The Quick Read: It depends on what you already owe and what the appraisal says, but the ceiling is the same for every jumbo lender. Texas’ constitution caps your new loan plus all other liens at 80% of the home’s appraised value. Your cash is that 80% minus the liens that stay, minus costs. A jumbo program’s higher leverage on other states’ loans does not lift that cap.
The Short Answer: One Formula Decides It
Here is the whole calculation:
Maximum new loan = 80% of appraised value − any other liens that stay in place.
Your cash-in-hand is that number minus what the new loan pays off, minus closing costs. Nothing else sets the top end.
Picture a home appraised at 100% of its value. Say you owe 50% of that on the first mortgage. The cap leaves room for a new loan up to 80%, so the gross room is 30% of the home’s value. Closing costs and any payoffs come out of that.
Now say you owe 82% of value. There is no room at all. The loan can’t pay you anything, because the cap is already used up.
Most borrowers expect the cap to work like a normal equity percentage. It doesn’t. Every lien counts toward the 80%, so having 40% equity does not mean you can take 40% out.
What “Jumbo” Means Here (and What It Doesn’t Change)
A jumbo loan is any loan one dollar above your county’s conforming limit. That limit is set by the federal government each year and varies by county. Above it, the loan falls outside the standard agency programs and goes to a wholesale jumbo lender.
In the jumbo programs Lendmire arranges, the headline lane starts at a 660 decision score. Leverage on purchase loans can reach 90%, loans can go to $5,000,000 on the largest lanes, and the ratio ceiling is 50% on the fixed lanes. Cash-out sits at lower leverage than purchase, and the largest lanes add a cash cap. Every figure is subject to lender guidelines and full file review.
Here is the catch for Texas homeowners. A program’s leverage limit and Texas’ 80% cap are two separate tests, and your loan must pass both. On a Texas homestead, the 80% cap is the lower of the two, so it controls. The jumbo program’s higher headline leverage never reaches you.
One more consequence. For a new loan to be jumbo and still pass the 80% test, the home must be worth more than 1.25 times your county’s conforming limit. That math makes a Texas jumbo cash-out a high-value-home product. If your loan would land at or below the limit, it is not a jumbo at all.
Why the Ceiling Counts Every Lien
The 80% cap is not a lender preference. It is written into the Texas Constitution, which says the new loan’s principal, added to all other debt secured by valid recorded liens on the homestead, cannot exceed 80% of fair market value on the date credit is extended. The Texas Attorney General quotes that wording in a formal opinion. No lender can waive it.
Liens that count include:
- Your first mortgage, unless the new loan pays it off.
- A second mortgage or home equity line that stays in place.
- A prior Texas home equity loan.
- Other recorded liens against the homestead, such as an energy or solar lien or a tax lien.
If the new loan pays a lien off, that lien stops counting. So the cleanest way to raise your cash is often to pay off the smaller liens with the new loan. Those payoffs still reduce the check you receive.
Worked Examples at Jumbo Scale
These examples use percentages of appraised value so nothing depends on a dollar figure. They show gross room before costs.
| Scenario | Liens staying after refi | Cap | Gross room |
|---|---|---|---|
| Low balance | 20% of value | 80% | 60% of value |
| Middle balance | 50% of value | 80% | 30% of value |
| High balance | 75% of value | 80% | 5% of value |
| Over the cap | 82% of value | 80% | — |
The first row assumes the new loan replaces your first mortgage, so only 20% of other liens remain. In that row, the gross room is the new loan’s maximum, not your cash. The payoff of the old mortgage comes out of it first.
The practical read: cash is large only when your existing balance is small relative to value. At high balances, the cap leaves a thin slice, and costs can eat most of it.
What Shrinks Your Check
Several things stand between gross room and the money you receive.
The appraisal. The 80% test runs on appraised value, so the appraisal is the biggest lever. Texas requires fair market value to rest on an appraisal that is attached to a written acknowledgment signed by you and the lender. Fannie Mae’s Selling Guide describes the same requirement for agency loans. On larger jumbo amounts, a lane may call for two appraisals above its threshold amount.
A lower appraisal shrinks cash on a fixed schedule. If the home appraises 5% below what you expected, the cap falls by 80% of that 5%, which is 4 points of your original value. When the liens that stay are already high, that drop can erase the cash entirely.
Costs. Closing costs come out of proceeds or get added to the balance. Texas limits lender fees on these loans, while third-party charges such as the appraisal and title work are treated differently. Both show up on your Loan Estimate and Closing Disclosure, and you should compare them line by line.
Reserves. Jumbo lanes measure reserves in months of the full payment, and the requirement rises with the loan amount. Reserves are money you keep, not money you spend, but they must be documented. Cash from the refinance generally does not count toward them in a way that helps you.
Payoffs. If the new loan has to clear a second lien or debts the lender needs paid to qualify, that money goes straight to the creditors. It never touches your account.
Which Limit Binds First?
Two sets of rules apply at once. Here is how they compare:
| Test | Who sets it | What it limits |
|---|---|---|
| Texas total-lien cap | State constitution | New loan plus all liens, at 80% of value |
| Jumbo program leverage | Wholesale lender guidelines | Cash-out loan size, lower than purchase leverage |
| Cash cap | Lender lane guidelines | Cash you can take on the largest lanes |
| Ratio and reserves | Lender lane guidelines | Whether you qualify at all |
The decision rule is simple: take the lowest result. On a Texas homestead, the 80% cap usually comes first on leverage. The cash cap and the reserve requirement can still pull your number lower, particularly on the largest loans. Jumbo lenders also re-qualify you fully on income, credit and assets. An existing loan does not carry over, even with the same servicer.
Eligibility Checks Before You Apply
Texas law decides whether a loan is a home equity loan, not the lender’s label. Fannie Mae’s eligibility page says a loan that falls under this section of Texas law must follow its rules however the loan is marketed. Check these items first:
- Homestead status. The rules apply only to your homestead. Occupancy also affects leverage: primary, second-home and investment occupancy carry different leverage on jumbo lanes.
- Lien position. The loan must be a first lien, or any other financing must be subordinated.
- Acreage and property type. Larger parcels and mixed-use property can complicate homestead status. Have a title company and an attorney confirm yours.
- Title. A revocable trust can be the borrower only if it is a qualifying trust under Texas law.
- Prior equity loans. Texas limits how often you can take these loans, and a prior one affects the timing of your next one.
Skip the guesswork on that last item. A lender experienced in Texas home equity rules should confirm the dates before you pay for an appraisal.
The Process Rules That Shape the Timeline
Texas builds protection into the process. Expect these steps:
1. You apply, and the lender gives you a required notice. The loan cannot close until a waiting period has passed after the later of those two events. The Texas OCCC explains how the clock starts. 2. The lender orders an appraisal and you sign the fair market value acknowledgment. 3. Closing must take place at the office of the lender, an attorney or a title company. 4. After closing, a federal cancellation window applies on a refinance of your primary residence. The CFPB’s rescission rule sets the timing and the triggers. The right can be waived only for a genuine personal financial emergency.
Texas cash-out is not a rushed product. Plan around the waiting periods instead of fighting them.
Texas home equity loans are also non-recourse, which means the lender can look only to the home, not your other assets, absent actual fraud. Violations of these rules carry serious remedies, including loss of first-lien status, so a loan that follows them to the letter protects you as much as the lender.
If the Ceiling Is Too Low
Sometimes the formula leaves you short. Here are the common alternatives, and what each does to the cap:
| Option | Effect on the 80% cap |
|---|---|
| Smaller cash-out | Same cap, lower new loan |
| Home equity line | Same cap applies, each draw has a minimum |
| Pay off small liens first | Frees room under the cap |
| Keep your current loan | No new lien, no cash |
| Wait for a new appraisal | Higher value raises the cap |
A VA cash-out is not an option here. The Texas Attorney General has concluded in the opinion cited above that the VA guaranty counts as collateral beyond the homestead. FHA and USDA loans also fall outside the conventional home equity rules.
Higher conforming limits don’t help either. They change which investor can buy your loan, not the 80% cap. For a closer look at what a jumbo lender will extend, Lendmire’s piece How Much a Jumbo Cash-Out Refinance Lends on a Texas Homestead walks through it. Another Lendmire piece covers how much more interest a jumbo cash-out costs on a Texas homestead.
If your numbers clear the test, Lendmire’s jumbo cash-out refinance program is the place to start comparing structures. Lendmire is a mortgage broker, not a lender, and lenders make the final decision.
Getting Out of a Texas Home Equity Loan Later
You are not stuck in this category forever. A seasoned Texas home equity loan can be refinanced into a regular, non-home-equity loan, but only with no cash back. The loan must also meet a seasoning requirement and carry a separate notice. That path doesn’t give a jumbo borrower more cash. It only lets you leave the home equity rules behind.
Think of a jumbo cash-out as a decision with a long tail. Whatever balance you set now is what you will carry into any later refinance.
Key Terms Defined
Homestead: The home you live in as your primary residence, which Texas law protects with special rules.
Jumbo loan: A mortgage one dollar above your county’s conforming limit.
Lien: A legal claim against your home that secures a debt.
Appraised value: The home’s value as set by a licensed appraiser, which the 80% test uses.
Reserves: Money you hold after closing, counted in months of the full payment.
Non-recourse: A loan where the lender can collect only from the home, not your other assets.
Frequently Asked Questions
Can a jumbo lender go above 80% on a Texas homestead?
No. The cap is in the state constitution, so no lender or program can waive it. A jumbo lane may allow higher leverage elsewhere, but Texas cash-out on your homestead stays at 80% of value across all liens.
How low does my balance need to be to get meaningful cash?
That depends on your appraisal, but the rule of thumb is simple. The lower your existing liens are as a share of value, the more room the cap leaves. When liens that stay approach 80% of value, the room nearly disappears, and costs can wipe out what remains.
Does a lower appraisal hurt more than I think?
Yes, because the cap moves with value. Every point the appraisal falls cuts the ceiling by 0.8 points, and the lien total does not shrink to match. Borrowers close to the cap feel this most.
Can I use a HELOC alongside a Texas cash-out loan?
Usually not. The same 80% cap applies to home equity lines, and some lender guidelines don’t allow a line alongside this kind of loan. Ask about it before you apply.
Is the money taxable or deductible?
Tax treatment can depend on your situation; borrowers should speak with a qualified tax professional before relying on any deduction or credit.
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. Program figures 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 broker licensed for consumer lending in 16 states. Lendmire arranges FHA, VA, conventional and jumbo purchase and refinance loans through wholesale lenders; every file is underwritten by the lender under the applicable program guidelines. Scotsman Guide named Lendmire a Top Mortgage Workplace in both 2025 and 2026.
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References
1. Texas Constitution Art. XVI §50
2. Texas Attorney General Opinion KP-0183
3. Fannie Mae Selling Guide B5-4.1-01
4. Fannie Mae Selling Guide B5-4.1-02
5. Texas OCCC advisory bulletins
This article is part of Lendmire’s Jumbo Loans series — every loan program’s qualification details, guidelines, and scenarios live on the loan options page.
Related reading: How Much a Jumbo Cash-Out Costs to Close With Two Appraisals · How to Size a Jumbo Cash-Out on a Texas Homestead · Should a Texas Homestead Owner Trim a Jumbo Cash-Out Below the Limit?
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.