On a Texas home equity loan, including a Texas cash-out refinance under Section 50(a)(6), the fees you pay to originate, evaluate, maintain, record, insure or service the loan generally cannot exceed 2 percent of the original principal amount. Interest and bona fide discount points used to buy down the rate are outside the cap, and the constitution excludes four specific third-party costs: a third-party appraisal, a survey by a state registered or licensed surveyor, the state base premium for a mortgagee title policy with endorsements, and certain title examination reports (Texas Constitution Art. XVI, Sec. 50(a)(6)(E)).
The Texas Constitution protects homesteads from most liens. A home equity loan is allowed only if it meets a long list of conditions in Section 50(a)(6), and the fee cap is one of them. If the loan does not comply, the lien's validity can be at risk, which is why lenders and title companies test the fees carefully before closing. See Texas cash-out rules.
Fees paid to any person that are necessary to originate, evaluate, maintain, record, insure or service the loan, unless excluded. Common examples include lender origination and underwriting fees, processing fees, and many third-party charges that are not on the excluded list. The Texas Finance Commission and Credit Union Commission publish interpretations on how specific fees are treated (7 Tex. Admin. Code 153.5). The lender and title company itemize and test every line.
Older articles sometimes mention a 3 percent cap. The current constitution says 2 percent. Use the constitution.
Because bona fide discount points are outside the cap, the way a loan is priced can affect whether a closing fits. That is a real structuring question, not a way to load fees and rename them. If the fees that count exceed 2 percent, something has to change before closing: a lower fee, fewer services, or a pricing adjustment within the rules. The loan does not close over the cap to be fixed later.
The Texas cap is a different test from the federal Loan Estimate tolerance rules (12 CFR 1026.19(e)(3)). A fee can be fine under federal rules and still push a Texas home equity loan over the cap. Both tests run. See the Loan Estimate.
For how cash-out works more broadly, see cash-out refinance.
Fictional example: a Fort Worth homeowner applies for a Texas cash-out refinance. The fee worksheet shows an origination charge, a processing fee, and several third-party charges. The appraisal, survey and base title premium are excluded as the constitution describes. The lender adds up the fees that count and compares them with 2 percent of the original principal. They are over by a small amount, so the lender reduces a fee before the Closing Disclosure is finalized.
If you are considering a Texas cash-out refinance, I can walk through the fee test and the 80 percent limit with your numbers before you apply. Book a call, or start an application.
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