Texas Cash-Out Refinance Rules: How Much Equity Can You Take Out?
In Texas, a cash-out refinance on your homestead is limited to 80% of your home’s fair market value, counting every loan secured by the home. It can’t close until at least 12 days after the later of your application or the lender providing the required Texas home equity notice. Fees are capped at 2% of the loan amount, with exclusions such as interest, bona fide discount points, appraisal, survey and title premium. You can generally do one of these loans per year. These rules come from Article XVI, Section 50(a)(6) of the Texas Constitution, so they apply no matter which lender you use.
By Dustin Edwards, Principal, CapFi Lending | NMLS #577050
Reviewed by Dustin Edwards, Principal, NMLS 577050 | Last updated October 19, 2026
I’ve worked in mortgage lending for 22 years, and the Texas rules are the thing homeowners ask me about most when they want to tap their equity. National lender websites often skip them or bury them. Here is the plain version for Austin and Central Texas homeowners.
The short answer: Texas cash-out rules at a glance
| Rule | What it means for you | Source |
|---|---|---|
| 80% limit | All loans on your homestead, including the new one, can’t add up to more than 80% of the home’s fair market value when the loan is made. | Tex. Const. art. XVI §50(a)(6)(B) |
| 12-day wait | Closing can’t happen until 12 days after the later of your application or the lender providing the required Texas home equity notice. | §50(a)(6)(M)(i) |
| 1-business-day disclosure | You get the final itemized list of fees at least 1 business day before closing, unless a narrow exception applies. | §50(a)(6)(M)(ii) |
| 2% fee cap | Fees are capped at 2% of the original loan amount. Interest, bona fide discount points, a third-party appraisal, a licensed survey and the state base premium for a mortgagee title policy don’t count. | §50(a)(6)(E); 7 Tex. Admin. Code §153.5 |
| One loan at a time, once a year | Only one 50(a)(6) loan can be on your homestead at a time, and a new one generally can’t close within one year of the last one. | §50(a)(6)(K), (M)(iii) |
| Non-recourse | You aren’t personally liable for the debt unless you obtained the loan by actual fraud. | §50(a)(6)(C) |
| Court-ordered foreclosure | The lender can foreclose only with a court order. | §50(a)(6)(D) |
| Spouse consent | Every owner and every owner’s spouse must agree to the loan. | §50(a)(6)(A) |
| Closing location | Closing must take place at the office of the lender, a title company or an attorney. | §50(a)(6)(N) |
| 3-day right to cancel | You and your spouse can cancel within 3 days after closing without penalty. Texas regulators count these as business days under federal Regulation Z rules. | §50(a)(6)(Q)(viii); 7 Tex. Admin. Code §153.1, §153.25 |
Why Texas limits cash-out refinances
Why is Texas different from other states?
Texas writes its homestead protections into the state constitution (Article XVI, Section 50), so any loan that takes cash out of the home you live in must meet consumer protections most states don’t have. They aren’t lender policy; every lender has to follow them.
Official interpretations of these rules come from the Texas Finance Commission and the Texas Credit Union Commission (7 Texas Administrative Code, Chapter 153).
What is a Texas 50(a)(6) loan?
A “50(a)(6) loan” is the legal name for a Texas home equity loan, including a cash-out refinance on your homestead. The name comes from the section of the Texas Constitution that sets its rules: Article XVI, Section 50(a)(6).
You may also hear it called a “Texas home equity loan” or “Texas cash-out.” It means a loan secured by your homestead that puts cash in your hands or pays off debt that isn’t already secured by the home. A refinance that gives you cash beyond paying off existing home-secured debt and allowed closing costs generally has to be made as a 50(a)(6) loan. Your loan officer will confirm which rules apply to your refinance.
The 80% rule: how much cash you can actually take out
How much cash can I take out of my home in Texas?
All loans secured by your homestead, including the new one, can’t add up to more than 80% of your home’s fair market value on the day the loan is made. The cash you can get is roughly that 80% figure, minus what you already owe on the home, minus closing costs.
The 80% limit is combined: it counts your first mortgage, any second lien and any HELOC together. Freddie Mac’s Seller/Servicer Guide (4301.7) also caps Texas 50(a)(6) loans at 80% loan-to-value and 80% combined loan-to-value.
Hypothetical example (round numbers for illustration only, not an offer or estimate):
- Appraised fair market value of the home: $500,000
- 80% of that value: $400,000. This is the most that all loans on the home can total.
- Current mortgage balance: $250,000
- Room under the 80% limit: $400,000 − $250,000 = $150,000
In this example, the new loan could be as large as $400,000. It would pay off the $250,000 mortgage, and up to about $150,000 would be left before closing costs. Your actual figure depends on the appraisal, your existing liens, closing costs and the lender’s approval.
Timing: the 12-day notice and 1-business-day disclosure rules
How long does a Texas cash-out refinance take, and what is the 12-day rule?
A Texas cash-out refinance can’t close until 12 days after the later of two dates: the day you apply, or the day the lender provides the required Texas home equity notice. You also have to receive a final itemized list of fees at least 1 business day before closing.
The 12-day notice. The Texas Constitution requires lenders to give you a specific written notice about these loans. The constitution calls it the notice “prescribed by Subsection (g).” The 12-day clock starts from whichever is later: your application, or the lender providing that notice (§50(a)(6)(M)(i)). Lenders can’t skip it.
The 1-business-day disclosure. At least 1 business day before closing, you must receive a final itemized disclosure of the loan’s fees. The exception is narrow: if there’s a bona fide emergency or another good cause, and you agree in writing, the disclosure can be given or modified on the closing day (§50(a)(6)(M)(ii)).
The 12 days are a minimum, not a forecast; appraisal, title and underwriting usually take longer.
Fees: the 2% cap and what’s excluded
What fees count toward the 2% cap, and which don’t?
Fees on a Texas home equity loan are capped at 2% of the original loan amount (the original principal). Interest, bona fide discount points, a third-party appraisal, a licensed survey and the state base premium for a mortgagee title policy don’t count toward the cap.
The 2% cap comes from §50(a)(6)(E), and the Texas Finance Commission’s rule on it is 7 Texas Administrative Code §153.5. Before January 1, 2018, the cap was 3%. Texas voters lowered it to 2% in a 2017 constitutional amendment.
These are excluded from the 2% cap:
- Interest
- Bona fide discount points (points you choose to pay to lower your interest rate)
- A third-party appraisal
- A survey by a licensed surveyor
- The state base premium for a mortgagee title policy with endorsements
- A title examination report, if it costs less than that state base premium
Discount points must be bona fide, meaning they actually buy you a lower rate. Ask your loan officer to walk you through the itemized fee disclosure line by line.
How often you can cash out, and refinancing out of a home-equity loan
How often can I do a Texas cash-out refinance?
Only one 50(a)(6) loan can be on your homestead at a time. A new one generally can’t close within one year of the last one.
Both rules come from the constitution (§50(a)(6)(K) and (M)(iii)). The one-year rule has a narrow exception: a new loan can’t close within one year of the last one unless, on oath, you request an earlier closing due to a declared state of emergency. Plan ahead: taking too little now could mean waiting a year for more.
Can I later refinance a Texas home-equity loan into a regular rate-and-term loan?
Yes. Since January 1, 2018, you can refinance a Texas home equity loan into a regular rate-and-term loan under §50(a)(4), as long as certain conditions are met.
The conditions (§50(f)):
- At least one year has passed since the home equity loan closed.
- You don’t take any new cash beyond the costs allowed for the refinance.
- All loans on the home total no more than 80% of its value.
- The lender gives you the required notice.
For the full details on each condition, the required notice and what you give up, read how to refinance out of a Texas home equity loan under 50(f)(2).
See our refinance options and how to know when it’s the right time to refinance, or follow our Refinance Rate Watch.
Other protections: non-recourse, court-ordered foreclosure, spouse consent, closing location
Where does closing happen, and does my spouse need to sign?
A Texas home equity loan can close only at the office of the lender, a title company or an attorney. Every owner of the home, and every owner’s spouse, must consent to the loan, even if the spouse isn’t on the title.
Here are the main protections Texas builds into every 50(a)(6) loan:
- Spouse consent (§50(a)(6)(A)): each owner and each owner’s spouse must agree to the loan voluntarily.
- Closing location (§50(a)(6)(N)): closing happens only at a lender’s, title company’s or attorney’s office, not at your kitchen table.
- Non-recourse (§50(a)(6)(C)): the lender’s remedy is the home itself, not your other assets, except in cases of actual fraud.
- Court-ordered foreclosure (§50(a)(6)(D)): the lender can foreclose only with a court order.
- No prepayment penalty (§50(a)(6)(G)): you can pay the loan off early without a penalty.
- No extra collateral (§50(a)(6)(H)): the lender can’t require additional collateral.
- 3-day right to cancel (§50(a)(6)(Q)(viii)): you and your spouse can cancel within 3 business days after closing without penalty.
Can I cash out an investment property or second home under these rules?
The 50(a)(6) rules apply to your homestead, the home you live in. A cash-out refinance on an investment property or second home follows the lender’s normal guidelines instead.
Guidelines vary by program and lender, so call us at (512) 593-1336 to talk through a cash-out on a non-homestead property.
Cash-out refinance vs. HELOC vs. home equity loan in Texas
Cash-out refinance vs. HELOC vs. home equity loan in Texas: which fits?
All three are bound by the same 80% combined limit on your homestead. The right fit depends on whether you want to replace your current mortgage, keep it and add a second loan, or keep a line of credit you can draw on as needed.
| Option | How it works | Worth considering when |
|---|---|---|
| Cash-out refinance | Replaces your current mortgage with a new, larger loan and pays you the difference in cash. | You’d like one loan and are comfortable replacing your existing mortgage. |
| Home equity loan (second lien) | Keeps your current mortgage and adds a separate loan with a lump sum of cash. | You want to keep your current first mortgage as it is. |
| HELOC | Keeps your current mortgage and adds a line of credit you draw from over time. | You need money in stages, such as a remodel, rather than all at once. |
A HELOC in Texas is also capped at 80% combined loan-to-value (§50(t)). An older rule that limited HELOC draws once the balance passed 50% of the home’s value was repealed in 2018.
As a broker, we can compare options from multiple lenders side by side. Learn more about our cash-out refinance and HELOC options, or try our Austin mortgage calculator.
Is a Texas cash-out refinance right for you?
A cash-out refinance can make sense when you have enough equity, a clear use for the cash and a plan for the new loan. Use this checklist as a starting point:
- The home is your homestead (if not, different rules apply).
- All loans on the home, including the new one, would stay at or under 80% of its value.
- You haven’t closed another 50(a)(6) loan on this home within the past year.
- Your spouse is on board and can sign, even if they aren’t on the title.
- You can wait at least 12 days before closing.
- You’ve compared a cash-out refinance with a HELOC or home equity loan.
- You know how you’ll use the cash and how the new loan fits your budget.
- You’ve reviewed the itemized fee disclosure and understand what you’re paying.
If you checked most of these, a conversation is a good next step. This article is educational and isn’t legal or tax advice. For questions about your own situation, consider talking with a Texas real estate attorney or a tax professional.
FAQ
How much can I cash out in Texas?
All loans on your homestead, including the new one, can’t exceed 80% of the home’s fair market value when the loan is made. The cash you can take out is roughly that amount, minus your current mortgage balances and closing costs.
What is the 12-day rule?
A Texas home equity loan, including a cash-out refinance, can’t close until 12 days after the later of your application or the lender providing the required Texas home equity notice. It’s a waiting period written into the Texas Constitution.
How often can I do a cash-out refinance in Texas?
Only one Texas home equity loan can be on your homestead at a time, and a new one generally can’t close within one year of the last one. There’s a narrow exception for a declared state of emergency.
What fees count toward the 2% cap?
Fees are capped at 2% of the original loan amount. Interest, bona fide discount points, a third-party appraisal, a licensed survey and the state base premium for a mortgagee title policy are excluded.
Can I refinance a Texas home-equity loan into a regular loan?
Yes. Since January 1, 2018, you can refinance it into a regular rate-and-term loan if at least a year has passed, you take no new cash beyond allowed costs, all loans total no more than 80% of the home’s value, and the lender gives the required notice.
Is a Texas home-equity loan non-recourse?
Yes. You aren’t personally liable for a Texas home equity loan unless you obtained it by actual fraud, and the lender can foreclose only with a court order.
Does my spouse have to sign?
Yes. Each owner and each owner’s spouse must consent (§50(a)(6)(A)), even if the spouse isn’t on the title.
Ready to see what you can access?
Want to know how much equity you can access under Texas rules? Start your application. Or call or text CapFi Lending at (512) 593-1336.
CapFi Lending is an independent mortgage broker in Austin, Texas. We compare options from multiple lenders so you can see your choices side by side. Office visits are by appointment only.
About the author: Dustin Edwards is the Principal of CapFi Lending, NMLS #577050, with 22 years in mortgage lending. He helps Austin and Central Texas homeowners understand their options, including Texas home equity and cash-out loans. Read Dustin’s bio.
Sources: Texas Constitution, Article XVI, §50 · Texas Finance Commission Home Equity Consumer Disclosure · 7 Tex. Admin. Code §153.1 · 7 Tex. Admin. Code §153.5 · Freddie Mac Guide 4301.7 · Summary of 2017 Proposition 2 (JD Supra) · Texas Finance Commission · OCCC
Disclosures: CapFi Lending, NMLS #1692019. Dustin Edwards, NMLS #577050. 2617 Willow St Unit 1, Austin, TX 78702 (by appointment only). (512) 593-1336. Equal Housing Opportunity. Verify licensing at NMLS Consumer Access. See our licensing page. This article is for educational purposes only and isn’t legal or tax advice, a commitment to lend or an offer of credit. All loans are subject to credit approval, underwriting and property eligibility. Last reviewed October 19, 2026.
