Cash Out Refinance Texas: 50(a)(6) Rules

What is a Texas 50(a)(6) loan?

A Texas 50(a)(6) loan is a home equity loan or cash-out refinance on a Texas homestead (primary residence), governed by Article XVI Section 50(a)(6) of the Texas Constitution. The provision was added in 1997 and amended several times since. It imposes Texas-specific restrictions that don't exist in any other state: 80% LTV cap, 12-day waiting period, 2% lender fee cap, single-lien rule, and homestead-only restriction.

What's the maximum LTV on a Texas cash-out refinance?

80% of the homestead's fair market value. The total of all liens against the property cannot exceed 80% LTV at closing. This applies even on loans where the borrower wants to take less cash out than would otherwise be allowed by underwriting.

How does the 12-day waiting period actually work?

Per §50(a)(6)(M)(ii), the loan can't close before the 12th day after the later of (a) the date the borrower submits the loan application to the lender, or (b) the date the lender delivers the prescribed §50(g) notice (the "Notice Concerning Extensions of Credit Defined by Section 50(a)(6)") on a separate document. Whichever of those two dates is later starts the clock. Calendar days, not business days. The waiting period gives the borrower time to review terms and walk away without consequence before closing.

Can I do an FHA cash-out refinance in Texas?

In practice it's hard to find. The federal FHA cash-out program's underwriting, disclosure, and origination requirements collide with the Texas Constitution's 50(a)(6) restrictions: FHA's higher LTV ceilings clash with the 80% cap, and the 12-day waiting period and 2% fee cap don't fit cleanly into the FHA process. Most lenders won't originate FHA cash-out in Texas. Conventional 50(a)(6) cash-out is the workable path for most borrowers.

Can I do a VA cash-out refinance in Texas?

Most lenders won't, but a handful of investors do. VA cash-out federally allows up to 100% LTV in some scenarios, which is fundamentally incompatible with the 80% cap under 50(a)(6).

The lenders that do offer VA cash-out in Texas cap LTV at 80% and layer the full 50(a)(6) overlay (12-day waiting period, 2% fee cap, closing-location restrictions, spousal consent) on top of standard VA requirements. Expect fewer investors, tighter overlays, and higher pricing than VA cash-out in other states.

VA purchase loans, VA rate-and-term refinances, and the VA IRRRL streamline are all freely available in Texas.

Can I refinance my 50(a)(6) loan into a non-cash-out (rate-and-term) refinance?

Yes, since the 2017 amendment (Texas Proposition 2 / SJR 60, effective January 1, 2018) created the §50(f)(2) "Texas Limited Cash-Out" refinance. Five conditions must be met:

1. At least one year since the original 50(a)(6) loan closed.
2. No new cash out. Closing costs financed into the loan are allowed and not treated as cash out, but you can't take money home.
3. Total loan amount stays at or under 80% LTV of the homestead's fair market value.
4. The lender delivers the prescribed §50(f)(2) notice on a separate document.
5. A separate 12-day waiting period applies after the §50(f)(2) notice is delivered, before the new loan can close.

Before 2018, the rule was "once-a-cash-out, always-a-cash-out."

Does 50(a)(6) apply to second homes or investment properties?

No. The Texas Constitution's homestead protections apply only to the borrower's primary residence (the homestead). Cash-out refinances on second homes and investment properties in Texas follow standard federal and lender requirements without the 50(a)(6) restrictions.

What fees count toward the 2% lender fee cap?

Fees paid to the lender or to a third party for the lender's benefit count toward the cap. The Constitution carves out six exclusions:

• Interest.
• Bona fide discount points used to buy down the rate.
• Third-party appraisal fees paid to an unaffiliated appraiser.
• Survey fees.
• Title insurance premiums.
• The state base premium for a title examination report when its cost is less than a title insurance premium.

Lenders track this carefully because any violation can give the borrower the right to cure or to recover.

Can I get a HELOC in Texas?

Yes, but Texas HELOCs (home equity lines of credit) on primary residences are subject to similar 50(a)(6)-derived restrictions: 80% combined LTV cap, single-lien rule, homestead-only, and the 12-day waiting period for the initial draw setup. HELOCs on second homes and investment properties don't have these restrictions.

What happens if a lender violates 50(a)(6)?

Section 50(a)(6) provides borrowers with significant remedies, including the right to require the lender to cure the violation, and in some cases, forfeiture of all principal and interest. Lenders monitor 50(a)(6) compliance closely because the remedies are unusually borrower-favorable compared to federal mortgage law.

How do you count the days in the 12-day cooling-off period?

Per §50(a)(6)(M)(ii), the clock starts the day after the later of two events: (a) the date the borrower submits the loan application to the lender, or (b) the date the lender delivers the prescribed §50(g) notice on a separate document. Whichever of those is later sets day zero. The loan cannot close before day 12. Calendar days, not business days. The notice must be on its own separate document, not embedded in other paperwork.

Can I take out more than one Texas home equity loan in a year?

No. §50(a)(6)(M)(iii) limits a homeowner to one §50(a)(6) loan per 12-month period on the same homestead, even if the previous one was already paid off. The clock is the clock. If you closed a 50(a)(6) cash-out in March, you can't close another one in November of the same year. You'd have to wait until at least March of the following year. This is one of the more commonly missed rules and a real planning constraint if you're staging multiple equity moves.

Are Texas 50(a)(6) loans non-recourse?

Yes. §50(a)(6)(C) makes Texas home equity loans non-recourse: the lender's only remedy on default is foreclosure on the homestead itself. There is no personal liability beyond the collateral and no deficiency judgment for any shortfall between the foreclosure sale price and the loan balance. This is one of the strongest borrower protections in any state and a key reason Texas home equity originations are pricier and tighter than conventional first-lien purchase loans.

Where does a Texas 50(a)(6) loan have to be closed?

Per §50(a)(6)(N), closing must occur at the permanent physical office of (1) the lender, (2) an attorney at law, or (3) a title company. Borrowers cannot sign at home, at a Starbucks, or in a fully remote setting. Mobile notaries are restricted under this provision, and remote online notarization for 50(a)(6) closings has been a subject of legal scrutiny; the safe path is closing in person at one of the three permitted office types.

Does my spouse have to sign if she isn't on the title?

Yes. Both spouses must sign the closing documents on a Texas 50(a)(6) home equity loan even if only one spouse is on the property's title. Texas homestead protections under the Texas Family Code (Chapter 5) and the §50(a)(6) consent requirement extend to the non-title spouse. The non-title spouse's signature consents to the lien against the homestead. No spousal signature, no valid 50(a)(6) loan.

How do I rescind a Texas cash-out loan?

Two separate rescission rights apply. First, the federal Truth in Lending Act (Reg Z, 12 CFR §1026.23) gives the borrower 3 business days after closing to rescind any home-secured refinance. Second, the Texas Constitution itself provides additional borrower protections during the pre-closing 12-day waiting period: the borrower can simply not close. To exercise the post-closing TILA rescission, deliver written notice to the lender within the 3-business-day window.

How do I apply for a Texas cash-out refinance under the 50(a)(6) rules?

You start by sending me your scenario and submitting a loan application, which is the event that can start the 12-day waiting-period clock under §50(a)(6)(M)(ii). I deliver the prescribed §50(g) notice on a separate document, order the appraisal to establish the homestead's fair market value, and verify income, assets, and title.

Because the rules require closing at the office of the lender, an attorney, or a title company and require both spouses to sign, I coordinate those details up front so nothing stalls your file at the end.

How much can I borrow with a Texas cash-out refinance?

The Texas cash-out refinance guidelines cap the total of all liens at 80% of the homestead's fair market value. Your available cash depends on your current balance, your home's appraised value, and how much equity sits above that 80% line.

Loan size also interacts with the 2026 baseline conforming loan limit of $832,750 for a one-unit property, which determines whether your refinance is a conforming conventional loan or a jumbo loan. I run your numbers against both the 80% cap and the conforming limit so you know your realistic range before we order an appraisal.

How long does a Texas cash-out refinance take under the 50(a)(6) guidelines?

Plan on the 12-day waiting period as a hard floor, since §50(a)(6)(M)(ii) prohibits closing before the 12th day after the later of your application date or the date I deliver the §50(g) notice. On top of that you have normal underwriting, appraisal, and title work, plus the 3-business-day TILA rescission window after closing before funds disburse. I build the calendar around those constitutional deadlines so the waiting period runs in parallel with underwriting rather than adding time at the end.

Can I use a Texas cash-out refinance to consolidate debt or pay for a remodel?

Yes. Once the funds disburse you can use the proceeds for almost any purpose, including consolidating higher-interest debt, funding a renovation, or covering education or business costs, as long as the loan stays within the 80% LTV cap and the rest of the 50(a)(6) rules. Many Texas homeowners I work with weigh a full cash-out refinance against a separate home equity loan or HELOC second lien, which is also subject to 50(a)(6)-derived limits. I help you compare both paths for your specific goal.

What documents do I need to apply for a Texas 50(a)(6) cash-out refinance?

Expect to provide proof of income (such as pay stubs, W-2s, or tax returns and bank statements if you're self-employed), recent statements for your current mortgage and any other debts, homeowners insurance, and a government ID. Because the 50(a)(6) rules attach to the homestead, I also confirm marital status and title so the right parties, including a non-title spouse, sign at closing. Getting these together early keeps your file inside the 12-day window without surprises.

What are the Texas cash-out refinance rules?

The Texas cash-out refinance rules come from Section 50(a)(6) of the Texas Constitution and apply to a cash-out on your homestead (primary residence). In plain terms:

• The total of all liens is capped at 80% of the home's fair market value.
• A 12-day waiting period must pass before closing.
• Lender fees are capped.
• Both spouses must sign, even if only one is on title.
• You can close only one such loan per 12-month period.
• Closing has to happen at the office of the lender, an attorney, or a title company.
• The loan is non-recourse.

These restrictions are unique to Texas and don't apply in other states. I walk each client through how every rule affects their specific file before we start.

Can you do a cash-out refinance in Texas?

Yes. You can absolutely do a cash-out refinance in Texas on your homestead, but it has to follow the Section 50(a)(6) rules rather than the federal cash-out programs used elsewhere. The most common path is a conventional 50(a)(6) cash-out, capped at 80% loan-to-value with a 12-day waiting period and spousal consent. FHA and VA cash-out are hard to find in Texas because federal program requirements collide with 50(a)(6), so most lenders won't originate them here. Send me your scenario and I'll confirm what's available for your situation.

How does a cash-out refinance work in Texas?

A Texas cash-out refinance replaces your current mortgage with a new, larger loan and gives you the difference as cash, all on your homestead and all inside the Section 50(a)(6) framework. The process:

1. You submit a loan application, I deliver the prescribed §50(g) notice on a separate document, and the 12-day waiting period clock starts on the later of those two dates.
2. We order an appraisal to set the home's fair market value, verify income, assets, and title, and confirm both spouses can sign.
3. The total of all liens has to stay at or under the 80% cap.
4. After closing, a 3-business-day federal rescission window applies before funds disburse.

I run the waiting period in parallel with underwriting so it doesn't add time at the end.

Is there a waiting period for a cash-out refinance in Texas?

Yes. Texas requires a 12-day waiting period before a 50(a)(6) cash-out can close, set by §50(a)(6)(M)(ii). The clock starts on the later of (a) the date you submit your loan application or (b) the date I deliver the prescribed §50(g) notice on a separate document, and it's counted in calendar days, not business days. Separately, a 3-business-day federal rescission window applies after closing before the loan funds. I schedule your file so the 12-day period runs alongside underwriting instead of stacking on at the end.

What makes a cash out refinance Texas-specific?

A cash out refinance Texas file is different because a homestead cash-out is governed by Section 50(a)(6) of the Texas Constitution, not just ordinary federal cash-out guidelines. The big differences are the 80% LTV cap, the 12-day waiting period, the lender fee cap, spousal consent, permitted closing locations, and the one-loan-per-12-month rule.

Can I use a DSCR cash-out refinance for a Texas rental property?

Yes, potentially. A DSCR cash-out refinance on a non-owner-occupied Texas rental is not a Texas homestead 50(a)(6) loan, so the homestead cash-out restrictions do not control the file. The lender still sets DSCR, equity, seasoning, reserve, credit, and prepayment penalty rules. If the property is your primary residence, the Texas 50(a)(6) rules apply instead.