Cash-Out Refinance in Texas
Turn the equity you’ve built into cash you can use — for a renovation, to wipe out high-interest debt, or to invest. Texas has its own equity rules under Section 50(a)(6), and Adam and his team make them simple, shopping multiple lenders so you get a fair deal.
What is a cash-out refinance in Texas?
A cash-out refinance in Texas replaces your current mortgage with a larger one and pays you the difference in cash. You’re borrowing against the equity in your home. Because it’s secured by your primary residence, it falls under Section 50(a)(6) of the Texas Constitution — a set of homeowner protections, including an 80% loan-to-value cap, that don’t exist in most other states.
Key takeaways
- Borrow up to 80% of your home’s value. Texas law requires you to keep at least 20% equity after a cash-out refinance on your primary residence.
- Lender fees are capped at 2% of the loan amount (third-party costs like appraisal, title, and survey are excluded).
- Two built-in waiting periods: a 12-day cooling-off period before closing, and at least 12 months between cash-out transactions on the same home.
- Primary residence only. Investment properties and second homes follow ordinary rules, not Section 50(a)(6).
- “Once a Texas cash-out, always a Texas cash-out.” The 80% cap follows the home on future refinances until specific conditions are met.
- Cash-out here is a conventional loan. VA and FHA cash-out refinances are generally not available in Texas — a conventional 50(a)(6) is the path.
How a Texas cash-out refinance works
The idea is straightforward. Over time, you build equity — the gap between what your home is worth and what you still owe. A cash-out refinance lets you convert some of that equity into cash without selling.
Here’s the mechanics: you take out a new mortgage that’s larger than your current balance. That new loan pays off your existing mortgage, and you receive the leftover amount as a lump sum at closing. Going forward, you make one monthly payment on the new, larger loan. Your equity goes down by the amount you took out, which is why it’s worth being deliberate about how much you pull and what you use it for.
What makes it different in Texas is the legal framework. Cash-out on a primary residence here isn’t just a lender product — it’s governed by the Texas Constitution, with protections written specifically to keep homeowners from over-borrowing against their homes.
Texas 50(a)(6) rules, in plain English
Section 50(a)(6) of the Texas Constitution sets the rules for taking cash out of your homestead. These are the ones that matter most:
- 80% loan-to-value cap. Your total mortgage debt after the refinance can’t exceed 80% of your home’s appraised value. You always keep at least 20% equity — a cushion that protects you if the market dips.
- 2% cap on lender fees. Lender charges like origination, underwriting, and processing are limited to 2% of the loan amount. Third-party costs — appraisal, survey, title insurance — and discount points are excluded from that cap.
- 12-day cooling-off period. You must receive a required disclosure (the “12-day letter”) and wait at least 12 days before the loan can close. It’s a built-in window to make sure you’re comfortable.
- One every 12 months. You can’t do another cash-out on the same property until at least 12 months after your last one closed.
- Primary residence only. Section 50(a)(6) applies to your homestead. Cash-out on an investment property follows ordinary loan rules instead.
- One lien, all others paid off. A Texas cash-out is typically a single-lien loan — existing mortgages and equity lines are paid off and folded into the new loan.
- “Once a Texas cash-out, always a Texas cash-out.” Once your home carries a 50(a)(6) loan, the 80% cap applies to future refinances too — even a no-cash refinance — until specific state conditions are met to convert it.
How much cash can you get?
Start with your home’s value, take 80% of it, and subtract what you still owe. Whatever’s left is roughly what you could take out — before closing costs. Here’s a simple example:
| Home’s appraised value | $400,000 |
| Maximum loan at 80% LTV | $320,000 |
| Current mortgage balance | − $250,000 |
| Estimated cash available (before costs) | ≈ $70,000 |
Your real number depends on your appraised value, your current balance, and the lender’s guidelines. The math is illustrative, not a quote.
What Texans use cash-out for
A cash-out refinance isn’t a sign of financial trouble — most people who use one are making a deliberate, strategic move. Common reasons include:
- Home improvements. Funding a renovation that can add value and comfort — often the smartest use, since the money goes back into the asset.
- Consolidating high-interest debt. Rolling credit cards or personal loans into one lower-rate mortgage payment.
- Investing or a down payment. Using equity toward a rental property or another opportunity.
- Major expenses. Education, a business need, or another large, planned cost.
Whatever the reason, we’ll help you weigh whether pulling equity is the right tool — or whether keeping it in place serves you better.
Curious how much equity you could tap?
Share your home’s value and current balance, and we’ll run the 80% math and show you options from multiple lenders — no pressure, no upfront credit check.
LET’S TALKCash-out vs. home equity loan or HELOC
A cash-out refinance isn’t your only way to access equity in Texas — and it isn’t always the best one. The deciding factor is usually your current first-mortgage rate. Here’s how the options compare.
| Option | Best for | Keeps your current mortgage rate? | Texas notes |
|---|---|---|---|
| Cash-out refinance | Replacing your mortgage and taking equity as a lump sum — ideal if today’s rate is near or below your current one. | No — it replaces your first mortgage. | Full 50(a)(6): 80% LTV, 2% fee cap, 12-day wait, once per 12 months. |
| Home equity loan | A lump sum while keeping your existing mortgage untouched. | Yes — it sits behind your first lien. | Still a 50(a)(6) loan: 80% combined LTV and the same homeowner protections. |
| HELOC | Flexible draws over time rather than one lump sum. | Yes — a separate line on top of your mortgage. | Texas equity rules apply; revolving access during the draw period. |
| Rate-and-term refinance | Lowering your rate or term with no cash taken out. | No — it replaces the loan, but with no cash out. | Not a 50(a)(6) loan, so it doesn’t lock in the 80% cap. |
VA & FHA cash-out in Texas
This trips up a lot of homeowners. In Texas, a cash-out refinance on your homestead is generally done as a conventional loan. Government-backed cash-out programs — VA and FHA — are typically not available for Texas cash-out under Section 50(a)(6).
For veterans, that means: the VA IRRRL streamline is available in Texas to lower the rate on an existing VA loan, but it doesn’t provide cash. If you’re a veteran who wants to access equity, a conventional Texas cash-out under 50(a)(6) is usually the route — and we’ll help you weigh whether it’s worth giving up your VA loan’s benefits to do it.
Step by step: the process
- Set your goal and check the mathWe start with why you want cash and how much, then confirm your equity supports it under the 80% cap. No upfront credit check to begin.
- Compare lender optionsWe shop multiple lenders and bring you real numbers — rate, payment, costs, and cash available — so you can compare side by side.
- Apply and get your 12-day noticeYou submit an application and documents. The required 12-day disclosure starts your cooling-off window.
- Appraisal and underwritingThe home is appraised to confirm value, and the lender verifies your income, assets, and equity.
- Wait out the cooling-off periodTexas requires the deliberate 12-day window before closing — a feature of the law, not a delay to worry about.
- Close and receive your cashYou sign the new loan, your old mortgage is paid off, and the remaining funds come to you.
When it makes sense — and when to wait
A cash-out refinance may be worth it if…
- Today’s rate is at or below your current mortgage rate, so replacing the loan doesn’t cost you on the balance you already owe.
- You have a strong, value-building use for the cash — a renovation or paying off much higher-interest debt.
- You have plenty of equity and will still keep a comfortable cushion after the 80% cap.
It may be better to wait — or choose a HELOC — if…
- You locked in a low first-mortgage rate and would be trading it for a higher one just to access cash.
- The amount you need is small relative to your mortgage, where a home equity loan or HELOC is more efficient.
- You’d be stretching to repay the larger balance, or the use for the cash isn’t essential.
We’ll tell you honestly which path fits — even when the answer is “keep your current mortgage and use a second-lien option instead.”
Cash-out refinance FAQs
What is a cash-out refinance in Texas?
It’s a new, larger mortgage that replaces your current one and pays you the difference in cash. You’re borrowing against your home’s equity. In Texas it’s governed by Section 50(a)(6) of the state constitution, which adds homeowner protections you won’t find in most states.
How much cash can I get from a cash-out refinance in Texas?
Up to the point where your total mortgage equals 80% of your home’s appraised value. Take 80% of the value, subtract what you owe, and the remainder is roughly your cash before closing costs. On a $400,000 home with a $250,000 balance, that’s about $70,000.
What is the Texas 50(a)(6) rule?
Section 50(a)(6) is the part of the Texas Constitution that governs cash-out and home equity loans on your primary residence. It sets the 80% loan-to-value cap, a 2% cap on lender fees, a 12-day cooling-off period, and a limit of one cash-out every 12 months.
What is the 12-day waiting period?
Texas requires you to receive a specific disclosure and then wait at least 12 days before your cash-out loan can close. It’s a built-in cooling-off window so you have time to be sure. A good broker sends that notice promptly so it doesn’t delay your closing.
Can I do a VA or FHA cash-out refinance in Texas?
Generally no. In Texas, cash-out on your homestead is done as a conventional loan; VA and FHA cash-out programs typically aren’t available here under 50(a)(6). Veterans can still use a VA IRRRL to lower their rate — it just doesn’t provide cash.
What can I use the cash for?
Anything you like — there’s no restriction. Most homeowners use it for renovations, consolidating high-interest debt, investing, or a major planned expense. We’ll help you think through whether pulling equity is the right move for your goal.
Are the fees really capped at 2%?
Yes. Lender charges like origination, underwriting, and processing are capped at 2% of the loan amount under Texas law. Third-party costs such as the appraisal, survey, and title insurance are excluded from that cap, and so are discount points.
Is a cash-out refinance better than a home equity loan?
It depends on your current mortgage rate. If today’s rate is near yours, a cash-out refinance can make sense. If you have a low rate you’d rather keep, a home equity loan or HELOC that leaves your first mortgage in place is often the smarter, cheaper option. We compare both for you.
How often can I do a cash-out refinance in Texas?
Once every 12 months on the same property. Texas law requires at least a year between cash-out transactions, which helps prevent homeowners from repeatedly draining their equity.
How do I start a cash-out refinance in Texas?
Reach out for a no-pressure conversation. Tell us your home’s value, your current balance, and what you’re hoping to do with the cash, and we’ll run the numbers and show you options from multiple lenders — with no upfront credit check.
About Adam Bartling
Loan Officer · NMLS# 2213358 · Retired U.S. Army Captain
Adam is a Texas mortgage broker and retired Army Captain with an education-first approach: shop multiple lenders, explain the trade-offs honestly, and structure each loan around the client’s long-term goals. On cash-out refinancing especially, that means being straight about when tapping equity is smart — and when keeping your low first-mortgage rate is the better call. Adam and his team serve homeowners across Texas and stay a lender for life with an annual real estate review.
Put your home’s equity to work — the right way
Get an honest read on your cash-out options from a Texas mortgage broker who shops multiple lenders for you and knows Section 50(a)(6) inside out. No upfront credit check, no pressure.
LET’S TALK