Texas Cash Out Refinance Guide: Rules, Limits and Lenders

Yes, you can do a cash-out refinance in Texas, but the rules here are stricter than anywhere else in the country, and they’re written into the state constitution rather than set by lenders. Texas didn’t permit home equity borrowing at all until 1997. When voters finally approved it, they built in consumer protections that no other state has, and those protections still govern every cash-out refinance on a Texas homestead today.

5 Rules that Matter Most for Cash Out Refinancing in Texas:

• 80% maximum. Your total secured debt cannot exceed 80% of the home’s fair market value — no exceptions, no program overrides
• One at a time. You may hold only one home equity loan on your homestead
• 12-day waiting period. Closing cannot occur until at least 12 days after you apply and receive the required notice
• 2% fee cap. Lender fees are capped at 2% of the loan amount, excluding certain third-party charges
• Once a 50(a)(6), always a 50(a)(6). Take one, and every future refinance of that loan carries the same restrictions — unless you qualify for a specific conversion

After nearly three decades in mortgage lending, I can tell you that Texas borrowers lose more deals to the 80% cap and the 12-day clock than to credit or income. Both are absolute. Understanding them before you apply saves weeks.

Where These Rules Come From

Texas cash-out refinancing is governed by Article XVI, Section 50(a)(6) of the Texas Constitution, implemented through 7 Texas Administrative Code Chapter 153. Lenders refer to these transactions simply as “50(a)(6) loans” or “Texas home equity loans.”

That constitutional status matters. Federal programs don’t override it. Lender overlays can’t waive it. A Texas cash-out refinance follows these rules regardless of whether it’s conventional, FHA, or VA.

The Complete Texas Cash-Out Rule Set

The non-recourse provision is the one Texas borrowers should appreciate most. In most states, a lender who forecloses and recovers less than the balance can pursue you for the difference. Texas 50(a)(6) loans don’t permit that — the house is the lender’s only remedy.

Once a 50(a)(6), Always a 50(a)(6)

This is the rule that surprises people years later, and it’s worth understanding before you sign.

Once you take a Texas cash-out refinance, that loan is permanently designated a 50(a)(6) loan. Every subsequent refinance of it carries the same constitutional restrictions — the 80% cap, the 12-day wait, the fee limits — even if you take no cash out.

There is one exit. Since 2018, Texas has permitted conversion to a standard rate-and-term refinance under Section 50(f)(2), provided:

• No cash is taken out beyond refinancing the existing balance and reasonable closing costs
• At least 12 months have passed since the 50(a)(6) loan closed
• The new loan stays at or below 80% LTV
• You receive a specific written notice at least three days before closing

That conversion is worth knowing about. A borrower who did a cash-out years ago and now wants a simple rate-and-term refinance can escape the 50(a)(6) designation — but only through this path, and only if all four conditions are met.

Lender Requirements for TX Cash-Refinances Beyond the Constitution

The Texas constitutional rules set the floor for cash out mortgage liens.

Many mortgage brokers, banks, credit unions and lenders that offer cash out refinances in the state of Texas add their own standards on top:

• Credit score: typically 620 minimum for conventional, with the best pricing at 740+. Some Texas lenders go lower on FHA
• Debt-to-income: generally 43% to 50%, depending on program and automated approval
• Seasoning: most require 6 to 12 months of ownership before a cash-out
• Full appraisal: required on nearly every 50(a)(6) transaction — appraisal waivers are rare here, because the 80% calculation depends on verified value
• Reserves: two to six months of payments, more on larger loans

One practical note on the appraisal. Because the 80% cap is calculated against fair market value, your appraisal determines exactly how much you can take. A value that comes in $20,000 below expectation reduces your available cash by $16,000. Build that possibility into your planning.

How Each Cash-Out Refi Program Works in Texas

Conventional. The most common path. Capped at 80% by both Fannie Mae guidelines and the Texas Constitution — the two happen to align.

FHA. Yes, available in Texas. FHA caps cash-out at 80% nationally, which matches the Texas limit, so there’s no conflict. For requirements, see our guide to FHA cash-out refinance guidelines.

VA. Available, but the Texas Constitution overrides the VA’s more generous allowance. VA permits cash-out to 100% of value nationally; in Texas, you’re capped at 80%. Veterans frequently don’t know this until underwriting.

USDA. Not available anywhere, including Texas. USDA offers only streamlined and rate-and-term refinancing — the program has no cash-out option at all.

Non-QM and portfolio. Yes, several lenders offer Texas cash-out through bank statement, asset depletion, and DSCR programs. The constitutional rules still apply on homestead property.

The Investment Property Exception

Here’s the distinction most Texas content misses: Section 50(a)(6) applies to homestead property. An investment property you don’t occupy isn’t a homestead, which means the 80% cap, the 12-day waiting period, and the fee limits don’t apply.

That opens options. Texas investors can access DSCR cash-out refinancing on rental property under standard investor guidelines rather than constitutional ones — typically 75% LTV, qualified on the property’s rental income rather than personal income.

One caution: if the property was ever your homestead, or if you’ve claimed a homestead exemption on it, confirm its current status with your lender before assuming the exception applies.

Top 10 Texas-Headquartered Cash-Out Refinance Lenders

These lenders are headquartered in Texas and originate 50(a)(6) loans. In-state lenders handle Texas home equity transactions daily, which matters on a product where the documentation requirements are unique and a procedural error can void the lien.

Verify NMLS numbers at nmlsconsumeraccess.org before applying. Lender headquarters, program availability, and licensing change. This list reflects Texas-headquartered institutions originating 50(a)(6) loans and is not a ranking by rate or volume.

Frequently Asked Questions on Texas Cash Out Refinances

What are the Texas cash-out refinance rules?

Five govern every transaction. Your total secured debt cannot exceed 80% of fair market value. You may hold only one home equity loan at a time. Closing cannot occur until 12 days after application and receipt of the required notice. Lender fees are capped at 2% of the loan amount, excluding appraisal, survey, and title insurance. And once you take a 50(a)(6) loan, every future refinance of it carries the same restrictions unless you qualify for a 50(f)(2) conversion. These come from the Texas Constitution, not lender policy.

Can you do an FHA cash-out refinance in Texas?

Yes. FHA caps cash-out at 80% of value nationally, which matches the Texas constitutional limit — so the two align without conflict. You’ll follow both FHA requirements and the Texas 50(a)(6) rules, including the 12-day waiting period and the 2% fee cap. FHA remains attractive for Texas borrowers with lower credit, since it permits scores below conventional minimums and its mortgage insurance isn’t priced by credit score. Expect a full appraisal; waivers are uncommon on Texas home equity transactions.

Can I do a VA cash-out refinance in Texas?

Yes, but with a significant limitation. The VA permits cash-out refinancing up to 100% of appraised value nationally. The Texas Constitution overrides that, capping you at 80% on homestead property. Veterans frequently discover this mid-application. The VA’s other advantages still apply — no mortgage insurance, competitive pricing, flexible credit standards — and the funding fee is waived entirely for veterans with a service-connected disability rating. Work with a lender experienced in both VA and Texas 50(a)(6) requirements.

Can I do a USDA cash-out refinance in Texas?

No — and not anywhere else either. USDA does not offer a cash-out refinance product in any state. The program provides only streamlined and rate-and-term refinancing, both of which require that you already hold a USDA loan and neither of which returns cash to you. If you have a USDA mortgage and need equity, your options are refinancing into a conventional or FHA cash-out loan, or taking a second lien — both subject to Texas 50(a)(6) rules on homestead property.

What are the Texas cash-out refinance guidelines for credit and income?

Beyond the constitutional rules, expect a 620 minimum credit score for conventional with the best pricing at 740 and above. Debt-to-income generally caps at 43% to 50%, depending on program and automated approval. Most lenders require six to twelve months of ownership before a cash-out, plus two to six months of payment reserves. A full appraisal is nearly always required, because the 80% calculation depends on verified fair market value — and a low appraisal directly reduces your available cash.

Does the 80% rule apply to a Texas cash-out refinance on an investment property?

No. Section 50(a)(6) governs homestead property. An investment property you don’t occupy as your primary residence isn’t a homestead, so the 80% cap, the 12-day waiting period, and the fee limits don’t apply. Investment cash-out follows standard lender guidelines instead — typically 75% LTV. Confirm the property’s homestead status first, particularly if you once lived there or have claimed a homestead exemption on it, since that can change the analysis.

Do non-QM lenders offer cash-out refinancing on Texas properties?

Yes. Bank statement, asset depletion, 1099-only, and DSCR programs are all available for Texas cash-out. Self-employed borrowers whose tax returns understate actual income often find these the only workable path. The constitutional rules still apply on homestead property — 80% cap, 12-day wait, 2% fee limit — regardless of documentation type. On investment property, non-QM lenders follow standard investor guidelines. Expect pricing above conventional and confirm the lender handles Texas 50(a)(6) documentation, since procedural errors can void the lien.

How long does a Texas cash-out refinance take?

Plan on 35 to 50 days, longer than a standard refinance elsewhere. The 12-day waiting period is built into that timeline and cannot be shortened or waived — it runs from the later of your application date or your receipt of the required consumer notice. Add the appraisal, which is nearly always required, plus the three-day rescission period after closing before funds disburse. Gathering documents before you apply is the only part of the timeline you control.

What I’d Tell a Texas Homeowner

Run the 80% math before anything else. Take your home’s realistic value, multiply by 0.80, and subtract everything you owe. That’s your maximum cash — and no lender, program, or negotiation changes it.

Understand what you’re signing up for permanently. A 50(a)(6) loan carries its designation forward through every future refinance unless you qualify for the 50(f)(2) conversion. If you expect to refinance repeatedly, that matters.

And compare against a second lien before committing. A cash-out refinance reprices your entire first mortgage. If yours carries a below-market rate, a Texas home equity loan or Texas HELOC reaches the same money without touching it, subject to the same 80% cap, but leaving your first mortgage alone. For the mechanics of how cash-out works generally, see our guide to how a cash-out refinance works.

This article is educational and not legal or financial advice. Texas home equity law is complex, and procedural errors can affect lien validity. Consult a licensed Texas mortgage professional and, where appropriate, a Texas attorney.

RefiGuide.org is an advertising marketplace, not a lender.

References (APA)

• Fannie Mae. (2026). B5-4.1-03: Texas Section 50(a)(6) loan underwriting, collateral, and closing considerations.
• Texas Department of Savings and Mortgage Lending. (2026). TX home equity lending. 
• U.S. Department of Housing and Urban Development. (2026). FHA single family housing policy handbook 4000.1.