Texas Cash-Out Refinance Rules in 2026: The 50(a)(6) Requirements Every Homeowner Should Know
FACT-CHECKEDFACT-CHECKEDTexas handles cash-out refinancing differently than almost every other state. The rules come from the state constitution rather than from any single lender's internal guidelines, and that source shapes the eligibility ceiling, the fee cap, and the borrower protections you need to understand before you ever submit an application.
Key Takeaways
- Texas caps combined loan-to-value at 80% of your home's value at closing.
- Lender fees on the loan are capped at 2% of the loan's principal amount.
- You wait 12 days before closing and get 3 days to rescind after.
- The loan can only be secured by the homestead, never other property.
- One Section 50(a)(6) loan per homestead in any 12-month period.
Can You Qualify? The 80% Ceiling Comes Before Anything Else
If you're a Texas homeowner asking about a cash-out refinance, you're really asking one question first: how much can I actually get, and what's going to stop me from getting it? That question has a more specific answer in Texas than it does almost anywhere else in the country, because Texas cash-out refinancing runs on the Texas Constitution rather than on lender guidelines the way most mortgage products do. Article XVI, Section 50(a)(6) sets the rules, and those rules don't bend by lender, by loan program, or by how good your credit looks on paper.
I've worked with plenty of homeowners who come in assuming a Texas cash-out refinance works the same way it would if they lived in Georgia or Ohio, and the assumption trips them up almost every time. The state built a specific set of protections into its constitution decades ago because it treats homestead equity differently than most states do, and if you're a Texas homeowner thinking about tapping your equity, understanding that framework before you apply saves you from being surprised at any point in the process. Let's walk through it the way I'd walk through it with you: can you qualify, what will it cost you, and what protects you once you're in it.
The first gate is your home's equity position relative to a hard constitutional ceiling. Texas law caps the combined loan-to-value on a homestead cash-out loan at 80% of the home's fair market value at the time of closing, and that ceiling applies before your credit score or income ever enter the picture. That means your new loan balance, combined with any other debt secured by the home, can't exceed 80% of what the home is worth on the day you close.
Take an illustrative case. Your home appraises at $350,000 and you currently owe $200,000 on your existing mortgage. 80% of $350,000 is $280,000, your ceiling for total secured debt against the home. Subtract the $200,000 you already owe, and you're looking at roughly $80,000 in cash-out proceeds before you hit the constitutional limit, and closing costs come out of that figure. A lender can set a lower limit based on its own risk appetite, and Fannie Mae's Selling Guide layers its own eligibility rules on the Texas Section 50(a)(6) loans it buys, but no lender in Texas can go above 80%, and that ceiling is fixed by the state regardless of how strong your credit file is.
This is also where the homestead-only collateral rule matters, and it's a detail that can trip you up if you've had other types of loans before. A Section 50(a)(6) loan can't be secured by any real or personal property other than the homestead itself. You can't cross-collateralize it with a second property, a vehicle, or anything else you own. The details of your file will differ from the next person's, but this piece of the rule never changes: the home is the only thing on the hook, which is exactly what sets up the protection I'll get to further down.
What Will It Cost You? The Fee Cap Most Borrowers Have Wrong
Once you know roughly how much equity you can access, the next question is what the lender can actually charge you to get it. If you ask our loan officers at AmeriSave, this is exactly the question they expect you to ask, because the number you're quoted has to sit at or under the constitutional cap. A lot of information floating around on this topic is outdated, so it's worth being precise. Texas caps lender fees on a Section 50(a)(6) loan at 2% of the loan's original principal amount. That figure excludes the appraisal fee, the survey fee, the state base premium for mortgagee title insurance with its endorsements, and title examination reports under specified conditions, so those costs sit outside the 2% ceiling rather than eating into it.
I bring this up because the cap used to be 3%, and some of what's still circulating hasn't caught up. Texas voters approved a constitutional amendment that lowered the fee cap from 3% to 2%, and that same amendment also opened eligibility to agricultural-homestead properties and allowed refinancing a home equity loan into a non-home-equity, rate-and-term loan under certain conditions. If a lender or a guide you're reading quotes a 3% ceiling, that's stale information.
If you're shopping a Texas cash-out refinance, ask directly which fees a lender is counting inside that 2% cap versus which ones they're treating as excluded, because the answer should be consistent with the constitutional carve-outs and not vague. A lender who can walk you through that distinction clearly is a lender who actually understands 50(a)(6), not one reciting a generic cash-out disclosure.
What Protects You? The Timeline and the Non-Recourse Rule
This is the part of the framework you might be tempted to underweight, and it's the part I'd argue matters most. Texas builds a deliberate timeline around this loan, and every piece of it exists specifically to protect you as the borrower.
Before you ever get to closing, there's a mandatory 12-day cooling-off period. The loan can't close before the 12th day after the later of your application date or the date the lender gives you the required notice. That's built-in time to review your terms, ask questions, and back out if something doesn't sit right, before you've signed anything binding. After closing, you get another window: a 3-day right to rescind the loan without penalty. Between those two points, you've got a real opportunity to change your mind, twice, at two different stages of the process.
There's also a spacing rule between loans. If you've closed a Section 50(a)(6) loan on your homestead already, you can't close another one on that same property within 12 months of the first one's closing date. That prevents repeated equity-stripping, the exact pattern the constitutional protections were designed to guard against in the first place.
This loan is also non-recourse, and that protection matters as much as the timeline itself. If a Texas Section 50(a)(6) loan were ever to go into default, the lender's only recourse is against the homestead itself, not your other assets, savings, or income, unless you committed actual fraud to obtain the loan. That's a meaningfully different risk profile than home equity products in most other states, and a direct result of how seriously Texas treats homestead protection. It's also why the loan can only close at specific locations: the office of the lender, an attorney, or a title company, never your kitchen table.
Bringing the Three Pieces Together
Your numbers won't look like anyone else's, but the order of operations for a Texas cash-out refinance really isn't different from one file to the next. Start with the 80% loan-to-value ceiling to know your realistic proceeds. Confirm the 2% fee cap and what sits outside it, so you're not comparing your Loan Estimate against outdated numbers. Then understand the protections built into the timeline: the 12-day wait before closing, the 3-day right to rescind after, the 12-month spacing rule between loans, and the non-recourse structure that limits what a lender can ever come after if things go wrong.
| Rule | What Section 50(a)(6) requires |
|---|---|
| Combined loan-to-value | No more than 80% of fair market value on the closing date |
| Lender fees | No more than 2% of original principal, excluding appraisal, survey, title premium, and qualifying title exam |
| Waiting period | No closing before the 12th day after application or required notice, whichever is later |
| Right to rescind | 3 days after closing, without penalty or charge |
| Spacing between loans | One Section 50(a)(6) loan per homestead in any 12-month period |
| Recourse | Homestead only, unless the loan was obtained by actual fraud |
| Closing location | Office of the lender, an attorney, or a title company |
I've said this about plenty of loan decisions, and it holds here too: don't shop with someone else's bank account. If your neighbor is tapping their equity too, their equity position, credit range, and reasons for doing it aren't yours, and the 50(a)(6) framework applies the same ceiling and the same protections to both of you regardless of how different your situations are. At AmeriSave, our loan officers walk Texas homeowners through exactly this sequence, because the constitutional rules aren't optional guidance, they're the floor and the ceiling every cash-out refinance in the state has to operate inside. Knowing that framework before you apply is what turns a confusing set of restrictions into a straightforward checklist you can actually use.
Texas Legislature. Texas Constitution, Article XVI, Section 50.
Texas Secretary of State. November 2017 Constitutional Amendment Election Ballot Language.
Fannie Mae. Selling Guide B5-4.1-01, Texas Section 50(a)(6) Loans.
Fannie Mae. Selling Guide B5-4.1-02, Texas Section 50(a)(6) Loan Eligibility.
Jerrie leads sales operations in the Dallas-Fort Worth region for AmeriSave, where his entire mortgage career has been spent since being recruited into the industry at age 18. Licensed as a Mortgage Loan Originator in 37 states, he specializes in making complicated loan options accessible and helping borrowers understand what matters most in their individual situations. He brings deep regulatory knowledge and a client-centric approach honed through progression from entry-level to upper management, including successfully onboarding and training 70 people from a closed Cleveland office.
Frequently Asked Questions
Yes. Texas caps the combined loan-to-value on a homestead cash-out refinance at 80% of your home's fair market value at closing. Your new loan balance, combined with any other debt secured by the home, can't exceed that 80% threshold. A lender may apply its own, more conservative limit, but no lender can approve a Texas Section 50(a)(6) loan above the constitutional ceiling. To estimate your available proceeds, calculate 80% of your home's current appraised value, then subtract what you currently owe against the property. That result is roughly the maximum cash-out amount available before other underwriting factors come into play.
Lender fees on a Section 50(a)(6) loan are capped at 2% of the loan's original principal amount. That cap excludes the appraisal fee, the survey fee, the state base premium for mortgagee title insurance and its endorsements, and title examination reports under specified conditions, so those costs sit outside the 2% limit. That 2% figure is lower than some older sources still describe, since Texas voters approved a constitutional amendment that lowered the fee cap from 3% to 2%.
Texas requires a mandatory 12-day cooling-off period before a Section 50(a)(6) loan can close. The loan can't close before the 12th day after the later of your application date or the date your lender provides the legally required notice. This waiting period exists to give you time to review your loan terms and ask questions before committing to closing, and it applies uniformly regardless of lender or loan size.
Yes. Texas homeowners have the right to rescind a Section 50(a)(6) extension of credit without penalty within 3 days after closing. This right of rescission gives you a second opportunity to change your mind after signing, separate from the 12-day cooling-off period that applies before closing. If you exercise this right within the window, the transaction is canceled without cost to you.
You can close a new Section 50(a)(6) loan on the same homestead only once every 12 months. If you closed a prior cash-out refinance on the property, you must wait until at least the first anniversary of that closing before closing another one. This spacing rule applies regardless of how much additional equity you may have built up in the meantime.
A Texas Section 50(a)(6) loan is non-recourse, meaning that if the loan goes into default, the lender's only recourse is against the homestead securing the loan. The lender can't pursue your other assets, savings, or income unless you committed actual fraud to obtain the loan. This protection is tied directly to the requirement that the loan be secured only by the homestead itself, with no other real or personal property pledged as collateral.
A Section 50(a)(6) loan must close at the office of the lender, an attorney at law, or a title company. It can't close anywhere else, including at your home, so a mobile notary at your kitchen table isn't an option for this loan the way it might be for a conventional refinance. The same section of the constitution also requires the lender to give you a final itemized disclosure of the actual fees, points, interest, costs, and charges at least one business day before closing, so you walk into that office knowing exactly what you're signing. Both requirements apply to every Texas cash-out refinance regardless of lender.