The Quick Read: Usually yes, but the route depends on what your earlier loan legally was. On a Texas homestead, state law often controls a cash-out, not FHA guidelines. Expect a one-year wait, an 80% cap on total debt for equity loans, and an appraisal that may value your acreage differently than you expect.
First, What Was Your Cash-Out Loan?
Start by naming the loan you have. That one fact decides everything else.
Texas treats a cash-out loan against a homestead as a special kind of loan, called a home equity loan. It carries extra borrower protections and a short list of hard limits. Most lenders report that FHA does not insure these Texas equity loans on a homestead. That is a lender-side report, not a line you can point to in HUD’s rulebook, so ask your loan officer to confirm it for your file.
So the loan you call an “FHA cash-out” could be one of three things:
- A Texas equity loan from another program. State law governs it.
- An FHA-insured loan that did not pull cash. It may have been a purchase, a rate-and-term loan, or a streamline.
- A cash-out on land that is not your homestead. Different rules apply.
Pull your closing documents. Look for language saying the loan is a Texas home equity loan. Your title commitment will usually show it too. If you cannot tell, ask the servicer in writing.
Lendmire arranges consumer loans through wholesale lenders in 16 states, Texas included. The first question on a file like this is always the same: what does the paperwork say the existing loan is?
Does the “Once an Equity Loan, Always an Equity Loan” Rule Still Apply?
No, not in the strict old form. Before 2018, a refinance of a Texas equity loan had to be another equity loan. A law-firm summary of the 2018 constitutional change describes how that changed. Today a borrower can refinance an equity loan into an ordinary, non-equity loan if several conditions are met.
Here are the conditions, in plain words:
1. One year has passed. The new loan cannot close before the first anniversary of the equity loan’s closing.
2. No new money. The new loan pays off the old one and covers actual costs or reserves. Nothing goes in your pocket.
3. The 80% line holds. Total debt against the homestead cannot exceed 80% of its fair market value on the refinance date.
4. The notice is given. The lender must hand you a written notice about the protections you are giving up. A mandatory waiting period follows before you can close.
The Texas Department of Savings and Mortgage Lending describes the same idea in its annual mortgage lending report: a rate-and-term-only refinance is allowed under certain conditions, and the loan then loses its home equity status.
Freddie Mac’s Guide counts a Texas loan that pays off an equity loan and meets all the state requirements as a “no cash-out” refinance. That is a conventional reference, not an FHA one. It shows how the market views the exit.
Does Acreage Change the Answer?
Acreage does not block a refinance. It changes the appraisal, the land that counts, and how much usable equity you have.
Here are the four places acreage shows up.
1. Homestead size. Texas limits how much land can carry homestead protection. The limits differ for urban and rural homes, and for families and single adults. Secondary summaries quote specific acre counts. Read the statute or ask a title company rather than trusting a blog’s number. If part of your land falls outside the homestead, the equity-loan rules may not treat that part the same way.
2. Agricultural exemption. Many acreage owners hold an ag exemption for tax purposes. The old ban on equity loans against land with that exemption was repealed. The same law-firm summary says lenders may close those loans for closings after the change took effect. That helps a lot of rural Texans.
3. Excess land. FHA appraisal policy sits in HUD Handbook 4000.1. Its glossary defines excess land as land not needed to support the existing home that could be sold separately. An appraiser may leave such land out of the value used for the loan-to-value test. Loan-to-value, or LTV, is the loan balance divided by the home’s value.
4. Thinner equity than you expect. The 80% cap leaves at least 20% equity untouched. If the appraisal excludes sellable acreage, the value drops and so does the usable equity. A property you think of as “a hundred acres” may appraise as a house on a modest lot plus land that counts less.
An acreage appraisal also leans on comparable sales, and rural comps are scarce. Outbuildings, a pond, or mixed-use land can all pull the number around. Ask your loan officer early how the appraiser will treat the extra land.
Your Refinance Options, Side by Side
Here is how the main paths compare. Program figures reflect the wholesale programs Lendmire places files with and are subject to lender guidelines and full file review.
| Option | Cash back? | What the loan becomes | Best fit |
|---|---|---|---|
| Texas non-equity refinance of an equity loan | No | Ordinary mortgage, equity protections end | You want out of equity-loan limits |
| New Texas equity loan | Yes | Another equity loan, 80% cap | You need more cash and accept the limits |
| FHA Streamline | No | New FHA loan, premium continues | You already hold an FHA loan |
| FHA rate-and-term | No | New FHA loan, up to 97.75% LTV | Principal residence, occupied 12 months |
| FHA cash-out | Yes | New FHA loan, up to 80% LTV | Owned and occupied 12 months (Texas homestead eligibility to be confirmed) |
Two notes on the table.
First, the FHA Streamline refinances an existing FHA loan with no appraisal, a limited credit review, and a net tangible benefit. Net tangible benefit means the new loan has to help you in a measurable way. FHA mortgage insurance carries on with the new loan. If your current loan is not FHA-insured, the Streamline is not on the menu.
Second, the FHA rate-and-term and cash-out lines assume the FHA loan is allowed on your Texas homestead at all. Handbook 4000.1 lists three FHA refinance types: cash-out, rate-and-term, and streamline. Whether a non-equity refinance of a Texas equity loan fits the FHA rate-and-term box is a point your lender has to confirm in writing. Do not assume it.
Where Do You Start? A Decision Guide
Find your starting loan below.
If you hold a Texas equity loan: The waiting period is measured from the closing date of the existing equity loan, and the exact timing depends on the file and the lender. Then test the 80% line against a fresh appraisal. If you want no cash back, the non-equity route may fit. If you want cash, any new loan is another equity loan with the same cap and a mandatory waiting period. Only one equity loan can exist on the home at a time.
If you hold an FHA loan that is not an equity loan: You have the broadest menu. The Streamline works if the numbers help you. A rate-and-term loan with an appraisal reaches 97.75% LTV on a principal residence you have occupied for the previous twelve months. A cash-out reaches 80% when you have owned and occupied the home for 12 months before the case number. Because the home is a Texas homestead, the lender has to decide whether cash back would make it an equity loan. Leverage, reserves, and pricing vary by lender and program; the final terms follow the full file review.
If you hold a conventional loan: FHA is a new loan, not a refinance of an FHA loan. The same FHA premium, appraisal and occupancy rules apply as for any borrower. The homestead rules apply too if you take cash.
If you are not sure: Get the documents first. Do not shop rates or programs until you know what the existing loan is.
A Worked Timeline for an Acreage Homestead
Picture a Texas homeowner on a rural property whose equity loan closed some time ago. The timeline looks like this, with no dollars attached.
1. Day one of the clock: the equity loan closes.
2. Twelve months later: the first anniversary passes. A non-equity refinance can close on or after this date, not before.
3. Before applying: the owner pulls the closing file, confirms the loan type, and checks that the home is still the principal residence.
4. At application: the lender provides the written notice about equity-loan protections ending.
5. Appraisal: the appraiser values the home and decides how to treat any excess land.
6. The 80% test: total debt on the homestead is compared to the appraised value. If acreage was excluded and value fell, the margin shrinks.
7. Waiting period, then closing: the mandatory wait passes and the loan closes with no cash advanced beyond payoff and actual costs.
There is one exception worth knowing. The Texas Office of Consumer Credit Commissioner has guidance on home equity loans. It says an equity loan may be refinanced into another equity loan before one year if the home sits in a declared disaster area and the owner asks on oath. That covers equity-to-equity only, not the non-equity exit. The same guidance says a modification that does not replace the note or advance new money is not a new extension of credit.
Is It the Right Move? Weigh the Tradeoffs
Converting out of an equity loan can feel like pure relief. It is not free of tradeoffs.
The state notice warns you about what you lose. After conversion, the 80% cap and the fee cap that protect equity-loan borrowers no longer apply to the new loan. A lender may be able to foreclose without a court order, and you may be personally liable for the debt. For many borrowers that is acceptable. It should be a choice, not a surprise.
Your payment can also change. The rate, the term, mortgage insurance, and the loan balance all move it. Up or down depends on your situation, so ask for a Loan Estimate and compare it with your current loan side by side.
On FHA, mortgage insurance works like this. There is an upfront premium of 1.75% of the base loan, usually financed into the balance. There is also an annual premium between 0.15% and 0.75% of the balance, depending on term, amount and LTV. On a thirty-year loan above 90% LTV, the annual premium lasts for the term. At or below 90%, it ends after eleven years. That is the mechanism, not a price quote.
Lendmire’s FHA cash-out refinance program page lays out the loan itself.
What the Lender Will Ask For
Expect to gather these items on an acreage refinance:
- The closing documents from the existing loan, showing its type
- A title commitment confirming the homestead status and any other liens
- Proof the home is your principal residence
- A legal description showing how much land is in the homestead
- Any agricultural exemption paperwork
- A decision score of 580 or higher for the wholesale FHA programs Lendmire works with
- Income and debt documents, since the automated finding governs most files
On ratios, the base pair is 31/43 (housing to total debt) with no compensating factors. Documented compensating factors can reach 40/50 at the top tier. FHA county loan limits apply and change every year, so ask for your county’s current limit instead of relying on a number you read online.
The Texas notice and the affidavit-and-agreement forms are part of the package. Your title company should walk you through them.
Common Mistakes on Acreage Refinances
These are the ones that cost borrowers time.
- Treating a refinance as rate-and-term when cash comes back. Even small cash to you can turn a non-equity refinance into an equity loan. The rules do not allow a mislabeled rate-and-term loan.
- Skipping the one-year clock. The date runs from the earlier loan’s closing, not from when you decided to refinance.
- Assuming all the land counts. Appraisers may exclude acreage that could be sold separately.
- Ignoring other liens. The 80% test counts total debt on the homestead, not just the first mortgage.
- Assuming FHA works the same in Texas as elsewhere. Confirm in writing that your lender can do the FHA loan you want on your homestead.
- Missing the notice. The written notice and the waiting period that follows are not optional steps.
Key Terms Defined
Home equity loan: A loan that lets you borrow against your homestead under special state rules, including a combined-debt cap and the right to certain protections.
Rate-and-term refinance: A new loan that replaces the old one to change the interest rate or the length of the loan, without cash back beyond payoff and costs.
Cash-out refinance: A new, larger loan that pays off the old one and gives you the difference in cash.
Seasoning: The waiting period a loan or ownership must sit before the next step. Here, 12 months.
LTV (loan-to-value): The loan balance as a share of the home’s appraised value.
Excess land: Land the home does not need that could be sold on its own, which an appraiser may leave out of value.
Frequently Asked Questions
Can I refinance a Texas equity loan into a regular mortgage?
Yes, if you meet the conditions. The new loan cannot close before the first anniversary of the old one, no new money can be advanced, total debt must stay at or under 80% of value, and the written notice must be given. The loan then loses equity-loan status.
Can I take more cash out right after an equity loan?
Not in the first year, except in a declared disaster area on a sworn request. After that, a new cash-out is another equity loan. The 80% cap and the one-equity-loan-at-a-time rule apply.
Is FHA cash-out available on a Texas homestead?
Most lenders report it is not, since FHA does not insure Texas equity loans on a homestead. A clear line in HUD’s own text is hard to find, so ask your lender to confirm in writing. If an FHA path is allowed, the program reaches 80% LTV on a home owned and occupied for 12 months. Terms vary by lender guidelines, property type, leverage, credit profile, and full file review.
Does my land count toward the loan’s value?
Sometimes only in part. An appraiser can leave out excess land that could be sold separately, which lowers the value used for the LTV test. Homestead acreage limits apply as well.
Does an ag exemption stop me from refinancing?
No. The old ban on equity loans against land with an agricultural exemption was repealed, and lenders may now close those loans.
Next Step
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. Everything here is subject to lender guidelines and full file review, and none of it is a commitment to lend.
For your own numbers, request a scenario review with Lendmire.
About Lendmire
Lendmire is a mortgage brokerage (NMLS# 2371349) licensed for consumer mortgage lending in 16 states, arranging FHA, VA, conventional and jumbo purchase and refinance loans through a wholesale lending network. Eligibility is determined by the lender on each file. Scotsman Guide named Lendmire a Top Mortgage Workplace in both 2025 and 2026.
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References
1. S.J.R. 60 handout (law firm summary)
2. sml.texas.gov: Sml Report on Mortgage Lending in Texas
4. HUD Handbook 4000.1 (Update 15)
5. Texas OCCC Home Equity Guidance
This article is part of Lendmire’s FHA Loan series — every loan program’s qualification details, guidelines, and scenarios live on the loan options page.
Related reading: Can a Conventional or FHA Borrower Do a VA Cash-Out in Year One? · How to Close a Texas FHA Cash-Out on an Existing FHA Loan · Can You Get an FHA Cash-Out When Conventional Is Too Costly?
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
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Required disclosures. Lendmire (NMLS# 2371349) operates as a licensed mortgage broker, not a direct lender or depository. The discussion in this article is general in nature and should not be relied upon as financial, legal, or tax advice — every investment scenario is unique and should be reviewed by a qualified professional. Any loan inquiry is subject to lender underwriting, and this article is not a commitment to lend or a guarantee of approval. Mortgage rates, loan terms, and program guidelines vary by borrower, property, and state, and may change without notice. Equal Housing Opportunity. Verify licensure at NMLS Consumer Access.