The Quick Read: Texas caps how much equity you can pull from the home you live in, and the cap comes from the state constitution, not from a lender’s policy. The new loan plus every other lien on the home cannot exceed 80% of its value. Closing also follows a waiting period, a written value acknowledgment and a right to cancel afterward. Lendmire’s cash-out refinance programs are arranged around these rules, subject to lender guidelines and full file review.
Why Texas Writes Its Own Cash-Out Rules
Most states leave cash-out limits to lenders and investors. Texas does not. Article XVI, Section 50 of the state constitution decides when a lien on a homestead is valid. A cash-out loan on your home falls under Section 50(a)(6), so people call it a “50(a)(6) loan” or “Texas A6.”
The rules are written into the constitution’s text, as reproduced by FindLaw. A lender cannot waive them, and an investor cannot loosen them. If a lender breaks one, the lien can be defective.
The law decides whether these rules apply, not the label on your loan. A refinance that touches no equity and no existing home equity lien is generally an ordinary rate-and-term loan, and it can follow the usual rules instead. Whether a given file is one or the other depends on the facts, and the lender’s compliance review settles it.
What the Constitution Requires
Here are the core requirements of a Texas homestead cash-out loan:
| Rule | What it means for you |
|---|---|
| Equity cap | New loan plus all other liens: 80% of value at most |
| Consent | Every owner and each owner’s spouse must agree |
| Non-recourse | No personal liability, except for actual fraud |
| Foreclosure | Only by court order |
| One lien | Generally the only debt secured by the homestead, with narrow exceptions |
| Waiting period | A required waiting period applies between application or notice and closing; timing varies by file and lender |
| Cancellation | A right to cancel after closing, without penalty |
| Value acknowledgment | You and the lender sign off on fair market value |
Compare that with the conventional cash-out limits on a primary residence outside this Texas framework. Those cap at 80% of value on a one-unit home too, with 75% on two- to four-unit homes, second homes and investment property. In Texas, the cap is the same 80% for a one-unit home. It is simply a legal ceiling rather than a program choice.
One more point. Our wholesale lane that reaches 89.99% with no mortgage insurance is not written in Texas. The constitution caps a homestead cash-out at the agency figure, so that lane stays off the table here.
How the 80% Cap Works
The cap is combined. It counts the new loan plus every other lien of record on the home. Suppose your home is worth a given amount and you owe a first mortgage. The new loan must pay off that first mortgage and any other liens, and the total debt still lands at or below 80% of value. Whatever room remains is your possible cash.
Three things shrink that room:
- The appraised value. The cap uses fair market value on the date credit is extended. A lower appraisal means less cash.
- Liens that must be paid off. An existing home equity loan, tax lien or similar debt comes out of the same 80%.
- Costs rolled into the loan. Anything financed adds to the balance.
Work the numbers from the appraisal down, not from the Zestimate up. The appraisal is the number the lender and the Texas rules actually use.
The Fee Cap: What Counts and What Doesn’t
Texas also limits lender fees. Under 7 TAC §153.5, fees needed to originate, evaluate, maintain, record, insure or service the loan may not exceed 2% of the original principal. That replaced an earlier 3% figure for loans made on or after January 1, 2018, per the agencies’ rule proposal.
The cap does not cover everything on your closing paperwork. The rule excludes these:
| Counted toward the 2% cap | Outside the cap |
|---|---|
| Origination and similar lender charges | Third-party appraisal |
| Charges to evaluate or service the loan | Survey |
| Recording and related charges | State base premium for the lender’s title policy |
| Certain bona fide lender charges tied to the loan’s pricing |
So the 2% cap does not mean your whole closing bill stops at 2%. Appraisal, survey and title premiums sit outside it. A home equity loan and a later modification are treated as a single transaction for the cap, per the joint agencies’ guidance, so you cannot split fees across the two.
The Closing Sequence, Step by Step
Texas stretches a cash-out across several steps. Here is the order it typically follows.
1. Application and notice. You apply, and the lender delivers a statutory notice on a separate instrument. All owners and spouses should receive it.
2. The 12-day wait. The loan may not close before the 12th day after the later of two events: your application or the lender giving the notice. Many pages say the clock runs from application alone. The constitutional text says the later of the two.
3. Processing during the wait. Underwriting and the appraisal can continue while the clock runs. The wait delays closing, not the file.
4. Appraisal. The written fair market value acknowledgment must be based on an appraisal, and the appraisal is attached to it, per the Fannie Mae Selling Guide. Expect a full appraisal rather than a waiver.
5. Underwriting. Income, credit and assets are reviewed as they would be on any cash-out. The 80% combined test sits on top.
6. Closing. Texas requires a final-terms disclosure before closing and sets rules on where closing happens, such as the lender’s office, an attorney’s office or a title company. Your closing team confirms the details for your file.
7. Cancellation window. You and your spouse have a right to cancel after credit is extended, and the exact timing depends on your file and the documents. Federal law adds its own right to rescind on a principal dwelling, and the lender must wait until it is reasonably satisfied you have not rescinded before it disburses funds.
8. Funding. Money moves after the windows close. Timing varies by file and lender, so plan your project or payoff around that, not around closing day.
The Fannie Mae guide also says the first payment must be due no later than two months after closing. And because this is a consumer mortgage, you still receive the Loan Estimate and Closing Disclosure, as with any other.
Who Has to Be There
Consent is the part that surprises households. Each owner and each owner’s spouse must consent, even a spouse who is not on the loan. Plan for everyone to attend closing, and expect lenders to treat an out-of-town spouse or a traveling co-owner as a scheduling problem to solve early.
A home held in a revocable living trust can still work. Fannie Mae’s eligibility page allows an inter vivos revocable trust as a borrower if it meets the agency’s trust rules and Texas “qualifying trust” requirements. Raise it at the start, not at the closing table.
Which Homes Qualify
The property must be a single-unit principal residence that is your Texas homestead. The same Fannie Mae page says two- to four-unit properties, investment properties and second homes are not eligible. Occupancy decides the rules: a rental is not a homestead, so these constitutional limits do not govern it.
Where the General Rule Breaks
“Once a Texas A6, always a Texas A6.” Mostly true, with a way out. A 2017 amendment added Section 50(f)(2), explained in the legislative analysis, which lets a home equity loan be refinanced as a non-home-equity loan. Lenders typically attach conditions, such as seasoning, no cash beyond payoff and costs, an 80% ceiling and advance notice. Those conditions vary by lender.
Plan ahead if you expect to want a regular refinance later. A drop in market costs is the usual reason people want out of an A6.
Government-backed loans. The FHA Streamline and the VA IRRRL are “no cash out” products. HUD says a streamline requires an FHA-insured loan that is current, a net tangible benefit, and no cash beyond a small allowance. VA says the IRRRL is a “VA to VA” loan. Neither is a way to take cash out of a Texas homestead. Government-backed cash-out options are narrower in Texas, and treatment of them changes, so confirm current rules for your file before relying on one.
Seasoning. Conventional cash-out generally needs the first mortgage being paid off to be at least 12 months old, measured note date to note date, and a borrower on title for 6 months, with exceptions for delayed financing, inheritance and legal awards. Texas adds its own waiting period between home equity loans.
Proceeds. Fannie Mae says proceeds may not be used to buy or improve the homestead if a loan for that purpose could have been made under a different provision of the constitution.
What Can Delay or Derail a Closing
- Notice timing errors. Counting the notice period from the wrong date pushes closing.
- Missing owners or spouses. A signature gap can stall everything.
- A lower appraisal. It shrinks the 80% room and the cash.
- Lien surprises. A tax, HOA or old home equity lien takes a share of the cap.
- Known noncompliance. Fannie Mae says a 50(a)(6) is ineligible for sale if the lender knows of a failure to comply, unless the refinance is done specifically to cure it.
Cash-Out, Second Lien or Rate-and-Term?
| Option | Choose it if |
|---|---|
| Cash-out refinance | You want one new first lien and the 80% cap fits |
| Second-lien home equity loan | You want to keep a first mortgage you like |
| Rate-and-term refinance | You need no cash and want to change the loan itself |
A refinance in the standard program reaches 95% on a one-unit principal residence, with mortgage insurance above 80%, because it is not a cash-out. If cash is not the goal, it avoids the Texas cash-out structure, though it works only when no equity is taken. Tax treatment can depend on your situation; borrowers should speak with a qualified tax professional before relying on any deduction or credit.
Before You Apply: A Short Checklist
- Know every owner and spouse who must attend.
- Gather a list of every lien on the home.
- Decide what the cash is for, given the proceeds restriction.
- Ask whether you may want a regular refinance later.
- Expect a full appraisal and a few weeks of lead time in your plans.
Key Terms Defined
Homestead: The home you live in, which Texas protects under its constitution.
50(a)(6) loan: A Texas cash-out loan secured by a homestead, with the constitution’s limits.
Non-recourse: The lender cannot pursue you personally beyond the home, except for actual fraud.
Combined loan-to-value: All liens on the home, added together, divided by its value.
Rescission: Your right to cancel a loan after closing without penalty.
Seasoning: The waiting period a loan or ownership must meet before a refinance.
Frequently Asked Questions
Can I take out more than 80% of my Texas home’s value?
No. The constitution caps the new loan plus all other liens at 80% of fair market value on the closing date. Lenders cannot raise it. They can set a lower limit based on their own guidelines.
Do the 12 days start when I apply?
Not always. The loan cannot close before the 12th day after the later of your application or the lender giving the statutory notice. If the notice goes out after you apply, the clock starts at the notice.
Does the 2% fee cap cover all my closing costs?
No. It covers lender-side charges to originate, evaluate, record, insure or service the loan. Third-party costs such as an appraisal, a survey and the base title premium fall outside it.
Can I refinance out of a Texas home equity loan later?
Often, yes, under conditions. Lenders typically set conditions, so ask about them before you close the first loan.
Can a spouse who is not on the loan skip closing?
Generally no. Every owner and each owner’s spouse must consent, so plan for them to attend.
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
As a mortgage broker (NMLS# 2371349), Lendmire helps homeowners and home buyers in 16 states with FHA, VA, conventional and jumbo purchase and refinance loans arranged through wholesale lenders. Lendmire is never the lender; program terms are set by the lender and the agency 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. 7 TAC §153.5
3. Texas agencies’ SJR 60 rule proposal (7 TAC 153)
4. Joint agencies’ home equity guidance (OCCC)
5. Fannie Mae Selling Guide B5-4.1-01
6. Fannie Mae Selling Guide B5-4.1-02
7. Texas SJR 60 bill analysis (85R)
8. HUD Streamline Refinance page
This article is part of Lendmire’s Refinance series — every loan program’s qualification details, guidelines, and scenarios live on the loan options page.
Related reading: Cash-Out Refinance Mortgage Insurance Rules and the No-MI Option · How to Close a Texas Cash-Out Refinance Through the Cancellation Period · Texas Cash-Out Refinance Rules When You Have a Low First Mortgage
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.