Texas · Cash-out refinance
Texas cash-out refinance rules, in plain words
Updated November 2026 · Every dollar figure is an example · Texas rules and limits change, check the current onesIn Texas, a cash-out refinance on the home you live in is a "home-equity loan" under the state constitution, and the constitution sets the rules. All your mortgage debt together cannot pass 80% of the home's value, the loan cannot close until 12 days after you apply, you can cancel for three days after you sign, the lender's fees are capped at 2% of the loan, and you can only close one of these every 12 months. The rules are the same at every lender, so the thing that differs is the price.
Why Texas is different
Most states let you borrow against your house however a lender will allow. Texas did not allow home-equity lending at all until 1998; when voters allowed it, in November 1997, they wrote the conditions into the constitution itself, in Article XVI, Section 50(a)(6). Lenders call these loans "50(a)(6) loans" or "Texas (a)(6)" for that reason. A cash-out refinance, a home-equity loan and a home-equity line of credit (HELOC) on your homestead all fall under the same section. (Your homestead is the home you live in and claim as your main home.)
Not legal advice — Texas home-equity rules are in the state constitution; check with your lender or a Texas attorney.
The rules, one by one
| Rule | What it means for you |
|---|---|
| 80% cap | Your new loan plus any other loan on the house cannot add up to more than 80% of the home's fair market value on the day you close. A $400,000 home means at most $320,000 of total debt. (Illustrative.) |
| 12-day wait | The loan cannot close until the 12th day after you apply or after the lender gives you the required Texas notice, whichever is later. No lender can speed this up. |
| Final figures a day early | At least one business day before closing you must have a copy of your loan application and a final itemized list of the fees, points, interest and charges (the Closing Disclosure does this). You get copies of everything you sign at closing. |
| Where you close | Only at the office of the lender, a title company or an attorney. Not at your kitchen table, not by a mobile notary. |
| 3 days to cancel | After you sign, you have three days to change your mind and cancel with no penalty. The money is not paid out until that window ends. |
| One a year, one at a time | You cannot close another 50(a)(6) loan until a year has passed since the last one, and you can only have one on the home at a time. |
| No prepayment penalty | You can pay it off early at no charge. |
| No personal liability | If the lender ever forecloses, it can take the house but cannot come after your other assets, unless there was fraud. |
| Fee cap | The fees the lender requires you to pay to get the loan cannot be more than 2% of the loan amount, with a short list of costs left out. Details below. |
A lender that breaks these rules can lose the right to collect the loan unless it fixes the problem within a set time. That is why Texas lenders are careful, and why a cash-out closing feels slower here.
The 2% fee cap, precisely
The cap is 2% of the original loan amount. It was 3% until 2018, and the 2018 change (passed by voters in November 2017) lowered it to 2% but took four costs out of the count. What is left out of the 2%:
- the appraisal, when an independent third-party appraiser does it;
- a property survey by a state-registered or licensed surveyor;
- the state base premium for the lender's title insurance policy, with its endorsements set under state law;
- a title examination report instead of a policy, if it costs less than the base premium for a lender's policy without endorsements.
Interest is not a fee, so it is never in the cap. Bona fide discount points, interest you pay up front for a lower rate, are left out of the cap by the constitution itself, as long as they really buy the rate down. Everything else the lender requires you to pay to get the loan counts: origination, underwriting, processing, document preparation, the settlement fee, recording, the credit report and the like.
On a $300,000 cash-out loan (illustrative), the cap is $6,000. On the Loan Estimate, that is roughly Section A (minus any points) plus Sections B and C minus the appraisal, survey and the title premium. Being under the cap does not make a loan a good deal; it only makes it legal. Two Loan Estimates for the same loan on the same day still show very different Section A numbers.
Getting out of a 50(a)(6) loan later: Section 50(f)(2)
Until 2018, once you had a 50(a)(6) loan, every later refinance of it was also a 50(a)(6) loan, with the same fee cap and conditions, even if you took no cash out. Since 2018, Section 50(f)(2) lets you refinance a home-equity loan into an ordinary rate-and-term loan, which usually prices a little better and has no cap on future refinances, if all of these hold:
- at least one year has passed since the home-equity loan closed;
- the new loan gives you no new money, other than paying the costs of the refinance itself;
- the new loan plus any other debt on the home is still at most 80% of its value;
- the lender gives you a specific written notice within three business days of your application and at least 12 days before closing.
If a lender tells you the only way to refinance your cash-out loan is another cash-out loan, ask about 50(f)(2). The lender decides whether to offer it; we do not.
What it means for your Loan Estimate
Because the rules are identical everywhere, the only thing that changes from one Texas lender to the next is the rate and Section A, the lender's own charges. A cash-out loan in Texas tends to carry a somewhat higher rate than a plain refinance at many lenders, which price the extra conditions in, so a quote above the weekly national average is not by itself a sign of a bad deal. Is my mortgage rate good? The Texas angle covers how much above is normal. Then compare the rate together with Section A, the way How to compare two Loan Estimates shows.
For a line you can draw on instead of a lump sum, read Texas home-equity loans and HELOCs.
Questions people ask
Can I take cash out of my house in Texas?
Yes, on the home you live in, up to the point where all your mortgage debt together is 80% of the home's value. A lender has to follow the Texas constitution's home-equity rules: a 12-day wait after you apply, closing at a lender, title or attorney office, three days to cancel, a 2% cap on lender fees, and one such loan every 12 months.
How long does a Texas cash-out refinance take?
At least 12 days from your application to closing, plus three days after closing before the money is paid out. Most take longer than that for the usual reasons: the appraisal, title work and underwriting. Nothing the lender does can shorten the 12 days or the three.
Can I refinance a Texas home-equity loan into a normal loan?
Since 2018, yes, under Section 50(f)(2), if a year has passed, you take no new money out, the total debt stays at or under 80% of the value, and the lender gives you the required notice at least 12 days before closing. Not every lender offers it, so ask.
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Check my quoteThe constitutional rules above are summarized from Article XVI, Section 50 of the Texas Constitution and the state's official interpretations of it as we understand them in November 2026; they have been amended several times and may change again. Figures are illustrative and are not a loan offer, approval, commitment to lend, or Loan Estimate. Your actual rates and fees depend on qualification with lenders. comparemyloan does not negotiate with lenders, lock rates, or take loan applications. This page is general information, not legal or tax advice.