The 80% cap
The new loan, plus everything else owed against the house, can't add up to more than 80% of the home's fair market value on the day the loan closes. If you owe a lot already, there may not be much room. The appraisal sets the value.
Texas cash-out refinance: the 50(a)(6) rules in plain English.
Pulling cash out of your house works differently in Texas. If it's your homestead, the Texas Constitution sets the rules, in a section called 50(a)(6). Lenders call these "Texas home equity" or "Texas cash-out" loans. Here's what the rules actually say, what they mean for you, and what to send me. I'm in Fort Worth, and most of my clients are around DFW.
First question: is it your homestead?
The 50(a)(6) rules are about your homestead, the home you live in. If you're taking cash out against it, these rules apply, whether it's a refinance of your current mortgage or a new loan on a house you own free and clear.
Two things are different. A refinance that only pays off what you already owe, plus the reasonable costs to do it, is a rate-and-term refinance, not a cash-out. And a rental or investment property isn't your homestead, so a cash-out on it doesn't follow the 50(a)(6) rules at all. More on that below.
The Texas cash-out rules, in plain English
One at a time, once a year
Only one 50(a)(6) loan can be on your homestead at a time. A new one generally can't close until a year after the last one closed. The narrow exception: a declared state of emergency covering your area, where you ask for an earlier closing under oath.
The 12-day wait
The loan can't close before the 12th day after the later of two dates: the day you apply, or the day the lender gives you the Texas home equity notice. You also have to get a final itemized list of the fees, points, interest, costs, and charges at least one business day before closing.
Where you close
Only at the lender's office, a title company, or an attorney's office. No mobile notary at your kitchen table. In DFW, that usually means the title company.
Three days to change your mind
After closing, you and your spouse can cancel the loan within three days, without penalty or charge.
The 2% fee cap
Fees you're required to pay to make the loan can't add up to more than 2% of the loan amount. Some things don't count toward that 2%: interest, legitimate discount points that actually buy down the rate, a third-party appraisal, a survey by a licensed surveyor, the state base premium for the lender's title policy with endorsements, and a title examination report that costs less than that base premium. Charges you choose on your own, like optional insurance, don't count either.
Agreeing on the value
You and the lender both sign a written acknowledgment of the home's fair market value on the day the loan closes.
No personal liability
A Texas home equity loan is without recourse for personal liability against you and your spouse, unless the loan was obtained by actual fraud. The lien can be foreclosed only with a court order. In plain words: the house secures the loan, not your paycheck or your other stuff.
A few more protections come with it. You can pay the loan off early without a penalty. No other property can be pledged as collateral. The lender can't call the loan due just because your home's value drops. And at closing you get a copy of your final application and everything you signed.
Once a home equity loan, usually always (here's the way out)
This one surprises people. Generally, once the loan on your homestead is a 50(a)(6) loan, any refinance of it has to be a 50(a)(6) loan too, with all the same rules. That matters later, when you just want a regular refinance.
There is a way back to a regular loan. Section 50(f)(2) allows a refinance out of home equity status when all of these are true:
- At least a year has passed The refinance can't close before the first anniversary of the home equity loan's closing.
- No new cash The new loan only pays off the existing debt, plus actual costs and reserves the lender requires.
- Still under 80% The new loan plus everything else owed against the home can't be more than 80% of its fair market value.
- A specific written notice The lender gives you a notice on a separate page within three business days of your application and at least 12 days before closing.
Read that notice. Going back to a regular loan means giving up some home equity protections, like the court-order foreclosure requirement and the no-personal-liability rule. Sometimes it's still the right move. I'll walk you through it.
Cash-out on an investment property is different
A rental isn't your homestead, so a cash-out refinance on it isn't a 50(a)(6) loan. The 80% homestead cap, the 12-day wait, and the 2% fee cap don't apply. Lender and program rules still do.
I do investment property cash-outs, including DSCR loans that qualify on the rent instead of your personal income. Borrowing in an LLC is available for investment properties only. Self-employed and taking cash out of your own home? The Texas rules above still apply, but the income side can be documented differently with bank statements on some programs. More options in the non-QM guide.
What to send me
- Your current mortgage statement, and any other loan against the house
- What you think the house is worth, and anything you've done to it
- Your homeowners insurance declarations page
- Your usual income documents: pay stubs and W-2s, tax returns, or bank statements if you're self-employed
- Roughly how much cash you need, and what it's for
- Whether the property is your home or a rental
How to start
Send the short form, call, or email. Tell me what the house is worth, what you owe, and how much cash you need. I'll tell you if it pencils out under the Texas rules before anybody orders an appraisal. If it doesn't make sense, I'll say so.
I lend in Texas, Oklahoma, California, Colorado, Montana, Florida and Georgia, and I can help in all the other states too. This page covers the Texas rules, since they're their own animal.
Phone: 817-873-6288
Email: [email protected]
Texas cash-out questions
How much cash can I take out of my house in Texas?
On your homestead, the new loan plus everything else owed against the house can't be more than 80% of the home's fair market value on the day you close. So the cash available is roughly 80% of the value, minus what you already owe, minus costs. The appraisal sets the value.
How long does a Texas cash-out refinance take?
There's a legal minimum: it can't close before the 12th day after the later of the day you apply or the day the lender gives you the Texas home equity notice. You also get a final itemized list of fees at least one business day before closing. The rest depends on the appraisal and how fast documents come back.
How often can I do a cash-out refinance on my Texas home?
Only one Texas home equity loan can be on your homestead at a time, and a new one generally can't close until a year after the last one closed. There's a narrow exception for a declared state of emergency in your area, requested under oath.
Can I cancel a Texas cash-out refinance after closing?
Yes. You and your spouse can rescind within three days after closing without penalty or charge.
Where does a Texas home equity loan have to close?
Only at the lender's office, a title company, or an attorney's office. No closing at your kitchen table.
Do the Texas home equity rules apply to a rental property?
No. Section 50(a)(6) is about your homestead. A cash-out refinance on an investment property follows different rules. I do investment property cash-outs too, including DSCR loans, and borrowing in an LLC is available for investment properties only.
Can I refinance a Texas home equity loan into a regular loan later?
Sometimes. Generally, once a loan on your homestead is a Texas home equity loan, a refinance stays one. The way out is a refinance that closes at least a year after the home equity loan, takes no new cash beyond paying off the existing debt and actual costs and reserves, stays at or under 80% of the home's value, and comes with a specific written notice at least 12 days before closing. You'd be giving up some home equity protections, so read that notice.
General information, not legal advice. The rules come from the Texas Constitution, Article XVI, Section 50, and the state's official interpretations at 7 Texas Administrative Code Chapter 153. Subject to qualification and program guidelines. Not all applicants will qualify. Not a commitment to lend.
More answers on the FAQ page, or see Fort Worth home loans. Or head back home.