The Quick Read: Texas writes its home equity limits into the state constitution, so they cap how much cash you can take, how soon you can close, and what the loan can cost. The core limit is 80% of your home’s value across every loan secured by the house. Texas law decides whether your loan counts as a Texas cash-out loan (called a 50(a)(6) loan), no matter what the lender calls it. A refinance with no cash back usually escapes these rules.
Why Is Texas Different?
Most states leave cash-out limits to lenders and investors. Texas does not. The rules sit in Article XVI, Section 50(a)(6) of the state constitution, which is why Texas cash-out loans are often called “50(a)(6)” loans or “A6” loans.
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: 7.32% as of October 22, 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.
The Texas A&M Real Estate Research Center explains that many home equity lending rules live in the constitution itself. State agencies add detail through rules in 7 Texas Administrative Code Chapter 153, and courts can review those interpretations.
The purpose is protection. The homestead is the one asset Texas works hardest to shield, so the state limits how much a homeowner can borrow against it.
What Counts as a Texas Cash-Out Refinance?
A Texas cash-out loan is a refinance of a homestead where you take cash beyond paying off existing liens and closing costs. That is the trigger. A refinance of a regular lien, with no cash to you at closing, is not a 50(a)(6) loan.
Here is where borrowers get tripped up. The agency labels and the Texas label do not match. Fannie Mae states that any loan that is a 50(a)(6) loan under Texas law must follow its Texas provisions, whether the Selling Guide calls it a “cash-out” or a “limited cash-out” refinance (Fannie Mae B5-4.1-02).
So a loan can look like a plain refinance on a lender’s menu and still be a home equity loan under Texas law. The state definition wins.
Across the wholesale programs Lendmire places files with, the usual conventional cash-out limit is 80% LTV on a one-unit primary residence, subject to lender guidelines and full file review. LTV, or loan-to-value, is the loan balance divided by the home’s value. In Texas, the constitution caps that figure at 80% on the homestead, so the higher-leverage wholesale cash-out lane is not written there.
The Rules at a Glance
| Rule | What it limits | Source |
|---|---|---|
| 80% equity cap | Total cash you can borrow | §50(a)(6) |
| Pre-closing wait | How soon you can close | §50(a)(6)(M) |
| Fee cap | Certain lender fees | §50(a)(6)(E) |
| Closing location | Where you can sign | §50(a)(6)(N) |
| Spousal consent | Who must agree | §50(a)(6)(A) |
| Fixed first payment | When payments start | Fannie Mae B5-4.1-01 |
Each rule below limits something different. Knowing which one binds first tells you what to plan around.
How the 80% Cap Limits Your Cash
The cap counts everything. Your new loan, added to every other debt secured against the home, cannot exceed 80% of fair market value on the day credit is extended, per the Texas A&M research center. Fannie Mae applies the same 80% limit to both LTV and combined LTV on Texas 50(a)(6) loans, despite any conflicting guide provision or automated recommendation (Fannie Mae B5-4.1-03).
The math runs like this:
1. Take the appraised value.
2. Multiply by 80%.
3. Subtract what you owe on all liens against the home.
4. What remains is the ceiling on cash and costs combined.
Picture a home with an existing first mortgage near 60% of its value. Only about 20 points of value remain under the cap. Closing costs financed into the loan eat into that room too.
Now picture a recent buyer who put 5% down. Their balance sits near 95% of value. The cap leaves nothing to take, so a Texas cash-out is simply unavailable until they build equity. Leverage, reserves, and pricing vary by lender and program; the final terms follow the full file review.
Two more points matter:
- Value is set by appraisal. Fannie Mae requires fair market value to rest on an appraisal attached to the borrower’s written acknowledgment of that value (Fannie Mae B5-4.1-01).
- Existing HELOCs count. Fannie Mae does not permit HELOC subordinate financing behind these loans, so a home equity line usually has to be paid off or dealt with at closing.
How the Timing Rules Shape Your Closing
You cannot rush a Texas cash-out. The lender must give you a state-required notice, titled “Notice Concerning Extensions of Credit Defined by Section 50(a)(6), Article XVI, Texas Constitution,” and closing cannot happen before the 12th day after the later of your application or delivery of that notice. That comes from §50(a)(6)(M)(i) and 7 TAC §153.12, both cited in the Texas Department of Savings and Mortgage Lending’s mortgage report.
After closing, a second wait begins. The federal right of rescission gives you three business days to cancel a refinance of your primary residence. The CFPB explains that the clock starts only after you sign the note, receive the accurate Truth in Lending disclosure, and get two copies of the rescission notice. Cancellation must be in writing. A phone call does not count.
Plan backward from any payoff deadline you face. If an expiring deadline drives your decision, a Texas cash-out may not fit the calendar.
How the Fee and Closing Rules Affect Cost and Logistics
Texas caps certain lender fees at 2% of the loan under §50(a)(6)(E) and 7 TAC §153.5. That cap does not equal your total closing costs. Third-party charges such as the appraisal, survey, and title premium sit outside it, so budget for them separately. Your Loan Estimate and Closing Disclosure show the full picture.
Closing logistics are strict as well:
- Closing must take place at the lender’s office, an attorney’s office, or a title company. Texas regulators note that this rule has no disaster or emergency exception.
- Every owner and every owner’s spouse must consent and attend.
- The first payment must come due no later than two months after closing, per Fannie Mae B5-4.1-01.
- The loan must be a fully amortizing first lien. Adjustable plans not on the eligible list and temporary buydowns are out.
Not every lender originates these loans. Fannie Mae requires an authorized lender that meets Texas eligibility criteria, so ask early whether a lender does Texas home equity work. A broker arranging the file can match you with lenders that do.
Which Properties and Loan Types Do the Rules Cover?
The rules attach to homestead property, meaning the home you live in. Second homes and investment property follow ordinary lender guidelines instead, and occupancy decides the leverage. Across the programs Lendmire places, conventional cash-out on a second home runs at 75% LTV, below the 80% primary-residence figure. Terms vary by lender guidelines, property type, leverage, credit profile, and full file review.
Fannie Mae’s Texas eligibility page allows detached and attached homes, PUD and condo units, and manufactured homes classified as real property under Texas law. The homestead cannot exceed the Texas acreage limit, and a borrower with adjacent land must submit evidence such as a survey. A qualifying revocable trust can be the borrower.
Government loans are less clear. Ask a broker to confirm what current lenders offer. The VA IRRRL and FHA Streamline, which involve no cash back, are different products.
Credit still matters. The wholesale conventional programs generally start at a 620 decision score, with the automated finding governing most files and a total ratio ceiling of 50%. Everything is subject to lender guidelines and full file review.
How Do the Rules Stay With the Loan?
A 50(a)(6) loan carries its status into later refinances.
The exit is a rate-and-term refinance. If the new loan pays off the existing equity loan, puts no cash in your hands, and meets the other conditions in §50(f)(2) and 7 TAC §153.45, it can convert to a non-equity loan. The state regulator confirms that under certain conditions a rate-and-term-only refinance is allowed and the loan loses its home equity status. Check the exact conditions with your loan officer.
Same lender does not mean a shortcut. Fannie Mae requires you to requalify when refinancing a prior 50(a)(6) loan, even if the lender already services it.
Which Rule Limits You First?
| Your situation | Rule that binds first |
|---|---|
| Bought recently with a small down payment | 80% equity cap |
| Large existing first mortgage | 80% equity cap |
| Have a HELOC | Subordinate financing limit |
| Payoff deadline within weeks | 12-day wait plus rescission |
| Spouse out of town | Spousal consent and closing attendance |
| Existing Texas equity loan | Requalification, then conversion rules |
What If the Rules Block Your Goal?
You have options, each with tradeoffs:
- Rate-and-term refinance. No cash back, so the Texas equity rules generally do not apply and the 80% cap does not govern the loan. Leverage follows the standard rate-and-term program limits instead, with mortgage insurance above 80%. The insurance can be cancelled at 80% and ends automatically at 78%.
- Keep your current loan. Sometimes the honest answer is to leave a good first mortgage alone.
- A home equity line or separate equity loan. Those fall under the same constitutional section. Lendmire’s piece Texas Cash-Out Refinance vs HELOC for the Same Home Equity lays out the tradeoffs.
Using proceeds matters too. Proceeds cannot buy or improve the homestead if a different constitutional provision could have funded that purpose.
Key Terms Defined
50(a)(6) loan: A Texas home equity loan, named for the constitutional section that governs it.
Homestead: The home you live in as your primary residence, which Texas law protects.
Combined LTV: All liens on the home added together, divided by its value.
Right of rescission: Your federal right to cancel certain refinances during a limited window after closing, with the timing depending on the file and the lender.
Rate-and-term refinance: A new loan that pays off the old one and costs, with only incidental cash back.
Common Misconceptions
- “A good automated approval means I’m eligible.” Fannie Mae notes a loan can get an “Eligible” recommendation and still fail Section 50(a)(6).
- “I can cancel by phone.” Cancellation must be in writing.
- “I can waive the rescission window anytime.” The CFPB says waiver applies only for a bona fide personal financial emergency.
- “Every Texas refinance is a home equity loan.” No. A rate-and-term refinance of a non-equity lien is not.
Frequently Asked Questions
Can I take out more than 80% of my home’s value in Texas?
No. On a homestead, the new loan plus every other lien cannot exceed 80% of fair market value. The limit is constitutional, so no lender can waive it.
Does a Texas cash-out refinance apply to a second home?
No. The rules attach to the homestead. A second home follows ordinary lender guidelines, and occupancy sets the leverage.
Can I refinance out of a Texas equity loan later?
Yes, under conditions. A rate-and-term refinance with no cash back can convert the loan to a non-equity loan if it meets the §50(f)(2) conditions. Otherwise the equity designation follows you into later refinances.
Do my spouse and I both have to attend closing?
Generally yes. Every owner and each owner’s spouse must consent, and closing must happen at a lender’s office, an attorney’s office, or a title company.
Does the 2% fee cap cover all my closing costs?
No. It limits certain lender fees. Third-party items like the appraisal, survey, and title premium sit outside it, so total costs run higher.
If you are weighing a cash-out refinance against keeping the loan you have, Lendmire can help you compare the options and how much equity each one may let you access through its cash-out refinance programs.
For your own numbers, request a scenario review with Lendmire.
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. Texas A&M Real Estate Research Center: What to Know About Home Equity Loans in Texas
2. Fannie Mae Selling Guide B5-4.1-02
3. Fannie Mae Selling Guide B5-4.1-03
4. Fannie Mae Selling Guide B5-4.1-01
5. Texas SML: SML Report on Mortgage Lending in Texas
This article is part of Lendmire’s cash-out refinance program — full qualification details, guidelines, and scenarios live on the program page.
Related reading: Cash Out Refinance vs Home Equity Loan for a Kitchen Remodel · Can You Do a Cash-Out Refinance for Half Your Home Value? · Cash-Out Refinance Appraisal Rules vs. a No-Appraisal Home Equity Loan
Guides: Cash-Out Refinance in Texas
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
- Mortgage Loan Originator · NMLS# 1129696 · Verify on NMLS Consumer Access
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- Lendmire LLC · Firm NMLS# 2371349 · Verify firm licensure
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.