The Quick Read: Yes, but only through a structure Texas allows on a homestead. One new loan pays off both liens. If cash comes out, it is a new Texas home equity loan. If none does, it follows a narrower no-cash path.
- The new loan counts as a Texas home equity loan (an A6) if any cash goes to the borrower.
- Combined debt against the home cannot exceed 80% of its value, and the rules allow only one A6 lien at a time.
- A no-cash refinance of an existing A6 has its own conditions, including a one-year wait.
- These rules attach to the owner-occupied homestead. They do not touch a rental.
- A rental is financed on different terms, so investors get more room to move there.
Key Terms Defined
Homestead: The home a Texas owner lives in as a primary residence. Special state rules protect it.
A6 loan: Short for Section 50(a)(6) of the Texas Constitution. It is the label for a cash-out home equity loan secured by a homestead.
Lien: A lender’s legal claim against a property until the debt is repaid.
CLTV (combined loan-to-value): All loans secured by the property, added together, divided by its value.
Rate/term refinance: A new loan that replaces old debt and returns no cash to the borrower beyond closing costs.
DSCR (debt service coverage ratio): The property’s rent divided by its full monthly housing payment: principal, interest, taxes, insurance, and any association dues. DSCR loans qualify primarily on property-level rental income covering the payment, subject to lender guidelines.
How large a line the equity supports in Texas.
An equity line is sized by combined loan-to-value, occupancy, and credit — not by rental coverage. Switch the occupancy or the credit band and the ceiling moves with it.
Investment-property lines require a 700 minimum credit score; second-home lines start at a 640 minimum and primary-residence lines at 600, and the combined-LTV ceiling steps down as the credit band drops on primary-residence and second-home lines and holds on investment-property lines; the line cap steps down on primary-residence lines and holds at every tier on investment-property and second-home lines.
A debt-to-income ratio above 45% requires 680+ credit. Profiles under 640 are limited to single-family homes. At least 75% of the approved line is drawn at closing. Ceilings, floors, and caps update from Lendmire’s centralized guideline source.
Line estimate
Illustrative estimate only — not a quote, Loan Estimate, approval, or commitment to lend. The rate is an editable assumption; equity-line pricing is variable through both the draw and repayment periods and never converts to fixed. Occupancy and credit drive the ceiling together: an investment property tops out at 70% combined LTV (minimum credit 700, line cap $500,000); a second home tops out at 90% combined LTV (minimum credit 640, line cap $500,000), with the ceiling stepping down as the credit band drops (the cap holds at every tier); a primary residence tops out at 80% combined LTV (minimum credit 600), and its $750,000 maximum line is available only at 75% combined LTV or below with a 700-or-better credit profile (720 on the longer-runway program) and a full appraisal. Lines above $500,000 require a full appraisal. Credit, debt-to-income, property type, and full underwriting review all affect the final line.
How Does Combining the Two Loans Actually Work?
The two loans never merge. A new first-lien loan pays off the old first mortgage and the old home equity loan at closing. Title work releases both old liens, and you are left with one loan and one payment.
Most people say “refinance both together” and mean exactly that. It is a payoff, not a merger. That distinction matters in Texas because the new loan gets a fresh legal label, and the label decides which rules apply.
The label depends on two questions:
1. Does any cash go to you beyond paying liens and closing costs? If yes, the new loan is an A6.
2. Did the old debt include an existing A6? If yes and no cash comes out, a narrower no-cash path may apply.
A first mortgage plus a home equity second lien is the classic Texas setup. Rolling both into one new loan is the standard way to clear the second lien. It also removes the lien-priority headaches that come with keeping it. If you keep the second lien and only refinance the first, the second lender must agree to stay behind the new loan. That step is called subordination, and a lender that refuses can stall the whole refinance.
What Do Texas Rules Change?
Texas rules cap the combined debt at 80% of the home’s fair market value and allow only one A6 lien at a time. The state constitution, Article XVI, Section 50, controls here. The Texas Constitution text reproduced by Justia sets out the 80% limit and the 12-day notice requirement. The rules apply to homesteads, and they work like this when you combine loans:
| Rule | What it means for a combined loan |
|---|---|
| 80% combined cap | New loan plus any other liens stays at or below 80% of value |
| One A6 at a time | Old A6 is paid off as part of the new loan |
| 12-day notice | Closing cannot happen before the 12th day after the later of application or notice |
| One-year gap | No new same-type loan within a year of a prior one, barring an oath exception |
| Non-recourse | Lender looks to the home, absent actual fraud |
The 80% test has a useful feature for combining. Balances that the new loan’s proceeds pay off can be excluded from the count of other liens. That is why folding an old second lien into the new loan works.
The state’s notice rule at 7 TAC §153.51 adds mechanics. A rebuttable presumption says mailed notice is received after three calendar days, not counting Sundays and federal holidays. Electronic delivery is allowed under federal e-signature rules. The same rule says the consumer notice is only a summary, and the constitution’s own terms prevail if they differ.
One more point: a homeowner has a short right to cancel after signing an A6 loan, which the Texas Bar’s consumer page describes as three days. Build that dead time into any plan tied to a purchase deadline.
Is There a Way Out of the A6 Label?
Yes, and this is where many older explanations are stale. Under the older constitutional text, any refinance of debt that included an A6 loan had to be another A6 loan. You can see that earlier language in the Texas Legislature’s SJR 7 bill text. The saying once an A6, always an A6 was accurate then.
A later amendment added a rate/term path in Section 50(f)(2). The current Section 50 text on FindLaw carries the refinance language. In practice, a no-cash refinance of an existing A6 loan has several conditions:
- At least a year has passed since the prior home equity loan closed.
- No additional equity is advanced. Proceeds pay valid liens, closing costs, and lender-required reserves only.
- Combined debt stays at or below 80% of fair market value.
- A notice specific to this refinance type is delivered to the borrower within the timeframe the Texas constitutional provisions require. It is a different form from the notice used for a cash-out A6 loan. Timing varies by file and lender.
Break any of these and the loan becomes an A6 again. A common wrinkle is a mid-application change of purpose. If a cash-out application turns into a no-cash refinance, or the reverse, the notice clock restarts. The paperwork may have to be cancelled and re-taken so the right notice is timely.
Combine or Keep Them Separate?
Combining makes sense when the first mortgage’s terms are not something you want to protect. Keeping the loans apart makes sense when they are. Here are the four routes:
| Route | Effect on first mortgage | Payments | Main trade-off |
|---|---|---|---|
| Combine into one new loan | Replaced | One | Gives up the old first mortgage’s terms |
| Refinance only the second loan | Kept | Two | May need a new A6 and a waiting period |
| Pay off the second with savings | Kept | One | Uses cash you may want elsewhere |
| Convert second to a line of credit | Kept | Two | Variable draw structure |
Picture a homeowner with a first mortgage at 55% of the home’s value and an A6 second at 15%. Treat those as illustrative modeled figures, not market data. Combined debt sits at 70%, so the 80% cap leaves about ten points of room. Fold both into a new loan for 70% of value with no cash out, and the 50(f)(2) conditions are the ones to meet. Take a new loan reaching into that last ten points, and the cash makes it an A6 under the full rules.
Reasons to combine:
- One payment replaces two.
- A variable-structure second lien goes away.
- Lien priority gets simple, with no subordination request.
Reasons not to combine:
- The old first mortgage may be cheaper than anything you would get today.
- Closing costs come out of the deal.
- The new balance may sit closer to the 80% line than you like.
This one is a genuine judgment call. The rule of thumb is to compare what the old first mortgage costs you now against what a new combined loan would cost, after closing costs. If keeping the first mortgage and only dealing with the second saves more over the time you plan to hold, skip the combination.
How Does the Process Run, Step by Step?
The Texas sequence includes required waiting periods that a standard refinance lacks. It runs like this:
1. Classify the deal. Confirm the property is your homestead, whether cash is coming out, and whether an A6 already exists.
2. Deliver the notice. The 12-day waiting period starts at the later of application or notice delivery.
3. Order an appraisal. The 80% test depends on fair market value.
4. Gather payoff statements for both liens and homestead documentation.
5. Collect consents. Owners and spouses must consent.
6. Sign. The file carries Texas-specific forms, including a home equity affidavit and agreement.
7. Release. Title work releases both old liens, and the new one is recorded.
To see how a standard agency approaches this, look at the Fannie Mae Selling Guide’s Texas A6 section. Treat it as contrast only, because DSCR files are not underwritten to agency rules. It names the Texas home equity affidavit and security instrument and notes the acreage limit on a homestead.
Why Is a Texas Homestead Different From a Rental?
The rules above follow the collateral, not the use of the money. A homestead carries the 80% cap, the 12-day wait, and the one-lien rule. A rental does not. You can pull equity from a homestead and spend it on a rental purchase, but the homestead loan still follows homestead law.
DSCR loans are designed for non-owner-occupied investment properties. Because they are business-purpose investor loans, they are reviewed differently from a standard owner-occupied mortgage. So a combined first-plus-A6 refinance on the home you live in is a homestead refinance, not a DSCR product. On a true rental, a DSCR cash-out refinance is available, and the homestead rules do not follow it.
Treat the homestead as the constrained asset and your rentals as the flexible ones. For the rental side, Lendmire’s piece Cash-Out Refinance vs Home Equity Loan for a Low First Mortgage walks through the trade-offs. The rental is a separate transaction with its own terms.
What Does Financing the Rentals Look Like?
Across the wholesale network Lendmire brokers through, standard-rental cash-out refinances top out around 75% LTV, with about six months of seasoning the common expectation. Short-term rentals sit lower, with cash-out at 70% on STR collateral. Short-term rental rules vary by city, county, HOA, and property type, so confirm local rules before relying on projected rental income. These specifics are subject to lender guidelines and a full review of property, leverage, and credit.
Credit expectations scale with the leverage you want:
- A 620 floor exists in parts of the network.
- Most programs want around 660.
- A score of 700 or better unlocks the strongest tiers.
On coverage, 1.00 is where many select programs start. A separate select-lender path takes coverage below 1.00, with leverage and terms adjusted. Stronger ratios open better pricing and leverage. Reserves vary by lender, leverage, loan size, and transaction type. They commonly run around six months of PITIA, meaning principal, interest, taxes, insurance, and association dues. For more on how these loans work, see the complete DSCR loans guide.
Clearing 1.00 is not the same as positive cash flow. DSCR compares rent to the payment only, so repairs, vacancy, management, utilities, and capital expenses sit outside the calculation. A rental can clear the number and still lose money in a bad year.
Some borrowers want to tap a rental without a full refinance. For an investment property, an equity line placed through the network caps at 70% CLTV. It requires a 700 minimum credit profile and tops out at a $500,000 line. The structure is a 5-year draw followed by a 25-year repayment, pricing floats across both periods, and at least 75% of the line is drawn at closing. Title must sit with an individual or a revocable living trust. An LLC cannot hold title on this product, subject to lender program eligibility. A property already deeded to an LLC needs a vesting change or a DSCR cash-out instead.
What If Your Primary Residence Is Involved?
On a Texas primary residence, the network caps equity lines at 80% CLTV. No higher primary tier applies in this state. Credit tiers step the ceiling down from there, and the program floor on a primary residence is a 600 credit profile. The 12-day wait, the one-lien rule, and 12-month seasoning bind primary residences only. Texas second homes and investment properties are eligible as non-homestead transactions. Properties are limited to 10 acres, and a property listed for sale in the past 60 days is ineligible. Every figure is subject to lender guidelines and full file review.
Edge Cases That Trip People Up
Under a year since the last home equity loan. The no-cash route cannot be used until a year has passed, unless an oath exception applies.
Two servicers. The first mortgage and second lien often sit with different companies. You need payoff statements from both, and both liens must be released.
A former homestead that is now rented. If a home ever carried an A6 lien, payoff and refinance become homestead-law questions, and title counsel should review the file. No clear public rule says when a former homestead stops being one, so describe your facts to counsel rather than assuming.
A non-A6 second lien. Combining a regular second lien with a first is mostly a lender-guideline question rather than a constitutional one. Ask the lender how it classifies the new loan.
Mixing purposes. A loan that pays off liens and also hands cash to the borrower is an A6, however it was described at application.
After Closing: What Changes?
A new A6 resets the one-year clock before another same-type loan. It also fills the single A6 slot, so no second A6 can sit alongside it. A 50(f)(2) refinance is a different outcome, but it carries the 80% test and its own notice. Plan any future equity draw around those limits before you sign.
Tax treatment can depend on how the funds are used and how the property is held. Investors should keep clear records and speak with a qualified tax professional before relying on any deduction.
Frequently Asked Questions
Does a cash-out refinance pay off both loans, or only the second?
It pays off whatever liens you tell the lender to include. Rolling both in is the usual choice, and the new loan becomes your only mortgage. You can also pay off just the first and keep the second, but that requires the second lender to agree to stay behind the new loan.
Does it matter whether I have a home equity loan or a HELOC?
It matters for the rules. In Texas both are home equity products secured by the homestead, and the one-lien rule counts either. A line of credit has a variable draw structure, while a home equity loan is a fixed amount. Combining either one into a new first lien works the same way.
Can I put a rental in the same refinance?
No. A homestead refinance and a rental refinance are separate transactions with different rules. Each property gets its own loan, so the homestead’s 80% cap never limits what a rental can do.
What if I have a rate I don’t want to lose on the first mortgage?
Then combining may not fit. Refinancing only the second loan, paying it from savings, or converting it to a line keeps the first mortgage untouched. Compare what the old first mortgage costs you against a new combined loan after closing costs.
Can an LLC hold a homestead loan?
No. A homestead is an individual’s primary residence. Entity ownership is a rental-property question, and any LLC financing is subject to lender program eligibility.
Next Step
If you are weighing a home equity line against a cash-out refinance and want to see how the numbers work, Lendmire can help you compare HELOC options based on the property, the equity available, credit profile, combined leverage, and your goals. As a broker, it arranges financing through select lenders in its wholesale network, and every figure is subject to lender guidelines. Equity-line placements run in 16 full-service states, narrower than the 41-market DSCR footprint, which includes Washington, D.C. Whether to combine the two loans or leave them alone comes down to the first mortgage’s terms and the 80% line, and an owner who also holds rentals can weigh a separate equity pull on those properties as a different transaction.
About Lendmire
Lendmire, NMLS# 2371349, is a mortgage brokerage that arranges home equity lines of credit through wholesale lending partners in its 16 full-service states. Lines on primary residences, second homes and investment properties are each reviewed individually by the lender under the program’s occupancy, credit and combined-loan-to-value guidelines. Scotsman Guide named Lendmire a Top Mortgage Workplace in both 2025 and 2026.
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References
1. Texas Constitution Art. XVI, Section 50
3. Texas Bar consumer page on home equity loans
4. Texas Legislature SJR 7 (78R) bill text
5. Texas Constitution Section 50
6. Fannie Mae Selling Guide B5-4.1-02
This article is part of Lendmire’s home equity line of credit program — full qualification details, guidelines, and scenarios live on the program page.
Related reading: Should I Take Money Out of Investments or Take Out a Home Equity Loan? · Is a Home Equity Loan Cheaper Than FHA Cash-Out for High-DTI Debt Payoff? · Should a One-Rental Investor Add a HELOC and Keep the First Mortgage?
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.