What Are Texas's Special Rules for Home Equity Loans and Cash-Out Refinancing?
Texas allows home equity loans, home equity lines of credit and cash-out refinances on a homestead, but under its constitution: combined loans are capped at 80% of the home's value, you can have only one such loan at a time and you have to wait 12 months between them. A VA cash-out refinance isn't allowed on a Texas homestead. The idea that Texas bans home equity borrowing outright is a myth.
Last updated September 29, 2026Can I get a home equity loan or line of credit in Texas?
Yes. Article XVI, Section 50(a)(6) of the Texas Constitution allows home equity loans, home equity lines of credit and cash-out refinances on a homestead, with borrower protections built in. The main one is the cap: all loans against the homestead together can't exceed 80% of its value.
Why can't I do a VA cash-out refinance in Texas?
Because of how the constitution treats collateral. In a 2018 opinion (KP-0183), the Texas Attorney General concluded that the federal guaranty on a VA loan counts as additional collateral, which Section 50(a)(6) doesn't allow, so a VA cash-out refinance on a Texas homestead isn't permitted. An FHA-insured home equity loan is legally possible, but it's rare in practice: FHA's mortgage insurance premium makes it hard to fit under the constitution's 2% cap on fees. So Texas homeowners who want cash out usually turn to a conventional home equity loan, line of credit or cash-out refinance.
How long do I have to wait between cash-out loans?
Twelve months. Texas doesn't allow a new Section 50(a)(6) loan to close until a year after the last one closed on the same homestead, and only one can be secured by the homestead at a time. So you can't take a second cash-out loan, or refinance a home equity loan into a new one, until a full year has passed.
It depends on your situation:
- You want cash from a Texas homestead with a conventional loan: a home equity loan, line of credit or cash-out refinance can work, within the 80% cap.
- You have a VA loan: a VA cash-out isn't available on a Texas homestead, so look at a conventional option.
- You took cash out within the past year: you'll need to wait until 12 months after that closing.
- You already have a Section 50(a)(6) loan: it has to be the only one; a new one would replace it.
| Home equity loans, lines of credit, cash-out refinances | Allowed on a homestead under Section 50(a)(6) |
|---|---|
| Combined loan-to-value cap | 80% of the home's value |
| VA cash-out refinance on a homestead | Not permitted (Attorney General Opinion KP-0183) |
| FHA-insured home equity loan | Legally possible, rarely offered because of the 2% fee cap |
| Number of Section 50(a)(6) loans | One at a time |
| Wait between cash-out closings | 12 months |
Related questions
Sources
- https://statutes.capitol.texas.gov/Docs/CN/htm/CN.16.htm
- https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/2018/kp0183.pdf
- https://selling-guide.fanniemae.com/sel/b5-4.1/general-requirements-texas-section-50a6-loans
- https://www.lendfriendmtg.com/learning-center/cash-out-refinances-in-texas
- https://www.mortgagelaw.com/insights/texas-home-equity-lending-and-prohibited-additional-collateral-part-two-va-guaranties-and-fha-mortgage-insurance
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