Texas cash-out refinance rules come from the Texas Constitution itself. When you borrow against your homestead and take out more than you owe, the loan is usually a home equity loan under Article XVI, Section 50(a)(6), often called a "Texas cash-out" or "(a)(6)" loan. These Texas home equity loan rules set an 80% limit, a 2% fee cap, a 12-day waiting period, a one-year wait between equity loans, and strict closing requirements.
I'm Taylor Ring, a Mortgage Loan Officer with Fairway Independent Mortgage Corporation (The Wood Group) in Belton. This guide covers the rules; for loan options, see my refinance loans page. Everything below comes from the Texas Constitution and the state's official home equity interpretations in 7 Texas Administrative Code Chapter 153, read October 18, 2026.
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Texas Home Equity Loan Rules at a Glance
| Rule | What It Says | Where It Comes From |
|---|---|---|
| 80% combined limit | All homestead debt, including the new loan, can't exceed 80% of fair market value | §50(a)(6)(B); 7 TAC §153.3 |
| 2% fee cap | Required fees can't exceed 2% of the original principal, with some exclusions | §50(a)(6)(E); 7 TAC §153.5 |
| 12-day wait | Can't close before the 12th day after the later of your application or the notice | §50(a)(6)(M)(i); 7 TAC §153.12 |
| 1-day review | Final itemized fees and a copy of your application at least one business day before closing | §50(a)(6)(M)(ii); 7 TAC §153.13 |
| One-year wait | No new equity loan or equity refinance within one year of the last one | §50(a)(6)(M)(iii); 7 TAC §153.14 |
| Closing location | Only at the office of a lender, attorney, or title company | §50(a)(6)(N); 7 TAC §153.15 |
| 3-day rescission | You and your spouse can cancel within three days after closing | §50(a)(6)(Q)(viii); 7 TAC §153.25 |
| One at a time | Only one (a)(6) loan can be secured by your home at any given time | §50(a)(6)(K) |
When Is a Texas Refinance an (a)(6) Loan?
Section 50(e) says a refinance of homestead debt that advances additional funds must be an (a)(6) loan, unless all the extra money goes to:
- Reasonable costs needed to refinance the debt (the rules say these can include escrow reserves for taxes and insurance), or
- Certain other permitted purposes, such as home improvements made under the Constitution's separate rules.
So if your current loan isn't an equity loan, a refinance with no cash to you generally isn't one either. Take cash out, and the full set of Texas home equity loan laws applies.
The label doesn't decide it. Fannie Mae's Selling Guide says its "cash-out" categories may differ from Texas law, and Texas law decides whether a loan is an (a)(6) loan.
The 80% Combined Loan-to-Value Limit
The new loan plus every other debt secured by your homestead can't exceed 80% of the home's fair market value on the day the loan is made. The official interpretation gives this example: on a home worth $100,000, total debt can't exceed $80,000. With $30,000 already owed, the most the equity loan can be is $50,000.
Under 7 TAC §153.3, the principal includes the cash advanced plus any closing charges you finance. You and the lender must also sign a written acknowledgment of the home's fair market value on the closing date.
The 2% Fee Cap (Not 3%)
Older articles may cite a 3% cap. Since a November 2017 constitutional amendment, Section 50(a)(6)(E) limits required fees to 2% of the original principal, not counting interest and bona fide discount points.
Excluded from the 2% cap:
- An appraisal by a third-party appraiser
- A survey by a state registered or licensed surveyor
- The state base premium for a mortgagee title policy with endorsements
- A title examination report, if it costs less than the base premium
Not counted as fees, under 7 TAC §153.5: interest, including per diem interest; bona fide discount points that truly buy down your rate; optional charges you choose; and charges the lender or a third party absorbs.
Counted toward the cap: required charges to originate, evaluate, maintain, record, insure, or service the loan that aren't interest. That includes third-party charges such as attorney document preparation fees.
My guide to closing costs in Texas explains the fee sections on your Loan Estimate.
The 12-Day Notice and Waiting Period
Before an (a)(6) loan, the lender must give you the "Notice Concerning Extensions of Credit Defined by Section 50(a)(6)" on a separate document. The OCCC publishes the form in English and Spanish. If discussions are mainly in another language, the Constitution requires a translated copy before closing.
The loan can't close before the 12th day after the later of the day you apply or the day you get the notice. Under 7 TAC §153.12, the next calendar day counts as day one, and closing can happen on or after the 12th calendar day. If the notice is mailed, §153.51 presumes delivery takes three calendar days, not counting Sundays and federal legal holidays.
The 1-Day and 3-Day Rules
One business day before closing. You must receive a copy of your loan application, if not already provided, and a final itemized disclosure of fees, points, interest, costs, and charges. Here, a business day is any day except Sundays and federal legal public holidays. The lender may provide or change these on closing day only for a bona fide emergency or other good cause, with your written consent.
Three days after closing. You and your spouse may rescind within three days without penalty. 7 TAC §153.25 says these are calendar days, extended if the third falls on a Sunday or federal holiday. Lenders must also follow the federal Truth in Lending three-business-day rescission rules where those apply.
Closing Location Rules
An (a)(6) loan may close only at an office of the lender, an attorney, or a title company. 7 TAC §153.15 adds:
- It must be the office's permanent physical address, not your home.
- Any power of attorney used to sign closing documents must itself be signed at one of those offices.
One Equity Loan Per 12 Months
You can't close a new equity loan, or refinance one, until one year after the closing date of the prior (a)(6) loan on the same home. Under 7 TAC §153.14, that's true even if the earlier loan is paid off. A modification within the year is allowed, but it can't advance new funds.
The exception: if you request it on oath due to a state of emergency declared by the President or the Governor for your area.
Other Texas Home Equity Loan Laws to Know
- Nonrecourse: no personal liability for you or your spouse, unless the loan was obtained by actual fraud.
- Court-ordered foreclosure only.
- No prepayment penalty.
- Homestead only: no other collateral, and §153.8 says no guarantor or surety.
- Home equity lines of credit: allowed under §50(t), with a $4,000 minimum advance and no card or unsolicited check access.
Homestead status matters here. If you haven't claimed yours, see how to file the homestead exemption in Texas.
The (f)(2) Refinance: Leaving (a)(6) Behind
Section 50(f)(2) lets you refinance an existing (a)(6) loan into a regular, non-home-equity loan if all of these are met:
- At least one year has passed since the equity loan closed.
- No new cash, other than paying off homestead debts and the lender's actual costs and required reserves.
- Total homestead debt stays at or below 80% of fair market value.
- The lender gives you the Constitution's refinance notice by the third business day after you apply and at least 12 days before closing.
That notice warns that a non-home-equity refinance lets the lender foreclose without a court order and adds personal liability for you and your spouse. The new lien is treated as a regular (a)(4) refinance lien, and an owner affidavit can confirm the (f)(2) conditions were met.
VA, FHA, and Conventional Cash-Outs in Texas
Conventional: Fannie Mae buys (a)(6) loans that are first liens on a single-unit principal residence homestead, fixed-rate or 5-, 7-, or 10-year ARMs, at no more than 80% LTV and CLTV. See conventional loans.
VA: In Opinion KP-0183 (February 26, 2018), the Texas Attorney General concluded that the VA's guaranty counts as additional collateral, so Section 50(a)(6)(H) prohibits a VA cash-out refinance on a Texas homestead. It notes (a)(6) doesn't apply to a traditional VA purchase or refinance. See VA loans.
FHA: I couldn't find official HUD guidance on Texas (a)(6) loans, so ask me about FHA options for your home.
This is general information, not legal advice.
Frequently Asked Questions
How much cash can I take out with a Texas cash-out refinance?
The new loan plus all other debt secured by your homestead cannot exceed 80 percent of the home's fair market value on the date the loan is made. On a home worth 100,000 dollars with 30,000 dollars already owed, the official example allows an equity loan of up to 50,000 dollars.
How often can I do a cash-out refinance in Texas?
You cannot close a new home equity loan, or refinance one, until one year after the closing date of your last Section 50(a)(6) loan on the same home, even if it was paid off. The only exception is an earlier closing you request on oath because of a declared state of emergency for your area.
What is the 12 day rule for Texas home equity loans?
A Texas home equity loan cannot close before the 12th day after the later of the date you apply or the date the lender gives you the required home equity notice. The day after the later date counts as day one, and closing can happen on or after the 12th calendar day.
What fees count toward the Texas home equity 2 percent cap?
Required fees to originate, evaluate, maintain, record, insure, or service the loan count toward the 2 percent cap. Interest, bona fide discount points, optional charges, and charges the lender absorbs do not count, and a third-party appraisal, a survey, the base title premium, and certain title exam reports are excluded.
Can I do a VA cash-out refinance in Texas?
Texas Attorney General Opinion KP-0183 concluded in 2018 that a VA cash-out refinance on a Texas homestead is prohibited, because the VA guaranty counts as additional collateral under Section 50(a)(6)(H). The opinion notes that the home equity rules do not apply to a traditional VA purchase or refinance loan.
Let's Review Your Equity Options
I'll check whether your goals fit the Texas home equity rules or another refinance fits better.
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Related Guides
- Refinance Loans
- Conventional Loans
- VA Loans
- Closing Costs in Texas
- How to File the Homestead Exemption in Texas
Sources
- Texas Constitution, Article XVI, Section 50
- 7 Texas Administrative Code Chapter 153, Home Equity Lending (official home equity interpretations; Cornell LII mirror of the Texas Administrative Code)
- OCCC home equity notice and (f)(2) refinance notice
- Texas Attorney General Opinion KP-0183
- Fannie Mae Selling Guide B5-4.1-01, B5-4.1-02, and B5-4.1-03
Taylor Ring, NMLS #2809683 | Fairway Independent Mortgage Corporation, NMLS #2289 | The Wood Group of Fairway, 127 Lake Rd Ste 300, Belton, TX 76513 | Equal Housing Opportunity. This is not a commitment to lend. All loans are subject to credit approval and program guidelines, and approval, rates, and program availability are not guaranteed. This article is general information, not legal or tax advice; consult an attorney about your situation. Not affiliated with or endorsed by the Texas Finance Commission, OCCC, the Texas Department of Savings and Mortgage Lending, the Texas Attorney General, VA, Fannie Mae, or any government agency.