What Are Texas's Special Rules for Home Equity Loans and Cash-Out Refinancing?
Texas allows home equity loans, HELOCs, and cash-out refinances on a homestead, but caps combined loans at 80% of the home's value, bans cash-out on FHA and VA loans, and requires a 12-month wait between transactions. The idea that Texas bans these products outright is a common misconception; the actual restrictions are narrower, and here is how they work.
Last updated July 22, 2026Can you get a HELOC or home equity loan in Texas?
Yes. Under Article XVI, Section 50(a)(6) of the Texas Constitution, conventional home equity loans, HELOCs, and cash-out refinances are all legally permitted on a Texas homestead, subject to a combined loan-to-value cap of 80% of the home's value. Some loan officers describe Texas as not allowing a "straight HELOC" or a separate second-lien cash-out loan, but that is not accurate under current law. Texas has allowed home equity lines of credit under this section since a 2018 constitutional amendment, alongside traditional home equity loans and cash-out refinances of a first mortgage.
Why can't you do a cash-out refinance with an FHA or VA loan in Texas?
This is where Texas's rule is genuinely different from most other states. Cash-out refinancing is not permitted at all on FHA-insured or VA-guaranteed loans secured by a Texas homestead, regardless of loan-to-value. For VA loans specifically, a 2018 opinion from the Texas Attorney General (KP-0183) concluded that the VA's guaranty functions as a form of additional collateral that conflicts with the homestead protections in Section 50(a)(6), so VA cash-out on a Texas homestead is not permitted at all, per Texas AG Opinion KP-0183. The same government-loan restriction applies to FHA financing. The 80% LTV cap described above applies only to conventional home equity loans, HELOCs, and cash-out refinances; it does not create a path to FHA or VA cash-out on a Texas homestead. In practice, this means homeowners who want to pull cash out of a Texas homestead typically use a conventional home equity loan, a HELOC, or a conventional cash-out refinance instead of an FHA or VA product.
How long do you have to wait between cash-out transactions on the same Texas home?
Texas law sets a firm 12-month waiting period between the closing of one Section 50(a)(6) home equity or cash-out transaction and the closing of the next one on the same homestead property. This is a precise 12-month rule, not a loose range, and only one Section 50(a)(6) loan may be secured by the homestead at any given time. So a homeowner cannot close a second cash-out transaction, or refinance an existing home equity loan into a new one, until a full year has passed since the last closing on that property.
| Home equity loans, HELOCs, cash-out refis | All legally allowed on a homestead |
|---|---|
| Combined loan-to-value (LTV) cap | 80% of home value, for conventional Section 50(a)(6) loans |
| Cash-out on FHA loans | Not permitted at all on a Texas homestead |
| Cash-out on VA loans | Not permitted at all on a Texas homestead (Texas AG Opinion KP-0183) |
| Number of Section 50(a)(6) loans at once | Only one per homestead |
| Waiting period between cash-out closings | 12 months, same property |
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
Educational information only, not individualized financial or legal advice. Program details and rates change; verify current terms with a licensed loan officer before making a decision.