Texas Cash-Out Refinance Rules: How 50(a)(6) Actually Works

If you own a home in Texas and want to pull cash out of your equity, you will run into a set of rules that exist nowhere else in the country. They are not lender policy or bank overlays. They are in the Texas Constitution — Article XVI, Section 50(a)(6) — which is why lenders just call these loans "Texas 50(a)(6)" or "Texas A6."

Most of the confusion I see comes from homeowners reading generic cash-out articles written for the other 49 states, then being surprised when their San Antonio loan does not work that way. Here is how it actually works here.

The 80% rule

On your homestead, all the loans against the home combined cannot exceed 80% of its value after the cash-out closes. If your home appraises at $400,000, the most total debt you can walk away with is $320,000 — your current balance, the new cash, and any financed costs all have to fit inside that number.

There is no way around this one. No lender has an exception, because it is not the lender’s rule to bend. And honestly, it is part of why Texas homeowners weathered past housing downturns better than most states. The equity cushion is mandatory.

Worth doing the math before you get attached to a number: if you owe $250,000 on that $400,000 home, your ceiling is $320,000, which is about $70,000 of cash before costs. Run your own numbers on the mortgage payment calculator before you plan around a figure.

The 2% fee cap

Lender fees on a 50(a)(6) loan are capped at 2% of the loan amount. A handful of third-party charges — the appraisal, the survey, the title insurance premium — sit outside the cap, but the lender’s own fees cannot blow past it.

This quietly protects you from the junk-fee stacking that shows up in other states, and it is one reason some out-of-state lenders simply do not offer Texas cash-out loans at all. The math does not work for them. As a broker I can see which wholesale lenders price A6 loans cleanly and which ones treat them as an afterthought — that difference is worth real money on a $300,000 loan.

The 12-day wait

A Texas cash-out cannot close until at least 12 days after you apply and receive the required consumer disclosure — everyone calls it the “12-day letter.” There is also a 3-day right of rescission after closing, where you can change your mind and cancel, and the closing itself must happen at a title company, lender’s office, or attorney’s office. Not at your kitchen table, and not by a mobile notary at a Starbucks.

None of this is a problem if your loan officer builds it into the timeline from day one. It becomes a problem when someone quotes you a two-week close that was never legally possible, and you have already promised a contractor a start date.

One at a time, once a year

Texas allows only one 50(a)(6) loan on your homestead at a time, and once you close one, you cannot close another for 12 months — even with a different lender. The “take a little now, come back for more later” strategy that works elsewhere does not work here.

This is the rule that costs people the most money, and it costs them quietly. If you need $60,000 for a renovation and you take $40,000 because it felt more conservative, that extra $20,000 is a year away. Think through the whole project before you set the number.

“Once a home equity, always a home equity” — mostly retired

For years, once you did a Texas cash-out, every future refinance of that loan stayed locked in the restrictive A6 box forever. A 2017 constitutional amendment softened this: after 12 months, you can refinance a 50(a)(6) into a regular rate-and-term loan — no new cash out, total debt within 80% of value, with the required disclosures.

That matters, because regular refinances typically price better than A6 loans. If you did a cash-out years ago and were told you are stuck with it, that advice may simply be out of date. It is worth a five-minute check.

Homestead vs. everything else

Section 50(a)(6) governs your homestead — your primary residence. Cash-out loans on investment properties and second homes in Texas follow normal national rules.

	Texas homestead (A6)	Investment / second home
Max combined LTV	80%, hard cap	Typically 70–80%, lender-set
Lender fee cap	2% of loan amount	None
Waiting period	12-day letter + 3-day rescission	Standard timeline
Frequency limit	One per 12 months	None
Where you close	Title company, lender, or attorney office	Anywhere permitted
Typical loan type	Almost always conventional	Conventional or DSCR

Investors pulling equity out of a San Antonio rental are doing a conventional or DSCR cash-out underwritten on the rent roll, not an A6 loan — a completely different conversation with completely different paperwork.

It is also worth knowing that most government programs sit this one out: FHA and VA cash-out refinances generally are not available on Texas homesteads, which is why A6 loans are almost always conventional. Veterans sometimes find this out late, having assumed their VA loan benefit in Texas covered it.

What this means in practice

• Know your number first. The 80% cap plus your current balance sets exactly how much cash is available. That math takes two minutes and should happen before anything else.
• Plan the timeline honestly. Twelve days minimum from disclosure to closing, plus three days of rescission before funds move. A realistic A6 close is measured in weeks, not days.
• Get it once, get it right. The 12-month rule means a second bite at the equity is a year away.
• Revisit old A6 loans. If you are carrying a cash-out from years back, the 2017 change may let you refinance into better pricing.
• Ask whether you need a cash-out at all. If you only need a modest amount and your first mortgage carries a low rate, keeping that rate and looking at a second lien is often the cheaper answer. Giving up a 3% first mortgage to access $40,000 is usually a bad trade, and I will tell you that before you apply.

Texas built these rules to protect homeowners, and for the most part they do. But they also mean a cash-out refinance here rewards working with someone who structures them routinely rather than once a year.

If you are weighing a cash-out against a home equity loan, or you just want to know what your 80% number actually is, start a pre-approval with no credit pull or see the full picture on my Texas refinance page. I will run your actual numbers, not a generic calculator’s.