The Quick Read: Closing costs on a Texas homestead cash-out refinance have no flat price. They are a stack of line items, and only some of them sit under the state’s 2% fee cap. Third-party costs like the appraisal, survey and title premium fall outside that cap. Your Loan Estimate shows the real total on its “Estimated Cash to Close” line.
What “Closing Costs” Actually Means on a Homestead Cash-Out
Closing costs are the upfront charges for making the loan and recording the new lien. The federal consumer-finance regulator’s Loan Estimate explainer describes them as part of what you pay at closing. They also go by “settlement costs.”
Texas Cash-out refinance estimate
The starting figures are an example value with a balance and a cash request in proportion. Replace them with yours.
Editable benchmark: 7.40% as of October 15, 2026 · Freddie Mac 30-year average via FRED®. A conventional market reference, not a cash-out refinance quote.
Illustrative starting assumptions: a $285,000 home value, a $157,000 current balance, the agency cap on a one-unit principal residence, 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 cash-out refinance quote; a cash-out loan is priced by the lender at lock. The cash available is the loan the program cap allows less the balances paid off, before closing costs, which are not included. The HELOC line is the program’s combined loan-to-value ceiling applied to the same value and balance. Taxes and insurance are editable estimates. Licensed in sixteen states for consumer mortgages. On a Texas homestead the state constitution caps a cash-out refinance at the agency figure and adds a waiting period, a prescribed closing location, and a fee cap; the wholesale lane above the agency cap is not available on a Texas homestead.
A cash-out refinance replaces your current first mortgage with a new, larger one. You take the difference, after payoff and costs, as cash. Lendmire’s cash-out refinance programs follow this basic structure, and the details shift by property and state.
Texas adds a layer. Cash-out on a homestead falls under a section of the state constitution known as §50(a)(6). Texas law decides the category, not the lender’s marketing.
Here is the practical result. You cannot treat this like a cash-out in Ohio or Georgia. The fees, the equity ceiling and the waiting steps all work differently.
How the Costs Break Down
Think of the bill in four buckets. Each one behaves differently under Texas rules.
| Bucket | What it pays for | Under the 2% cap? |
|---|---|---|
| Lender-controlled fees | Origination, processing, underwriting | Generally yes |
| Third-party costs | Appraisal, survey, title premium, title exam | No, excluded |
| Prepaids and escrows | Taxes, insurance, per diem interest | Generally no |
| Optional pricing charges | Optional charge paid at closing to adjust loan pricing | Bona fide charges generally no |
The “generally” matters. Attorney commentary says appraisal management company fees are not excluded. Treat that as a starting point and confirm edge cases with a Texas attorney or title company.
Note what is missing from the table: a dollar total. No primary source gives a typical Texas cash-out closing-cost figure, and the honest answer is that it depends on your loan and your file. Your Loan Estimate is the document that answers it.
The 2% Fee Cap, Explained
The cap is the single biggest cost rule in Texas. A 2017 constitutional amendment (Proposition 2) lowered the limit on fees from 3% to 2% of the original loan principal. It also carved out the appraisal, survey, title insurance premium and title exam fees.
That carve-out creates the most common misunderstanding. “The cap is 2%, so my closing costs are 2%.” No. The cap covers a slice of the bill. Your total can run well past 2% of the loan without anything improper.
Picture a homeowner who reads “2% cap” in a headline and budgets exactly that. Then the appraisal, survey, title premium, prepaid interest and escrow deposits arrive. None of them count toward the cap. The budget misses by a wide margin. The cap is real. It just isn’t the total.
Here is the order that makes sense on paper:
1. Add up the lender-controlled fees and compare them to 2% of the loan amount.
2. Add the excluded third-party costs.
3. Add prepaids and escrow deposits.
4. Subtract the whole stack from your proceeds, or from your pocket.
The 80% Ceiling Shapes What You Net
On a Texas homestead, the loan plus every other lien on the home cannot exceed 80% of its value, per Freddie Mac’s Guide. Conventional cash-out on a one-unit primary residence in other states also tops out at 80%, so the headline number looks familiar. In Texas it comes from the constitution, not just agency policy.
LTV, or loan-to-value, is the loan balance divided by the home’s appraised value. At 80%, you must keep at least 20% equity after the new loan.
This is where costs and cash collide. Every dollar of closing cost you roll into the loan uses up room under the ceiling. That shrinks the cash you actually receive. It’s arithmetic, not a trick.
Take a home whose math allows the maximum loan. Pay costs out of pocket, and all the room goes to payoff and cash. Finance the costs, and some of that room goes to fees instead. Same ceiling. Less cash in your hand.
| Approach | Cash you bring | Cash you receive | Loan balance |
|---|---|---|---|
| Pay costs at closing | More | Larger | Lower |
| Finance costs into loan | Less | Smaller | Higher |
The CFPB’s guide to the Loan Estimate and Closing Disclosure notes that some closing costs can be financed and are disclosed separately. Financing also raises the balance you repay over the full term, which is the tradeoff to weigh.
How the Loan Moves From Application to Funding
Each step affects what you pay or what you net. Across the wholesale programs Lendmire works with, the steps below are the ones that trip people up.
1. Application and disclosure. After a complete application, you receive a Loan Estimate. Texas also requires a notice about extensions of credit, often called the “12-day letter.” Lender guidelines tie a waiting period to that notice, so no one funds a Texas homestead cash-out the same week.
2. Full appraisal. A new appraisal is required on every transaction. Appraisal waivers and value-acceptance options don’t apply. The appraised value sets your 80% ceiling.
3. Full requalification. Income, credit and assets are re-verified, even if you stay with the same lender. A same-lender refinance does not mean fewer requirements.
4. Pricing. Pricing follows how the agency classifies the loan.
5. Special documents. Texas homestead loans use their own security instrument, an affidavit and agreement, and title endorsements. That paperwork is part of why some lenders skip the product.
6. Closing and rescission. Closing happens at a lender, attorney or title company office, and spouses sign. Then the right to cancel runs before funding.
The Rescission Period and What It Does to Your Costs
You get three business days to cancel a cash-out refinance on your home. The CFPB’s right of rescission page says refinances and home equity loans carry this right. Saturdays count. Sundays and legal public holidays do not.
A waiver exists only for a genuine personal financial emergency, and it must be your own signed written statement. A pre-printed form doesn’t work. So if someone tells you the lender can simply waive it, that is not how it works.
Timing touches your costs. Funding doesn’t happen until the period ends, and that timing affects the prepaid interest and escrow figures on your Closing Disclosure.
One more point. If you cancel, your original loan stays in place. The refinance never replaces it.
Where the General Rules Break
The overview above fits most files. These edge cases don’t follow it.
You already have a Texas home equity loan. Texas law lets only one §50(a)(6) loan stand against a homestead at a time. Lender guidelines also describe a seasoning rule between these loans. Confirm the specifics with a title company before planning around it.
You want out of one. A seasoned §50(a)(6) loan can be refinanced into a regular loan through a different part of the constitution. You take no cash beyond payoff and costs, and the loan stays at or under 80%. That path avoids the cash-out classification going forward.
The property isn’t your primary home. §50(a)(6) applies only to a primary-residence homestead. Investment properties and second homes fall outside the Texas rules, and occupancy sets the leverage there. On a conventional cash-out, second homes and investment property cap at 75%, versus 80% on a one-unit primary residence.
Multi-unit homes. The rules for these Texas loans don’t allow multi-unit properties.
The loan type. A §50(a)(6) loan must be a first lien, fully amortizing, with only approved adjustable-rate types. It cannot be a second lien or a line of credit.
Government programs. Whether FHA and VA cash-out loans are available on a Texas homestead depends on how the homestead rules apply to the specific loan. The FHA Streamline and VA IRRRL are different tools. Both are reduced-documentation refinances for existing government loans, not cash-out products. The VA IRRRL carries a 0.5% funding fee unless you’re exempt.
A plain refinance. Lender sources say a straightforward refinance of a loan that isn’t a §50(a)(6) loan isn’t a §50(a)(6) transaction. That’s where rate-and-term refinancing comes in. Rate-and-term takes only incidental cash back, and it can reach 95% LTV on a one-unit primary residence, with mortgage insurance above 80%. Fannie Mae describes the cash back as small and capped. All figures are subject to lender guidelines and full file review.
What Costs Have Done Lately
Closing costs have climbed. The CFPB’s May 2024 request for information on closing costs reported that costs, especially lender-imposed ones, rose sharply. Median total loan costs on purchase loans rose more than 36% over two years. That figure covers purchase loans, not refinances. It signals direction, not what your refinance will cost.
How to Keep Costs Down
You control more than you’d guess.
- Compare Loan Estimates, not headlines. The form is standardized, so line items line up across lenders. Lender-controlled fees are where offers differ most.
- Check the cap math. Ask where each fee lands: capped, excluded, or gray area.
- Ask about the title discount. Texas regulates title rates, and a reissue discount may apply when you recently bought or refinanced. A title company can tell you whether you qualify.
- Decide on financing early. Know whether you want maximum cash or a lower balance before you lock in a loan size.
- Time the closing. Prepaid interest depends on the closing date. Your Closing Disclosure shows how much.
Who This Does and Doesn’t Fit
This explanation fits a Texas homeowner taking cash from a primary residence. It doesn’t fit a purchase buyer, whose closing costs are measured against price. It doesn’t fit someone doing a plain rate-and-term refinance with no cash.
Tax treatment can depend on your situation; borrowers should speak with a qualified tax professional before relying on any deduction or credit.
Key Terms Defined
Closing costs: The upfront charges to make the loan and transfer or record ownership, also called settlement costs.
§50(a)(6): The section of the Texas Constitution that governs cash-out loans against a homestead.
LTV (loan-to-value): Your loan balance divided by the home’s appraised value.
Per diem interest: Daily interest charged from the funding date to the start of your first payment cycle.
Escrow: Money held to pay property taxes and insurance on your behalf.
Rescission: Your legal right to cancel certain home loans after signing, under a window that depends on the loan type and the specific file.
Frequently Asked Questions
Is the 2% cap the most I’ll pay at closing?
No. The 2% cap limits certain lender-controlled fees as a share of the original loan. Appraisal, survey, title premium and title exam fees are excluded, and prepaids and escrows generally sit outside it. Your total can exceed 2% of the loan, so use the Loan Estimate’s cash-to-close line.
Can I roll closing costs into a Texas cash-out loan?
Yes, in many cases, but it reduces your cash. The loan plus all other liens cannot exceed 80% of the appraised value. Financing the costs uses part of that room. Compare cash received against a higher balance before choosing.
Do I need a new appraisal if I refinance with my current lender?
Yes. A full appraisal is required on every Texas §50(a)(6) transaction, and income, credit and assets are re-verified. Staying with the same lender doesn’t skip those steps.
Can I waive the three-day right to cancel?
Only for a bona fide personal financial emergency, and only through your own signed written statement. Pre-printed waiver forms are not allowed. Without that, funding waits until the period ends.
Does this apply to a rental or second home in Texas?
No. The Texas homestead rules apply to a primary residence. Occupancy decides leverage on other properties. A conventional cash-out on a second home or investment property caps at 75%, subject to lender guidelines.
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. Programs 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.
For current guidelines and terms, see Lendmire’s refinance programs page.
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. CFPB: What is a Loan Estimate
5. Fannie Mae
6. CFPB closing-costs request for information
This article is part of Lendmire’s cash-out refinance program — full qualification details, guidelines, and scenarios live on the program page.
Related reading: Can You Get an Appraisal Waiver on a Cash-Out Refinance? · How Much Cash Your Income Supports on a Cash-Out Refinance · How to Calculate Your Cash-Out Refinance Amount After Closing Costs
Guides: Cash-Out Refinance in Texas
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.