The Quick Read: The Texas Constitution caps the combined liens on a homestead at 80 percent of its appraised value when you take cash out. A cash-out refinance has no purchase-style down payment, so the equity you must leave in the home is the closest equivalent. That 80 percent line sits in the state constitution, not in lender policy, and it applies to a jumbo loan the same way it applies to any other. Whichever limit is stricter, the constitution or the jumbo guideline, is the one that controls.
What Does “Down Payment” Mean on a Cash-Out Refinance?
On a cash-out refinance there is no down payment. You already own the home. The practical equivalent is the equity you leave in it, which in Texas is at least 20 percent of the appraised value.
Some readers mean something else by the phrase. They want to pull cash from one home and use it as a down payment on another. That is a separate use of proceeds, and the cap still limits how much cash the first home can produce. This article covers both readings, but the math below is the equity-left-in-the-home reading.
Two quick points before the details:
- The cap measures the home’s value against all debt secured by it, not just the new loan.
- Credit strength does not raise it. A strong borrower and a marginal borrower face the same constitutional ceiling.
Key Terms Defined
Homestead: The home you live in as your primary residence, which Texas law protects and treats differently from other property.
50(a)(6) loan (also called an “A6” loan): A cash-out or home equity loan secured by a Texas homestead, named for the constitutional section that governs it.
Combined loan-to-value (CLTV): All liens on the home added together, divided by the appraised value.
Jumbo loan: A mortgage above the county’s conforming limit, which means it falls outside Fannie Mae and Freddie Mac purchase eligibility.
Lien of record: A debt secured against the property that shows in the public record, such as a first mortgage, a home equity line, or a second loan.
Fair market value: The value set by appraisal on the date the loan is made.
Why Is the 80 Percent Cap Constitutional and Not a Lender Rule?
The cap is written into the state constitution. Article XVI, Section 50(a)(6)(B) says the new principal, added to all other liens of record, cannot exceed 80 percent of the home’s fair market value on the date the loan is made. The official text is reproduced at Justia. The Texas Attorney General quotes the same limit in Opinion KP-0183 and uses an example: a borrower with 50 percent equity who takes a 30 percent cash-out stays within the limit.
The constitutional text makes no distinction by loan size, so it gives a jumbo loan no exception. A lender cannot waive the cap, and a strong credit profile cannot buy past it.
This is why the rule belongs in a different category from underwriting. Underwriting decides whether you qualify. The constitution decides how much total debt the home can carry once cash comes out.
Fannie Mae’s Selling Guide makes a related point: a loan that is an A6 loan under Texas law follows the A6 rules however the guide labels the refinance. The classification follows the law, not the label.
How Do the Cap and Jumbo Guidelines Interact?
Both apply at once, and the stricter one controls. A jumbo loan begins one dollar above the county’s conforming limit, which FHFA sets each year. That limit changes annually, so check the current figure for your county.
Across the wholesale jumbo programs Lendmire places files with, the headline lane works from a 660 decision score and leverage up to 90 percent on the right purchase file. Cash-out sits at lower leverage than purchase, and on the largest lanes the cash is capped. Loans run up to $5,000,000, with a 50 percent ratio ceiling on the fixed lanes. Reserves rise with the loan amount, and larger loans bring two appraisals above a lane’s threshold. All of this is subject to lender guidelines and full file review.
Here is the point. Jumbo leverage figures are program ceilings for the loan type. The Texas cap is a legal ceiling on a homestead. If the program would allow more than the constitution does, the constitution wins.
| Limit | Source | Who can change it |
|---|---|---|
| 80% combined liens on a homestead | Texas Constitution | No lender or investor |
| Cash-out leverage on a jumbo lane | Lender guidelines | The lane’s rules |
| Cash cap on the largest lanes | Lender guidelines | The lane’s rules |
| Credit, ratio, and reserve floors | Lender guidelines | The lane’s rules |
On most Texas homestead files, the constitutional line is the binding one. Jumbo cash-out already runs below purchase leverage, but the cash-cap and reserve rules can still bite on the biggest files.
How Is the Maximum Cash Calculated, Step by Step?
The ceiling comes from the appraisal and your existing debt, not from your income or score. Work it in this order.
1. Get the appraised value. Fannie Mae’s guide says fair market value must rest on an appraisal, attached to the borrower’s written acknowledgment of value. The borrower and lender sign that acknowledgment on or before closing.
2. Multiply the value by 80 percent. That product is the total debt the home may carry.
3. Subtract every lien of record. That includes the current first mortgage, any home equity line, and any second loan. Payoffs through the refinance come out of the same ceiling.
4. What is left is the legal limit on new cash, before costs. Closing costs financed into the loan reduce it further.
Think of it as a pie with a fixed crust. Every dollar of existing debt takes a bite before any cash reaches you.
A low appraisal shrinks the ceiling dollar for dollar. On a high-value home, a modest percentage miss on value is a large dollar swing. That is why jumbo borrowers feel appraisal variance harder than anyone else.
Worked Scenarios in Percentages
Use percentages of value, not dollar amounts. Three borrowers, each with a home appraised at 100 percent of value:
| Existing liens | Room under 80% cap | Cash-out outlook |
|---|---|---|
| 30% of value | 50% of value | Wide room before costs |
| 55% of value | 25% of value | Moderate room |
| 78% of value | 2% of value | Almost none, costs may erase it |
The third borrower is the jumbo trap. A large first mortgage taken near the top of the market, on a home that has not gained value, leaves a thin sliver. Costs financed into the loan can erase it. A strong credit score does not change that.
CFPB guidance makes a general point that applies here: no home equity option converts 100 percent of equity into cash, and lenders typically require some equity to remain. In Texas, the remaining equity is a legal minimum, not just lender comfort.
What Process Rules Shape a Texas Cash-Out?
Several fixed steps come with an A6 loan, and none of them can be waived.
1. Notice. The Texas Bankers Association’s document checklist lists a “Notice Concerning Extension of Credit” required 12 days before closing. That waiting period is statutory. It cannot be shortened to meet a purchase deadline.
2. Terms and conditions. The same checklist lists a mandatory terms and conditions agreement among the A6 documents.
3. Closing location. Per the text of the constitutional notice, closing may occur only at the office of a lender, a title company, or an attorney.
4. First payment timing. Fannie Mae’s guide says the first payment date must fall no later than two months after closing.
5. Proceeds use. Proceeds cannot buy or improve the homestead if a loan for that purpose could have been made under a different provision of the Texas Constitution.
Texas also sets a statutory cap on lender-controlled fees on these loans. Third-party charges such as the appraisal and title are generally treated separately. Ask your loan officer to show where each cost falls on the Loan Estimate.
On the compliance side, a mistake can be costly. Fannie Mae treats an A6 loan with an identified compliance failure as ineligible for sale unless a cure refinance was completed. Expect strict file handling for that reason.
Where Does the General Rule Break?
Several edge cases change the answer.
Existing home equity loan. Only one A6 loan may be secured by the home at any given time. If you already carry a home equity loan, you cannot simply add another. The route is to refinance out of it. Since 2018, Section 50(f)(2) allows a no-cash-out refinance of an existing equity loan into an ordinary mortgage when conditions are met, including the 80 percent combined limit and a 12-day notice, per Texas Legal Guide’s reproduction of the text. Other conditions apply, so ask your loan officer which ones fit your file.
Large acreage. Homestead status turns on acreage, not price. Under Texas Property Code Section 41.002, an urban homestead is limited to 10 acres, and a rural one to 200 acres for a family or 100 for a single adult. Urban status requires a municipal or platted setting, police and fire protection, and at least three of five listed utilities. This matters on estate lots, which are common in jumbo files. If you own adjacent land, the lender will want a survey showing the mortgaged homestead is a separate parcel within the permitted acreage.
Trust ownership. Fannie Mae allows a revocable living trust as an A6 borrower when it meets its trust criteria and is a qualifying trust under Texas law. Jumbo lenders set their own trust rules, so ask early.
Occupancy. A6 loans are limited to a single-unit principal residence that is your Texas homestead. Two- to four-unit properties, second homes and investment properties fall outside that framework. Occupancy also decides leverage on a jumbo lane.
Government programs. The Attorney General’s opinion discusses VA cash-out refinancing under the same constitutional framework. Details differ by program, so confirm them with a loan officer.
Jumbo versus conforming investors. Fannie Mae’s A6 rules govern loans sold to Fannie Mae, so conforming-size loans. Jumbo A6 loans stay with banks or private investors, who set their own requirements for appraisal type, reserves and credit. Some set tighter rules than the constitution requires. Ask for the lane’s overlays before you order the appraisal.
What If the Cap Blocks Your Plan?
You have a few options, each with a cost.
- Take less cash. The simplest fix is to size the request to the ceiling.
- Wait for equity. Payments and appreciation raise the cushion over time, though neither is guaranteed.
- Keep the existing loan. If you hold a first mortgage you like, a refinance that resets the loan may not be worth it. The CFPB notes a larger loan can raise the monthly payment and reset the term.
- Pay down other debt first. The CFPB’s research found that moving non-mortgage debt into mortgage debt can raise foreclosure risk. Consider whether the cash is worth that trade.
- Use a different property. Non-homestead property sits outside these rules, but it is a separate transaction, not a way around the cap on your own home.
If the purpose is a down payment on another home, remember the cash from this refinance also has to fit your debt ratios on the next loan. Run both files together before committing.
Pre-Application Checklist
1. Get a rough value estimate, then expect the appraisal to decide the real number.
2. List every lien on the home, including any home equity line.
3. Confirm the home qualifies as a homestead, including acreage.
4. Decide whether the loan is a true cash-out or a refinance out of an existing equity loan.
5. Ask how reserves and the cash cap work on the lane you are considering.
6. Plan around the fixed notice period. It will not move for a purchase deadline.
Tax treatment can depend on your situation; borrowers should speak with a qualified tax professional before relying on any deduction or credit.
If you are weighing a jumbo cash-out against keeping the loan you have, Lendmire can help you compare programs and the equity each one reaches. Lendmire’s jumbo cash-out refinance program is arranged through wholesale lenders, and every program detail is subject to lender guidelines and full file review. This is not a commitment to lend.
Frequently Asked Questions
Can a lender make an exception to the 80 percent limit for a strong jumbo borrower?
No. The limit is in the Texas Constitution, and the Attorney General treats it as a limit on valid loans. Credit score, income and loan size do not change it. A lender who closed above it would be making a loan that does not meet the constitutional standard.
Does the 80 percent count only the new loan?
No. It counts the new principal plus every other lien of record on the home. A large first mortgage, a home equity line or a second loan all use up the ceiling before any cash reaches you.
Who sets the value used in the test?
An appraisal does, measured as of the date the loan is made. Fannie Mae’s guide says the appraisal must be attached to your written acknowledgment of value. Your own estimate or a tax appraisal does not set it.
Can I buy a second home or rental with cash from this loan?
The cash can be spent as you choose, within the proceeds-use limits above, but the cap still limits how much the homestead can produce. A second home or rental is not itself eligible for an A6 loan, which requires a primary-residence homestead.
Can I do another cash-out later?
Only one A6 loan may be secured by the home at a time. If you already carry one, a new cash-out generally means refinancing out of it first, under conditions the constitution sets. Ask your loan officer what applies to your file.
For your own numbers, request a scenario review with Lendmire.
About Lendmire
Lendmire (NMLS# 2371349) is a mortgage brokerage serving homeowners and home buyers in 16 states. FHA, VA, conventional and jumbo purchase and refinance loans are arranged through wholesale lending channels; Lendmire brokers the financing and the lender underwrites each application. 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
2. Texas Attorney General Opinion KP-0183
4. FHFA – Conforming Loan Limit Values for 2026
5. Fannie Mae Selling Guide B5-4.1-01
6. CFPB – Using Home Equity guide
7. Texas Bankers Association’s document checklist
8. Texas Legal Guide’s reproduction of the text
9. CFPB: CFPB Report Finds Cash Out Mortgage Refinance Borrowers Improve Credit Scores
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: Jumbo Cash-Out Refinance Rules for a Texas Homestead · Jumbo Cash-Out Appraisal Rules for a W-2 Homeowner With a Jumbo Loan · How to Structure a Jumbo Cash-Out on a Paid-Off Home Past the Cap
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
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Important disclosures. Lendmire (NMLS# 2371349) is a licensed mortgage brokerage. Lendmire is not a direct lender, depository institution, or financial advisor. All loan inquiries are subject to lender underwriting; this article does not constitute a commitment to lend. Rates, terms, and program guidelines are subject to change without notice and vary by borrower profile, property type, and state. Information in this article is general in nature and is not financial, legal, or tax advice. Equal Housing Opportunity. NMLS Consumer Access: nmlsconsumeraccess.org.