Texas protects homesteads more than any other state. If you want to pull cash out of your home with a cash-out refinance, a home equity loan or a HELOC, Section 50(a)(6) of the Texas Constitution sets the rules. Here is what they mean for you, and what they don’t.
Short answer: in Texas you can borrow against your homestead up to 80% of its value, counting every loan on it. The loan can’t close for 12 days after you apply, must close at a lender’s, attorney’s or title company’s office, and you have 3 days to cancel. Fees are capped at 2%, you can do it only once every 12 months, and the loan is non-recourse: the lender can’t come after your wages or other assets.
All liens on your homestead, including the new one, can’t exceed 80% of its fair market value. Every HELOC draw is tested against that 80%.
The loan can’t close until the 12th day after you apply or receive the required Texas notice, whichever is later. You can’t waive it.
Closing must happen at the office of a lender, attorney or title company, never at your home.
You can cancel within three days after closing. Under federal law that is three business days in practice.
You can’t close a new Texas home equity loan within one year of the last one, even if the old one is paid off.
Lender and broker fees are capped at 2% of the loan. The appraisal, survey and title insurance don’t count toward the cap.
Every owner and every owner’s spouse must consent in writing, even a spouse who isn’t on the title.
You aren’t personally liable for a shortfall. The lender can only foreclose on the home, and only with a court order.
Take a San Antonio home worth $400,000 with a $220,000 first mortgage.
| Home value | $400,000 |
| 80% limit | $320,000 |
| Minus current mortgage | −$220,000 |
| Most you could borrow against it | $100,000 (before closing costs) |
In many other states lenders go to 85% or 90%. In Texas, 80% is the ceiling for your homestead, whatever a national ad says.
| Option | How it works | Best when |
|---|---|---|
| HELOC | A line of credit you draw from as needed. Your first mortgage stays as it is. | Your current rate is low and you need money over time, like a remodel. |
| Home equity loan | A lump sum as a second loan, usually at a fixed rate. | You need one known amount and want to keep your first mortgage rate. |
| Cash-out refinance | Replaces your mortgage with a bigger one and pays you the difference. In Texas this is also a 50(a)(6) loan with all the rules above. | Today’s rate is close to or better than your current rate. |
Beto runs the numbers both ways. If keeping a 3% first mortgage and adding a HELOC costs less than a cash-out refi, he’ll tell you. See HELOC options and cash-out refinance.
Since 2018, Texas lets you refinance a home equity loan into a regular loan without the 50(a)(6) restrictions, if all of these are true: it has been at least a year since the home equity loan closed, you take no new cash, the new loan is at or under 80% of value, and you receive a specific notice at least 12 days before closing. That matters when rates drop.
These rules apply to the home you live in. In a city, a homestead can be up to 10 acres. In the country, up to 200 acres for a family or 100 acres for a single adult. Since 2018, agricultural-exempt homesteads can also qualify, which matters for Hill Country owners.
Not on your homestead. The 80% combined limit is in the Texas Constitution. Investment properties are not homesteads, so different rules apply to them.
No. The 12 days can’t be waived. Plan for about three weeks from application to funding, counting the 3-day cancellation period after closing.
No. A Texas home equity loan must close at a lender’s, attorney’s or title company’s office.
Yes. Every owner’s spouse must consent to the lien in writing, even if they aren’t on the title or the loan.
Yes. If you take cash out on your homestead, it falls under the same 50(a)(6) rules: 80% cap, 12 days, closing location, and once every 12 months.
This is a plain-English summary of Texas Constitution Article XVI, Section 50 and the Texas home equity interpretations (7 TAC Chapter 153). It is not legal advice.