Texas Cash-Out Refinance Rules, Explained: The Lien Limit, the 12-Day Notice, and More

When do the Texas rules apply?

The 50(a)(6) rules apply when you borrow against your homestead, the home you live in, and take out more than you owe. That includes:

• A refinance where you get cash back
• A refinance that pays off non-mortgage debt like credit cards or a truck note
• A home equity loan or home equity line of credit (HELOC) on your homestead

A plain rate-and-term refinance, where you just refinance what you owe plus reasonable closing costs, generally isn't a 50(a)(6) loan (Tex. Const. art. XVI §50(e)). Investment property and second homes aren't homesteads, so these rules don't apply to them.

Rule 1: The total-lien limit

Your new loan, plus every other loan secured by the home, can't be more than a set share of the home's fair market value on the day the loan is made. The exact limit is written into the Texas Constitution (§50(a)(6)(B)).

In practice, your cash out is whatever room is left under that limit after paying off what you owe and your closing costs. If there's a second lien on the house, it counts toward the limit too. You and the lender also sign a written acknowledgment of the home's fair market value at closing (§50(a)(6)(Q)(ix)).

The constitutional limit is the ceiling. A loan program can be stricter, never looser.

Rule 2: The 12-day wait

A Texas cash-out loan can't close before the 12th day after the later of:

1. the day you submit your loan application, or
2. the day the lender gives you the Notice Concerning Extensions of Credit, a one-page disclosure that summarizes your rights under the constitution (§50(a)(6)(M)(i), §50(g)).

There's also a one-business-day rule. You have to receive a copy of your loan application (if you haven't already) and a final itemized disclosure of the fees, points, interest, and costs at least one business day before closing. The lender can only shorten that with your written consent in a bona fide emergency or for other good cause (§50(a)(6)(M)(ii)).

What it means for you: a Texas cash-out takes at least 12 days from application, and usually longer once you count the appraisal and underwriting. Plan for it if you need the money by a certain date.

Rule 3: The fee cap

The fees you pay to originate, evaluate, maintain, record, insure, or service the loan are capped at a small share of the original loan amount set by the constitution (§50(a)(6)(E)). Some items don't count toward the cap:

• Interest and bona fide discount points used to buy down the rate
• An appraisal by a third-party appraiser
• A survey by a state-registered or licensed surveyor
• The state base premium for the lender's title policy, with endorsements
• A title examination report, if it costs less than that base premium

On your Loan Estimate, the fees subject to the cap show up across Sections A, B, C, and E. Your lender has to test them against the cap.

Rule 4: Once a year

You generally can't close a new 50(a)(6) loan within one year of closing another one on the same homestead. The only exception is if you request an earlier closing under oath because of a declared state of emergency in your area (§50(a)(6)(M)(iii)). And you can only have one 50(a)(6) loan on the home at a time (§50(a)(6)(K)).

Rule 5: Closing has its own rules

• Where: only at the office of the lender, an attorney, or a title company (§50(a)(6)(N)).
• Who signs: each owner and each owner's spouse must consent to the lien, even if the spouse isn't on the loan (§50(a)(6)(Q)(xi)).
• Copies: you get a copy of the final loan application and every document you sign at closing (§50(a)(6)(Q)(v)).
• 3-day right to cancel: you and your spouse can rescind within three days after closing without penalty (§50(a)(6)(Q)(viii)).

Protections built into a Texas home equity loan

A 50(a)(6) loan also comes with protections you won't find on most other mortgages:

• No personal liability for you or your spouse unless the loan was obtained by actual fraud. The lender's remedy is the home (§50(a)(6)(C)).
• Foreclosure only by court order (§50(a)(6)(D)).
• No prepayment penalty (§50(a)(6)(G)).
• No extra collateral. It can't be secured by any other property (§50(a)(6)(H)).

Can I refinance out of a Texas cash-out loan later?

Yes. You can refinance into another 50(a)(6) loan, subject to the once-a-year rule. Since 2017 you can also refinance a Texas home equity loan into a regular, non-home-equity loan if all of these are true: at least a year has passed since the equity loan closed, you take no new cash beyond costs and reserves, the total of all liens stays within the constitutional limit, and the lender gives you a specific written notice at least 12 days before closing (§50(f)(2)). That notice spells out the protections you'd give up, like non-recourse and court-ordered foreclosure. Read it carefully.

By John Stafford, Loan Officer, NMLS #2470539. John Stafford NMLS #2470539 | GoRascalJohn powered by GoRascal Inc. NMLS #2072896. Licensed in Texas and Tennessee. Equal Housing Opportunity. This article is general education, not legal advice, a loan approval, or an offer of credit. Example figures are illustrations only. Last updated October 22, 2026.