<PAGE>
 
                                                                EXHIBIT 10.16(C)

                     THIRD AMENDMENT TO THE LOAN AGREEMENT
                     -------------------------------------


     This THIRD AMENDMENT TO THE LOAN AGREEMENT ("Agreement") is made
                                                  ---------          
effective as of, although not necessarily on, the 15th day of October, 1996, by
and between GUARANTY FEDERAL BANK, F.S.B., a federal savings bank ("Bank") and
                                                                    ----      
HOMEOWNERS MORTGAGE & EQUITY, INC., a Delaware corporation, d/b/a HOME, INC.
                                                                            
("Borrower") and HOMECAPITAL INVESTMENT CORPORATION, a Nevada corporation
----------                                                                 
("Guarantor").
-----------   


                             W I T N E S S E T H :
                             - - - - - - - - - -  


     WHEREAS, on June 1, 1996, Borrower and Bank entered into that certain
Warehouse Loan Agreement (together with all amendments, modifications and
restatements thereof, the "Loan Agreement") dated of even date therewith
                           --------------                               
providing for a $2,000,000.00 credit facility (together with all increases,
collectively, the "Loan").
                   ----   

     WHEREAS, in connection with the execution of the Loan Agreement,
Borrower executed that certain Promissory Note dated of even date (the "Note"),
                                                                        ----   
that certain Security Agreement ("Security Agreement") was executed by Borrower
                                  ------------------                           
and Bank and a Financing Statement filed with the Secretary of State of Texas
(the "Financing Statement");
      -------------------   

     WHEREAS, effective as of July 9, 1996 Bank and Borrower entered into
that one certain First Amendment to the Loan Agreement whereby the loan amount
was increased $10,000,000.00 and certain other changes were made to the loan
documents;

     WHEREAS, effective as of September 17, 1996 Bank and Borrower entered into
that certain Second Amendment to Loan Agreement;

     WHEREAS, Bank, Borrower and Guarantor desire to amend the Loan Documents to
reflect certain changes to the Loan Agreement. All terms not defined herein are
used as defined in the Loan Agreement.

     NOW, THEREFORE, for and in consideration of the premises and the mutual
covenants and agreements contained herein, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
Bank and Borrower hereby agree as follows:

     1.   Loan Agreement.  The following modifications are hereby made to the
          --------------  
Loan Agreement effective as of the date hereof:

          (a)  The first Whereas clause on page 1 of the Loan Agreement is
     hereby modified to replace the figure of "$10,000,000.00" with the figure
     of "$15,000,000.00".

          (b)  The definition of "Commitment" is hereby modified to read in its
                                 ----------                                   
     entirety:

               ""Commitment" as to Bank shall mean the obligation of Bank to
                 ----------    
          make Advances to Borrower pursuant to Section 2.01 hereof in an
                                                ------------
          aggregate amount not to exceed at any one time outstanding the amount
          of $15,000,000.00."

          (c)  The following new definition is added to Section 1.01 in
                                                        ------------         
     alphabetical order:

               ""Guarantor" shall mean HOMECAPITAL Investment Corp., a Nevada
                 ---------                                                     
     corporation, the parent corporation of Borrower."
<PAGE>
 
          (d)  The definition of "Material Adverse Effect" is hereby modified to
                                  -----------------------                       
     read as follows in its entirety:

               ""Material Adverse Effect" shall mean any event or set of
                 -----------------------                                
          circumstances that (i) would have a material adverse effect on the
          validity or enforceability of this Agreement, the Note or any Loan
          Document, (ii) is, or upon the passage of time or happening of an
          event will be, material and adverse to the financial condition or
          business operations of Borrower or Guarantor, or (iii) would
          materially impair the ability of Borrower or Guarantor to fulfill its
          obligations under this Agreement, the Note or any Loan Document to
          which it is a party."

          (e)  The definition of "Maximum Loan Amount" is hereby modified to
                                  -------------------
     read as follows in its entirety:

               ""Maximum Loan Amount" means, at any time, the sum of
                 -------------------
     $15,000,000.00."

          (f)  The definition of "Obligations" is revised to read as follows:
                                  -----------                                

               ""Obligations" shall mean all present and future indebtedness,
                 -----------                                                 
          obligations, and liabilities of Borrower or Guarantor to the Bank, and
          all renewals and extensions thereof, or any part thereof, arising
          pursuant to this Agreement or any other Loan Document or line of
          credit evidenced by the Working Capital Line of Credit and Security
          Agreement (Servicing Secured) by and between Borrower and Bank, and
          all interest accruing thereon, and reasonable attorneys' fees incurred
          in the drafting, negotiation, enforcement or collection thereof,
          regardless of whether such indebtedness, obligations, and liabilities
          are direct, indirect, fixed, contingent, joint, several or joint and
          several."

          (g)  Section 7.11 is hereby modified as follows:
               ------------                               

               Section 7.11 Net Worth.  Borrower's Net Worth shall not be less
                            ---------
          than the sum of (a) $3,000,000.00, (b) 80% of Borrower's Net Income
          for all preceding calendar quarters beginning with the calendar
          quarter beginning on June 30, 1996, plus (c) 100% of all contributions
          to stockholders' equity of Borrower after the date hereof, less all
          fees and costs directly incurred in connection with such contribution.

          (h)  Section 7.13 is hereby modified as follows:
               ------------                               

               "Section 7.13 Adjusted Tangible Net Worth.  Borrower's Adjusted
               ---------------------------                      
          Tangible Net Worth shall not be less than the sum of (a)
          $3,000,000.00, (b) 80% of Borrower's Net Income for all preceding
          calendar quarters beginning in the calendar quarter beginning on June
          30, 1996, plus (c) 100% of all contributions to stockholders' equity
          of Borrower after the date hereof, less all fees and costs directly
          incurred in connection with such contribution."

          (i)  Sections 8.01(b), (c), (d), (e), (f), (g), (h), (i), (j), (l),
               --------------------------------------------------------------
     (m), (n), (o), (x) and (y) are hereby modified to read as follows:
     --------------------------                                        

               "(b) Default is made in the due observance or performance by
          Borrower or Guarantor of any of the other covenants or agreements of
          Borrower or Guarantor contained in this Agreement or in any Loan
          Document; provided, however, with respect to such defaults other those
          specified in Sections 8.01(a), 8.01(c) through 8.01(k), 8.01(p),
                     -----------------------------------------  -------  
          8.01(q) and 8.01(s) through 8.01(y) (for which no notice and
          -------     -------         -------  
          opportunity to cure shall be available unless such opportunity is

                                      -2-
<PAGE>
 
          specifically provided in such individual sections), Borrower shall
          have thirty (30) days after notice of default from Bank within which
          to cure such default;

               (c)  Any statement, warranty or representation by or on behalf of
          Borrower or Guarantor contained in this Agreement or any Loan Document
          or any certificate furnished in connection with this Agreement, proves
          to have been incorrect or misleading as of the date made or deemed
          made and constitutes a Material Adverse Effect;

               (d)  Borrower or Guarantor fails to make when due any payment on
          any other Indebtedness, including but not limited to the Existing
          Indebtedness as shown on Exhibit "G", which failure constitutes a
                                   -----------                             
          Material Adverse Effect;

               (e)  Borrower or Guarantor shall generally not pay its debts as
          they become due or shall admit in writing its inability to pay its
          debts, or shall make a general assignment for the benefit of
          creditors;

               (f)  Borrower or Guarantor shall (i) apply for or consent to the
          appointment of a receiver, trustee, custodian, intervenor or
          liquidator of Borrower or Guarantor or of all or a substantial part of
          Borrower's assets or Guarantor's assets, (ii) file a voluntary
          petition in bankruptcy, (iii) make a general assignment for the
          benefit of creditors, (iv) file a petition or answer seeking
          reorganization or an arrangement with creditors or to take advantage
          of any bankruptcy or insolvency laws, (v) file an answer admitting the
          material allegations of, or consent to, or default in answering, a
          petition filed against Borrower or Guarantor in any bankruptcy,
          reorganization or insolvency proceeding, (vi) allow any of its assets
          to be attached or seized, or (vi) take corporate action for the
          purpose of effecting any of the foregoing;

               (g)  An involuntary petition or complaint shall be filed against
          Borrower or Guarantor seeking bankruptcy or reorganization of Borrower
          or Guarantor or the appointment of a receiver, custodian, trustee,
          intervenor or liquidator of Borrower or Guarantor, or all or
          substantially all of Borrower's assets or Guarantor's assets, and such
          petition or complaint shall not have been dismissed within sixty (60)
          days of the filing thereof; or an order, order for relief, judgment or
          decree shall be entered by any court of competent jurisdiction or
          other competent authority approving a petition or complaint seeking
          reorganization of borrower or appointing a receiver, custodian,
          trustee, intervenor or liquidator of Borrower or Guarantor, or of all
          or substantially all of Borrower's assets or Guarantor's assets;

               (h)  Any default or event of default shall occur under any other
          Indebtedness of Borrower or Guarantor to the Bank including but not
          limited to the line of credit evidenced by the Working Capital Line of
          Credit and Security Agreement (Servicing Secured) by and between
          Borrower and Bank;

               (i)  The failure of Borrower or Guarantor to pay any money
          judgment against Borrower or Guarantor;

               (j)  The failure to have discharged any levy on, seizure,
          attachment, sequestration, or similar proceedings against any of
          Borrower's assets or Guarantor's assets;

               (l)  A Reportable Event or Prohibited Transaction shall have
          occurred with respect to a Plan of Borrower or Guarantor which could
          have a Material Adverse Effect;

                                      -3-
<PAGE>
 
               (m)  A notice of intent to terminate a Plan of Borrower or
          Guarantor under a "distress termination" as described in Section
          4041(c) of ERISA shall be filed which could, in the opinion of the
          Bank, have a Material Adverse Effect;

               (n)  The Plan administrator of Borrower or Guarantor shall
          receive a notice that the PBGC has instituted proceedings to terminate
          a Plan of Borrower or Guarantor or appoint a trustee to administer a
          Plan;

               (o)  Borrower or Guarantor or any ERISA Affiliate of Borrower or
          Guarantor shall withdraw from a multiemployer Plan and the Bank shall
          determine that such withdrawal could have a Material Adverse Effect;

               (x)  If any property of Borrower or Guarantor is seized or
          attached; and

               (y)  If more than 35% of the stock (on an individual or
          cumulative basis) in Borrower is sold, transferred or conveyed to or
          by any party without the prior written consent of the Bank."

          (j)  Exhibit "C" to the Loan Agreement is hereby modified to read as
               ------------     
     shown on Exhibit "A" attached hereto and incorporated herein by this
              -----------
     reference.

          (k)  Schedule H-1 is hereby modified to read as shown on Exhibit "B"
               ------------                                        -----------
     attached hereto and incorporated herein by this reference.

     2.   Note.  Borrower shall execute a new promissory note in the form shown
          ----                                                                 
on Exhibit "A" and incorporated herein by this reference.
   -----------                                           

     3.   Guaranty.  For and in consideration of the increase in the Loan Amount
          --------                                                              
and the changes stated therein to the Loan Documents, Guarantor shall execute a
Guaranty in the form shown as Exhibit "C" and incorporated herein by this
                              -----------                                
reference.

     4.   Acknowledgement by Borrower.  Except as otherwise specified herein,
          ---------------------------                                        
the terms and provisions of the Loan Documents are ratified and confirmed and
shall remain in full force and effect, enforceable in accordance with their
terms.  Borrower hereby acknowledges, agrees and represents that (i) Borrower is
indebted to the Bank pursuant to the terms of the Note; (ii) the liens, security
interests and assignments created and evidenced by the Loan Documents are,
respectively, valid and subsisting liens, security interests and assignments of
the respective dignity and priority recited in the Loan Documents; (iii) the
representations and warranties contained in the Loan Documents are true and
correct representations and warranties of Borrower, as of the date hereof and no
defaults exist under the Loan Documents; and (iv) Borrower has no set-offs,
counterclaims, defenses or other causes of action against the Bank arising out
of the Loan Documents, the modification and extension of the Loan, any documents
mentioned herein or otherwise and to the extent any such set-offs,
counterclaims, defenses or other causes of action may exist, whether known or
unknown, such items are hereby waived by Borrower.

     5.   Acknowledgement by Guarantor.  Except as otherwise specified herein,
          ----------------------------                                        
the terms and provisions of the Loan Documents are ratified and confirmed and
shall remain in full force and effect, enforceable in accordance with their
terms.  Guarantor hereby acknowledges, agrees and represents that (i) Guarantor
is indebted to the Bank pursuant to the terms of the Note; (ii) the liens,
security interests and assignments created and evidenced by the Loan Documents
are, respectively, valid and subsisting liens, security interests and
assignments of the 

                                      -4-
<PAGE>
 
respective dignity and priority recited in the Loan Documents; (iii) the
representations and warranties contained in the Loan Documents are true and
correct representations and warranties of Guarantor, as of the date hereof and
no defaults exist under the Loan Documents; and (iv) Guarantor has no set-offs,
counterclaims, defenses or other causes of action against the Bank arising out
of the Loan Documents, the modification and extension of the Loan, any documents
mentioned herein or otherwise and to the extent any such set-offs,
counterclaims, defenses or other causes of action may exist, whether known or
unknown, such items are hereby waived by Guarantor.

     6.   No Waiver of Remedies.  Nothing contained in this Agreement shall
          ---------------------                                            
prejudice, act as, or be deemed to be a waiver of any right or remedy available
to the Bank by reason of the occurrence or existence of any fact, circumstance
or event constituting a default under the Note or the other Loan Documents.

     7.   Costs and Expenses.  Contemporaneously with the execution and delivery
          ------------------                                                    
hereof, Borrower shall pay, or cause to be paid, all costs and expenses incident
to the preparation, execution and recordation hereof and the consummation of the
transaction contemplated hereby, including, but not limited to, recording fees
and reasonable fees and expenses of legal counsel to the Bank.  The attorney's
fees and expenses of the Bank's law firm, Jackson & Walker, L.L.P., shall be
paid simultaneously with the execution of this Agreement.

     8.   Additional Documentation.  From time to time, Borrower shall execute
          ------------------------                                            
or procure and deliver to Bank such other and further documents and instruments
evidencing, securing or pertaining to the Loan or the Loan Documents as shall be
reasonably requested by the Bank so as to evidence or effect the terms and
provisions hereof.

     9.   Effectiveness of the Loan Documents.  Except as expressly modified by
          -----------------------------------                                  
the terms and provisions hereof, each of the terms and provisions of the Loan
Documents are hereby ratified and shall remain in full force and effect;
provided, however, that any reference in any of the Loan Documents to the Loan,
the amount constituting the Loan, any defined terms, or to any of the other Loan
Documents shall be deemed, from and after the date hereof, to refer to the Loan,
the amount constituting the Loan, defined terms and to such other Loan
Documents, as modified hereby.

     10.  GOVERNING LAW.  THE BORROWER HEREBY AGREES THAT THE OBLIGATIONS
          -------------                                                  
CONTAINED HEREIN ARE PERFORMABLE IN DALLAS COUNTY, TEXAS.  ALL PARTIES HERETO
AGREE THAT (I) ANY ACTION ARISING OUT OF THIS TRANSACTION MAY BE FILED IN DALLAS
COUNTY, TEXAS, (II) VENUE FOR ENFORCEMENT OF ANY OF THE OBLIGATIONS CONTAINED IN
THE LOAN DOCUMENTS SHALL BE IN DALLAS COUNTY, TEXAS, (III) PERSONAL JURISDICTION
SHALL BE IN DALLAS COUNTY, TEXAS, (IV) ANY ACTION OR PROCEEDING UNDER THIS
AGREEMENT OR ANY OTHER LOAN DOCUMENT MAY BE COMMENCED AGAINST BORROWER IN DALLAS
COUNTY, (V) SUCH ACTION MAY BE INSTITUTED IN THE COURTS OF THE STATE OF TEXAS
LOCATED IN DALLAS COUNTY, TEXAS OR IN THE UNITED STATES DISTRICT COURT FOR THE
NORTHERN DISTRICT OF TEXAS LOCATED IN DALLAS COUNTY, TEXAS, AT THE OPTION OF THE
BANK AND (VI) THE BORROWER HEREBY WAIVES ANY OBJECTION TO THE VENUE OF ANY SUCH
SUIT, ACTION OR PROCEEDING AND ADDITIONALLY WAIVES ANY RIGHT IT MAY HAVE TO BE
SUED ELSEWHERE.  NOTHING HEREIN SHALL AFFECT THE RIGHT OF EACH BANK TO
ACCOMPLISH SERVICE OF PROCESS IN ANY OTHER MANNER PERMITTED BY LAW.

     11.  Time.  Time is of the essence in the performance of the covenants
          ----                                                             
contained herein and in the Loan Documents.

     12.  Binding Agreement.  This Agreement and the Loan Documents shall be
          -----------------                                                 
binding upon the heirs, executors, administrators, personal representatives,
successors and assigns of the parties hereto; provided, however, the foregoing
shall not be deemed or construed to (i) permit, sanction, authorize or condone
the assignment of all or any part of the Collateral or any of Borrower's rights,
titles or interest in and to the Collateral or any rights,


                                      -5-
<PAGE>
 
titles or interests in and to Borrower, except as expressly authorized in the
Loan Documents, or (ii) confer any right, title, benefit, cause of action or
remedy upon any person or entity not a party hereto, which such party would not
or did not otherwise possess.

     13.  Headings.  The section headings hereof are inserted for convenience of
          --------                                                              
reference only and shall in no way alter, amend, define or be used in the
construction or interpretation of the text of such section.

     14.  Construction.  Whenever the context hereof so required, reference to
          ------------                                                        
the singular shall include the plural and likewise, the plural shall include the
singular; words denoting gender shall be construed to mean the masculine,
feminine or neuter, as appropriate; and specific enumeration shall not exclude
the general but shall be construed as cumulative of the general recitation.

     15.  Counterparts.  To facilitate execution, this Agreement may be executed
          ------------                                                          
in as many counterparts as may be convenient or required. It shall not be
necessary that the signature and acknowledgement of, or on behalf of, each party
or that the signature and acknowledgement of all persons required to bind any
party appear on each counterpart. All counterparts shall collectively constitute
a single document containing the respective signatures and acknowledgement of,
or on behalf of, each of the parties hereto. Any signature and acknowledgement
page to any counterpart may be detached from such counterpart without impairing
the legal effect of the signatures and acknowledgements thereon and thereafter
attached to another counterpart identical thereto except having attached to it
additional signature and acknowledgement pages.

     THIS AGREEMENT AND THE LOAN DOCUMENTS COLLECTIVELY REPRESENT THE FINAL
AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.  THERE ARE NO
UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.

     EXECUTED as of the date first above written.


                              BANK:
                              ---- 

                              GUARANTY FEDERAL BANK, F.S.B.,
                              a federal savings bank



                              By:  ___________________________________
                                   W. James Meintjes,
                                   Assistant Vice President



                              BORROWER:
                              -------- 

                              HOMEOWNERS MORTGAGE & EQUITY, INC.,
                              a Delaware corporation d/b/a HOME, INC.


                              By: /s/ Tommy M. Parker
                                  ------------------------------------
                                  Tommy M. Parker,
                                  Executive Vice President

                                      -6-
<PAGE>
 
                              GUARANTOR:
                              --------- 

                              HOMECAPITAL INVESTMENT CORPORATION,
                              a Nevada corporation


                              By: /s/ John W. Ballard
                                  ------------------------------------
                                  Name:  John W. Ballard
                                       -------------------------------  
                                  Title: President
                                        ------------------------------


STATE OF TEXAS      (S)
                    (S)
COUNTY OF DALLAS    (S)


     This instrument was ACKNOWLEDGED before me the ____ day of October, 1996,
by W. James Meintjes, Assistant Vice President of GUARANTY FEDERAL BANK, F.S.B.,
a federal savings bank, on behalf of said bank.

                                       ________________________________
                                       Notary Public - State of Texas

                                       ________________________________
My Commission expires:                 Printed Name of Notary
----------------------

STATE OF TEXAS      (S)
                    (S)
COUNTY OF TRAVIS    (S)


     This instrument was ACKNOWLEDGED before me the 15th day of October, 1996,
                                                    ---- 
by Tommy M. Parker, Executive Vice President of HOMEOWNERS MORTGAGE & EQUITY,
INC. d/b/a Home, Inc., a Delaware corporation, on behalf of said corporation.

                                       /s/ Amy Andrews
                                       --------------------------------  
                                       Notary Public - State of Texas

                                       AMY ANDREWS
                                       --------------------------------
My Commission expires:                 Printed Name of Notary
      02-14-98
----------------------

                             [STAMP APPEARS HERE]

                                      -7-
<PAGE>
 
STATE OF TEXAS      (S)
                    (S)
COUNTY OF TRAVIS    (S)


     This instrument was ACKNOWLEDGED before me the 15th day of October, 1996,
by John W. Ballard, President of HOMECAPITAL INVESTMENT CORPORATION, a Nevada
corporation, on behalf of said corporation.

                                       /s/ Amy Andrews
                                       --------------------------------
                                       Notary Public - State of Texas
                          
                                       /s/ AMY ANDREWS
                                       --------------------------------
                                       Printed Name of Notary

My Commission expires:                 
    02-14-98

                             [STAMP APPEARS HERE]

                                      -8-
<PAGE>
 
                                                                     EXHIBIT "A"
                                                                     -----------

                           WAREHOUSE PROMISSORY NOTE
                           -------------------------


$15,000,000.00             Dallas, Texas                        October 15, 1996


     FOR VALUE RECEIVED, the undersigned, HOMEOWNERS MORTGAGE & EQUITY, INC.
D/B/A HOME, INC., a Delaware corporation (herein called "Borrower"), hereby
                                                         --------          
promises to pay to the order of GUARANTY FEDERAL BANK, F.S.B., a federal savings
bank (herein called "Bank"), the principal sum of FIFTEEN MILLION AND NO/100
                     ----                                                   
DOLLARS ($15,000,000.00) or, if less, the aggregate unpaid principal amount of
the Loan made under this Note by Bank to Borrower pursuant to the terms of the
Loan Agreement (as hereinafter defined), together with interest on the unpaid
principal balance thereof as hereinafter set forth, both principal and interest
payable as herein provided in lawful money of the United States of America, for
the account of Bank, at the offices of Guaranty Federal Bank, F.S.B. at 8333
Douglas Avenue, Dallas, Texas or at such other place within Dallas County, Texas
or such other address as may be given to Borrower by the Bank.

     This Note (a) is executed and delivered pursuant to that certain Warehouse
Loan Agreement dated as of June 1, 1996 between Borrower and the Bank (herein,
as from time to time supplemented, amended or restated, called the "Loan
                                                                    ----
Agreement"), and is the Warehouse Promissory Note and the Note as defined
---------                                                                
therein, (b) is subject to the terms and provisions of the Loan Agreement, which
contains provisions for payments and prepayments hereunder, acceleration of the
maturity hereof upon the happening of certain stated events and the obligation
of Bank to advance funds hereunder, and (c) is secured by and entitled to the
benefits of certain Loan Documents (as identified and defined in the Loan
Agreement).  Payments on this Note shall be made and applied as provided herein
and in the Loan Agreement.  Interest shall be due and payable on each Interest
Payment Date.  Reference is hereby made to the Loan Agreement for a description
of certain rights, limitations of rights, obligations and duties of the parties
hereto and for the meanings assigned to terms used and not defined herein and to
the Loan Documents for a description of the nature and extent of the security
thereby provided and the rights of the parties thereto.  All capitalized terms
used herein and not otherwise defined herein shall have the meanings given
thereto in the Loan Agreement.  The holder of this Note shall be entitled to the
benefits provided for in the Loan Agreement.

     Interest shall be due and payable on the tenth day of each month, beginning
November 10, 1996, and on any other Interest Payment Date.  Interest shall
accrue on the outstanding principal balance of this Note at the rates specified
in the Loan Agreement.

     The principal amount of this Note, together with all unpaid interest
accrued hereon, shall be due and payable in full on January 31, 1997.  All
payments of principal of and interest upon this Note shall be made by Borrower
to the Bank in federal or other immediately available funds.  All payments made
hereon shall be due and payable and applied in accordance with the Loan
Agreement.

     Notwithstanding the foregoing paragraph and all other provisions of this
Note, in no event shall the interest payable hereon, whether before or after
maturity, exceed the maximum amount of interest which, under applicable law, may
be charged on this Note, and this Note is expressly made subject to the
provisions of the Loan Agreement which more fully set out the limitations on how
interest accrues hereon.  In the event applicable law provides for a ceiling
under Texas Revised Civil Statutes Annotated article 5069-1.04, that ceiling
shall be the indicated rate ceiling and shall be used in this Note for
calculating the Maximum Rate and for all other purposes.  The term "applicable
law" as used in this Note shall mean the laws of the State of Texas or the laws
of the United States,

                                      -1-
<PAGE>
 
whichever laws allow the greater interest, as such laws now exist or may be
changed or amended or come into effect in the future.

     If this Note is placed in the hands of an attorney for collection after
default, or if all or any part of the indebtedness represented hereby is proved,
established or collected in any court of in any bankruptcy, receivership, debtor
relief, probate or other court proceedings, Borrower and all endorsers, sureties
and guarantors of this Note jointly and severally agree to pay reasonable
attorneys' fees and collection costs to the holder hereof in addition to the
principal and interest payable hereunder.

     Borrower and all endorsers, sureties and guarantors of this Note hereby
severally waive demand, presentment for payment, protest, notice of protest,
notice of intention to accelerate the maturity of this Note, diligence in
collecting, the bringing of any suit against any party and any notice of or
defense on account of any extensions, renewals, partial payments or changes in
any manner of or in this Note or in any of its terms, provisions and covenants,
or any releases or substitutions of any security, or any delay, indulgence or
other act of any trustee or any holder hereof, whether before or after maturity.

     Borrower reserves the right to prepay the outstanding principal balance of
this Note, in whole or in part at any time and from time to time without premium
or penalty, in accordance with the terms of the Loan Agreement.

     This Note is executed in modification (but not in extinguishment) of (a)
that certain Warehouse Promissory Note dated June 1, 1996 in the principal
amount of $2,000,000.00 executed by Borrower payable to the order of Bank and
(b) that certain Warehouse Promissory Note dated July 9, 1996 in the principal
amount of $10,000,000.00 executed by Borrower payable to the order of Bank.

     THIS NOTE AND THE RIGHTS AND DUTIES OF THE PARTIES HERETO SHALL BE GOVERNED
     ---------------------------------------------------------------------------
BY THE LAWS OF THE STATE OF TEXAS, EXCEPT TO THE EXTENT THE SAME ARE GOVERNED BY
--------------------------------------------------------------------------------
APPLICABLE FEDERAL LAW.
-----------------------

     THIS NOTE AND THE OTHER LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT
BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.  THERE ARE NO
UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.

                                       HOMEOWNERS MORTGAGE & EQUITY, INC. D/B/A
                                       HOME, INC., a Delaware corporation


                                       By: ______________________________
                                           Tommy M. Parker,
                                           Executive Vice President

                                      -2-
<PAGE>
 
STATE OF TEXAS     (S)
                   (S)
COUNTY OF TRAVIS   (S)


     This instrument was ACKNOWLEDGED before me the ____ day of October, 1996,
by Tommy M. Parker, Executive Vice President of HOMEOWNERS MORTGAGE & EQUITY,
INC. D/B/A HOME, INC., a Delaware corporation, on behalf of said corporation.


                                       ________________________________
                                       Notary Public - State of Texas

                                       ________________________________
My Commission expires:                 Printed Name of Notary   

_____________________

                                      -3-
<PAGE>
 
                                                                     EXHIBIT "B"
                                                                     -----------
                                 Schedule H-1
                                 ------------

Financial Covenants        Required                         Actual or
-------------------        --------                         ------ --
                                                              [IN COMPLIANCE]*
----------------------------------------------------------------------------- 


1) No Merger [7.01]:                                          [YES] or [NO] *

2) Limitation on Indebtedness
     of Borrower [7.02]:                                      [YES] or [NO] *

3) Negative Pledge [7.05]:                                    [YES] or [NO] *

4) Loans, Advances and
     Investments of Borrower
     and Affiliates [7.06]:                                   [YES] or [NO] *

5) Operational Changes [7.09]:                                [YES] or [NO] *
 
6) Compliance with ERISA
     [7.10]:                                                  [YES] or [NO] *
 
7) Net Worth of Borrower           Not less than $3,000,000
     [7.11]:                       plus 7.11(b) & (c)              _______
 
8) Tangible Net Worth of           Not less than
     Borrower [7.12]:              HUD, FNMA, GNMA,
                                   FHLMC minimum                   _______
 
9) Adjusted Tangible Net
     Worth of Borrower             Not less than $3,000,000
     [7.13]:                       plus 7.13(b) & (c)              _______
 
10) Total Liabilities to
     Adjusted Tangible Net         Not more than
     Worth [7.14]:                 3.5 to 1.0                      _______

11) Management [7.15]:                                        [YES] or [NO] *

12) Interested Transactions [7.16]:                           [YES] or [NO] *

13) Transfer of Stock [7.17]:                                 [YES] or [NO] *

14) Liquidity [7.20]:              Not less than
                                   $500,000.00                     _______

                                      -4-
<PAGE>
 
                                       HOMEOWNERS MORTGAGE & EQUITY, INC.
                                       D/B/A HOME, INC., a Delaware corporation



                                       By: _______________________________
                                           __________________, ___________


______________________________
          [Date]


STATE OF TEXAS     (S)
                   (S)
COUNTY OF TRAVIS   (S)


     This instrument was ACKNOWLEDGED before me the ____ day of __________,
199__, by _________________, _________________ of HOMEOWNERS MORTGAGE & EQUITY,
INC. D/B/A HOME, INC., a Delaware corporation, on behalf of said corporation.


                                       ________________________________
                                       Notary Public - State of Texas
 
                                       ________________________________
My Commission expires:                 Printed Name of Notary  

_____________________

                                      -5-
<PAGE>
 
                                                                     EXHIBIT "C"
                                                                     -----------

                            UNCONDITIONAL GUARANTY
                            ----------------------


     WHEREAS, HOMEOWNERS MORTGAGE & EQUITY, INC., a Delaware corporation, d/b/a
HOME, INC. (hereinafter called the "Borrower"), desire to borrow from GUARANTY
                                    --------                                  
FEDERAL BANK, F.S.B. the "Bank"), the principal sum of FIFTEEN MILLION AND
                          ----                                            
NO/100 DOLLARS ($15,000,000.00) (collectively, the "Loan"); and
                                                    ----       

     WHEREAS, said borrowings are to be made by the Borrower pursuant to and
under the terms of that Agreement dated June 1, 1996, between the Borrower and
the Bank together with all amendments thereof (hereinafter called the "Loan
                                                                       ----
Agreement") and all promissory notes executed by Borrower in connection
---------                                                              
therewith; and

     WHEREAS, the Loan amount of $15,000,000.00 represents an increase in the
amount of the Loan and Bank would not consent to such an increase without the
execution by Guarantor of this Guaranty, Guarantor being the parent corporation
of Borrower;

     WHEREAS, the undersigned desires the Bank to increase the Loan amount and
to continue to make the aforesaid Loan, and the Bank requires, as a condition
thereof, that a guaranty in the form hereof be executed and delivered by the
undersigned;

     NOW, THEREFORE, in consideration of the premises and to induce the Bank to
enter into the Loan Agreement and to make the Loan contemplated thereby and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the undersigned, HOMECAPITAL INVESTMENT CORPORATION, a
Delaware corporation (hereinafter called the "Guarantor"), hereby
                                              ---------          
unconditionally guarantees to the Bank and to every subsequent holder or holders
of any promissory note or notes evidencing the Loan (said promissory note or
notes together with any note or notes renewing the same or any part thereof
being hereinafter collectively called the "Note") that (i) the principal of and
                                           ----                                
interest on, and attorneys' fees provided in, the Note will be promptly paid
when due in accordance with the provisions thereof or, in the case of extension
of time of payment in whole or in part of the Note, all sums will be promptly
paid when due in accordance with the terms of the extension; (ii) all covenants
and agreements of the Borrower contained in the Note, the Loan Agreement and/or
any other instrument evidencing, securing or governing the disbursement of the
Loan, whether presently existing or hereinafter entered into, will be duly and
promptly observed and performed; and (iii) all additional amounts owing or which
hereafter become owing by the Borrower under the terms of the Note, the Loan
Agreement and/or any other instrument evidencing, securing or governing the
disbursement of the Loan, whether presently existing or hereinafter entered
into, will be promptly paid when due.  This Guaranty directly and substantially
benefits Guarantor.

     The obligations of the Guarantor shall be performable without demand of the
Bank and shall be unconditional irrespective of the genuineness, validity,
regularity or enforceability of the Loan Agreement or the Note, or any other
circumstance which might otherwise constitute a legal or equitable discharge of
a surety or a guarantor; and the Guarantor hereby waives diligence, presentment,
demand of payment, protest, all notices (whether of nonpayment, intention to
accelerate, acceleration, dishonor, protest or otherwise) with respect to the
Note, notice of acceptance of this Guaranty and of the incurring by the Borrower
of any of the obligations hereinbefore mentioned, all demands whatsoever, and
all rights to require the Bank, to (a) proceed against the Borrower, (b) proceed
against or exhaust any collateral held by the Bank to secure the payment of the
indebtedness guaranteed hereby, or (c) pursue any other remedy the Bank may now
or hereafter have against the Borrower.

     The Guarantor hereby agrees that, at any time or from time to time, without
notice to the Guarantor:
<PAGE>
 
          (1) The time for payment of the principal of or interest on the Note
     evidencing the Loan may be extended or the Note may be renewed in whole or
     in part;

          (2) The time for the Borrower's performance of or compliance with any
     covenant or agreement contained in the Loan Agreement, the Note and/or any
     other instrument evidencing, securing or governing the disbursement of the
     Loan, whether presently existing or hereinafter entered into, may be
     extended or such performance or compliance may be waived;

          (3) The maturity of the Note may be accelerated as provided therein or
     in the Loan Agreement and/or any other instrument evidencing, securing or
     governing the disbursement of the Loan, whether presently existing or
     hereinafter entered into;

          (4) The Loan Agreement, the Note and/or any other instrument
     evidencing, securing or governing the disbursement of the Loan, whether
     presently existing or hereinafter entered into, may be modified or amended
     by the Bank and the Borrower in any respect, including, but not limited to,
     an increase in the principal amount; and

          (5) Any security for the Loan may be modified, exchanged, surrendered
     or otherwise dealt with and/or additional security may be pledged or
     mortgaged for the Loan;

all without affecting the liability of the Guarantor.

     The Guarantor hereby acknowledges that the withdrawal from, or termination
of, any ownership interest in Borrower shall not alter, affect or in any way
limit the obligations of Guarantor hereunder.

     If this Guaranty shall be placed in the hands of an attorney for collection
or should it be collected by legal proceedings or through any probate or
bankruptcy court, the Guarantor agrees to pay to the Bank's reasonable
attorneys' or collection fees.

     The Bank may assign its rights hereunder in whole or in part; and upon any
such assignment, all the terms and provisions of this Guaranty shall inure to
the benefit of such assignee to the extent so assigned.  The terms used to
designate any of the parties herein shall be deemed to include the heirs, legal
representatives, successors and assigns of such parties; and the term "Bank"
shall include, in addition to the Bank, any lawful owner, holder or pledgee of
any indebtedness guaranteed hereby.

     The Bank is relying and is entitled to rely upon each and all of the
provisions of this Guaranty; and accordingly, if any provision or provisions of
this instrument should be held to be invalid or ineffective, then all other
provisions shall continue in full force and effect.

     The Guarantor acknowledges that the Loan represents money which will be
advanced to the Borrower in a series of advances to be made from time to time
pursuant to the Loan Agreement.  To induce the Bank to make the advances
thereunder, the Guarantor hereby agrees that in the event of the termination,
liquidation or dissolution of the Borrower, this Guaranty shall continue in full
force and effect.

     The Guarantor hereby represents and warrants to the Bank that the financial
statements and information regarding the Guarantor heretofore delivered to the
Bank are true and correct in all material respects, having been applied on a
consistent basis throughout the period covered thereby, and fairly present the
financial position of the Guarantor as of the dates thereof, and that no
material adverse change has occurred in the financial condition of the Guarantor
reflected therein since the date thereof.

     The Guarantor hereby represents and warrants to the Bank that:

                                      -2-
<PAGE>
 
     (a) Neither the execution and delivery of this Guaranty, nor the
consummation of any of the transactions herein or therein contemplated, nor
compliance with the terms and provisions hereof or with the terms and provisions
thereof, will materially contravene or conflict with any provision of law,
statute or regulation to which Guarantor is subject or any judgment, license,
order or permit applicable to Guarantor, or any indenture, mortgage, deed of
trust or other agreement or instrument to which Guarantor is a party or by which
Guarantor may be bound, or to which Guarantor may be subject.

     (b) Guarantor is not in default (and no event exists which with notice or
the passage of time could become a default) under any loan agreement, mortgage,
security agreement or other material agreement or obligation to which it is a
party or by which any of its properties is bound including but not limited to
the Loan Documents.

     (c) There are no actions, suits or legal, equitable, arbitration or
administrative proceedings pending, or to the knowledge of Guarantor, threatened
against Guarantor.

     (d) All tax returns required to be filed by the Guarantor in any
jurisdiction have been filed or extended and all taxes, assessments, fees and
other governmental charges upon Guarantor or upon any of its properties, income
or franchises have been paid prior to the time that such taxes could give rise
to a lien thereon, unless protested in good faith by appropriate proceedings and
with respect to which reserves in conformity with GAAP have been established on
the books of Guarantor.  The Guarantor has no knowledge of any proposed tax
assessment against Guarantor.

     (e) Guarantor shall permit any authorized officer, employee or agent of the
Bank, to visit and inspect any of the business properties of the Guarantor,
examine Guarantor's books of record and accounts, take copies and extracts
therefrom, and inspect and discuss the procedures, finances and accounts of
Guarantor with Guarantor's accountants and auditors, all at such reasonable
times and as often as Bank may desire.  Guarantor shall furnish such reports as
Bank may reasonably request.

     Notwithstanding any provision in this Guaranty to the contrary, Guarantor
hereby waives and releases (i) any and all rights of subrogation, reimbursement,
indemnification or contribution which it may have, against others liable on all
or any part of the Loan, (ii) any and all rights to be subrogated to the rights
of the Bank in any collateral or security for all or any part of the Loan, and
(iii) any and all other rights and claims of such Guarantor against Borrower or
any third party as a result of such Guarantor's payment of all or any part of
the Loan.

     Capitalized terms not defined herein are used as defined in the Loan
Agreement.

     The obligations of the Guarantor and any other guarantor of the Note
evidencing the Loan shall be joint and several.  The Guarantor agrees that the
Bank, in its sole discretion, may (i) bring suit against the Guarantor and any
other guarantor of the Note evidencing the Loan jointly and severally or against
any one or more of them, (ii) compound or settle with any one or more of the
guarantors of the Note evidencing the Loan for such consideration as the Bank
may deem proper, (iii) release one or more of the guarantors of the Note
evidencing the Loan from liability thereunder, and (iv) otherwise deal with the
Guarantor and any other guarantors of the Note, or any one or more of them, in
any manner whatsoever; and that no such action shall impair the rights of the
Bank to collect the indebtedness hereby guaranteed from the Guarantor.  Nothing
contained in this paragraph shall in any way affect or impair the rights or
obligations of the Guarantor with respect to any other guarantor of the Note
evidencing the Loan.

     Any indebtedness of the Borrower to the Guarantor now or hereafter existing
(including, but not limited to, any rights to subrogation the Guarantor may have
as a result of any payment by the Guarantor under this Guaranty), together with
any interest thereon, shall be, and such indebtedness is hereby subordinated
until payment in full of the indebtedness of the Borrower to the Bank under the
Loan Documents and all other obligations hereunder.  Until payment in full with
interest of the indebtedness of the Borrower to the Bank (and including interest
accruing on the Note after any petition under the Bankruptcy Reform Act of 1978,
as amended (the 

                                      -3-
<PAGE>
 
"Bankruptcy Code"), which post-petition interest the parties agree shall remain
 ---------------
a claim that is prior and superior to any claim of the Guarantor notwithstanding
any contrary practice, custom or ruling in proceedings under the Bankruptcy Code
generally), the Guarantor agrees not to accept any payment or satisfaction of
any kind of any indebtedness of the Borrower to the Guarantor. Further, the
Guarantor agrees that until such payment in full: (i) no Guarantor shall accept
payment from any other Guarantor by way of contribution on account of any
payment made hereunder by such party to the Bank; (ii) no one of them will take
any action to exercise or enforce any rights to such contribution; and (iii) if
any individual or entity comprising the Guarantor should receive any payment,
satisfaction or security for any indebtedness of the Borrower to any individual
or entity comprising the Guarantor or for any contribution by any other
individual or entity comprising the Guarantor for payment made hereunder by the
recipient to the Bank at any time the Borrower is in default under the Loan
Documents, the same shall be delivered to the Bank in the form received,
endorsed or assigned as may be appropriate for application on account of, or as
security for the indebtedness of the Borrower to the Bank. This provision shall
not restrict or impair Guarantor's right to receive compensation from Borrower
for his service to Borrower as an employee. Any lien or charge on the Collateral
(as defined in the Loan Agreement), all rights therein and thereto, and on the
profits, losses, income and distributions to be realized therefrom, which the
Guarantor may have or obtain as security for any loans or advances to Borrower
shall be, and such Lien or charge hereby is, waived. Guarantor waives any rights
Guarantor has under, or any requirements imposed by Chapter 34 of the Texas
Business & Commerce Code, as in effect on the date of this Guaranty or as it may
be amended from time to time. Guarantor waives any rights of subrogation it may
have against the Borrower.

     In the event the Borrower is a corporation, joint stock association or
partnership, or is hereafter incorporated, if the indebtedness at any time
hereafter exceeds the amount permitted by law, or the Borrower is not liable
because the act of creating the obligation is ultra vires, or the officers or
persons creating same acted in excess of their authority, and for these reasons
the indebtedness to the Bank which the Guarantor agrees to pay cannot be
enforced against the corporation, joint stock association or partnership, such
fact shall in no manner affect the Guarantor's liability hereunder; but the
Guarantor shall be liable hereunder, notwithstanding any finding that said
corporation, joint stock association or partnership is not liable for such
indebtedness, and to same extend as the Guarantor would have been if the
indebtedness of the Borrower had been enforceable against the Borrower.

     THIS GUARANTY AND ALL RIGHTS, OBLIGATIONS AND LIABILITIES ARISING HEREUNDER
SHALL BE CONSTRUED ACCORDING TO THE LAWS OF THE STATE OF TEXAS AND THE UNITED
STATES OF AMERICA.

     THIS GUARANTY SHALL BE PERFORMABLE FOR ALL PURPOSES IN DALLAS COUNTY,
TEXAS. COURTS WITHIN THE STATE OF TEXAS SHALL HAVE JURISDICTION OVER ANY AND ALL
DISPUTES BETWEEN GUARANTOR AND BANK, WHETHER IN LAW OR EQUITY, INCLUDING, BUT
NOT LIMITED TO, ANY AND ALL DISPUTES ARISING OUT OF OR RELATING TO THIS GUARANTY
OR ANY OTHER LOAN DOCUMENT; AND VENUE IN ANY SUCH DISPUTE WHETHER IN FEDERAL OR
STATE COURT SHALL BE LAID IN DALLAS COUNTY, TEXAS.  GUARANTOR HEREBY CONSENTS TO
PERSONAL JURISDICTION IN DALLAS COUNTY, TEXAS AND WAIVES ANY RIGHTS HE OR SHE
MAY HAVE TO BE SUED ELSEWHERE.

     THIS GUARANTY AND THE LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN
THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS,
OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.  THERE ARE NO UNWRITTEN ORAL
AGREEMENTS BETWEEN THE PARTIES.

                                      -4-
<PAGE>
 
     IN WITNESS WHEREOF, this Guaranty has been duly executed by the
undersigned, effective as of, although not necessarily on, the 15th day of
October, 1996.

Address of Guarantor:
-------------------- 
                                    HOMECAPITAL INVESTMENT CORPORATION,
6836 Austin Center, Blvd.           a Delaware corporation
Suite 280
Austin, Texas  78731
                                    By:
                                         Name:___________________________
                                         Title:__________________________



STATE OF TEXAS           (S)
                         (S)
COUNTY OF TRAVIS         (S)


     This instrument was ACKNOWLEDGED before me the ____ day of October, 1996,
by ______________________, _______________________ of HOMECAPITAL INVESTMENT
CORPORATION, a Delaware corporation, on behalf of said corporation.


                                         ________________________________
                                         Notary Public - State of Texas

My Commission expires:                   ________________________________
_____________________                    Printed Name of Notary


                                      -5-