Private Money Loans

Texas private money loans require a deed of trust as the primary security instrument, along with a promissory note, loan agreement, personal guaranty (for entity borrowers), and state-specific disclosures and compliance riders. For fix-and-flip and construction loans, draw agreements, scope of work exhibits, and completion guarantees are also required.

Automate Loan Docs generates complete, Texas-specific document packages that comply with all applicable state requirements. Every template is drafted by the attorneys at Geraci LLP, whose team has over 30 years of combined experience advising private money lenders across all 50 states — including extensive experience with Texas lending transactions.