How does a Texas 50(a)(6) home-equity (cash-out) loan actually work?
Texas writes its cash-out rules into the state constitution, not just lender guidelines. A Section 50(a)(6) home-equity loan lets you pull cash out of your homestead, but with guardrails no other state has. Know them before you apply.
What is a Texas 50(a)(6) loan?
A Section 50(a)(6) loan is a cash-out refinance or home-equity loan secured by your Texas homestead, governed by Article XVI, Section 50 of the Texas Constitution. Any time you take equity out of your primary residence as cash — whether you call it a cash-out refinance or a home-equity loan — Texas treats it as a 50(a)(6) loan with its own rulebook.
This is the part that surprises people moving to Texas from other states: the limits below are constitutional, so a lender can't waive them no matter how strong your file is.
The 80% loan-to-value cap
On a Texas home-equity loan you can borrow up to 80% of the home's fair market value, total. Add any existing first mortgage to the new cash, and the combined balance can't cross 80%. That means you always keep at least 20% equity in the home — Texas does not allow 90% or 95% cash-out on a homestead.
| Item | Example |
|---|---|
| Fair market value | $400,000 |
| 80% ceiling | $320,000 |
| Existing first mortgage | $250,000 |
| Maximum cash available | $70,000 |
The value is set by a current appraisal, and on a 50(a)(6) loan the appraised value has to be agreed in writing — you can't use an inflated number to stretch the 80%.
The 2% fee cap
Texas limits the fees a lender can charge on a home-equity loan to 3% of the loan amount. As of 2026, a short list of bona-fide discount points and legitimate third-party charges (appraisal, survey, title premiums) sit outside that cap, but the lender's own fees have to fit inside it. This is a borrower protection, and it's one reason comparing Texas home-equity offers is less about gimmicks and more about the real terms.
The 12-day rule and other timing protections
Two timing rules define a Texas home-equity closing:
- 12-day cooling-off: the loan can't close until at least 12 days after you apply and receive the required "Notice Concerning Extensions of Credit." This is a deliberate pause to prevent rushed equity stripping.
- One-year rule: you can't take out a new 50(a)(6) loan within 12 months of closing your last one on the same homestead.
- One-at-a-time: only a single home-equity loan can exist against the property at any moment.
- 3-day right to cancel: after closing you still have three business days to rescind.
Who uses a Texas home-equity loan?
Texans use 50(a)(6) cash-out to consolidate higher-cost debt, fund a remodel, cover a large expense, or free up cash while keeping a comfortable equity cushion. Because the rules force you to leave 20% in the home, it tends to be a more conservative move than cash-out in states with looser limits.
One thing worth planning for: once a loan is designated 50(a)(6), that designation follows the property until you refinance it out the right way. We cover exactly how in our companion guide, undoing a Texas home-equity designation.
Common questions
Can I do a cash-out refinance above 80% LTV in Texas?
No. On a homestead, the Texas Constitution caps a 50(a)(6) loan at 80% of fair market value, combining any first mortgage with the cash taken. You must retain at least 20% equity. Only non-homestead properties can use ordinary higher-LTV cash-out rules.
How long does a Texas home-equity loan take to close?
Plan on at least 12 days from application, because Texas requires a mandatory 12-day cooling-off period after you apply and receive the required notice. After closing you also have a 3-business-day right to cancel.
Can I have two home-equity loans on my Texas home?
No. Texas allows only one 50(a)(6) home-equity loan against your homestead at a time, and you cannot close a new one within 12 months of the previous one.
Does the 80% cap apply to a second home or rental?
No. The 50(a)(6) homestead rules apply to your primary residence. Second homes and investment properties follow standard cash-out guidelines, which can allow higher loan-to-value.
How Mike + Cornerstone help
Texas home-equity rules are unforgiving if you don't plan around them. We model your 80% ceiling on a real appraisal, lay out the fees against the 3% cap so there are no surprises, and time the 12-day window so your closing isn't delayed. If a home-equity loan isn't your best move, we'll tell you.
Talk to Mike first Get pre-approved
No pressure, no commitment. Free 20-minute consult. Mike will look at your scenario and tell you straight whether this works for you.
This article is general information for Texas homebuyers and homeowners, not financial or legal advice, and is not a commitment to lend. Program figures are current as of June 28, 2026 and can change; we confirm the numbers for your specific situation. Equal Housing Lender.