The Quick Read: The Texas constitution sets the ceiling, and no lender can raise it. Your new loan plus every other lien on the home cannot add up to more than 80% of its appraised value. The cash you actually receive is what remains after the old mortgage, any other liens and closing costs come out of that 80%. A lower appraisal or a bigger existing balance shrinks it.
What Makes a Texas Homestead Cash-Out Different?
Texas treats cash-out loans on your primary home as a special category. The law behind it is Section 50(a)(6) of Article XVI of the state constitution. Lenders and title companies shorten that to “50(a)(6)” or “A6.”
Most states leave the leverage limit to the lender and the loan program. Texas writes it into the constitution. A lender can be more conservative than 80%. It cannot go higher on a homestead.
Here is the practical effect. Across the wholesale programs we place files with, a conventional cash-out on a one-unit primary residence tops out at 80% loan-to-value (LTV). LTV is the loan balance divided by the home’s value. In most states, that 80% is the program’s own limit. In Texas, the constitution makes it the legal limit too.
Lendmire’s cash-out refinance programs follow the same structure. On a Texas homestead, the state rule is the binding number.
Two things set this loan apart:
- It counts all the debt on the home. The 80% applies to the total of every lien, not just the new loan.
- It comes with extra consumer protections. These include a waiting period before closing, limits on certain lender fees and a requirement that each owner and spouse consent.
How Is the Maximum Cash Calculated?
The maximum cash is 80% of the appraised value, minus the payoff of your existing mortgage, minus any other lien that stays on the home, minus closing costs rolled into the loan. Whatever is left is the cash you can receive.
Walk through it step by step:
1. Start with value. This is the appraised value that you and the lender agree on in writing. The Texas Department of Savings and Mortgage Lending describes that written agreement as part of the 80% rule.
2. Multiply by 80%. That is the most total secured debt the home can carry after closing.
3. Subtract the debt that has to be paid or stays. The existing first mortgage is paid off with the new loan. Other liens that remain count too.
4. Subtract costs. Closing costs and prepaid items rolled into the loan reduce the cash that reaches you.
Notice that the cap is on total debt. A homeowner who thinks “I can borrow 80% of my value” is overcounting. You can only have total liens of 80%. The old mortgage uses up part of that room before you see any cash.
Three Scenarios in Percentages of Value
These are modeled examples, not quotes. Every figure is a share of the appraised value, so you can apply the pattern to your own home.
| Scenario | Debt on the home | Room under the 80% cap | Cash before costs |
|---|---|---|---|
| A: Mortgage at 40% of value | 40% | 80% − 40% | About 40% |
| B: Mortgage at 65% of value | 65% | 80% − 65% | About 15% |
| C: Mortgage at 50% plus another lien at 10% that stays | 60% | 80% − 60% | About 20% |
Costs then come out of each of those numbers.
Scenario C matters because not every lien is a mortgage. A tax lien, a contractor’s lien or a home-improvement lien still counts against the cap if it stays on the property.
How a Lower Appraisal Changes the Number
Value is the swing factor. Take Scenario A with an appraisal 5% lower than you expected. The cap falls by 4% of your original value, because 80% of that 5% is 4%. Every point of that comes straight out of your cash.
This is the difference between equity on paper and borrowable equity. You may own more than 20% of the home outright and still be limited by the cap, the payoff and the costs.
Does the 80% Limit Apply to Every Refinance in Texas?
No. It applies to cash-out loans against a homestead. A true refinance is a different loan, and the 80% rule does not govern it.
A rate-and-term refinance replaces your existing first mortgage and pays closing costs, with only incidental cash back. If the loan being paid off was a purchase-money loan or an earlier no-cash-out refinance, the new loan is not a 50(a)(6) loan. Across the programs we arrange, a one-unit primary residence can reach 95% LTV on this type of refinance. Mortgage insurance applies above 80% and can be cancelled later as the balance drops.
The line between the two is thin in Texas. Cash back to you on a refinance of a non-50(a)(6) loan that goes beyond incidental turns it into a 50(a)(6) loan. That can include cash back that a lender in another state would treat as incidental.
Fannie Mae and Freddie Mac also confirm the split. Fannie Mae’s Texas 50(a)(6) eligibility section says Texas law decides whether a loan is a 50(a)(6) loan, while Fannie Mae policy decides how it is delivered. Texas law labels the loan. The agency label can differ. That mismatch trips up borrowers who assume the two definitions match.
What Counts Against the Cap?
Every lien secured by your home counts. Here is a quick checklist:
- Your current first mortgage. It is paid off at closing, and its balance eats into the 80%.
- A home equity line of credit (HELOC) or second mortgage. Texas allows only one 50(a)(6) loan secured by the home at a time. In practice, an existing HELOC usually has to be paid off and closed in the refinance.
- Other recorded liens. Tax, contractor, HOA and home-improvement liens that stay on title count toward the total.
- Costs rolled in. Closing costs and prepaids added to the balance use up room.
The Texas Office of Consumer Credit Commissioner’s disclosure states the combined-lien limit and the one-loan-at-a-time rule in plain terms.
Which Rules Shape the Process?
Texas adds steps you will not see in other states. Here is the sequence a borrower experiences.
Application and notice. The lender gives you a required notice about the extension of credit. A 50(a)(6) loan cannot close before the 12th day after the later of your application or the lender’s delivery of that notice. This is a legal minimum, not a target.
Appraisal and agreed value. The value must be agreed in writing. Appraisal rules on this loan are stricter than on many other refinances, and the shortcuts some lenders offer elsewhere do not apply here.
Underwriting. The lender reviews credit, income, assets and debt ratios under agency cash-out standards. The wholesale conventional programs we work with start at a 620 decision score, with the automated finding governing most files. Those are program guidelines, and each lender sets its own file review. Texas also requires its own documents, such as an affidavit and agreement specific to the home equity loan.
Closing. Texas requires this loan to close at the office of the lender, an attorney or a title company. Each owner and each owner’s spouse must consent. Many lenders also limit this loan type to one-unit homes, so a duplex may not fit.
Cancellation window. You have a short window after closing to cancel a refinance of the home you live in. The Consumer Financial Protection Bureau explains that Saturdays count and Sundays and legal public holidays do not. The cancellation must be in writing. A phone call is not enough. Funds generally are not released until the window ends.
Add the waiting period and the cancellation window and you get a clear rule: cash does not appear overnight. If you need money by a fixed deadline, start well ahead of it.
There is also a cap on certain lender fees on this loan type. Appraisal, survey and title premium are treated separately. We describe it only in general terms here. Your Loan Estimate and Closing Disclosure show what you are actually charged.
Where Does the General Rule Break?
The 80% rule is clean. The edges are not. These are the cases where borrowers get surprised.
Seasoning
Seasoning is the waiting period between events, such as buying a home and refinancing it. Under Fannie Mae’s cash-out refinance policy, the first mortgage being paid off must be at least 12 months old, measured note date to note date. At least one borrower must have been on title for six months. Exceptions exist, such as inheritance and delayed financing.
Delayed financing does not escape the Texas rules. A purchase refinanced this way still counts as cash-out in Texas. The exception only waives the title-time rule.
Property Type and Occupancy
The 50(a)(6) rules apply to the homestead only. Fannie Mae’s eligibility matrix sets 80% for a one-unit principal residence and 75% for two- to four-unit properties. On a Texas homestead, the state’s 80% cap sits on top of that matrix. A second home follows ordinary agency rules, where occupancy decides the leverage. The same 75% applies there.
Higher-Leverage Programs
Some wholesale lanes reach beyond 80% on cash-out with no mortgage insurance elsewhere. Those lanes are not written on a Texas homestead, because the state cap controls.
Existing Home Equity Loans
Having a 50(a)(6) loan does not lock you in forever. Since 2018, Texas has allowed a home equity loan to be refinanced into an ordinary loan under certain conditions. They include waiting until the first anniversary of the original loan, giving a special advance notice and meeting an 80% combined test. A law-firm summary of the constitutional amendment walks through those conditions. Freddie Mac’s Guide Section 4301.7 treats a qualifying payoff of this kind as a no-cash-out refinance. That is also the section that sets the 80% cap on Texas equity mortgages.
This matters for the future. A cash-out carries the Texas rules into every later refinance unless you use that conversion path.
FHA and VA
FHA and VA cash-out loans are generally not available against a Texas homestead. Confirm this with a loan officer, because individual lenders describe it differently. What you can still use are the no-cash-out government options: the FHA Streamline and the VA Interest Rate Reduction Refinance Loan (IRRRL). These change the loan you have. They do not pull equity out.
What About Mortgage Insurance?
At 80% LTV, mortgage insurance does not come into play on a cash-out. Mortgage insurance applies above 80% LTV. So the same state cap that limits your cash also removes that cost from the loan. Terms depend on the lender’s guidelines, the property type, the leverage, and a full review of the credit profile.
If you end up on a rate-and-term refinance above 80% instead, the borrower may request cancellation at 80% of the original value. The servicer must end it automatically at 78%. Published typical annual premiums run 0.58% to 1.86% of the balance. That range shows the scale of the cost, not a quote.
How Does the Decision Look in Practice?
Picture a Texas homeowner with a first mortgage equal to roughly half the home’s value and a goal of funding a major repair. The 80% cap leaves about 30% of value in room. Closing costs rolled into the loan trim that. If the appraisal comes in a few points low, the room trims again.
Now picture the same homeowner with a first mortgage near 70%. The room is about 10% of value before costs. Cash-out may not make sense at all. A larger balance generally means a larger payment, and the cash delivered might be small.
Some questions to ask yourself:
- How much cash do I need, as a share of my home’s value? Compare it to the room under the cap.
- What am I giving up? A refinance replaces the loan you have. If your existing first mortgage has a structure you like, giving it up is a real cost.
- Do I have a HELOC? It will probably need to be paid off and closed.
- Is this a one-time need or an ongoing one? The one-loan-at-a-time rule affects later borrowing.
Tax treatment can depend on your situation; borrowers should speak with a qualified tax professional before relying on any deduction or credit.
Before You Ask for a Number
Gather these first:
- Your current mortgage statement and the balance on any HELOC.
- A list of any other recorded liens on the home.
- Proof of income and assets.
- The names of every owner and spouse who must consent.
Key Terms Defined
50(a)(6) loan: A cash-out or home equity loan secured by a Texas homestead under Article XVI, Section 50(a)(6) of the state constitution. Also called an “A6.”
Homestead: The home you live in as your primary residence. Texas protects it with special rules.
LTV and combined LTV: The loan balance divided by the home’s value. The combined version adds every other lien on the home.
Seasoning: The waiting period a lender requires between two events, such as buying a home and refinancing it.
Rate-and-term refinance: A refinance that replaces your existing first mortgage with only incidental cash back.
Right of rescission: Your right to cancel certain refinances of your home within a limited window after closing, with the exact timing and applicability varying by file and lender.
If You Are Comparing Options
If you are weighing a cash-out refinance against keeping the loan you have, Lendmire can help you compare the programs and the equity each one reaches. Program figures are subject to lender guidelines and full file review. Nothing here is a commitment to lend.
Frequently Asked Questions
What is the most cash I can take out on a Texas homestead?
It is 80% of the appraised value, minus every lien that must be paid off or stays, minus closing costs rolled into the loan. The cap covers total debt on the home, not just the new loan. A home with a low existing balance has more room, and a home with a large balance has less.
Can a lender offer more than 80% if I qualify strongly?
No. The 80% limit comes from the Texas constitution, and Freddie Mac’s guide repeats it for Texas equity loans. A lender can set a lower limit, but not a higher one. Strong credit and income do not move that ceiling.
What happens to my HELOC when I do a cash-out refinance?
Texas allows only one 50(a)(6) loan secured by the home at a time. That usually means a HELOC on the same home is paid off and closed as part of the refinance. Its balance counts against the 80% total.
Can I do a cash-out refinance on a rental or second home in Texas?
The 50(a)(6) rules cover your homestead only. A second home or rental follows ordinary agency rules, where occupancy decides the leverage, and the matrix sets 75% for cash-out on those.
Is the cash available right away after I sign?
No. Texas requires a waiting period before a 50(a)(6) loan can close, and federal rules give you three business days to cancel afterward. Funds generally are not released until that window ends. Plan ahead for any deadline.
For your own numbers, request a scenario review with Lendmire.
About Lendmire
Lendmire — NMLS# 2371349 — is a mortgage broker that arranges FHA, VA, conventional and jumbo home purchase and refinance financing in 16 states through wholesale lenders. Every option is subject to the lender’s guidelines and full underwriting. Scotsman Guide named Lendmire a Top Mortgage Workplace in both 2025 and 2026.
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References
1. Texas Department of Savings and Mortgage Lending
2. Fannie Mae Selling Guide B5-4.1-02: Texas Section 50(a)(6) Loan Eligibility
3. CFPB: Right of Rescission After Closing
4. Fannie Mae Selling Guide B2-1.3-03: Cash-Out Refinance Transactions
5. Fannie Mae Eligibility Matrix
6. Bressler/BMandG SJR 60 handout
7. Freddie Mac Single-Family Guide, Section 4301.7
This article is part of Lendmire’s Refinance series — every loan program’s qualification details, guidelines, and scenarios live on the loan options page.
Related reading: Can a Texas Homestead Cash-Out Refinance Get a Lower Payment Later? · How Much a Cash-Out Refinance Releases for an ADU or Addition · Can a Texas Cash-Out Refinance Be Refinanced Again for a Lower Payment?
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
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Important disclosures. Lendmire (NMLS# 2371349) is a licensed mortgage brokerage. Lendmire is not a direct lender, depository institution, or financial advisor. All loan inquiries are subject to lender underwriting; this article does not constitute a commitment to lend. Rates, terms, and program guidelines are subject to change without notice and vary by borrower profile, property type, and state. Information in this article is general in nature and is not financial, legal, or tax advice. Equal Housing Opportunity. NMLS Consumer Access: nmlsconsumeraccess.org.