The Quick Read: Usually well below the legal ceiling: on a Texas primary-residence homestead, the state constitution caps all liens combined at 80% of fair market value, while the asset depletion path in Lendmire’s wholesale network lists a tighter 60% cash-out ceiling, so the lower program limit usually sets the cash. Asset depletion decides whether a borrower qualifies. It does not raise the amount.
- The Texas cap counts every lien on the home, not just the new loan, so existing balances come off the top first.
- On the asset depletion path, a cash-out refinance on a principal residence, second home or investment property tops out at 60% leverage, subject to underwriting.
- Cash-out proceeds never count as qualifying assets on the depletion path.
- A rental is not a Texas homestead loan, so the constitutional cap does not apply to it. The program’s own leverage limit does. Terms depend on the lender’s guidelines, the property type, the leverage, and a full review of the credit profile.
At a Glance: Two Tests, Two Ceilings
An asset depletion cash-out has to clear two separate gates. The first is collateral: how much equity the law and the program allow you to borrow against. The second is qualification: whether your assets, turned into monthly income, carry the new payment. The smaller result controls the file.
| Rule | Texas homestead cash-out | Does asset depletion change it? |
|---|---|---|
| All liens combined | 80% of fair market value | No |
| What counts toward the cap | Every lien of record | No |
| Open equity loans | One at a time | No |
| Waiting period before closing | 12 days (statutory) | No |
| Program cash-out leverage | 60% on the depletion path | This is the program’s own limit |
The first four rows come from the Texas Constitution. The last row comes from the program. Those are different rulebooks, and borrowers often mix them up.
How the Texas Ceiling Works
The 80% figure is constitutional, so no lender can waive it on a homestead. Article XVI, Section 50 of the Texas Constitution sets the framework. The Texas A&M Real Estate Research Center explains that home equity loans in Texas fall into three categories: cash-out refinances, home equity loans and lines of credit. It also notes that the constitution itself spells out many of the rules.
The formula is short. Take 80% of the appraised value. Subtract every existing lien, including second mortgages. Subtract costs. What remains is the legal maximum cash.
Percentages make this easy to see. Say existing liens equal 50% of the home’s value. The cap leaves 30% of value before costs. Say existing liens equal 70%. The cap leaves 10%. A free-and-clear home leaves the full 80%, and it still counts as a cash-out loan.
Eighty percent is not the amount you receive. It is the ceiling on total debt against the house.
How Asset Depletion Creates Income
Asset depletion is a way to qualify, not a separate cash-out product. Across the wholesale network there are two asset-based paths, and a borrower is qualified on one at a time.
| Feature | Asset qualifier path | Asset depletion path |
|---|---|---|
| How it qualifies | Assets cover the whole loan | Assets become monthly income |
| Income documented | None | Derived income runs through debt-to-income |
| Leverage | 80% purchase, 75% refinance | 80% purchase or rate-and-term, 60% cash-out (65% on an investment-property purchase or rate-and-term) |
| Loan amounts | Up to $4,000,000 | $125,000 to $3,500,000 |
| Statements | 60 days of seasoning, two months per account | One statement within 45 days, others at least 120 days old |
On the depletion path, each asset class counts at a set share of its balance. Cash accounts and certificates of deposit count at 100%. Securities count at 80%, private stock at 75%, retirement accounts at 70% at any age, and real-estate equity at 60%. Custodial accounts, deferred compensation, escrow accounts, foreign funds, cash on hand, stock options and unvested restricted stock units are not eligible.
The conversion divides usable assets by 60 months. Take $1,500,000 in securities (80% counts as $1,200,000) plus $300,000 in cash (100%). That is $1,500,000 usable, divided by 60, or $25,000 of monthly qualifying income. That income then has to carry the housing payment and other debts through the debt-to-income test. This arithmetic is illustrative, and the lender’s own calculation governs.
The assets stay where they are. The division is a qualifying convention, not a withdrawal plan. Tax treatment varies, so consult a qualified professional before moving any investments.
Which Limit Wins?
For a Texas homestead on the depletion path, the program ceiling usually binds first. The program lists 60% on a cash-out of a principal residence. The constitution allows up to 80% across all liens. The lower number wins.
Run it in percentages. Suppose existing liens equal 40% of value. The constitution would leave 40% of value before costs. The 60% program ceiling leaves 20%. Now suppose existing liens equal 55%. The constitution leaves 25%, and the program leaves 5%. The tighter the existing balance, the more the program ceiling cuts. This assumes the program’s leverage counts the existing mortgage, which is how combined leverage is normally measured. The lender confirms the exact method on your file.
Then comes the income test. A larger loan means a larger payment, and that payment goes into the debt-to-income calculation. A borrower can fit under both leverage ceilings and still fall short on income. Usable assets drive that result, and the lender’s score and loan-amount matrix sets the credit requirement. A first-time investor on the depletion path needs a 700 score.
Two minimums apply on this path. Qualified assets must be at least the lesser of $1,000,000 or 1.25 times the loan balance. When asset depletion is the only income source, liquid assets can never fall below $250,000. If asset income only supplements documented income, it can count up to a 45% debt-to-income ratio. In that case the minimum-assets rule is waived.
Availability on a given homestead file depends on the property, the borrower and the lender. Each file is underwritten individually through select programs.
Do Cash-Out Proceeds Count as Assets?
No. On the depletion path, cash-out proceeds never count as qualifying assets. That rule closes the loophole borrowers often hope for. You cannot pull equity out, add it to the asset pool and divide it again.
Your assets must already be there. Statements need to be at least 120 days old at application, plus the most recent one within 45 days. Funds from the sale of a business, an inheritance or a legal settlement are excused from that seasoning. The assets are fully documented. Skipping income documents is not the same as skipping documentation.
Other asset classes are not published as eligible on either path. That includes cryptocurrency, precious metals, collectibles and pledged or borrowed funds. Business accounts count only for the borrower’s ownership share. The documented route is converting the asset to a seasoned cash balance in a regulated account, with the source reviewed by the lender. Cash retained inside an entity is not yours to deplete until it reaches your personal accounts.
The Qualifier Path: When Assets Cover the Loan
Some reader files fit the other path better. On the asset qualifier path, eligible assets must equal or exceed the entire loan amount, and no income or employment is documented. Brokerage accounts, certificates of deposit, money market and savings count at 100%. Retirement accounts count at 90% under age 59½ and 100% at 59½ or older.
Here is the sanctioned shape. An $800,000 loan with $330,000 in brokerage accounts, $300,000 in a 401(k) under age 59½ (90% counts as $270,000) and $200,000 in savings counts $800,000 of usable assets. That file is reviewed on assets alone. The score floor is 600, and reserves are not required at or below 75% loan-to-value on a refinance.
Whether cash-out is allowed on this path, and at what leverage, is set by the lender and is not published. Do not plan around a qualifier-path cash-out figure.
Rentals and Edge Cases
A rental is not a homestead, and that changes the ceiling. The 80% constitutional cap, the 12-day wait and the other homestead protections apply to the primary residence, not to an investment property. On the depletion path, an investment property is limited to 60% on a cash-out and 65% on a purchase or rate-and-term refinance. The program sets those limits, not the state.
Several edge cases trip up files:
- Former homestead now rented. Prior homestead equity-loan history can follow the title. Have the title company review it before you promise cash.
- LLC ownership. Homestead protection applies to natural persons, not entities, per Lone Star Land Law. A borrower living in an LLC-owned house does not get homestead treatment, so title counsel should review those files.
- One equity loan at a time. Texas’s required consumer notice for these loans states that only one of them may be secured by the home at once. The notice also describes required waiting periods tied to the application and the disclosure, and timing varies by file and lender.
- No cash out, no homestead equity loan. A refinance that pays off only the existing mortgage is a different transaction from a cash-out.
- Outside Texas. Where no state-level cap like this applies, the program’s own leverage limit usually sets the ceiling.
Housing history also matters. The program wants 0x30x12 on housing, and one 30-day late in the last twelve months is considered case by case. Multiple bankruptcies are not eligible. A housing event needs four years of seasoning on the depletion path.
Lendmire’s piece How Much a Texas Homestead Cash-Out Refinance Funds for a Second Home covers the second-home side of the same cap.
Key Terms Defined
Homestead: the Texas primary residence of a natural person, which carries constitutional lien limits.
Combined leverage: the total of every lien on the property divided by its appraised value.
Usable assets: account balances after the program’s percentage credit for each asset class.
Qualifying income: the usable-asset total divided by 60 months on the depletion path.
Seasoning: the minimum time funds must sit in an account, shown by statements, before they count.
Common Mistakes
- Treating 80% as the share of value you can take as cash, instead of the cap on all liens.
- Expecting more assets to raise the cash-out ceiling. More assets help qualification only.
- Counting proceeds from the new loan as assets.
- Applying homestead rules to a rental, or rental leverage to a homestead.
- Leaving crypto or a business balance as is, instead of converting it to a seasoned cash balance first.
When This Is the Wrong Tool
Asset depletion fits households with large balances and little documented income, such as retirees, business sellers and people living on a portfolio. Other borrowers fit elsewhere.
If a rental’s own rent can carry the loan, DSCR financing works from the property rather than from your personal assets. Lendmire’s complete DSCR loans guide explains how that works. A bank statement program fits borrowers who document income through deposits. Lendmire’s piece Can a Texas Homeowner Get an FHA Cash-Out Refinance? covers that program’s own limits. Those programs follow their own rules, not this one’s.
Frequently Asked Questions
Can I take 80% of my home’s value as cash?
No. Eighty percent is the cap on all liens combined, so cash equals 80% of value minus existing liens and costs. On the asset depletion path, the program’s 60% cash-out ceiling for a principal residence usually cuts it further, subject to underwriting.
Does having more assets increase my cash-out?
No. More assets can improve qualification and may help you pass the income test. The cash-out ceiling still comes from the property type, the constitutional cap on a homestead and the program leverage limit.
Do I have to sell my investments to use them?
No. On the depletion path, assets are divided by 60 months to produce qualifying income, and they stay invested. The lender still reviews the statements and the source of any large deposits.
Can I use the cash I take out to qualify?
No. Cash-out proceeds never count as qualifying assets on the depletion path. The assets must already be in your accounts, with statements at least 120 days old plus one within 45 days.
Does the 80% cap apply to my rental house?
No. The cap applies to the homestead, not to an investment property. On the depletion path, the program limits investment-property cash-out to 60%.
If you are qualifying on assets rather than income and want to see how the numbers work, Lendmire can help you compare asset-based mortgage options based on your statements, the property, credit profile, leverage, and your goals. Lendmire’s consumer lending is licensed in 16 states, Texas among them. It arranges loans through select lenders as a broker, not as the lender, and nothing here is a commitment to lend.
Lendmire’s asset-based mortgage in Texas page presents the program for Texas borrowers.
About Lendmire
As a mortgage broker (NMLS# 2371349), Lendmire helps self-employed and high-net-worth borrowers in 16 states qualify on bank statements, a profit-and-loss statement, 1099s or liquid assets instead of tax returns, through wholesale lenders. Lendmire is never the lender; program terms are set by the lender and its guidelines. Scotsman Guide named Lendmire a Top Mortgage Workplace in both 2025 and 2026.
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References
1. Texas Constitution, Article XVI, Section 50
2. Texas A&M Real Estate Research Center: What to Know About Home Equity Loans in Texas
3. Lone Star Land Law: Homestead Protections in Texas
This article is part of Lendmire’s asset-based mortgage program — full qualification details, guidelines, and scenarios live on the program page.
Related reading: Maxed-Out Jumbo vs Super Jumbo Loan for a Retiree on Asset Depletion · How to Qualify for an Asset Depletion Jumbo Loan · Do Cash-Out Proceeds Count as Assets on an Asset Depletion Refinance?
Guides: Asset-Based Mortgage 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.