Texas cash-out refinance rules: what Section 50(a)(6) actually means for you

Why does Texas have its own rules for this?

Texas Constitution Section 50(a)(6) sets specific consumer protections on home equity loans that most other states leave to the lender. It exists because Texas historically restricted homestead borrowing more than almost any other state, and the current rules are the modern, narrower version of that protection, not a loophole lenders invented.

The practical effect is that a Texas cash-out refinance or home equity loan comes with real limits a homeowner in another state simply would not run into. Knowing them before you apply saves you from being surprised mid-file.

How much can you actually pull out?

The maximum loan-to-value on a Texas Section 50(a)(6) loan is 80 percent, combined across everything secured by the home. On a home appraised at $500,000, that caps your total mortgage balance, existing plus new cash out, at $400,000, full stop, regardless of what your income or credit would otherwise support.

Lender fees on the loan itself are also capped, generally at 2 percent of the loan amount for lender-controlled costs like origination, processing, and underwriting. Third-party costs like the appraisal and title insurance sit outside that cap.

The waiting periods nobody mentions upfront

You have to receive specific required disclosures at least 12 days before closing, and that window cannot be waived or shortened, no matter how motivated everyone is to close faster. Build that into your timeline from the start rather than finding out about it two weeks before you need the funds.

There is also a once-per-year rule. You cannot close a second Section 50(a)(6) loan on the same homestead until at least 12 months have passed since the last one. If you are planning to tap equity twice for a larger project, that has to be sequenced, not done back to back.

One more Texas-specific quirk: closing cannot happen at your home. It has to be at the lender's office, an attorney's office, or a title company, an in-person requirement that surprises people expecting a mobile notary at the kitchen table.

What this means if you already know why you want the equity

None of this makes a Texas cash-out refinance a bad option, it just means the math and the timeline are more fixed than they are elsewhere. The 80 percent cap is the number to build a plan around first, before you get attached to a specific project budget.

Tell me what the equity is actually for, and I will run the real number your home supports under the 80 percent cap, side by side with what a home equity loan versus a full refinance would look like for your specific situation.