A Texas cash-out refinance on your homestead is governed by the Texas Constitution, Article XVI, Section 50(a)(6). The big rules: your new loan plus every other lien on the home can't exceed 80% of its fair market value, most fees are capped at 2% of the loan amount, you can't close until at least 12 days after you apply or receive the required notice (whichever is later), you can only do one of these loans every 12 months, and you get 3 days after closing to cancel. These are constitutional rules, not lender preferences, so no lender can shop them away.
I'll walk you through each rule in plain English, then how it plays out on a real timeline.
Texas protects homesteads from forced sale except for specific kinds of debt listed in Section 50(a). A loan that puts new money in your pocket, or pays off debts not already secured by the home, is an "extension of credit" under 50(a)(6), often called a Texas home equity loan or "Texas cash-out" (Tex. Const. art. XVI, sec. 50(e)). A refinance that only pays off existing home loans plus reasonable closing costs is a different path. See rate-and-term refinancing.
Fannie Mae puts it plainly: Texas law decides whether a loan is a 50(a)(6) loan, regardless of whether Fannie Mae calls it a cash-out or limited cash-out refinance (Selling Guide B5-4.1-02).
All of these come from Tex. Const. art. XVI, sec. 50(a)(6), last amended Nov 7, 2017.
The new loan, added to the balances of every other lien recorded against your homestead, can't exceed 80% of the home's fair market value on the day the loan is made (50(a)(6)(B)). If you have a second lien or other recorded debt, it counts. You and the lender both sign a written acknowledgment of the fair market value (50(a)(6)(Q)(ix)), and the appraisal is usually what sets it. See what an appraisal checks.
Fees you pay to originate, evaluate, maintain, record, insure or service the loan can't exceed 2% of the original principal, not counting interest and bona fide discount points used to buy down the rate. These four are excluded from the cap: a third-party appraisal, a survey by a state registered or licensed surveyor, the state base premium for the lender's title policy with endorsements, and a title examination report if it costs less than that base premium (50(a)(6)(E)). This is why your Loan Estimate on a Texas cash-out looks a little different.
The loan can't close before the 12th day after the later of the day you submit your application or the day the lender gives you the constitutional notice (50(a)(6)(M)(i) and 50(g)). It's a waiting period, not a deadline.
You also must receive a copy of your loan application, if you didn't already get one, and a final itemized disclosure of the actual fees, points, interest, costs and charges at least one business day before closing. The constitution allows changes on closing day only for a bona fide emergency or other good cause with your written consent (50(a)(6)(M)(ii)).
A new 50(a)(6) loan can't close before the first anniversary of the closing date of any other 50(a)(6) loan on the same homestead, unless you request an earlier closing under oath because of a declared state of emergency covering your area (50(a)(6)(M)(iii)).
A 50(a)(6) loan must be the only debt on the homestead when it's made, except for purchase money, taxes, owelty, a qualifying refinance, certain improvement liens, or a manufactured home conversion (50(a)(6)(K)). In practice, existing home equity debt gets paid off at closing.
The loan can close only at the office of the lender, an attorney, or a title company (50(a)(6)(N)). You can't sign documents with blanks for substantive terms (50(a)(6)(Q)(iii)), and you get copies of the final application and everything you sign (50(a)(6)(Q)(v)).
You and your spouse can rescind the loan within three days after closing without penalty (50(a)(6)(Q)(viii)). Federal law also gives a three-business-day right of rescission on many refinances of a principal home (Regulation Z, 12 CFR 1026.23). In practice, the money goes out after that window passes.
A Texas cash-out runs on more than one clock. Federal rules require you to receive your Closing Disclosure at least three business days before you sign (12 CFR 1026.19(f)(1)(ii)). Texas adds the 12-day wait and the one-business-day final disclosure rule. Plan the calendar around the longest one. Anyone promising a Texas cash-out closing a few days after you apply isn't describing this constitution.
The constitution sets the floor. Each loan program adds its own requirements:
If you have a 50(a)(6) loan now, you aren't stuck with it forever. The constitution allows refinancing it into a regular non-home-equity loan if the refinance closes at least one year after the original loan, adds no new cash beyond refinancing home debts and actual costs and reserves, keeps all liens at or under 80% of fair market value, and you receive a specific written notice no later than the third business day after you apply and at least 12 days before closing that explains you'll lose the home equity protections (50(f)). That notice matters: a regular loan allows foreclosure without a court order and carries personal liability.
This example is made up to show how the limits interact.
Carla in Burleson wants to pay off a car loan and two credit cards and replace her roof. Her home appraises at $350,000. Eighty percent of that is $280,000. She owes $190,000 on her first mortgage and has no other liens. Her new loan can total no more than $280,000. It pays off the $190,000 first, which leaves at most $90,000 for her payoffs, her roof and her closing costs. Her lender gives her the Texas notice the same day she applies, so the earliest legal closing is the 12th day after that, and she also needs her Closing Disclosure three business days before signing. After she signs, she has three days to cancel before funds go out. If her appraisal had come in lower, her available cash would shrink with it.
Thinking about pulling cash out of your Fort Worth area home? Let me check your equity against the 80% limit and map the 12-day timeline before you count on the money. Book a call, or start an application. For how cash-out works in general, see cash-out refinancing, and for what the homestead rules protect, see Texas homestead protection.
Links checked Oct 21, 2026.
About the author: McKade Lively, NMLS 2704474, American Pacific Mortgage Corporation dba True North Home Loans, NMLS 1850.
Equal Housing Opportunity.
Last reviewed: Oct 2026