The Quick Read: Two ceilings set the number, and the lower one wins. Texas caps total liens on a homestead at 80% of its value, and the jumbo program sets its own limits on top of that. Start with appraised value, apply the Texas cap, subtract every lien that stays or gets paid off, then subtract the costs you finance. What is left is your cash, subject to lender guidelines and full file review.
Most of the confusion on these files comes from treating the Texas rule as a lender preference. It is not. It is a constitutional limit, so no credit score, reserve balance or loan program can lift it.
Lendmire arranges loans under its jumbo cash-out refinance program through wholesale lenders. It is a mortgage broker and does not lend. What follows is how the sizing works on a Texas homestead, start to finish.
What Makes a Cash-Out “Jumbo” on a Texas Homestead?
A loan is jumbo when it starts one dollar above the county’s conforming limit. That limit is federal, set by the Federal Housing Finance Agency, and it has nothing to do with Texas homestead law. The two rules answer different questions.
FHFA’s annual release explains that limits are set county by county. A higher ceiling applies only where 115% of the local median home value exceeds the national baseline, and that ceiling is capped at 150% of the baseline. Limits change every year, so check your county’s current figure before assuming a loan is jumbo.
Why it matters for sizing: a high-value texas homestead can cross the conforming line even after the 80% cap trims the loan. A home worth a lot, with a modest existing balance, produces a large new first lien. That is where the jumbo lanes come in.
Key Takeaways
- The Texas cap counts every lien on the home, not just the new loan.
- Appraised value is the lever. A lower appraisal shrinks the cap by 80% of the drop.
- Jumbo program limits sit on top of the Texas cap. Whichever is lower sets the loan.
- Texas allows one home equity loan at a time on a homestead.
- Net cash is what remains after payoffs and financed costs.
Key Terms Defined
Homestead. The home you live in as your primary residence, which Texas law protects from forced sale except for certain listed debts.
50(a)(6) loan. A Texas home equity loan, named for the section of the state Constitution that allows a lien against the homestead if conditions are met.
Combined lien total. The new loan plus every other lien secured by the home, measured against the cap.
Net cash. The money you receive after the old loan is paid off and financed costs are deducted.
Reserves. Liquid funds, counted in months of the full payment, that some lenders require you to hold after closing.
Where Does the 80% Cap Come From?
It comes from the Texas Constitution, not from lenders. The homestead is protected from forced sale except for a short list of debts. A home equity loan is one of the listed exceptions, and it is valid only when it meets the conditions.
The Texas Attorney General has written that the Constitution lists eight exceptions to forced-sale protection. A lien that does not secure one of those debts is not valid against the homestead.
The state’s consumer notice lists the working conditions:
- The loan is voluntary, with the consent of each owner and each owner’s spouse.
- The new principal plus all other liens on the home cannot exceed 80% of its value.
- You may prepay without penalty.
- Only one such loan may be secured by the home at a time.
I see borrowers miss the second bullet most often. They hear “80%” and think of the new loan alone. The cap counts everything attached to the property.
The Two Ceilings: Which One Binds?
The lower of two limits sets your loan. One is legal and fixed. The other is the program’s and varies by lane.
| Ceiling | Who sets it | What it limits |
|---|---|---|
| Homestead cap | Texas Constitution | Total liens vs. value |
| Program leverage | Wholesale lender | Loan vs. value on that lane |
| Program loan maximum | Wholesale lender | Dollar size of the loan |
| Cash cap | Some lanes | Cash you can take out |
Across the wholesale jumbo lanes Lendmire works with, leverage reaches 90% on the headline lane, and loans run to $5,000,000 on the largest lanes. Cash-out sits at lower leverage than purchase. On a Texas homestead the 80% constitutional cap is already at or below the cash-out leverage most lanes allow, so the legal cap usually binds first. All figures are subject to lender guidelines and full file review.
Where the program binds instead: a lane with a cash cap, or a very large file where the extra reserve and appraisal steps come into play. On a very large home, the 80% cap can produce a loan above a lane’s loan maximum, and then the maximum is the ceiling that matters.
The Sizing Formula, Step by Step
Here is the sequence the file follows. Do it in this order.
1. Confirm the loan is a 50(a)(6). Texas law decides this, not the lender’s label. A refinance that takes no cash out may fall outside it, but that is a question for counsel or the OCCC.
2. Start with appraised value. The appraisal and a signed fair-market-value acknowledgment drive everything below. Above a lane’s threshold amount, two appraisals are required.
3. Apply the cap. Multiply value by 80%. That is the most the home can carry in total liens.
4. Subtract liens that stay. If any other lien remains on the home, it comes off the ceiling first. A first-lien cash-out replaces your existing mortgage, so usually the only lien to subtract is one you are keeping.
5. Subtract the payoff. The existing first mortgage is paid from the new loan.
6. Subtract financed costs. Lender charges, title, survey and appraisal fees that you roll in reduce the cash.
7. What remains is your net cash. The number is subject to lender guidelines and any cash cap on the lane.
In shorthand: 80% of value, minus other liens, minus the payoff, minus financed costs.
A Worked Example With No Dollar Math
Picture a homestead that appraises at a high seven-figure value. The existing mortgage is about 45% of that value. The Texas cap allows total liens of 80%. The gap is 35 points of value, and every financed cost comes out of those 35 points.
Now say the appraisal comes in 5% lower than expected. The cap shrinks by 80% of that drop, while the payoff stays the same. The cash shrinks by that same amount, and the cushion for costs thins.
Run it a second way. A borrower owes about 70% of value. The cap leaves only 10 points. After financed costs, there may be little cash left, and the file may not be worth doing. A cash-out is a poor fit when the payoff already eats most of the headroom.
What Counts Toward the Cap?
All secured debt counts. The question for each lien is whether it stays or goes.
| Lien type | Counts toward the cap? |
|---|---|
| New first lien | Yes |
| Existing first mortgage left in place | Yes |
| Existing first mortgage paid off | No, replaced |
| HELOC on the homestead | Yes, and it is a 50(a)(6) |
| Owelty lien from a divorce | Depends on how it was made |
| Tax lien | Yes, if secured on the home |
A HELOC and a cash-out cannot both sit on one homestead. The OCCC notice’s one-loan rule covers it. If you have a HELOC, it gets paid off and closed as part of the refinance, or the refinance does not work.
Appraisal Sensitivity
The appraisal is the only input you cannot control, and it moves the answer the most.
| Appraisal result | Effect on the cap | Effect on net cash |
|---|---|---|
| Higher than expected | Rises at 80% of the gain | Rises by the same amount |
| As expected | Unchanged | Unchanged |
| Lower than expected | Falls at 80% of the drop | Falls by the same amount |
No reserves or credit score lifts the number back up. The practical step is to hand the appraiser recent comparable sales and a list of improvements before the visit, and to ask for reconsideration with specific comps if the value looks light.
What Reduces Your Net Cash?
Costs and payoffs come out before you see a dollar. Texas limits the fees the lender controls. A compliance guide from Compliance Pathways describes a 2% cap on fees to make the loan, with third-party charges such as the appraisal, survey and base title premium carved out. Treat that as a secondary summary and check the OCCC notice. Because of the carve-outs, total costs can run past 2% without a violation.
Items that reduce cash:
- Payoff of the existing first mortgage
- Any other lien being cleared
- Financed lender fees within the Texas limit
- Third-party charges for appraisal, survey and title
- Prepaid taxes and insurance set up at closing
Your Loan Estimate and Closing Disclosure show each line. Compare them to the sizing you did on paper.
Timing and Procedure
The Texas process has fixed steps that run before and after closing.
| Rule | What it means |
|---|---|
| 12-day wait | The loan cannot close before the later of 12 days after application or receipt of the lender’s notice |
| Closing location | The office of a lender, an attorney or a title company |
| Right to cancel | Three business days after signing |
| Prepayment | No penalty |
| One loan at a time | No second equity loan alongside it |
| Repeat refinance | Lenders apply a spacing rule between equity closings |
The 12-day wait is a pre-closing minimum, not a period after closing. The CFPB explains the right of rescission: Saturdays count as business days, while Sundays and legal public holidays do not. Waiver is allowed only for a bona fide personal financial emergency, in the borrower’s own written statement.
Timing also touches value. If the appraisal date and your closing date drift apart, a lender may want the value refreshed. Plan the appraisal with the notice date in mind.
Where the General Rule Breaks
The 80% rule is clean, but these cases change the file.
You already have a Texas equity loan. Refinancing it into a new equity loan starts a new 50(a)(6). Lenders apply a spacing rule between equity closings. The OCCC has also issued guidance on a disaster exception to the one-year seasoning rule.
The home is not your primary residence. The homestead rules cover the home you live in. A second home follows different logic, and the lane’s occupancy decides the leverage.
You want to exit a prior equity loan. A no-cash-out refinance that meets the Constitution’s other conditions may convert it to an ordinary mortgage. Confirm that with counsel before you plan around it.
A divorce buyout. An owelty lien can be a different lien type under the Constitution, so it is counted and documented differently.
Large acreage or unusual property. Lenders set acreage ceilings for urban and rural homesteads, and they differ. Ask before you assume the property qualifies.
Trusts. If the home is in a living trust, bring it up at the start. Whether the structure works is a counsel and lender question.
Fewer lenders on Texas cash-out. Many jumbo lenders avoid Texas homestead cash-out. A broker screens for the lanes that accept it, which is the main reason to start with the program fit rather than a single lender.
How the Loan Is Underwritten
Ability to repay is the second gate after the cap. The CFPB’s ability-to-repay rule requires the lender to make a reasonable, good-faith determination that you can afford the loan. That means weighing income or assets, employment, the payment, taxes and insurance, other debts and credit history.
On the programs Lendmire places files with, the headline jumbo lane works with a 660 decision score. Ratio ceilings are 50% on the fixed lanes, 45% on the adjustable lane and 43% on the interest-only lane. Reserves are counted in months of the full payment and rise with the loan amount. Fixed, adjustable and interest-only structures are all available, and the right one depends on how long you plan to hold the loan. Condominiums that are not warrantable are accepted on two lanes. Every figure is subject to lender guidelines and full file review, and nothing here is a commitment to lend.
Credit and reserves decide whether you qualify. They do not change the Texas cap.
Common Sizing Mistakes
- Treating 80% as the new loan only. It is the combined lien total.
- Assuming strong credit lifts the cap. It does not.
- Forgetting the HELOC. An existing one is a 50(a)(6) and blocks a second.
- Ignoring third-party costs. They sit outside the Texas fee cap and still reduce cash.
- Sizing on a hoped-for value. Size on the lower realistic appraisal.
- Using a stale conforming limit. FHFA resets it yearly.
- Confusing the label with the law. A “rate-and-term” refinance may or may not fall outside the equity rules.
Tax treatment can depend on your situation; borrowers should speak with a qualified tax professional before relying on any deduction or credit.
Pre-Application Checklist
Gather these before you ask for a number:
- A recent mortgage statement showing the payoff
- A list of every lien on the home
- Recent comparable sales and a list of improvements
- Names of every owner and spouse
- Trust documents, if the home is in a trust
- Reserve account statements
- A clear use for the cash
If you are weighing a cash-out refinance against keeping the loan you have, Lendmire can help you compare programs and the equity each one reaches.
Frequently Asked Questions
Can a high credit score raise the 80% limit on a Texas homestead?
No. The limit is constitutional and applies to total liens against the home. Credit and reserves affect whether a lender approves the file, not how much the law allows.
What if I want to keep my low first mortgage?
A cash-out refinance replaces the first lien. Keeping it means taking a second lien, and Texas allows only one equity loan at a time. The combined total of both liens must still fit under the 80% cap.
Does the cap apply to a second home?
No. The homestead rules cover your primary residence. A second home sits outside them, and on the jumbo lanes occupancy decides the leverage.
Does a jumbo loan have different Texas rules?
No. The 80% cap is the same for any size. What changes with a jumbo is the program overlay: reserves, appraisal count and any cash cap, all subject to lender guidelines.
How do I know if my loan is jumbo?
It is jumbo if it starts above your county’s conforming limit. FHFA publishes limits yearly by county, so look up the current figure for yours rather than relying on a last-year number.
For current guidelines and terms, see Lendmire’s jumbo loan programs page.
About Lendmire
Lendmire, NMLS# 2371349, is a mortgage brokerage with consumer lending licenses in 16 states. FHA, VA, conventional and jumbo purchase and refinance loans are arranged through wholesale lending partners, and each application is reviewed individually by the lender. Scotsman Guide named Lendmire a Top Mortgage Workplace in both 2025 and 2026.
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References
1. FHFA – 2026 Conforming Loan Limit Values
2. Texas Attorney General opinion GA-0279
5. Texas OCCC – Home equity lending guidance (COVID-19 measures)
6. CFPB – Ability-to-repay and qualified mortgage rule
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 to Size a Jumbo Cash-Out for a Second Home Renovation · How Much a Jumbo Cash-Out Refinance Lends on a Texas Homestead · Jumbo Cash-Out Refinance Leverage Limits on a Texas Homestead
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
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Legal disclosures. Lendmire (NMLS# 2371349) is a state-licensed mortgage brokerage that arranges financing through wholesale lender relationships. Lendmire is not a direct lender, depository institution, or registered financial advisor. The discussion above is general informational content about real estate financing — it is not financial, legal, or tax advice, and readers should consult licensed professionals for guidance on their individual circumstances. Loan inquiries are subject to lender underwriting; this article does not represent a commitment to lend. Loan terms, rates, and qualification standards vary by borrower, property, and state, and are subject to change at any time. Equal Housing Opportunity. NMLS Consumer Access: nmlsconsumeraccess.org.