Cash Out Refinance Texas: 50(a)(6) Rules
A source-cited guide to the Texas Constitution's rules for cash-out refinances secured by a homestead.
A Texas homestead cash-out refinance is generally an extension of credit governed by Article XVI, Section 50(a)(6) of the Texas Constitution. The principal of the new loan plus the principal balances of all other liens may not exceed 80% of the home's fair market value.
The same constitutional framework imposes a required notice and timing sequence, limits certain fees and charges, restricts closing locations, and requires the consent of each owner and each owner's spouse. It also provides a three-day post-closing right to rescind the loan without penalty or charge.
This page explains the constitutional baseline. Texas law, agency program rules, lender guidelines, title requirements, and the facts of the file all affect whether a particular refinance is eligible.
Section 50(a)(6) is the Texas constitutional rule for a loan secured by equity in a homestead. A cash-out refinance usually replaces an existing mortgage with a larger loan and returns part of the difference to the owner, but Texas classification turns on the legal transaction rather than the label used by a lender or website.
For a Section 50(a)(6) loan, the Constitution provides that:
- The new principal plus all other lien principal balances may not exceed 80% of fair market value.
- The loan cannot close before the later of 12 days after application or 12 days after the owner receives the required notice.
- Fees and charges to make the loan generally may not exceed 2% of the loan amount, subject to four named exclusions.
- Only one Section 50(a)(6) loan may be secured by the home at a time.
- Each owner and each owner's spouse must consent.
- The loan may close only at the office of the lender, a title company, or an attorney at law.
- The loan must be without recourse for personal liability against the owner and spouse unless obtained by actual fraud.
Classification matters: Fannie Mae expressly warns that its cash-out and limited-cash-out labels may differ from Texas law. The lender is responsible for determining whether Section 50(a)(6) applies and should consult counsel for the transaction.
Key facts
- 80% combined-lien limit: the new loan principal plus the principal balances of all other liens may not exceed 80% of fair market value.
- 12-day timing rule: closing cannot occur before 12 days after application or 12 days after receipt of the required notice, whichever date is later.
- Final-cost timing: without the owner's consent, closing cannot occur before one business day after the owner receives the final itemized disclosure and a copy of the application if not previously provided.
- Generally one year between loans: a new Section 50(a)(6) loan on the same homestead generally cannot close before the first anniversary of the prior one, subject to the Constitution's declared-emergency exception.
- 2% fee-and-charge cap: the named exclusions are a third-party appraisal, a survey by a state-registered or licensed surveyor, the state base premium for a mortgagee title policy with endorsements, and a title examination report if its cost is less than the state base premium for a mortgagee policy without endorsements.
- One at a time: only one Section 50(a)(6) loan may be secured by the home at a time.
- Owner and spouse consent: the Constitution requires the consent of every owner and every owner's spouse.
- Specified closing locations: the loan may close only at the office of the lender, a title company, or an attorney at law.
- Three-day Texas rescission right: the loan documents must provide that the owner may rescind within three days after closing without penalty or charge.
- Court-order foreclosure and limited recourse: the lien may be foreclosed only with a court order, and the loan must be without personal recourse except for actual fraud.
- No prepayment penalty or additional collateral: the Constitution permits prepayment without penalty or charge and prohibits additional real or personal property as security.
- Program overlays remain separate: agency and lender eligibility rules can be narrower than the Texas constitutional baseline.
Texas 50(a)(6) file checkpoints
The constitutional baseline in plain English, followed by the fact that should be confirmed for a particular file.
| Issue | Constitutional baseline | File question |
|---|---|---|
| Property status | Section 50(a)(6) concerns credit secured by a Texas homestead | Is this property the owner's Texas homestead? |
| Combined liens | New principal plus other lien principal balances cannot exceed 80% of fair market value | What liens remain at closing, and what value will be acknowledged? |
| Required notice | Closing waits until the later of 12 days after application or 12 days after notice receipt | What are the documented application and notice-receipt dates? |
| Prior equity loan | A first-anniversary rule generally applies to another Section 50(a)(6) loan on the same homestead | Did a prior equity loan close within the last year? |
| Fees and charges | A 2% cap applies, with four categories expressly excluded from that calculation | How has the lender classified each charge? |
| Consent | Each owner and each owner's spouse must consent | Who owns the homestead, and who must participate in the transaction? |
| Closing | Closing may occur only at an office of the lender, title company, or attorney at law | Which permitted office will conduct the closing? |
| Program rules | The Constitution supplies the Texas baseline, not agency or investor eligibility | Which current lender and program rules also apply? |
Refinancing an existing 50(a)(6) loan
An existing Section 50(a)(6) loan does not automatically mean every future refinance must remain a home equity loan. Section 50(f)(2) permits a qualifying refinance into a non-home-equity lien when all constitutional conditions are met.
The conditions include:
- The refinance cannot close before the first anniversary of the equity loan's closing date.
- No additional funds may be advanced except funds used to refinance debt described by Section 50(a)(1) through (a)(7), plus actual costs and reserves required by the lender.
- The refinanced principal plus other valid recorded lien balances cannot exceed 80% of fair market value.
- The lender must provide the prescribed written notice on a separate document no later than the third business day after application and at least 12 days before closing.
The prescribed notice explains that converting to a non-home-equity loan waives important protections. Owners should compare the proposed documents and obtain legal advice when they need an interpretation of their rights.
Texas law and mortgage-program rules are separate layers
Texas law determines whether Section 50(a)(6) applies. Mortgage agencies, investors, lenders, and title companies can impose additional or narrower requirements.
- Fannie Mae: its Selling Guide says Fannie classification may differ from Texas law. For loans delivered to Fannie Mae, eligible Section 50(a)(6) loans are first-lien, fully amortizing loans on a one-unit principal residence, with specified fixed-rate or ARM options.
- FHA: Kellibrooke does not offer or estimate FHA cash-out or other FHA equity-removal financing. FHA purchases, FHA Streamline, and otherwise eligible rate-and-term refinances remain separate transactions.
- VA: Texas Attorney General Opinion KP-0183 concludes that a VA guaranty is additional collateral prohibited by Section 50(a)(6)(H). Kellibrooke therefore does not advertise or estimate a VA-backed loan that removes equity from a Texas homestead.
A cash-out refinance on a non-homestead property is not governed by the homestead provisions merely because the property is in Texas. Current lender, investor, title, and other legal requirements still apply.
Sources & methodology
Primary constitutional, regulatory, agency, and official-program sources checked September 3, 2026. This educational guide is not legal advice, a loan approval, or a statement that a specific program is currently available for a file.
- Texas Constitution Article XVI: Section 50 (home equity loan restrictions)
- Official PDF: Texas Constitution Article XVI, including Sections 50(a)(6), 50(f), and 50(g)
- Office of Consumer Credit Commissioner: current Section 50(a)(6) consumer disclosure
- Finance Commission of Texas: home-equity disclosures
- Fannie Mae Selling Guide B5-4.1-01: Texas Section 50(a)(6) loan overview
- Fannie Mae Selling Guide B5-4.1-02: classifications and eligibility
- Texas Attorney General Opinion KP-0183: VA cash-out and the additional-collateral prohibition
- CFPB Regulation Z §1026.23: federal rescission rule and exemptions
Questions about Texas 50(a)(6)
What is a Texas Section 50(a)(6) loan?
Section 50(a)(6) of Article XVI of the Texas Constitution permits certain loans secured by equity in a Texas homestead. These loans are commonly called home equity loans, and a refinance that removes equity from a Texas homestead is generally analyzed under this framework. The legal classification depends on the transaction, not merely the label used in an advertisement.
Can you do a cash-out refinance on a Texas homestead?
Potentially. A Texas homestead cash-out refinance must satisfy Section 50(a)(6), including the combined-lien limit, notice and timing rules, consent requirements, fee restrictions, and permitted closing location. It must also satisfy the current requirements of the selected mortgage program, lender, and title company.
What is the maximum LTV for a Texas cash-out refinance?
The principal amount of the new Section 50(a)(6) loan, when added to the principal balances of all other liens against the home, may not exceed 80% of the home's fair market value. Available cash is therefore not simply 80% of value; existing liens and transaction costs also affect the result.
How does the Texas 12-day rule work?
The loan may not close before 12 days after the owner submits an application to the lender or before 12 days after the owner receives the required constitutional notice, whichever date is later. Without the owner's consent, it also may not close before one business day after the owner receives the final itemized disclosure and a copy of the application if one was not previously provided.
What fees are excluded from the Texas 2% cap?
The Constitution generally caps fees and charges to make the loan at 2% of the loan amount. It expressly excludes a third-party appraisal, a property survey by a state-registered or licensed surveyor, the state base premium for a mortgagee title policy with endorsements, and a title examination report if its cost is less than the state base premium for a mortgagee policy without endorsements. The lender and title company should classify the actual charges for the file.
Does a spouse have to participate in a Texas 50(a)(6) loan?
The Constitution requires the voluntary consent of each owner of the home and each owner's spouse. The title, homestead, marital, and loan documents determine whose signatures and acknowledgments are required; the constitutional rule should not be reduced to a claim that every spouse signs every document.
Where can a Texas 50(a)(6) loan close?
The Texas Constitution says the loan may close only at the office of the lender, a title company, or an attorney at law. The lender and title company should confirm the permitted closing arrangement for the transaction.
Can a Texas homeowner obtain more than one 50(a)(6) loan?
Only one Section 50(a)(6) loan may be secured by the home at a time. A new loan of the same type on the same homestead generally cannot close before the first anniversary of the prior loan's closing, subject to the Constitution's narrow declared-emergency exception.
What post-closing protections apply to a Texas 50(a)(6) loan?
The loan documents must provide that the owner may rescind within three days after closing without penalty or charge. The Constitution also requires a court order for foreclosure and makes the loan without personal recourse against the owner and spouse unless the extension of credit was obtained by actual fraud. Federal Regulation Z has a separate rescission framework with stated exemptions.
Can an existing 50(a)(6) loan be refinanced as a non-home-equity loan?
Section 50(f)(2) permits this when every condition is met: at least one year has passed, no additional funds are advanced except qualifying refinanced debt and actual lender-required costs and reserves, combined liens remain at or below 80% of fair market value, and the lender delivers the prescribed notice within the required timing. That notice explains that important home-equity protections will be waived.
Do Fannie Mae, FHA, and VA use the same Texas cash-out rules?
No. Texas law supplies the constitutional baseline, while each agency, investor, lender, and title company applies separate eligibility rules. Fannie Mae warns that its refinance classifications may differ from Texas law. Kellibrooke does not offer or estimate cash-out or other equity-removal financing backed by FHA or VA. FHA and VA purchase loans, FHA Streamline, VA IRRRL, and otherwise eligible rate-and-term refinances are separate transactions. Under Texas Attorney General Opinion KP-0183, Kellibrooke does not advertise or estimate a VA-backed loan that removes equity from a Texas homestead.
Does Section 50(a)(6) apply to a Texas rental property or second home?
The Section 50(a)(6) restrictions discussed here attach to a Texas homestead. A non-homestead rental property or second home is not governed by those homestead restrictions merely because it is in Texas, but current lender, investor, title, and other legal requirements still apply.
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