Texas · Section 50(a)(6)
Texas plays by its own constitution.
Cash-out refinancing a Texas homestead is governed by the state constitution, not just lender guidelines. That means a hard ceiling, a mandatory waiting period, and a doctrine that used to follow the loan forever. Here is what actually applies.
Soft credit check. No impact to your score.
Why Texas is different
These rules are in the constitution, not the guidelines.
Texas did not permit home equity lending at all until 1997. When it finally did, the protections were written directly into Article XVI, Section 50 of the state constitution rather than into ordinary lending regulation.
That distinction is the whole story. A lender overlay can be argued with, and an underwriter can make an exception. A constitutional requirement cannot. When someone tells you a Texas cash-out cannot go past a certain point, they are not being conservative, they are describing a hard boundary.
Every rule below applies to a homestead cash-out no matter which lender funds it.
What constrains the loan
Six rules that decide the whole file.
- The ceiling
80% of your home's value, total
All liens against a Texas homestead taken together cannot exceed 80% of its fair market value under a Section 50(a)(6) loan. That is a constitutional limit, not a lender overlay, so no lender can make an exception to it. In most other states cash-out programs reach higher, which is the single biggest practical difference Texas homeowners run into.
- The waiting period
Twelve days before closing, minimum
You must receive the required written notice of your rights, and your loan cannot close, until at least 12 days have passed. This cooling-off period is built into the constitution specifically so nobody can be rushed into borrowing against a homestead. It applies to every 50(a)(6) loan and cannot be waived.
- The one-year rule
One home equity loan at a time, once a year
You may have only one Section 50(a)(6) loan against your homestead at any time, and you cannot close a new one within twelve months of closing the last. Planning a cash-out in Texas means planning around that calendar rather than assuming you can return to the well.
- The fee cap
Fees capped at 2% of the loan amount
Certain fees on a 50(a)(6) loan are capped at 2% of the principal. Bona fide discount points and some third-party charges such as appraisal and title premiums sit outside the cap. It is a real constraint on how a Texas cash-out can be structured, and it is one reason these files are priced differently from a standard cash-out.
- Where you sign
Closing happens at an office, not your kitchen table
A Texas home equity loan must be closed at the permanent office of a title company, an attorney, or the lender. Mobile notaries at the property are not permitted for these loans, which surprises borrowers used to signing at home.
- The exclusion
Not on agricultural homesteads
Property designated for agricultural use generally cannot secure a Section 50(a)(6) home equity loan, with a narrow exception for land used primarily for dairy farming. If your homestead carries an agricultural designation, this needs to be sorted out before anything else.
The part most people get wrong
“Once a Texas cash-out, always a Texas cash-out.” Not anymore, if you qualify.
The restriction stuck to the lien
For two decades, once a loan was made under Section 50(a)(6) the restrictions attached to the lien itself. Refinance it later and the new loan was a home equity loan too, carrying the same 80% ceiling and the same requirements, even if you took no cash whatsoever. That is where the saying comes from, and it is still repeated as though nothing changed.
There is now a documented way out
Proposition 2 added a path to refinance a home equity loan into an ordinary non-home-equity loan. Broadly, it requires that at least twelve months have passed since the original loan closed, that no new cash goes to the borrower beyond permitted costs, that total secured debt stays within 80% of fair market value, and that you receive a prescribed written notice before closing.
Clear those and the 50(a)(6) restrictions come off the lien going forward. Worth checking before you assume you are stuck with them.
Eligibility for this conversion is specific to your file and has to be confirmed by the lender and the title company underwriting it. This page describes how the rules work in general terms. It is not legal advice, and it is not a determination about your loan.
Texas cash-out questions, answered.
What is a Section 50(a)(6) loan in Texas?
Section 50(a)(6) is the provision of Article XVI of the Texas Constitution that governs home equity loans against a Texas homestead. Any refinance where you take cash out of your primary residence in Texas falls under it. It carries requirements no other state imposes, including a limit of 80% combined loan-to-value, a mandatory 12-day cooling-off period before closing, a cap on certain fees at 2% of the loan amount, a restriction to one such loan at a time and no more than one in a twelve-month period, and a requirement that closing occur at a title company, attorney or lender office.
How much cash can I take out of my home in Texas?
All liens against the homestead combined cannot exceed 80% of the property's fair market value. So your available cash is 80% of the appraised value minus everything you currently owe against the home, then minus closing costs. Because this is a constitutional limit rather than a lender guideline, no lender can exceed it, and an appraisal coming in lower than expected directly reduces what is available.
What is the Texas 12-day rule?
Before a Texas home equity loan can close, you must receive a prescribed written notice of your constitutional rights, and at least 12 days must pass after that before closing occurs. The purpose is to guarantee a cooling-off window so nobody is pressured into borrowing against their homestead. It is a floor set by the constitution, it cannot be waived, and it applies no matter how ready everyone is.
Is it true that once you do a Texas cash-out, it is always a Texas cash-out?
That was the rule for many years and it is the origin of the saying. Once a loan was made under Section 50(a)(6), the restrictions attached to the lien itself, so refinancing it later produced another 50(a)(6) loan with the same 80% ceiling and the same requirements, even when the borrower took no additional cash. Proposition 2, effective January 2018, added Section 50(f)(2), which created a way out. Under it a home equity loan can be refinanced into an ordinary non-home-equity loan if conditions are met, so the doctrine is no longer absolute. It still holds for any loan that does not qualify for that conversion.
How do I convert a Texas home equity loan to a regular mortgage?
Section 50(f)(2) permits refinancing a 50(a)(6) loan into a conventional non-home-equity loan when the requirements are satisfied. In general terms these include at least twelve months having passed since the original home equity loan closed, no additional cash being advanced to the borrower beyond permitted costs, the new loan keeping total secured debt within 80% of fair market value, and the borrower receiving a specific prescribed written notice before closing. Doing this successfully removes the 50(a)(6) restrictions from the lien going forward, which is why it is worth checking eligibility before assuming you are stuck. The determination is file-specific and needs to be confirmed by your lender and title company.
Is a Texas cash-out refinance different from a home equity line of credit?
Yes. A Section 50(a)(6) cash-out refinance replaces your existing mortgage with one new loan and gives you the difference in cash. A home equity line of credit in Texas is governed by Section 50(t) and is a separate revolving lien alongside your existing mortgage. Both are constrained by the same 80% combined ceiling against the homestead, but the mechanics, the documentation and the structure are different.
Does the 80% limit apply to a Texas rate-and-term refinance?
No. The 80% ceiling and the rest of the Section 50(a)(6) requirements apply to home equity loans, meaning transactions where you take cash out of the homestead. A straightforward rate-and-term refinance that pays off existing mortgage debt without giving you cash is not a 50(a)(6) loan and is not subject to those limits. The distinction matters, because a small amount of incidental cash can pull an otherwise ordinary refinance into home equity territory.
Does F5 Mortgage handle Texas cash-out refinances?
Yes. Texas is one of the ten states F5 Mortgage is licensed in, and we place Texas home equity and refinance loans across our wholesale lender network. Because these files carry constitutional requirements and a fee cap, lender appetite and pricing vary more than on a standard refinance, which is a good argument for comparing several rather than accepting the first answer.
Find out what your Texas homestead actually supports.
Tell us the property and what you owe, and we will work out where the 80% ceiling puts you and shop the file across our wholesale lenders. Texas home equity pricing varies more than a standard refinance, which is exactly why comparing is worth doing.
This page describes Texas constitutional requirements in general terms for educational purposes. It is not legal advice and it is not a determination about any particular loan. Requirements are set by the Texas Constitution and may be amended. All loans are subject to credit approval and underwriting. Loan availability depends on borrower qualifications, property type, occupancy and program guidelines. This is not a commitment to lend. Rates, programs and costs vary by credit, loan amount, loan-to-value, occupancy, property type and program, and change with market conditions.