Texas Cash-Out Refinance Rules: 80% LTV, the 12-Day Wait, and What They Mean for You
Texas has some of the strictest cash-out refinance rules in the country. If you want to pull equity out of the home you live in, the Texas Constitution limits how much you can borrow, how much the lender can charge, how fast you can close, and how often you can do it. Here is what each rule means in plain English, with an example, so you can plan before you apply.
Expo Lending is a Texas-based mortgage broker serving homeowners and investors statewide. This guide is general information, not legal advice, and every loan is subject to underwriting.
The short version
- 80% cap: all loans on your homestead combined cannot exceed 80% of its fair market value.
- 2% fee cap: most lender and closing fees are capped at 2% of the loan amount (interest, bona fide discount points, and a few third-party items are excluded).
- 12-day wait: you cannot close until the 12th day after the later of your application or the required Texas home equity notice.
- Once a year: a new home equity loan cannot close within one year of the last one.
- Homestead only: these rules protect the home you live in. Rentals and investment properties follow different rules.
The Texas cash-out rules, one by one
A cash-out refinance on a Texas homestead is legally a “home equity loan” under Article XVI, Section 50(a)(6) of the Texas Constitution, which is why you will hear lenders call it a “Texas 50(a)(6)” or “Texas A6” loan.
The constitution also makes these loans non-recourse (you are not personally liable for a shortfall unless there was actual fraud) and allows foreclosure only by court order. Those protections are a big reason Texas keeps the other rules strict.
How much cash can you actually get? A quick example
Say your home appraises at $400,000 and you owe $240,000.
- 80% of $400,000 = $320,000(the most all loans on the home can total).
- $320,000 − $240,000 payoff = $80,000 of room.
- Closing costs come out of that room, so your cash in hand is somewhat less than $80,000.
If you have a second lien or HELOC, it counts toward the 80% too, and it usually has to be paid off at closing because the home equity loan must generally be the only voluntary loan of its kind on the home. These numbers are an illustration only, not a quote. Your appraisal, credit, income, and program decide the real number.
Take what you need the first time. Because a new cash-out loan generally cannot close within a year of the last one, taking too little now can mean waiting a year to get more.
Homestead vs. rental or investment property
The Section 50(a)(6) rules protect your homestead, the home you live in. A rental property, Airbnb, or other investment property that is not your homestead is not bound by the 80% limit, the 12-day wait, or the once-a-year rule. Each lender and program still sets its own maximum loan-to-value, seasoning, and pricing.
That is why many Texas investors pull equity from rentals with a DSCR loan, which qualifies on the property’s rental income instead of personal income. See investment property loans in Texas and DSCR loans for Airbnb and short-term rentals for how that works.
Self-employed? The Texas rules still apply
If you are self-employed, a bank statement, P&L, or 1099 loan can make qualifying easier than using tax returns. But if the property is your homestead and you take cash out, it is still a Texas home equity loan, so the 80% limit, fee cap, 12-day wait, and once-a-year rule all still apply. Read more in our self-employed mortgage guide.
Tell us your estimated value, what you owe, and what the cash is for. We will run the 80% math, compare programs, and map out your 12-day timeline before you apply. Mon–Fri 9 AM–6 PM Central.
Getting out of a Texas cash-out loan later
Older advice says “once a Texas home equity loan, always a home equity loan.” That is no longer true. Under Section 50(f)(2), you can refinance a Texas cash-out loan into a regular rate-and-term loan when all of these are met:
- At least one year has passed since the cash-out loan closed.
- You take no new cash beyond paying off qualifying debt and actual costs and reserves the lender requires.
- All loans on the home together stay at or under 80% of its fair market value.
- The lender gives you the required written notice within 3 business days of your application and at least 12 days before closing.
This can matter when rates drop and you want a lower payment without taking more cash.
A typical Texas cash-out timeline
- Consultation and application. We review your goal, value, payoff, and income documents.
- Texas home equity notice. The 12-day clock starts from the later of your application and this notice.
- Appraisal, title, and underwriting. These usually take longer than 12 days anyway.
- Final itemized fees at least one business day before closing.
- Closing at the lender’s, an attorney’s, or a title company’s office, with your spouse’s consent.
- 3-day cancellation period, then funding.
Mistakes that cost Texas homeowners time or money
- Counting on more than 80%. Rules in other states, or loan programs that allow higher loan-to-value elsewhere, don’t override the Texas limit on a homestead.
- Forgetting a HELOC or second lien. It counts toward the 80%.
- Not planning for the spouse signature. A spouse who is traveling can delay closing.
- Taking too little cash. The one-year rule means you may not be able to come back soon.
- Expecting to close in a week. The 12-day wait is a minimum, not a target.
Frequently asked questions
How much cash can I take out of my Texas home?
On your homestead, the new loan plus every other loan recorded against the home cannot be more than 80% of its fair market value. Take 80% of the appraised value, subtract what you owe, and that is roughly the most you can borrow before closing costs. Your credit, income, and the program you qualify for can lower that number.
Why do I have to wait 12 days to close?
The Texas Constitution says a home equity (cash-out) loan on your homestead cannot close before the 12th day after the later of your loan application or the date the lender gives you the required Texas home equity notice. It is a minimum cooling-off period, so appraisal, title, and underwriting usually take longer anyway.
Can I do a Texas cash-out refinance more than once a year?
Generally no. A new 50(a)(6) home equity loan on the same homestead cannot close before the one-year anniversary of the last one, except when the owner requests an earlier closing on oath because of a declared state of emergency that covers the area.
Do these rules apply to my rental or investment property?
No. Section 50(a)(6) protects your homestead. A rental or investment property that is not your homestead is not bound by the 80% limit, 12-day wait, or one-year rule, although each lender and program sets its own limits. Investors often use DSCR or other investment-property cash-out loans instead.
Does my spouse need to sign a Texas cash-out refinance?
Yes. A homestead home equity loan requires the consent of each owner and each owner’s spouse, even if the spouse is not on the loan or the title. Plan the signing early if your spouse travels or lives elsewhere.
Once I take a Texas cash-out loan, am I stuck with it?
No. You can later refinance it into a regular rate-and-term (non-home-equity) loan if all the conditions in the Texas Constitution are met: at least one year has passed since the cash-out loan closed, you take no new cash beyond paying off qualifying debt and actual costs and reserves, the total of all loans stays at or under 80% of the home’s value, and the lender gives you the required written notice on time.
Does a bank statement or other self-employed loan avoid these rules?
No. If the property is your homestead and you take cash out, the Texas home equity rules apply no matter how your income is documented. A bank statement, P&L, or 1099 program changes how you qualify, not the Texas cash-out rules.
This article is general information, not legal or tax advice. Expo Lending LLC, NMLS #2619446. Aiden Fahimi, Broker | Mortgage Advisor, NMLS #1943973. 1000 Main St, Suite 2300 PMB 1161, Houston, TX 77002. Office (877) 732-4464 · Direct/Text (713) 885-3944. General education only, not a commitment to lend. Programs, guidelines, rates, and availability vary and are subject to underwriting. Example figures are illustrations, not quotes. Equal Housing Opportunity. NMLS Consumer Access: nmlsconsumeraccess.org.