The Quick Read: Texas sets a separate 80% ceiling on borrowing against a homestead, and that ceiling belongs to the Texas home-equity loan, not to the VA program. VA’s own national ceiling is 100% of the appraised value. The two limits do not blend into an “80% VA loan.” On a Texas homestead, a true VA cash-out is generally not written at all, and the 80% figure governs the conventional cash-out loan veterans use instead.
Why Do Sources Disagree About This?
A VA cash-out refinance is generally not available on a Texas homestead. The 80% cap people cite is real, but it is attached to a different loan.
Texas VA cash-out estimate
Seeded with an example value, a typical balance, and a round cash request at the first-use fee; change any field.
Editable benchmark: 7.32% as of October 22, 2026 · Freddie Mac 30-year average via FRED®. A conventional market reference, not a VA cash-out refinance quote.
Illustrative starting assumptions: a $285,000 home value, a $157,000 current balance, the Texas homestead cap with the first-use funding fee financed, a thirty-year term at the current Freddie Mac benchmark, and property taxes and insurance estimated at typical rates for Texas. Every field is editable.
Illustrative estimate only — not a Loan Estimate, approval, quote, or commitment to lend. The rate field carries the weekly Freddie Mac thirty-year conventional benchmark, a market reference and not a VA cash-out refinance quote; a VA loan is priced by the lender at lock. The total loan, funding fee included, is capped at the program leverage on the reasonable value; the fee follows the tier chosen. The cash available is what the cap allows less the balances paid off and the fee, before closing costs, which are not included. The HELOC line is the line program’s combined loan-to-value ceiling applied to the same value and balance. Taxes and insurance are editable estimates. The debt-to-income figure is a guideline; residual income decides a VA file. Licensed in sixteen states for consumer mortgages. On a Texas homestead the state constitution caps a cash-out refinance at eighty percent of value, fee included, and adds a waiting period, a prescribed closing location, and a fee cap; the calculator applies the Texas cap.
The mix-up comes from treating Texas’ limit as a tweak to the VA rule. It is a separate test written into Texas’ constitution. A VA cash-out would have to pass the VA rules and the Texas rules at once. On a homestead, it cannot pass the Texas side.
This article takes the position that the safest reading is the one lenders and title companies actually follow. It covers both limits, shows how each works, and then lays out what a Texas veteran can do with equity.
Key Takeaways
- VA’s national ceiling for a cash-out is 100% of the appraised value, including the financed funding fee.
- Texas caps a homestead cash-out loan at 80% combined, counting every lien on the home.
- The VA guaranty is treated as extra security that Texas does not allow on a homestead equity loan.
- Texas veterans have real options: a VA streamlined refinance, a no-cash refinance, or a conventional Texas cash-out.
- The decision turns on whether you need cash and whether your current loan is itself a Texas equity loan.
What Does the VA Program Allow Everywhere Else?
Outside the Texas homestead, the VA cash-out refinance program is one of the most flexible equity products around. Across the wholesale programs Lendmire places VA files with, a cash-out reaches up to 100% of the appraised value, with the financed funding fee counted inside that number. It refinances any loan type into a VA loan. It carries no mortgage insurance, and a net tangible benefit must be shown.
Seasoning applies as well. The new loan must come after the later of 210 days from the first payment on the loan being replaced and the sixth payment. The funding fee on a cash-out is 2.15% for first use and 3.3% for subsequent use, and it is waived for veterans receiving service-connected disability compensation and the other exempt groups. Residual income is the controlling underwriting test. The 580 decision-score floor in these wholesale programs is a program floor, and lenders can set their own. Everything here is subject to lender guidelines and full file review.
VA’s own handbook is the source for the ceiling. The VA Lenders Handbook chapter on refinancing says the maximum cash-out loan may not exceed 100 percent of VA’s reasonable value. Financing the funding fee or energy-efficiency improvements must not push the loan over that line. Closing costs can be paid from loan proceeds, but the loan still stays inside the maximum.
VA also sorts refinances into types. A VA program notice on refinance categories defines three. A VA streamline refinance replaces an existing VA loan with a new VA loan. A Type I cash-out has a loan amount that does not exceed the payoff. Only the Type II structure puts money in the borrower’s hands.
That is the national picture. Texas changes it for homesteads.
What Is the Texas Equity Limit?
Texas’ constitution protects a homestead from forced sale, with a short list of exceptions. One exception is the home-equity lien, which the Texas Constitution’s homestead section allows under its own conditions. Lenders call this a “50(a)(6)” loan, after the section number.
The most quoted condition is the 80% cap. The new loan, plus every other debt secured by a lien on the home, may not exceed 80% of the home’s fair market value. That figure is a constitutional limit. It is not a lender overlay, and no lender can raise it.
Three points shape how it works in practice:
- Combined, not stand-alone. The cap counts the first mortgage payoff, any second lien, and any other lien of record. It is not 80% of value in new money.
- Cash is what triggers it. Under Texas law, a refinance that puts cash in the owner’s hands beyond the payoff and closing costs is a home-equity loan. A refinance with no cash out generally is not.
- At least 20% equity stays in the home. That is the point of the rule.
The Texas Finance Commission’s own rulemaking summary on refinancing out of an equity loan shows the same 80% figure at work in a related setting, which comes up again below.
Why Doesn’t Texas’s 80% Simply Cap the VA Loan?
Because there are two separate tests, and a Texas homestead cash-out has to pass both. The first is the equity ceiling. The second is a rule against extra collateral.
The Texas constitution bars a home-equity loan from being secured by anything beyond the homestead itself. State regulators read a guaranty or surety as additional property. A VA loan carries a federal guaranty. The 2018 Texas Attorney General opinion, as summarized by law firms, concluded that the guaranty is collateral other than the homestead and so precludes a VA cash-out in Texas. Note that an attorney general opinion is advisory. It is not a statute or a court ruling. In practice, lenders and title companies underwrite to it.
Here is how the two tests sit side by side.
| Test | What it asks | Who sets it |
|---|---|---|
| Equity ceiling | Do all liens stay at or under 80% of value? | Texas constitution |
| Extra-collateral rule | Is anything besides the home securing the loan? | Texas constitution |
| VA ceiling | Does the loan stay at or under 100% of appraised value? | VA |
A loan could clear the first test and still fail the second. That is why staying under 80% does not rescue a VA cash-out on a Texas homestead. And it is why a lender blog saying “VA cash-out up to 80%” is describing something that is generally not written.
How Does the 80% Limit Set Your Maximum Cash?
The cap sets the maximum cash on the conventional Texas cash-out loan, and the math is simple. Take 80% of fair market value. Subtract every lien you have. Subtract the costs that will be financed. What is left is the most cash you could receive.
The table below uses percentages of the home’s value, with no dollar figures. It models a conventional Texas home-equity loan, not a VA loan.
| Existing liens (% of value) | Room under 80% cap | What it means |
|---|---|---|
| 40% | 40% of value | Large cushion before costs |
| 60% | 20% of value | Moderate cash room |
| 75% | 5% of value | Little left after costs |
| 85% | None | Over the cap; no cash-out |
Two things shrink the usable number. First, financed costs come out of the room. Second, the value itself matters. A lower appraisal cuts the 80% line, and the room goes with it. A home that looks like it has 60% in liens at one value can sit at 70% at a lower value. That is why a veteran who plans around a specific amount should treat the appraisal as the biggest variable.
How Much Cash Does a Texas Veteran “Lose” Compared With Other States?
The gap is the space between the national ceiling and the Texas ceiling. In most states, a VA cash-out can reach 100% of value. A Texas homestead owner using a conventional equity loan stops at 80%.
| Feature | VA cash-out (outside Texas homestead) | Texas homestead equity loan |
|---|---|---|
| Combined ceiling | 100% of appraised value | 80% of fair market value |
| Mortgage insurance | None | Typically avoided at or under 80% |
| Funding fee | Yes, unless exempt | Not applicable |
| Financed costs | Inside the 100% | Inside the 80% |
| Extra guaranty | Yes (VA) | Not allowed |
At the same equity, the Texas homestead borrower keeps at least a fifth of the home’s value untouched. A veteran with 100% of the home’s value in liens has no cash-out room under either path. A veteran with modest liens has room on both, but 20 points less of it in Texas.
One more tradeoff deserves attention. Giving up a VA loan means giving up its features, such as no monthly mortgage insurance and residual-income underwriting. A conventional loan at or under 80% typically avoids mortgage insurance too, but the veteran starts with a new loan on new terms. Compare the whole picture, not only the cash.
What Else Shapes Timing and Structure?
A Texas home-equity loan carries procedural rules that other cash-outs do not. In plain terms, they include:
- A waiting period after application or notice.
- A short right to cancel after signing.
- Closing at a lender, attorney or title office.
- A cap on certain lender fees, with items like the appraisal, survey and base title charges treated separately.
- One such loan at a time, with spacing between them.
- A non-recourse structure.
- Consent from a spouse for the lien.
Rules like these vary in detail, and they change. They should be confirmed with the lender and the title company against current Texas regulations. They also mean a Texas equity loan is a different closing experience from a VA refinance. Plan for it.
Where Does the General Rule Break?
The rule “no VA cash-out on a Texas homestead” has edges. Know them before you rule anything out.
The VA streamlined refinance (IRRRL). A standard IRRRL takes no cash out. It is generally treated as a no-cash refinance, so the Texas equity limit does not apply. The IRRRL refinances an existing VA loan into a new VA loan, including a move from adjustable to fixed, with no VA appraisal, a 0.5% funding fee unless exempt, and a net tangible benefit. Seasoning is the later of 210 days from the first payment and the sixth payment. The catch: if your current loan is itself a Texas home-equity loan, the situation changes. Have the lender and title company review it before you plan around it.
Refinancing out of an existing Texas equity loan. Texas lets an owner refinance a home-equity loan into a non-equity loan if conditions are met. The Finance Commission’s summary lists them as a timing limit, no additional funds advanced, a required disclosure, and a cap on the loan-to-value ratio. This path is about getting out of the equity loan, not about taking cash.
Property that is not your homestead. The homestead rules apply to your homestead. A second home or other property sits outside them. Because VA loans are for homes you occupy, this rarely helps a veteran. The program’s occupancy rules decide leverage, and that is a different conversation.
A paid-off home. A VA cash-out must pay off an existing lien. A home with no mortgage has nothing to refinance, so it cannot use this program.
VA purchase loans. A traditional VA purchase loan is not a home-equity loan. The Texas limit does not touch it.
How Do You Decide What to Do?
Start with your goal, then match the path.
| Your goal | Path to look at |
|---|---|
| Lower the rate or switch to fixed on a VA loan | VA IRRRL |
| Take cash, Texas homestead | Conventional Texas home-equity loan |
| Take cash, a home outside Texas | VA cash-out, up to 100% |
| Restructure with no new cash | No-cash refinance |
| Leave an existing Texas equity loan | Refinance into a non-equity loan, if conditions are met |
Then run three checks:
1. Do you actually need cash? If not, an IRRRL or no-cash refinance keeps the VA loan and avoids the 80% limit entirely.
2. What is your combined lien total against realistic value? If it sits near 75% or more, the 80% cap leaves little room once costs come out.
3. Is your current loan a Texas equity loan? That changes which refinances are open.
If you are weighing a Texas cash-out against keeping the VA loan, read Lendmire’s piece Does a VA Cash-Out Refinance Through a Broker Work Like a Bank’s?. It covers how a broker shops wholesale programs for the same file.
Key Terms Defined
50(a)(6) loan: A Texas home-equity loan named for its constitutional section, covering any cash-out loan against a homestead.
Combined loan-to-value: The total of all liens on the home, divided by the home’s value.
Reasonable value: The value VA sets through its appraisal, which drives the 100% test.
Funding fee: A VA charge, waived for exempt veterans, that is 2.15% on a first-use cash-out and 3.3% on later use.
IRRRL: VA’s streamlined refinance of an existing VA loan, with no appraisal and a 0.5% fee unless exempt.
Residual income: The money left each month after major obligations, which is VA’s controlling underwriting test.
Homestead: The home you live in and claim as your Texas residence, which carries special protections.
Common Misconceptions
“VA cash-out in Texas is allowed up to 80%.” This appears on many lender blogs. The better reading is that the guaranty counts as extra collateral, so it is generally not written.
“The 80% is a lender rule.” It is a constitutional limit, and no lender can waive it.
“The 80% applies only to the new money.” It is combined and includes your first mortgage.
“Texas bans all VA refinances.” It does not. IRRRLs and no-cash refinances are generally available.
“Fees can push a VA loan past 100%.” The funding fee and energy improvements must fit inside the 100% ceiling under the current handbook.
Frequently Asked Questions
Can I get a VA cash-out refinance on my Texas home?
Generally not on a homestead. The VA guaranty is treated as extra collateral that Texas does not allow on a home-equity loan. Some lender pages say otherwise, but lenders and title companies follow the state’s reading. A veteran who needs cash usually turns to a conventional Texas home-equity loan.
Does staying under 80% make a VA cash-out possible?
No. The 80% limit and the extra-collateral rule are separate tests. A loan can sit well under 80% and still fail the second one. That is why the equity ceiling alone does not decide the question.
Do closing costs and the funding fee count toward the limit?
Yes, when they are financed. On a VA loan they stay inside the 100% ceiling. On a Texas equity loan, they come out of the room under the 80% cap. Either way, financed costs reduce the cash you receive.
Does the Texas limit apply to a VA streamlined refinance?
Usually not, since an IRRRL takes no cash out. The exception is when your current loan is itself a Texas home-equity loan. Have a lender and title company check that before you rely on the streamlined path.
What if I already have a Texas equity loan?
You may be able to refinance it into a non-equity loan if the conditions are met. They include a timing limit, no additional funds advanced, a loan-to-value limit, and a disclosure. This is a way out of the equity loan, not a way to take more cash.
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 details are subject to lender guidelines and full file review, and nothing here is a commitment to lend.
For your own numbers, request a scenario review with Lendmire.
About Lendmire
Lendmire (NMLS# 2371349) is a mortgage brokerage serving homeowners and home buyers in 16 states. FHA, VA, conventional and jumbo purchase and refinance loans are arranged through wholesale lending channels; Lendmire brokers the financing and the lender underwrites each application. Scotsman Guide named Lendmire a Top Mortgage Workplace in both 2025 and 2026.
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References
1. VA Lenders Handbook, Chapter 6: Refinancing Loans
3. Texas Constitution, Article XVI, Section 50
4. Texas Finance Commission rulemaking summary on Section 50(f)(2)
This article is part of Lendmire’s VA cash-out refinance program — full qualification details, guidelines, and scenarios live on the program page.
Related reading: How a VA Cash-Out Refinance Limit Is Sized From Appraised Value · Can You Do a VA Cash-Out Refinance Before Seasoning Is Met? · How a Lender Counts Seasoning on a VA Cash-Out Refinance
Guides: VA Cash-Out Refinance in Texas
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.